a
Introduction:A taxpayer must report taxable income using the same method which he uses for maintaining accounting records and the method that clearly reflects the taxpayer’s income. The standard methods used are cash receipt method, accrual method, and hybrid method of accounting.
The treatment of deductible contribution to IRA on April 15, 2020 when cash basis reporting is used.
b
Introduction: A taxpayer must report taxable income using the same method which he uses for maintaining accounting records and the method that clearly reflects the taxpayer’s income. The standard methods used are cash receipt method, accrual method, and hybrid method of accounting.
The treatment of election to accrue the increase in
c
Introduction: A taxpayer must report taxable income using the same method which he uses for maintaining accounting records and the method that clearly reflects the taxpayer’s income. The standard methods used are cash receipt method, accrual method, and hybrid method of accounting.
The treatment of prepayments of half yearly interest in advance on mortgage on the last day of 2019 when cash basis reporting is used.
d
Introduction: A taxpayer must report taxable income using the same method which he uses for maintaining accounting records and the method that clearly reflects the taxpayer’s income. The standard methods used are cash receipt method, accrual method, and hybrid method of accounting.
The treatment of payments of all outstanding invoices for standard business expenses in the last week of December.
e
Introduction: A taxpayer must report taxable income using the same method which he uses for maintaining accounting records and the method that clearly reflects the taxpayer’s income. The standard methods used are cash receipt method, accrual method, and hybrid method of accounting.
The treatment of big bill issued to customer on January 1, 2020 even though all the work is done in December of 2019.
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Chapter 6 Solutions
Income Tax Fundamentals 2020
- Karen, 28 years old and a single taxpayer, has a salary of $33,000 and rental income of $33,000 for the 2019 calendar tax year. Karen is covered by a pension through her employer. What is the maximum amount that Karen may deduct for contributions to her IRA for 2019? $__________________________ If Karen is a calendar year taxpayer and files her tax return on August 15, what is the last date on which she can make her contribution to the IRA and deduct it for 2019? $__________________________arrow_forwardShanna, a calendar year and cash basis taxpayer, rents property to be used in her business from Janice. As part of the rental agreement, Shanna pays 8,400 rent on April 1, 2019, for the 12 months ending March 31, 2020. a. How much is Shannas deduction for rent expense in 2019? b. Assume the same facts, except that the 8,400 is for 24 months rent ending March 31, 2021. How much is Shannas deduction for rent expense in 2019?arrow_forwardVirginia and Richard are married taxpayers with adjusted gross income of $28,000 in 2019 If Virginia is able to make a $1,500 contribution to her IRA and Richard makes a $1,500 contribution to his IRA, what is the Saver's Credit Virginia and Richard will be eligible for? $0 $1,500 $2,000 $3,000 $4,000arrow_forward
- Arlen is required by his 2019 divorce agreement to pay alimony of $2,000 a month and child support of $ 2,000 a month to his ex-wife Jane. What is the tax treatment of these two payments for Arlen? What is the tax treatment of these two payments for Jane? Arlen_______________________________________________________________________________________________________________________________________________ Jane_______________________________________________________________________________________________________________________________________________arrow_forwardFreda is a cash basis taxpayer. In 2019, she negotiated her salary for 2020. Her employer offered to pay her 21,000 per month in 2020 for a total of 252,000. Freda countered that she would accept 10,000 each month for the 12 months in 2020 and the remaining 132,000 in January 2021. The employer accepted Fredas terms for 2020 and 2021. a. Did Freda actually or constructively receive 252,000 in 2020? b. What could explain Fredas willingness to spread her salary over a longer period of time? c. In December 2020, after Freda had earned the right to collect the 132,000 in 2020, the employer offered 133,000 to Freda at that time, rather than 132,000 in January 2021. The employer wanted to make the early payment so as to deduct the expense in 2020. Freda rejected the employers offer. Was Freda in constructive receipt of the income in 2020? Explain.arrow_forward
Individual Income TaxesAccountingISBN:9780357109731Author:HoffmanPublisher:CENGAGE LEARNING - CONSIGNMENT