Individual Income Taxes
43rd Edition
ISBN: 9780357109731
Author: Hoffman
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Textbook Question
Chapter 2, Problem 32DQ
For her tax class, Yvonne must prepare a research paper discussing the tax aspects of qualified stock options. Explain to Yvonne how she can research this topic using various tax research resources.
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A paid tax preparer must demonstrate due diligence. Review the following scenario, and then choose the appropriate response. Cherylynn Johnson (58) comes in to your office to have her tax return prepared. She states that she wants to use the head of household filing status and claim the Earned Income Tax Credit (EITC). She also tells you that her dependent child is her granddaughter, Alana (12), who currently lives with her. All of the following are appropriate questions to ask or actions to take EXCEPT:
Ask Cherylynn how long Alana has lived with her and inquire into the whereabouts of Alana's parents.
Ask Cherylynn who paid most of the expenses of maintaining her home.
Inform Cherylynn that she must provide you with documentation proving Alana lived with her before you can prepare the return.
Inquire whether the IRS has ever denied or reduced Cherylynn's EITC in a prior year.
Han and Leia have come to you for tax help for their 2023 tax year. What issues does their set of
facts present to you as their tax advisor? What advice do you have for them? Please make any
assumptions that you need in-order to address and respond to the issues presented by the fact
pattern. Clearly state the assumptions that you make. It is advisable to utilize a memorandum
style in which you address the facts, issues, analysis, and conclusions. Support your answers
with cites to code, regulations, cases, rulings, IRS publications or other research data.
1. In 2023 the Village of Mos Eisley valued the property at $3,150,000 and assessed real
property taxes on the both the home and the out-parcels of property. Jobba the Assessor
determined that the home represented 30% of the value and the out-parcels represented
the remaining 70% of the value for the property. The real estate taxes on the Lake Tatooine
property are $31,500 per year.
Use the following information to complete Johnelle and Latoya Henry's 2018 federal income tax return. If information is missing, use reasonable assumptions to fill in the gaps.
You may need the following forms to complete the project: Form 1040 and Schedule A. The forms, schedules, and instructions can be found at the IRS Web site (www.irs.gov). The instructions can be helpful in completing the forms.
Facts:
Page C-4
Johnelle Henry is employed as a human resources manager for Toys Unlimited, Inc., and Latoya is a financial planner for her mother's company, Long-term Investments, Inc., a full-service wealth-planning firm. They provide the following information:
Page C-3
They both want to contribute to the presidential election campaign.
They live at 9876 Old Waverly, Charleston, South Carolina.
Johnelle's birthday is 7/17/1965 and his Social Security number is 555-12-6789.
Latoya's birthday is 9/11/1967 and her Social Security number is 987-65-4321.
Johnelle or Latoya do not have any…
Chapter 2 Solutions
Individual Income Taxes
Ch. 2 - A large part of tax research consists of...Ch. 2 - Why do taxpayers often have more than one...Ch. 2 - Prob. 3DQCh. 2 - Prob. 4DQCh. 2 - Prob. 5DQCh. 2 - Prob. 6DQCh. 2 - Rank the following items from the lowest to...Ch. 2 - Prob. 8DQCh. 2 - Prob. 9DQCh. 2 - Prob. 10DQ
Ch. 2 - Prob. 11DQCh. 2 - Prob. 12DQCh. 2 - Sanjay receives a 90-day letter after his...Ch. 2 - Prob. 14DQCh. 2 - Prob. 15DQCh. 2 - Prob. 16DQCh. 2 - Prob. 17DQCh. 2 - Prob. 18DQCh. 2 - Prob. 19DQCh. 2 - Prob. 20DQCh. 2 - Prob. 21DQCh. 2 - Prob. 22DQCh. 2 - Prob. 23DQCh. 2 - Prob. 24DQCh. 2 - Prob. 25DQCh. 2 - Prob. 26DQCh. 2 - Prob. 27DQCh. 2 - Prob. 28DQCh. 2 - Prob. 29DQCh. 2 - Prob. 30DQCh. 2 - Prob. 31DQCh. 2 - For her tax class, Yvonne must prepare a research...Ch. 2 - Prob. 33DQCh. 2 - Prob. 34DQCh. 2 - Prob. 35DQCh. 2 - Prob. 36DQCh. 2 - Prob. 37PCh. 2 - Prob. 38PCh. 2 - Prob. 39PCh. 2 - Prob. 40PCh. 2 - Prob. 41PCh. 2 - Using the legend provided, classify each of the...Ch. 2 - Prob. 43PCh. 2 - Prob. 1RPCh. 2 - Prob. 2RPCh. 2 - When Oprah gave away Pontiac G6 sedans to her TV...Ch. 2 - Prob. 4RPCh. 2 - (1) Go to taxalmanac.org, and use the website to...
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- Individual tax filing requirements and circumstances can change, so it is important to be familiar with the research tools available to you as a tax practitioner. In this discussion, you will consider research resources available for tax preparers and how they can be used in the field. What are the available commercial and noncommercial tax resources that you could utilize as a tax practitioner? Refer to Section 2-2A through 2-2C (specifically, exhibit 2-7) in your textbook for options. Which commercial resource do you think is the most beneficial to a tax practitioner? (Note that you will not be able to access the commercial resources but can find their features on their website.) Which noncommercial resource do you think is the most beneficial to a tax practitioner? How might you use the tax research process (refer to Section 2-3 in your textbook) for utilizing tax resources in preparing individual tax returns. (Think about ways you could use this process to support you in…arrow_forwardAssuming that you were a tax consultant of a certain company, discuss the specific provisions of the TRAIN LAW which you can use in tax planning. Apply your knowledge in tax saving strategies.arrow_forwardQuestion 31 of 50. Review the following scenario, then choose the appropriate response describing steps a paid tax preparer must take to demonstrate due diligence. Charlie (21) comes in to your office to have his tax return prepared. He states that he is a full-tim college student with income from a part-time job, and his parents will not claim him as a dependent. He wants to claim the American Opportunity Tax Credit (AOTC). Which of the following describes an appropriate question to ask or action to take ooo Ask him if he has ever been convicted of a misdemeanor offense or had his driver's license revoked. Inform him that he may be assessed a penalty of $545 if he fails to provide all the information required. Inform him he must provide copies of all transcripts before you can prepare his retum. Request a copy of his Form 1098-T, Tuition Statement, and inquire into when and how his education and other were paid. Mark for follow up Question 32 of 50. Tee of these pro ambing systems.…arrow_forward
- Enzo is preparing a client's return. The taxpayer is claiming the Earned Income Credit (EIC), Child Tax Credit (CTC), Additional Child Tax Credit (ACTC), and the American Opportunity Tax Credit (AOTC). Which of the following best describes the actions Enzo must take to substantiate the taxpayer's eligibility for the credits?arrow_forwardUsing the search terms, “What do I need to know before I file my taxes” or “Tax changes to know before filing my taxes”, share your findings with your classmates. In your response, summarize your findings and include the following: Search term(s) used. Note one thing you found interesting or learned about for the first time involving Individual Taxes — Income, Exclusions, and Filing Status from your research. Include a link to the reference used.arrow_forwardA new client, Mary, is your first client. She needs to lodge his income tax for 2021/22. Further, she wants toknow about some tax-related provisions and practices. She asks some questions - what are the differencesbetween taxable income, ordinary income, and statutory income? What types of ordinary and statutory incomedo not constitute assessable income?arrow_forward
- Choose the response that accurately completes the following sentence. A taxpayer claiming the Premium Tax Credit: May be claimed as a dependent on another person's return, as long as they are under age 27. May have employer-sponsored health care coverage. Will receive a refund if the amount of the credit is larger than the tax they owe. Must have purchased private coverage through a plan outside the Marketplace.arrow_forwardWhich of the following are not deductible by a CPA who prepares tax returns? a. Subscription to the Kiplinger Tax letter b. Subscription to CCH service online c.Dues to the country club to entertain clients d. Dues to the California Society of CPAsarrow_forward2. What must the certified volunteer preparer do with Form 13614-C before starting the tax return? a. Make sure all questions on Form 13614-C are answered. b. Change "Unsure" answers to "Yes" or "No" based on a conversation with the taxpayer. c. Determine the certification level required to complete the return. d. All the above.arrow_forward
- Choose the response that accurately completes the following sentence. To meet one of the due diligence requirements of a paid tax preparer, it is not enough to ask more questions; tax preparers must also:arrow_forwardSonya wants to become a Certified Public Accountant. Therefore, she decides to go to college and obtain a degree in accounting. What is the tax treatment of Sonya’s educational expenses? Group of answer choices Sonya may not deduct the educational expenses as a business deduction. Educational Expenses are never allowed a tax deduction. Sonya may deduct the educational expenses because they are required for her to become an accountant. Educational expenses are always allowed a business deduction.arrow_forwardFor each of the following situations, indicate whether the taxpayer(s) is (are) required to file a tax return for 2021. Explain your answer. Yes? No? and Why Monica is a maid in a San Francisco Hotel. Monica received $500 in unreported tips during 2021 and owes Social Security taxes on these tips. Her total income for the year, including tips, is $4,500. Is Monica required to file an income tax return for 2021?arrow_forward
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