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TAX 9863 Lecture Notes - Lecture 20: Ordinary Income, Federal Reporter, Qualified Dividend

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scarletsnail973
20 Dec 2019
School
Baruch College
Department
Tax
Course
TAX 9863
Professor
Handler

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Document Summary

P. 701: here are two questions on capital losses incurred in the current year. The figure for taxable income given in column a reflects a single taxpayer"s taxable income for each of the. 2 years without regard to his capital gains and losses. Note that in computing gross income (as adjusted) on the return, no gains will be included since capital losses exceed capital gains and the 1211(b) excess amount will be a reduction. Netted them to get ,400 (tp would deduct entire amount because less than ,000) Netted them both ,000 capital loss (tp would entire ,000 which results in ,000 capital loss carryover to use next year) Under the mechanics of carryover provided by code, where there is both a net stcl and net. Ltcl, in year in which sum of net capital losses > ,000, the stcl is deducted to the maximum extent possible against ordinary income before ltcl is deducted against ordinary income.

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Related Questions

Thomas and Miles are equal partners in a​ partnership, whichuses the calendar year as its tax year. On September​ 1, this​year, Katie contributed​ $60,000 cash for a​ one-third interest inthe partnership. The partnership reports a​ $24,000 ordinary lossfor the tax year ending on December 31 of this year. The lossallocation to Katie​ (new partner) is

A. ​$0.
B. ​$2,667.
C. ​$4,000.
D.​$8,000.

A corporation has the following capital gains and losses duringthe current​ year: ​LTCG: ​$25,000 ​LTCL: ​15,000 ​STCG: 8,000​STCL: 4,000 The tax result to the corporation is
A. $10,000 NLTCG included in gross income and taxed at ordinary​rates; $4,000 NSTCG included in gross income and taxed at reducedrates.
B. ​$10,000 NLTCG is included in gross income and taxed at reduced​rates; and​ $4,000 NSTCG included in gross income and taxed atordinary rates.
C. $14,000 included in gross income and taxed at reducedrates.
D.$14,000 included in gross income and taxed at ordinary rates.

Stephanie owns a​ 25% interest in a qualifying S corporation.​Stephanie's basis in the stock was​ $40,000 at the end of the yearafter adjustments are made for capital contributions anddistributions​ (but not operating​ results). Stephanie also loanedthe S corporation​ $10,000 this year. The S corporation incurred a​$240,000 ordinary loss this year. Assume that next year the S​corporation's ordinary income is​ $160,000. ​ Stephanie's basis inher stock at the end of next year is A.$10,000.
B.$20,000.
C. $30,000.
D. ​$40,000.

Tara transfers land with a​ $690,000 adjusted basis and a​$700,000 FMV to a corporation in a Sec. 351 transfer. Immediatelyafter the​ transfer, Tara owns​ 100% of the corporationlongdash—stock with a FMV of​ $615,000. In​ addition, $85,000 ofliabilities are assumed by the corporation with respect to thetransfer. No other property is transferred.​ Tara's recognized gainon the transfer is
A. $15,000.
B. ​$0.
C. $5,000.
D. $10,000.

Jenkins Corporation has the following income and expense itemsduring the current​ year: Net loss from operations​ (beforedividend​ income) ​($ 25,000) Dividends from​ 25% ownedcorporations ​150,000 The allowed​ dividends-received deductionis
A. $125,000.
B. $100,000.
C. ​$150,000.
D. $120,000.

The following cases makes different assumptions with respect tothe amounts of income and deductions of Mr. Michel Daigle for thecurrent taxation year under the various subdivisions of Division Bof the Income Tax, and the last two previous years’ taxespayable:

Case 2-A

Employment Income

$35,000

Income (Loss) From Business

(10,000)

Income From Property

12,000

Taxable Capital Gains

42,000

Allowable Capital Losses

(18,000)

Subdivision E Deductions (Spousal Support)

(4,000)

Taxable Income Previous Years:

2016: $10,000

2017: nil

Case 2-B

Employment Income

$33,000

Income (Loss) From Business

(39,000)

Income From Property

14,000

Taxable Capital Gains

36,000

Allowable Capital Losses

(42,000)

Subdivision E Deductions (Spousal Support)

(7,000)

Taxable Income Previous Years:

2016: $10,000

2017: $8,000

Required: For Both cases, calculate Mr.Daigle’s Net Income for tax purposes, indicate any possible losscarryovers from the current year, taxes payable for current year,and calculate require installment payment for current year.

(assume Federal rate of 15% and Provincial Rate of 7%)

Without considering the following capital gains and​ losses,Cathy, who is​ single, has taxable income of $430,000 and amarginal tax rate of 39.6%. During the​ year, she sold stock heldfor nine months at a gain of $17,000​; stock held for three yearsat a gain of $13,000​; and a collectible asset held for six yearsat a gain of $22,000. Ignore the effect of the gains on anythreshold amounts and assume that her marginal tax rate of 39.6 %.39.6% does not change.

Requirement a. What is her taxable income and the increase inher tax liability after considering the three​ gains? Her taxableincome is $ What is the increase in her tax liability afterconsidering the three​ gains? Category Taxable amount Rate Tax NetSTCG 17000 20% 3400 Net LTCG (ANCG) 13000 20% 2600 Net gains fromcollectibles 22,000 20% 4400 Increase in tax liability 10400

Requirement b. In addition to the above three​ sales, assumethat she sells another asset and has a STCL of $22,000. What is hertaxable income and the increase in her tax liability afterconsidering the four​ transactions? Her taxable income is $ . Whatis the increase in her tax liability after considering the four​transactions? First select the label for the applicable categoryof​ gains, then enter the taxable amount. In the last columncompute the tax for each category and the increase in taxliability. ​(Abbreviations used . Enter the net taxable amount foreach category. If a box is not used in the table leave the box​empty; do not select a label or enter a​ zero.) Category Taxableamount Rate Tax Increase in tax liability

Requirement c. In addition to the above three sales in Part​ a,assume that she sells another collectible asset held seven years asan investment and has a $29,000 capital loss. What is her taxableincome and the increase in her tax liability after considering thefour​ transactions? Her taxable income is $ . What is the increasein her tax liability after considering the four​ transactions?First select the label for the applicable category of​ gains, thenenter the taxable amount. In the last column compute the tax foreach category and the increase in tax liability. ​(Abbreviationsused . Enter the net taxable amount for each category. If a box isnot used in the table leave the box​ empty; do not select a labelor enter a​ zero.) Category Taxable amount Rate Tax Increase in taxliability

Requirement d. Determine her medicare tax on net investmentincome in​ (a) if all of the $430,000 of taxable income is due tosalary. Her medicare tax on net investment income, from Requirementa, is $ because all of the $430,000 of taxable income is due tosalary.