SWFT Comprehensive Volume 2019
42nd Edition
ISBN: 9780357233306
Author: Maloney
Publisher: Cengage
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Answer the questions after reading the passages.
1.Mario is engaged in a pharmaceutical business. One day, Mario unnecessarily bought from Dario a truckload of supplies and medicines to be sold in his pharmacy so that he could post the cost in his ledger as expense to reduce his tax liability. Is the contract of sale between Mario and Dario valid? Why or why not?
2. Joanna entered into a loan contract with Marie over Marie’s car where Joanna is the borrower and Marie is the lender. It was stated in the contract that the ownership will be transferred to Joanna. The title to the car was given to Joanna who registered the car in her name. Before the end date of the contract, Joanna expressed her intention to buy the car. But Marie refused to agree to Joanna’s intent. Was Marie correct in refusing to agree to Joanna’s intent? Why or why not
3. Scott requested Jenny to work with the Bureau of Internal Revenue (BIR) in further reducing the tax liability of the company believing her to be an…
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- Mario is engaged in a pharmaceutical business. One day, Mario unnecessarily bought from Dario a truckload of supplies and medicines to be sold in his pharmacy so that he could post the cost in his ledger as expense to reduce his tax liability. Is the contract of sale between Mario and Dario valid? Why or why not? 2. Joanna entered into a loan contract with Marie over Marie’s car where Joanna is the borrower and Marie is the lender. It was stated in the contract that the ownership will be transferred to Joanna. The title to the car was given to Joanna who registered the car in her name. Before the end date of the contract, Joanna expressed her intention to buy the car. But Marie refused to agree to Joanna’s intent. Was Marie correct in refusing to agree to Joanna’s intent? Why or why not? 3. Scott requested Jenny to work with the Bureau of Internal Revenue (BIR) in further reducing the tax liability of the company believing her to be an accountant. Meanwhile, Jenny took advantage of…arrow_forwardJenna, a paid preparer, is preparing a return for her neighbor and close friend, Gerald. Gerald wishes to claim the head of household filing status using his daughter, Sara, as a dependent. Jenna knows that Sara lived with Gerald's ex-wife (Sara's mother) all year. However, when she asked him about this, Gerald replied: "Oh, I understand that you have to ask that. Sara lived with me all year." Then he gave Jenna a knowing wink. Jenna should: Document her question and Gerald's answer and prepare the return claiming the filing status. Call Gerald's wife and verify that she will not file a return using the head of household status. Decline to prepare Gerald's return with the requested filing status. She may not ignore her personal knowledge, no matter what Gerald says. Obtain a signed statement from Gerald that he agrees to assume the risk of any consequences of the tax position claimed on the return.arrow_forwardWhich of the following describes a taxpayer with a hobby? Sara, an independent seller for a cosmetics company, who sells products to friends and neighbors because she enjoys learning about the new products available. She maintains separate business and personal accounts and keeps meticulous business records. Craig, a taxpayer who builds model trains. He occasionally wins cash prizes in local train modeling contests. He deposits his winnings into his personal checking account. Everett, a university research associate, who had made profits on his research activities in the past and fully expects to do so in the future. Gail, a taxpayer who writes travel articles. She visits each location only after she has a valid contract with a publisher and keeps her business and personal accounts separate. Her travel expenses and earnings are in line with the earnings and expenses of other travel writers.arrow_forward
- Asshish is a medical doctor and a scientist. He works at a local hospital in the mornings, attending to patients. At lunchtime he takes a train to the local university where he works in a research laboratory. At the end of the day, he takes the train home. Advise Asshish as to the tax deductibility of the train fares. O The train fare from the university to his home will not be deductible as it is a private or domestic expense O The train fare from the university to his home will be deductible as it is necessary to put him in a position to earn the income O The train fare from the university to his home will not be deductible as it is a fringe benefit tax O The train fare from the university to his home will be deductible as it is directly connected to his income exertionarrow_forwardWhich of the following describes a taxpayer with a hobby? a) Sara, an independent seller for a cosmetics company, who sells products to friends and neighbors because she enjoys learning about the new products available. She maintains separate business and personal accounts and keeps meticulous business records. b) Craig, a taxpayer who builds model trains. He occasionally wins cash prizes in local train modeling contests. He deposits his winnings into his personal checking account. c) Everett, a university research associate, who had made profits on his research activities in the past and fully expects to do so in the future. d) Gail, a taxpayer who writes travel articles. She visits each location only after she has a valid contract with a publisher and keeps her business and personal accounts separate. Her travel expenses and earnings are in line with the earnings and expenses of other travel writers.arrow_forwardJane, a partner in a CPA firm, borrows money from one of her firm's audit clients. She is a covered member with respect to this client. For which type of loan may Jane borrow from the client and not impair her independence? A.) She uses the money to help her parents B.) She purchases a home that will be her primary residence C.) She uses the money to obtain a master's degree D.) She purchases an automobile, which is collateral for the loanarrow_forward
- Ms. Gail Go created a trust in favour of her son, Wilson Go. He appointed Atty. Ramulo as a trustee. Mr. Denniz Ling also created a trust in favour of his mother, Mary Mr. Ling appointed Mr. Aguilar as trustee. Atty. Ramulo sold his business car to Mr. Aguilar at a loss. Can Atty Ramulo deduct the loss from the sale of the car? Briefly explain.arrow_forwardFor each of the following scenarios, determine if the event is included or excluded from gross income. In addition, you must also explain the reason for your decision. A father gives his son $10,000 so that he can purchase a car. A family member receives $3,000 from a friend after your house was destroyed by fire. A client gives her attorney an extra $500 because he did an excellent job preparing her will. An employer gave an employee an iPad because he has not been absent from work for three weeks. A spouse died three weeks ago, and her employer gave the spouse’s children $2,000. An uncle died and left his neighbor $40,000 in cash and a car worth $22,000.arrow_forwardFatima and Saira are sisters. They own a land. Fatima and Saira gave their land to Fatima's daughter, Mariam. The land was given to Mariam by Fatima on the condition that she will pay 200 OMR to Saira every year. The daughter agrees to the condition and signs the agreement, but later does not pay it. So, Saira has filed a complaint against Mariam. Questions a. Can Saira claim the payment from Mariam? Explain why or why not? b. Is the contract in this case enforceable by law? Explain why or why not?arrow_forward
- Jeremy received a tax refund check and needs to have it deposited into his account. He decided to ask his friend JT to do that for him. What does Jeremy need to write on the back of the check to make sure that JT doesn't cash the check for himself?arrow_forwardFelix is a property claims adjuster for a large property insurer. Janet is a policyholder who recently notified the company that the roof of her home incurred substantial damage because of a recent hailstorm. Janet owns her home and has a standard Homeowner's policy with no special endorsements. What questions should Felix ask before the claim is approved for payment by his company.arrow_forwardDoes the taxpayer recognize gross income in the following situations? a. Ava is a filing clerk at a large insurance company. She is permitted to leave the premises for lunch, but she usually eats in the company's cafeteria because it is quick and she is on a tight schedule. On average, she pays $2 for a lunch that would cost $12 at a restaurant and it cost her employer $10 to prepare. However, if the prices in the cafeteria were not so low and the food was not so delicious, she would probably bring her lunch at a cost of $3 per day. Ava's meals are provided as . Therefore, Ava would include $fill in the blank 08654900eff8078_2 per meal in her gross income. b. Scott is an executive for an international corporation located in New York City. Often he works late, taking telephone calls from the company's European branch. Scott often stays in a company-owned condominium when he has a late-night work session. The condominium is across the street from the company office and…arrow_forward
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