1. Will and Janine are divorced during the current year. Will isto have custody of their two children and will receive their houseas part of the divorce sttlement. The house, which Will and Janinebought for $60000 is worth $100000. Janine is to receive one oftheir automobiles, for which they paid $21000 and which is nowworth $9000. Will will get the other automobile, which cost $6000and which is now worth $2000. Janine is to pay Will alimony of $900per month. However, the alimony payment is to be reduced by $200per month as each child reaches age 8 or if a child shoud die ormarry before reaching age 18. What are the tax effects of thedivorce settlement for Will and Janine?
2. Determine whether the following taxpayers have gross incomefrom the payment of their expenses:
a. Julia's mother, Henriettam is short of cash when it comestime to pay her property taxes. July pays Henrietta's propertytaxes of $350.
b. Kurt fell asleep at the wheel one night and crashed his carinto a telephone pole. Repairs to the car cost $600. Kurt isn'tcovered by insurance and doesn't have the cash to pay the repairshop, his employer pays the repair bill.
c. Leonard leases a building from the PLC Partnership for $800per month. The lease agreement reuires Leonard to pay the propertytaxes of $1100 on the building.
d. On July1, Gino bought some land from Harco Corporation for$4000. As part of the sales agreement, Gino agrees to pay theproperty taxes of $700 for the year. Harco had paid $10000 for theland.
2.Determine the proper year(s) for reporting the income in eachof the following cases:
a. Lagoonn Inc an accrual basis taxpayer, owns an amusemntpark.The park is open April through September. In October, Lagoonbegins selling discounted season passes for the upcoming season. Bythe end of the year, Lagoon has received $40000 from the advancesale of the discounted passes.
b. Arnie sells and repairs televisions. In December of thecurrent year, a customer special-orders a television that retailsfor $2600 ( Arnie's cost is $1300). Arnie reuires the customer toprepay $1500 as a condition of placing the order.
c. Quick Systems Inc an accrual basis taxpayer leases outcomputer equipment. During December, Quick receives $22000 fromcustomers as advance rent for January
d. Trinh is a service representative for Harrington Corporation,Trinh and Harrington are cash basis taxpayers. In addittion to hersalary, Trinh receives a bonus equal to 5% of all receoptscollected from her customer during the year. On December 30, acustomer gives he a $5000 check payable to Harrington for Trinh'swork during the current year. Trinh returns to her office onJanuary 3 and promptly gives the check to the company'scontroller.
3. How much income would an accrual basis taxpayer report in2016 in each of the following situations?
a. Toby's Termite Services, Incm provide monthly pest control ona contract basis. Toby sells a 1-year contract for $600 and a 2year contract for $1080. In October, Toby sells 10 one yearcontractss and 5 two year contracts.
b. John's Tractor Sales receives a $150 deposti from a customerfor a new tractor that the customer order in December. The tractorarrives the following February, at which time the custome pays theremaining $9800 of the agreed upon sales price.
c. A customer of First Financial Lending sends First Financialtwo $600 checks in December in payment of December and Januaryinterest on a loan.
d. First Financial Lending receives interest payments totaling$8400 in January 2017 in payment of Dec 2016 interest on loans.
1. Will and Janine are divorced during the current year. Will isto have custody of their two children and will receive their houseas part of the divorce sttlement. The house, which Will and Janinebought for $60000 is worth $100000. Janine is to receive one oftheir automobiles, for which they paid $21000 and which is nowworth $9000. Will will get the other automobile, which cost $6000and which is now worth $2000. Janine is to pay Will alimony of $900per month. However, the alimony payment is to be reduced by $200per month as each child reaches age 8 or if a child shoud die ormarry before reaching age 18. What are the tax effects of thedivorce settlement for Will and Janine?
2. Determine whether the following taxpayers have gross incomefrom the payment of their expenses:
a. Julia's mother, Henriettam is short of cash when it comestime to pay her property taxes. July pays Henrietta's propertytaxes of $350.
b. Kurt fell asleep at the wheel one night and crashed his carinto a telephone pole. Repairs to the car cost $600. Kurt isn'tcovered by insurance and doesn't have the cash to pay the repairshop, his employer pays the repair bill.
c. Leonard leases a building from the PLC Partnership for $800per month. The lease agreement reuires Leonard to pay the propertytaxes of $1100 on the building.
d. On July1, Gino bought some land from Harco Corporation for$4000. As part of the sales agreement, Gino agrees to pay theproperty taxes of $700 for the year. Harco had paid $10000 for theland.
2.Determine the proper year(s) for reporting the income in eachof the following cases:
a. Lagoonn Inc an accrual basis taxpayer, owns an amusemntpark.The park is open April through September. In October, Lagoonbegins selling discounted season passes for the upcoming season. Bythe end of the year, Lagoon has received $40000 from the advancesale of the discounted passes.
b. Arnie sells and repairs televisions. In December of thecurrent year, a customer special-orders a television that retailsfor $2600 ( Arnie's cost is $1300). Arnie reuires the customer toprepay $1500 as a condition of placing the order.
c. Quick Systems Inc an accrual basis taxpayer leases outcomputer equipment. During December, Quick receives $22000 fromcustomers as advance rent for January
d. Trinh is a service representative for Harrington Corporation,Trinh and Harrington are cash basis taxpayers. In addittion to hersalary, Trinh receives a bonus equal to 5% of all receoptscollected from her customer during the year. On December 30, acustomer gives he a $5000 check payable to Harrington for Trinh'swork during the current year. Trinh returns to her office onJanuary 3 and promptly gives the check to the company'scontroller.
3. How much income would an accrual basis taxpayer report in2016 in each of the following situations?
a. Toby's Termite Services, Incm provide monthly pest control ona contract basis. Toby sells a 1-year contract for $600 and a 2year contract for $1080. In October, Toby sells 10 one yearcontractss and 5 two year contracts.
b. John's Tractor Sales receives a $150 deposti from a customerfor a new tractor that the customer order in December. The tractorarrives the following February, at which time the custome pays theremaining $9800 of the agreed upon sales price.
c. A customer of First Financial Lending sends First Financialtwo $600 checks in December in payment of December and Januaryinterest on a loan.
d. First Financial Lending receives interest payments totaling$8400 in January 2017 in payment of Dec 2016 interest on loans.
