Book that I use is AC 450A Income Tax I , 4th edition 2013 Homework – Written Questions Show your calculations for full or partial credit 1. Harmony was self-employed for the first half of 2012, e

Book that I use is AC 450A Income Tax I , 4th edition 2013

Homework – Written Questions Show your calculations for full or partial credit

1. Harmony was self-employed for the first half of 2012, earning $18,000 of Schedule C (business) net income. During the second half of the year, she began working as an employee and earned $38,000 in salary. What amount of self-employment taxes is Harmony required to pay?

2. Apollo is single and his AMT base is $100,250. This amount includes $500 of qualified dividends (the dividends were taxed at 15% in determining the regular tax liability). What is Apollo’s tentative minimum tax for 2012?

3. Joe operates a plumbing business that uses the accrual method and reports on a calendar year. This year Joe signed a $50,000 binding contract with Brian. Under the contract Brian will provide Joe with up to 2,000 hours of vehicle repairs at $25 per hour. This year Brian provided 200 hours of repair services and billed Joe for $5,000. At year end Joe had not paid Brian for the services. What amount, if any, can Joe deduct for the repair services for 2012?

4. Yasmin purchased two assets during 2012. Yasmin placed in service computer equipment (5-year property) on May 26th with a basis of $10,000 and machinery (7-year property) on December 9th with a basis of $10,000. Calculate the maximum depreciation expense (ignoring §179 and bonus depreciation):

5. Kristine sold two assets on March 20th of 2012. The first was machinery with an original basis of $51,000, currently in the fourth year of depreciation, and under the half-year convention. The second was furniture with an original basis of $16,000 placed in service during the fourth quarter, currently in the third year of depreciation, and under the mid-quarter convention. What is Kristine’s depreciation expense for the current year, rounded to the nearest whole number.

6. In 2012, Northern LLC placed in service on September 6th machinery and equipment (7-year property) with a basis of $580,000. Assume that Northern has sufficient income to avoid any limitations. Calculate the maximum depreciation expense including §179 expensing (ignore any potential bonus depreciation), rounded to the nearest whole number.

7. Assume that Reid has 2012 taxable income of $125,000 before any §179 expense and acquired the following assets: he placed in service computer equipment (5-year property) on August 6th with a basis of $100,000 and machinery (7-year property) on November 9th with a basis of $100,000. Calculate the maximum depreciation expense including §179 expensing (but not bonus depreciation).

8. Oksana started an LLC on November 2 of 2012. She incurred $30,000 of start-up costs. How much of the start-up costs can be immediately expensed for the year? How much amortization may Oksana deduct in the first year

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AC 450A Income Tax I , 4th edition 2013
Homework – Written Questions
Show your calculations for full or partial credit
1.
Harmony was self-employed for the first half of 2012, earning $18,000 of Schedule C (business)
net income. During the second half of the year, she began working as an employee and earned
$38,000 in salary. What amount of
self-employment taxes
is Harmony required to pay?
2.
Apollo is single and his AMT base is $100,250. This amount includes $500 of qualified dividends
(the dividends were taxed at 15% in determining the regular tax liability). What is Apollo’s
tentative minimum tax for 2012?
3.
Joe operates a plumbing business that uses the accrual method and reports on a calendar year.
This year Joe signed a $50,000 binding contract with Brian. Under the contract Brian will provide
Joe with up to 2,000 hours of vehicle repairs at $25 per hour. This year Brian provided 200 hours
of repair services and billed Joe for $5,000. At year end Joe had not paid Brian for the services.
What amount, if any, can Joe deduct for the repair services for 2012?
4.
Yasmin purchased two assets during 2012. Yasmin placed in service computer equipment (5-
year property) on May 26
th
with a basis of $10,000 and machinery (7-year property) on December
9
th
with a basis of $10,000. Calculate the maximum depreciation expense (ignoring §179 and
bonus depreciation):
5.
Kristine sold two assets on March 20
th
of 2012. The first was machinery with an original basis of
$51,000, currently in the fourth year of depreciation, and under the half-year convention. The
second was furniture with an original basis of $16,000 placed in service during the fourth quarter,
currently in the third year of depreciation, and under the mid-quarter convention. What is
Kristine’s depreciation expense for the current year, rounded to the nearest whole number.
6.
In 2012, Northern LLC placed in service on September 6
th
machinery and equipment (7-year
property) with a basis of $580,000. Assume that Northern has sufficient income to avoid any
limitations. Calculate the maximum depreciation expense including §179 expensing (ignore any
potential bonus depreciation), rounded to the nearest whole number.
7.
Assume that Reid has 2012 taxable income of $125,000 before any §179 expense and acquired
the following assets: he placed in service computer equipment (5-year property) on August 6
th
with a basis of $100,000 and machinery (7-year property) on November 9
th
with a basis of
$100,000. Calculate the maximum depreciation expense including §179 expensing (but not bonus
depreciation).
8.
Oksana started an LLC on November 2 of 2012. She incurred $30,000 of start-up costs. How
much of the start-up costs can be immediately expensed for the year? How much amortization
may Oksana deduct in the first year

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