TAX

Lacy is a single taxpayer. In 2019, her taxable income is $42,500. What is her tax liability in each of the following alternative situations? Her $42,500 of taxable income includes $6,500 of qualified dividends.

1. 42500-6500=36000 2. 970+(36000-9700)*.12=4126 2. (42500-39375)*.15+(6500-(42500-39375))*0%= 468.75 4. 4126+468.75=4594.75

Jose purchased a delivery van for his business through an online auction. His winning bid for the van was $24,500. In addition, Jose incurred the following expenses before using the van: shipping costs of $650; paint to match the other fleet vehicles at a cost of $1,000; registration costs of $3,200, which included $3,000 of sales tax and an annual registration fee of $200; wash and detailing for $50; and routine maintenance for $250. What is Jose's cost basis for the delivery van?

Cost basis $29,150 Explanation Description Amount Explanation Purchase price $24,500 Shipping costs 650 Business preparation cost Paint 1,000 Business preparation cost Sales tax 3,000 Business preparation cost Total cost basis $29,150 *Note that the registration fee, washing and detailing, and engine tune-up are costs for repairs and maintenance that are not required to be capitalized.

Circuit Corporation (CC) is a calendar-year, accrual-method taxpayer. CC manufactures and sells electronic circuitry. On November 15, year 0, CC enters into a contract with Equip Corp (EC) that provides CC with exclusive use of EC's specialized manufacturing equipment for the five-year period beginning on January 1 of year 1. Pursuant to the contract, CC pays EC $100,000 on December 30, year 0. How much of this expenditure is CC allowed to deduct in year 0 and in year 1? (Leave no answers blank. Enter zero if applicable.)

Deductible amount Year 0 $0 Year 1 $20,000

Michelle operates a food truck. Indicate the amount (if any) that she can deduct as an ordinary and necessary business deduction in each of the following situations. (Leave no answers blank. Enter zero if applicable.) c. Michelle provided a candidate with free advertising painted on her truck during the candidate's campaign for city council. Michelle paid $500 to have the ad prepared and an additional $200 to have the ad removed from the truck after the candidate lost the election.

Deductible amount $0

Michelle operates a food truck. Indicate the amount (if any) that she can deduct as an ordinary and necessary business deduction in each of the following situations. (Leave no answers blank. Enter zero if applicable.) b. Michelle paid $750 to reserve a parking place for her food truck for the fall football season outside the local football arena. Michelle also paid $95 for tickets to a game for her children.

Deductible amount $750

Michelle operates a food truck. Indicate the amount (if any) that she can deduct as an ordinary and necessary business deduction in each of the following situations. (Leave no answers blank. Enter zero if applicable.) a. Michelle moves her food truck between various locations on a daily rotation. Last week, Michelle was stopped for speeding. She paid a fine of $125 for speeding, including $80 for legal advice in connection with the ticket.

Deductible amount $80

After several profitable years running her business, Ingrid decided to acquire the assets of a small competing business. On May 1 of year 1, Ingrid acquired the competing business for $300,000. Ingrid allocated $50,000 of the purchase price to goodwill. Ingrid's business reports its taxable income on a calendar-year basis. (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.) a. How much amortization expense on the goodwill can Ingrid deduct in year 1, year 2, and year 3?

Year Deductible amortization expense Year 1 $2,222 Year 2 $3,333 Year 3 $3,333 Explanation a. Ingrid could deduct $2,222 amortization expense on the goodwill in year 1 and $3,333 of amortization expense on the goodwill in years 2 and 3, computed as follows: DescriptionAmount Explanation(1)Basis of Goodwill$50,000Provided(2)Recovery period 18015 years(3)Monthly amortization$277.78(1)/(2)(4)Months in year 1×8May through December(5)Year 1 straight-line amortization$2,222(3) × (4)(6)Months in years 2 and 3×12January through December(7)Years 2 and 3, annual straight-line amortization$3,333(3) × (6)

Indicate the amount (if any) that Josh can deduct as an ordinary and necessary business deduction in each of the following situations. This year Josh paid $25,600 to employ the mayor's son in the business. Josh would typically pay an employee with these responsibilities about $22,000 but the mayor assured Josh that after his son was hired, some city business would be coming his way.

$22000

Manny hired his brother's firm to provide accounting services to his business. During the current year, Manny paid his brother's firm $104,000 for services even though other firms were willing to provide the services for $84,000. How much of this expenditure, if any, is deductible as an ordinary and necessary business expenditure?

$84,000

Michelle operates a food truck. Indicate the amount if any that she can deduct as an ordinary and necessary business deduction in each of the following situations. Michelle moves her food truck between various locations on a daily rotation. Last week, Michelle was stopped for speeding. She paid a fine of $140 for speeding, including $95 for legal advice in connection with the ticket.

$95

Indicate the amount (if any) that Josh can deduct as an ordinary and necessary business deduction in each of the following situations. Josh borrowed $64500 form First State Bank using his business assets as collateral. he used the money to buy City of Blanksville bonds. Over the course of a year, Josh paid interest of $10,700 on the borrowed funds, but he recieved $10,000 of interest on the bonds.

0

Melissa recently paid $625 for round trip airfare to San Francisco to attend a business conference for three days. Melissa also paid the following expenses: $725 fee to register for the conference, $415 per night for three night's lodging, $205 for meals, and $395 for cab fare. Suppose that Melissa made the trip to San Francisco primarily to visit the national parks and only attended the business conference as an incidental benefit of being present on the coast at that time. What amount of the airfare can Melissa deduct as a business expense?

0

Michelle operates a food truck. Indicate the amount if any that she can deduct as an ordinary and necessary business deduction in each of the following situations. Michelle provided a candidate with free advertising painted on her truck during the candidates campaign for city council. Michelle paid $560 to have the ad prepared and an addition $260 to have the ad removed from the truck after the candidate lost the election.

0

kimberly is a self-employed taxpayer. She recently spent $1800 for airfare to travel to Italy. What amount of the airfare is deductible in each of the following alternative scenarios. Her trip was for entirely personal purposes.

0

kimberly is a self-employed taxpayer. She recently spent $1800 for airfare to travel to Italy. What amount of the airfare is deductible in each of the following alternative scenarios. On her trip, she spent seven days on personal activities and three days on business activities

0 (because over half is spent for personal use)

Renee operates a proprietorship selling collectibles over the web, and last year she purchased a building for $24 million for her business. This year, Renee's proprietorship reported revenue of $85 million and incurred total expenses of $78.1 million. Her expenses included cost of goods sold of $48.5 million, sales commissions paid of $6.4 million, $10.5 million of interest paid on the building mortgage, and $12.7 million of depreciation. Suppose that Renee's revenue includes $5 million of business interest income. What is the maximum amount of business interest that could be deducted this year under the business interest limitation?

10.5 million = 5 million + 30%*25.1 million **25.1 million= (85-78.1=6.9) + (10.5-5)+12.7

Olga is married and files a joint tax return with her husband. What amount of AMT exemption may she deduct under each of the following alternative circumstances? Her AMTI is $395,000

111700 on chart

Lacy is a single taxpayer. In 2019, her taxable income is $42,500. What is her tax liability in each of the following alternative situations? She files under the single filing status.

12292.50 = (42500-39475)*.22 + 4543

Kimberly is a self-employed taxpayer. She recently spent $1800 for airfare to travel to Italy. What amount of the airfare is deductible in each of the following alternative scenarios. On her trip, she spent seven days on business activities and three days on personal activities

1260 = (1800/10)*7

Ryan is self-employed. This year Ryan used his personal auto for several long business trips. Ryan paid $2350 for gasoline for these trips. His depreciation on the car if he was using it fully for business purposes would be $3900. During the year, he drove his car a total of 17,400 miles ( a combination of business and personal travel). Ryan estimates that he drove approximately 1495 miles on business trips, but he can only provide written documentation of the business purpose for trips totaling 930 miles. What business expense amount can Ryan deduct (if any) for these trips?

1670 step 1.(930/17400)*3900=208.4482759 step2.(930/1495)*2350=1461.87291 step3. 208.4482759+1461.87291= 1670.321186

Kimberly is a self-employed taxpayer. She recently spent $1800 for airfare to travel to Italy. What amount of the airfare is deductible in each of the following alternative scenarios. her trip was entirely for business purposes

1800

Trey has two dependents, his daughters, ages 14 and 17, at year-end. Trey files a joint return with his wife. What amount of child credit will Trey be able to claim for his daughters under each of the following alternative situations? His AGI is $106,200

2000 for014yr old and only 500 for 17 yr old=2500

In 2019, Elaine paid $2,120 of tuition and $1,300 for books for her dependent son to attend State University this past fall as a freshman. Elaine files a joint return with her husband. What is the maximum American opportunity tax credit that Elaine can claim for the tuition payment and books in each of the following alternative situations? Elaine's AGI is $104,250.

2120+1300=3420-2000=1420 2000+(1420*.25)=2355

Steve's tentative minimum tax (TMT) for 2019 is $253,000. What is his AMT if his regular tax is $238,700?

253000-238700=14300

Assume Sarah is a cash method, calendar year taxpayer , and she is considering making the following cash payments related to her business. Calculate the after-tax cost of each payment assuming she is subject to 37% marginal tax rate. $4,100 payments for next years property taxes on her place of business

2583 = 4100*(1-.37)

Assume Sarah is a cash method, calendar year taxpayer , and she is considering making the following cash payments related to her business. Calculate the after-tax cost of each payment assuming she is subject to 37% marginal tax rate. $2600 contribution to the mayors re-election campaign

2600 (non deductible)

Renee operates a proprietorship selling collectibles over the web, and last year she purchased a building for $24 million for her business. This year, Renee's proprietorship reported revenue of $85 million and incurred total expenses of $78.1 million. Her expenses included cost of goods sold of $48.5 million, sales commissions paid of $6.4 million, $10.5 million of interest paid on the building mortgage, and $12.7 million of depreciation. What is Renee's adjusted taxable income for purposes of calculating the limitation on business interest expense?

30.1 million = (85-78.1=6.9)+12.7+10.5 (taxable interest before interest-total expense=gross income. Gross income+depreciation + interest expense)=adjusted taxable income

Julie paid a day care center to watch her two-year-old son while she worked as a computer programmer for a local start-up company. What amount of child and dependent care credit can Julie claim in each of the following alternative scenarios? Julie paid $5,650 to the day care center and her AGI is $50,000 (all salary).

3000*.20=600

Melissa recently paid $625 for round trip airfare to San Francisco to attend a business conference for three days. Melissa also paid the following expenses: $725 fee to register for the conference, $415 per night for three night's lodging, $205 for meals, and $395 for cab fare. Suppose that while Melissa was on the coast, she also spent two days sightseeing the national parks in the area. To do the sightseeing, she paid $1,590 for transportation, $880 for lodging, and $390 for meals during this part of her trip, which she considers personal in nature. What amount of the travel costs can Melissa deduct as business expenses?

3093 because they are personal and non deductible

Melissa recently paid $625 for round trip airfare to San Francisco to attend a business conference for three days. Melissa also paid the following expenses: $725 fee to register for the conference, $415 per night for three night's lodging, $205 for meals, and $395 for cab fare. What amount of these costs can Melissa deduct as business expenses?

3093= 625 + 725+ (3*415)+(205/2)+395

Ryan is self-employed. This year Ryan used his personal auto for several long business trips. Ryan paid $2350 for gasoline for these trips. His depreciation on the car if he was using it fully for business purposes would be $3900. During the year, he drove his car a total of 17,400 miles ( a combination of business and personal travel). Ryan can provide written documentation of the business purpose for trips totaling 4350 miles. What business expense amount can Ryan deduct (if any) for these trips?

3325 = 3900*(4350/17400)+2350

Assume Sarah is a cash method, calendar year taxpayer , and she is considering making the following cash payments related to her business. Calculate the after-tax cost of each payment assuming she is subject to 37% marginal tax rate. 5000 to reimburse the cost of meals incurred by employees while traveling for business

4075 = 5000*(1-(.5*.37))

Assume Sarah is a cash method, calendar year taxpayer , and she is considering making the following cash payments related to her business. Calculate the after-tax cost of each payment assuming she is subject to 37% marginal tax rate. $5400 for football tickets to entertain out-of-town clients during contract negotiations

5400 (non deductible)

Brooke, a single taxpayer, works for Company A for all of 2019, earning a salary of $72,000. What is her FICA tax obligation for the year?

72000*.062=4464+ 72000*.0145=1044=5508

Renee operates a proprietorship selling collectibles over the web, and last year she purchased a building for $24 million for her business. This year, Renee's proprietorship reported revenue of $85 million and incurred total expenses of $78.1 million. Her expenses included cost of goods sold of $48.5 million, sales commissions paid of $6.4 million, $10.5 million of interest paid on the building mortgage, and $12.7 million of depreciation. What is the maximum amount of business interest expense that Renee can deduct this year?

9.03 million = 30.1*30%

Suppose that Melissa's permanent residence and business was located in San Francisco. She attended the conference in San Francisco and paid $725 for the registration fee. She drove 105 miles over the course of three days and paid $169 for parking at the conference hotel. In addition, she spent $295 for breakfast and dinner over the three days of the conference. She bought breakfast on the way to the conference hotel and she bought dinner on her way home each night from the conference. What amount of the travel costs can Melissa deduct as business expenses?

955 = 725+(.58*105)+169

Christopher is a self-employed cash-method, calendar-year taxpayer, and he made the following cash payments related to his business this year. Calculate the after-tax cost of each payment assuming Christopher has a 37 percent marginal tax rate. c. $600 for office supplies in May of this year. He used half of the supplies this year and he will use the remaining half by February of next year.

After-tax cost $378 Explanation $378 = $600 × (1 - 0.37) - all deductible since used within the next year.

Christopher is a self-employed cash-method, calendar-year taxpayer, and he made the following cash payments related to his business this year. Calculate the after-tax cost of each payment assuming Christopher has a 37 percent marginal tax rate. d. $450 for several pairs of work boots. Christopher expects to use the boots about 80 percent of the time in his business and the remainder of the time for hiking. Consider the boots to be a form of clothing.

After-tax cost $450

Christopher is a self-employed cash-method, calendar-year taxpayer, and he made the following cash payments related to his business this year. Calculate the after-tax cost of each payment assuming Christopher has a 37 percent marginal tax rate. a. $500 fine for speeding while traveling to a client meeting.

After-tax cost $500

Christopher is a self-employed cash-method, calendar-year taxpayer, and he made the following cash payments related to his business this year. Calculate the after-tax cost of each payment assuming Christopher has a 37 percent marginal tax rate. b. $800 of interest on a short-term loan incurred in September and repaid in November. Half of the loan proceeds were used immediately to pay salaries and the other half was invested in municipal bonds until November.

After-tax cost $652 Explanation $652 = $800 [1 − (0.5 × 0.370)]. Half of the interest is not deductible because it was used to purchase tax-exempt securities.

At the beginning of the current year, Poplock began a calendar-year dog boarding business called Griff's Palace. Poplock bought and placed in service the following assets during the year: Asset Date Acquired Cost Basis Computer equipment 3/23 $5,000 Dog-grooming furniture 5/12 7,000 Pickup truck 9/17 10,000 Commercial building 10/11 270,000 Land (one acre) 10/11 80,000 Assuming Poplock does not elect §179 expensing and elects not to use bonus depreciation, answer the following questions: (Use MACRS Table 1, Table 2, Table 3, Table 4 and Table 5.) (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount. Leave no answer blank. Enter zero if applicable.) a. What is Poplock's year 1 depreciation deduction for each asset?

Asset Depreciation Deduction Computer equipment $1,000 Dog grooming furniture $1,000 Pickup truck $2,000 Commercial building $1,445 Land $0 Total $5,445

At the beginning of the current year, Poplock began a calendar-year dog boarding business called Griff's Palace. Poplock bought and placed in service the following assets during the year: Asset Date Acquired Cost Basis Computer equipment 3/23 $5,000 Dog-grooming furniture 5/12 7,000 Pickup truck 9/17 10,000 Commercial building 10/11 270,000 Land (one acre) 10/11 80,000 Assuming Poplock does not elect §179 expensing and elects not to use bonus depreciation, answer the following questions: (Use MACRS Table 1, Table 2, Table 3, Table 4 and Table 5.) (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount. Leave no answer blank. Enter zero if applicable.) b. What is Poplock's year 2 depreciation deduction for each asset?

Asset Depreciation Deduction Computer equipment $1,600 Dog grooming furniture $1,714 Pickup truck $3,200 Commercial building $6,923 Land $0 Total $13,437 Explanation b. $13,437, under the half-year convention for personal property, calculated as follows: Purchase Recovery(1) Original(2)(1) × (2)AssetDateQuarterPeriod BasisRateDepreciationComputer equipment23-Mar1st5years$5,00032.00%$1,600Dog grooming furniture12-May2nd7years$7,00024.49% 1,714Pickup truck17-Sep3rd5years$10,00032.00% 3,200Commercial building11-Oct4th39years$270,0002.564% 6,923 $13,437 Land is not depreciable.

Henrich is a single taxpayer. In 2019, his taxable income is $454,000. What is his income tax and net investment income tax liability in each of the following alternative scenarios? His $454,000 of taxable income includes $47,000 of long-term capital gain that is taxed at preferential rates. What is his income tax, net investment income tax and total tax liablilty

Income tax 1. 454000-47000=407000 2. (407000-204100)*.35+46625.50=117643.50 3. .15*47000=7050 4.117643.5+7050=124693.5 net investment income tax 1. 47000*.038=1786 use 47000 b/c it's lower than 454000-200000=254000 total tax laiabilty 1. 1786+124693.5=126479.5

Gary inherited a Maine summer cabin on 10 acres from his grandmother. His grandparents originally purchased the property for $500 in 1950 and built the cabin at a cost of $10,000 in 1965. His grandfather died in 1980 and when his grandmother recently passed away, the property was appraised at $500,000 for the land and $700,000 for the cabin. Since Gary doesn't currently live in New England, he decided that it would be best to put the property to use as a rental. What is Gary's basis in the land and in the cabin?

Land $500,000 Cabin $700,000 Explanation The basis of inherited property is the fair market value on the date of death or, if elected by the estate, the alternate valuation date if less. Consequently, Gary's basis will be $500,000 in the land and $700,000 for the cabin.

Evergreen Corporation (calendar-year-end) acquired the following assets during the current year: (ignore §179 expense and bonus depreciation for this problem): (Use MACRS Table 1 and Table 2.) Asset Date Placed in Service Original Basis Machinery October 25 $70,000 Computer equipment February 3 10,000 Used delivery truck* August 17 23,000 Furniture April 22 150,000 *The delivery truck is not a luxury automobile. b. What is the allowable MACRS depreciation on Evergreen's property in the current year if Evergreen does not elect out of bonus depreciation?

MACRS depreciation $253,000 Explanation b. $253,000, using 100 percent bonus depreciation. All of Evergreen's assets placed in service during the year are eligible for bonus depreciation. (1) Placed in Original(2)(1) × (2)Asset ServiceQuarterBasisRateDepreciation Machinery (7 year)October 254th$70,000100%$70,000 Computer equipment (5 year)February 31st$10,000100%$10,000 Used delivery truck (5 year)August 173rd$23,000100%$23,000 Furniture (7 year)April 222nd$150,000100%$150,000 Total $253,000 $253,000

Evergreen Corporation (calendar-year-end) acquired the following assets during the current year: (ignore §179 expense and bonus depreciation for this problem): (Use MACRS Table 1 and Table 2.) Asset Date Placed in Service Original Basis Machinery October 25 $70,000 Computer equipment February 3 10,000 Used delivery truck* August 17 23,000 Furniture April 22 150,000 *The delivery truck is not a luxury automobile. a. What is the allowable MACRS depreciation on Evergreen's property in the current year, assuming Evergreen does not elect §179 expense and elects out of bonus depreciation?

MACRS depreciation $38,038 $38,038, under the half-year convention, calculated as follows: (1) Placed inOriginal(2)(1) × (2)AssetServiceBasisRateDepreciation Machinery (7 year)October 25$70,00014.29%$10,003 Computer equipment (5 year)February 3$10,00020.00%$2,000 Used delivery truck (5 year)August 17$23,00020.00%$4,600 Furniture (7 year)April 22$150,00014.29%$21,435 Total $253,000 $38,038

Convers Corporation (calendar-year-end) acquired the following assets during the current tax year: (ignore §179 expense and bonus depreciation for this problem): (Use MACRS Table 1, Table 2and Table 5.) Asset Date Placed in Service Original Basis Machinery October 25 $70,000 Computer equipment February 3 $10,000 Used delivery truck*March 17 $23,000 Furniture April 22 $150,000 Total $253,000 *The delivery truck is not a luxury automobile. In addition to these assets, Convers installed new flooring (qualified improvement property) to its office building on May 12 at a cost of $300,000. b. What is the allowable MACRS depreciation on Convers's property in the current year assuming Convers does not elect out of bonus depreciation (but does not take §179 expense)?

MACRS depreciation$257,815 Explanation b. $257,815, under the half-year convention, as computed below. Note that the qualified improvement property does not qualify for bonus depreciation and must be depreciated over a 39-year period. (1) Placed inOriginal(2)(1) × (2)Asset ServiceBasisRateDepreciationMachinery (7 year)October 25$70,000100%$70,000Computer equipment (5 year)February 3$10,000100%$10,000Used delivery truck (5 year)March 17$23,000100%$23,000Furniture (7 year)April 22$150,000100%$150,000Qualified improvement property (39-year)May 12$300,0001.605%$4,815Total $553,000 $257,815

Convers Corporation (calendar-year-end) acquired the following assets during the current tax year: (ignore §179 expense and bonus depreciation for this problem): (Use MACRS Table 1, Table 2and Table 5.) Asset Date Placed in Service Original Basis Machinery October 25 $70,000 Computer equipment February 3 $10,000 Used delivery truck*March 17 $23,000 Furniture April 22 $150,000 Total $253,000 *The delivery truck is not a luxury automobile. In addition to these assets, Convers installed new flooring (qualified improvement property) to its office building on May 12 at a cost of $300,000. a. What is the allowable MACRS depreciation on Convers's property in the current year assuming Convers does not elect §179 expense and elects out of bonus depreciation?

MACRS depreciation$42,853 Explanation a. $42,853, under the half-year convention, as computed below: (1) Placed inOriginal(2)(1) × (2)Asset ServiceBasisRateDepreciationMachinery (7 year)October 25$70,00014.29%$10,003Computer equipment (5 year)February 3$10,00020.00%$2,000Used delivery truck (5 year)March 17$23,00020.00%$4,600Furniture (7 year)April 22$150,00014.29%$21,435Qualified improvement property (39-year)May 12$300,0001.605%$4,815Total $553,000 $42,853

Nicole is a calendar-year taxpayer who accounts for her business using the cash method. On average, Nicole sends out bills for about $12,000 of her services at the first of each month. The bills are due by the end of the month, and typically 70 percent of the bills are paid on time and 98 percent are paid within 60 days. a. Suppose that Nicole is expecting a 2 percent reduction in her marginal tax rate next year. Ignoring the time value of money, estimate the tax savings for Nicole if she postpones mailing the December bills until January 1 of next year. (assuming that the accounts remained collectible and that clients didn't pay in advance).

Tax savings $168 Explanation a. On average Nicole would delay $8,400 (70 percent of the average monthly billings of $12,000) of collections thereby shifting this income into the next year (assuming that the accounts remained collectible and that clients didn't pay in advance). Hence, if her business is profitable, Nicole's tax savings would be $168 ($8,400 × 0.02).

After several profitable years running her business, Ingrid decided to acquire the assets of a small competing business. On May 1 of year 1, Ingrid acquired the competing business for $300,000. Ingrid allocated $50,000 of the purchase price to goodwill. Ingrid's business reports its taxable income on a calendar-year basis. (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.) b. In lieu of the original facts, assume that Ingrid purchased only a phone list with a useful life of 5 years for $10,000. How much amortization expense on the phone list can Ingrid deduct in year 1, year 2, and year 3?

Year Phone List Year 1 amortization expense $444 Year 2 amortization expense $667 Year 3 amortization expense $667 Explanation b. Ingrid's amortization for the phone list for year 1 is $444, years 2 and 3 is $667, computed as follows: DescriptionPhone List(1)Basis of phone list$10,000(2)Recovery period in months 180(3)Monthly amortization$55.55(4)Months in year 1 × 8(5)Year 1 straight-line amortization$444(6)Months in years 2 and 3 × 12(7)Years 2 and 3, annual straight-line amortization$667 Although Ingrid purchased only the phone list, it is still considered a §197 intangible and will be amortized over 180 months (see §197).

Ralph operates a business that acts as a sales representative for firms that produce and sell precious metals to electronics manufacturers. Ralph contacts manufacturers and convinces them to sign contracts for the delivery of metals. Ralph's company earns a commission on the sales. This year, Ralph contacted a jeweler to engrave small lapel buttons for each of his clients. Ralph paid $20 each for the lapel buttons and the jeweler charged Ralph an additional $7 for engraving. The electronics manufacturers, however, prohibit their employees from accepting gifts related to sales contracts. a. What is the total value of gift given to electronic manufacturers b. Can Ralph deduct the cost of the lapel buttons as business gifts?

a. Total gift - $27 b. Can Ralph deduct the cost of the lapel buttons as business gifts - yes

For the following taxpayers, determine if they are required to file a tax return in 2019. Ricko, single taxpayer, with gross income of $15,800.

required

This year Luke has calculated his gross tax liability at $2,260. Luke is entitled to a $3,090 nonrefundable personal tax credit, a $1,845 business tax credit, and a $830 refundable personal tax credit. In addition, Luke has had $2,875 of income taxes withheld from his salary. What is Luke's net tax due or refund

liability is less than non refundable tax liability so = 0 business credit will be passed over to next year. 830+2875=3705 refund

Dorothy and Rudolf, married taxpayers, both age 68, with gross income of $22,700.

not required