Memo To: John and Jane Smith From: Your Name, CPA Date: February 2, 2013 Subject: Explanation of business and personal tax benefits and liabilities. 1(a). As a result of a recent court settlement for a client John earned $300,000 for his law practice LLC. He wants to minimize his tax liability and understand how the IRS will treat this money earned. He lease’s office space for $3,500 per month. He wants to know the advantages in leasing office space versus purchasing the building. John has income derived from a business and as such the gross income will be taxable (Code §1.61-3(a)) (Tax Almanac, 2005). This $300,000 taxable income will pass through to his personal taxes and is subject to self employment tax since he has an LLC. He …show more content…
Since John and Jane do not have employer sponsored retirement programs, I recommend establishing traditional IRA’s. This will allow both of them to have a retirement program and a tax deduction each year of $10,000 (§219(f) (3)) (Tax Almanac, 2007, April 27). John is able to establish Jane’s IRA and contribute since she has minimal income (Code §219(c )) (Tax Almanac, 2007, April 27). With the lease payment of $42,000 and the IRA’s of $10,000, John will have deductions of $52,000 against the $300,000 and an additional deduction of paying half of the self employment tax. 2(a) Jane inquired what the tax treatment difference if any there is in paying down a mortgage and assuming a new mortgage in terms of federal taxes. Married taxpayers may exclude up to $500,000 of gain upon the sale of their residence every two years (Code § 121(b)(1) and (2), (Code §121(b)(3)(B)) (Tax Almanac. 2009, June 18, Internal Revenue Code:Sec. 121. Exclusion of Gain from Sale of Principal Residence). The requirement is that they need to have owned and occupied the residence as their principal residence for two out of the last five years prior to the sale (Code §121(b)(3)(A)) (Tax Almanac, 2009, June 18). Assuming a new mortgage will most likely give them a larger deduction of mortgage interest and if they have lived in their current home for a while that is nondeductible (Code § 163(h)(3)(E)(i) (Tax Almanac. 2009, June 18, . Internal Revenue Code:Sec. 163.
1.An extensive network of specialized cells that carry information to and from all parts of the body is called the nervous system.
Some of the current changes that can be seen in regards to prescription privileges include changes in the ways that physicians and mental health professionals are able to prescribe medications to their patients. According to Brenda Smith of the APA (2012), currently patients receive their medications for psychological conditions by a physician usually without having been evaluated by a mental health practitioner according to the CDC. The trend includes individuals to visit their general health practitioners in order to receive psychotropic medications such as antidepressants and anxiolytics. The problem with individuals receiving these medications from other sources include: deterrence
* What are the differences between the following components of taxable income? Provide at least one example of each.
After going through the case of Margie Whitson, the dilemma is the fact that Margie is looking to have her pacemaker removed which will in turn would end her life. So far, Margie Whitson has had a rough year and has come to the decision that she wants her pacemaker deactivated because she believes it is delaying her death. Her pacemaker is the only thing keeping her heart beating at this point. But even at that, her doctor, Dr. Vijay, refuses to deactivate it due to the fear of legal action/misunderstandings of the ethical and legal acceptability. Margie Whitson is very determined to have her pacemaker removed so she call for Jane Robison, the social
Ken is 63 years old and unmarried. He retired at age 55 when he sold his business, understock.com. Though Ken is retired, he is still very active. Ken reported the following financial information this year. Assume Ken’s modified adjusted gross income for purposes of the bond interest exclusion and for determining the taxability of his Social Security benefits is $70,000 and that Ken files as a single taxpayer. Determine Ken’s 2009 gross income.
-3 x 1.66 pts. = minus 5 pts. = 45 pts. out of 50 pts. = 90%
b. The emperor Kangxi led the conquest of the island of Taiwan , home to Chinese and Japanese pirates, in 1681. Struggles with a new rival to the north and northwest, manchurians , led to constant conflict and extensive territorial gains for China.
inventory using the cost method and did not change the method used during the current
3) Residents are taxed at a different tax rate to non-residents. Discuss the main difference between residents and non-residents and tests that are being applied to distinguish between those two categories.
What is the probability of rolling a four in the gambling dice game of craps (given two six sided dice)? 3/36 or 8.33%. What is the probability that a player can roll a four 3 times in a row (assume that rolling the dice each time does not affect the outcome of the next roll)? 3/36 x 3/36 x 3/36 = 27/46656 = 3/5184
Think about how you have used technology in science and other classes in the past. Describe 5 ways you have used technology in classes (2 must be from science). From your experiences and research, does educational technology improve teaching and learning in the classroom? Support your answer with at least 2 resources
As the Chief Executive Office of Middlefield Hospital, it has been brought to my attention by the Chief Financial Officer that our financial performance has been deteriorating for the past six (6) months. It has also been brought to my attention that the new facility has been admitting more new patients and our admissions have been declining. The number of uninsured patients has increased over this period of time. The management team has identified some other interesting facts that are possibly hurting the reputation of Middlefield Hospital. My determination is that the financial performance of Middlefield Hospital needs to be improved.
Middlefield hospital was once a great hospital that served a variety of patients with the best care. Over the past couple years Middlefield has been having some problem because of the new big hospital in the area. With this new hospital coming to the area Middlefield has been losing many of its patients and getting a lot more uninsured or under insured patients.
| a) Crash cost of A = (600-300)/(5-3) = $150; Crash Cost of B = (450-250)/(3-2) = $200; Crash Cost of C = (500-400)/(6-4) = $50; Crash Cost of D = (400-150)/(5-3) = $125 b) As per the above schedule, the activities on the
The purpose of this memo is to address each of the loans made to family members by Brunswick this year from a tax perspective.