Response to the following :
1) Lakshmi is single and provides you with the following tax information for 2012 Salary $200,000 ,Bank account interest $1,000 ,Capital gain on an asset (stock) held for 11 months 4,000, Capital gain on an asset (stock) held for 16 months 9,000, Capital gain on an asset (antique doll) held for 30 months 5,000 ,Itemized deductions 8,000 .Compute her tax liability. (Show all calculations in good form)
2) During the current year, Donna, a single taxpayer, report the following items income of income and expenses
Income Salary $86,000, Muncipal bond interest 1,300 ,Alimony received 24,000, Capital gain on an asset held less than one year $3,000 Rental Income from residential rental house 12,500 ,
Expenses/losses: Interest on principal residence 8.000 Real estate taxes on principal residence 1,000, Capital loss on an asset held less than one year 7,000 ,Expenses related to rental property Mortgage interest 6,000 ,Repairs 2,400 ,Taxes 700, Depreciation 1,200. Compute Donn's taxable income.(Show all calculation in good form)
3) Lindsey Forbes, a detective who is single, operates a small pottery activity in her spare time. This year she reported the following income and expense from this activity Revenue from sale of pottery $9,000 Depreciation on potter's wheel (3,000) Property taxes on shed where she does pottery (1,200) Supplies used such as clay, etc. (6,500) In addition, she had salary of $70,000 and itemized deductions, not including expenses listed above, of $6,100.
a. What is the amount of lindsey's taxable income assuming the activity is classified as a hobby?
b. What is the amount of Lindsey's taxable income assuming the activity is classified as a trade or business?
4) Phoebe's AGI for the current year is $120,000. Included in this AGI IS $100,000 salary and $20,000 of interest income. In earning the investment income, Phoebe paid investment interest expense of $30,000. She also incurred the following expenditures subject to the 2% of AGI limitation. Investment expenses: Subscriptions to investment journals $500 ,Investment counseling 1,500, Safe-deposit box rental for stock certificates 100
Nonineivestment expenses: Unreimbursed employee business expenses $1,800, Tax return preparation fees (non-business-related) 500, What is Phoebe's investment interest expense deduction for the year?
5) Parveen is married and files a joint return. He reports the following items of income and loss for the year: Salary $135,000 Activity A(passive) 13,000 Activity B(nonbusiness rental real estate) (45,000) If Parveen actively participates in the management of Activity B, what is his AGI for the year and what is the passive loss carryover to next year?
6)If a loan actively has made to a related party, what are some considerations for determining whether the loan is a bona fide debt or is in fact, merely a gift?
7)What are some factors which indicate that a debt may be worthless?