1. Naomi was the beneficiary of a $100,000 insurance policy on her mother who died in January 2011. It took the insurance company several months to make the payment so she received $100,206 in May 2011. She was a joint tenant on a bank account with her mother. She inherited the $14,000 in the account that had all been deposited by her mother. After a long battle with her medical insurance company, Naomi received a $6,000 reimbursement in 2011 for an operation that she underwent in 2010. As a result of her high medical expenses, she was able to take a $7,000 deduction by itemizing on her 2010 tax return rather than taking the $5,700 standard deduction. What are Naomi's taxable income items from these events for 2011?
2. Carl, an employee of a Miami CPA firm, was sent to work in Tampa for eight months on March 1, year 1, on a financial audit. His monthly transportation expenses were $400, his monthly lodging was $1,200, and his meals were $800 per month. At the end of the sixth month, his employer determined that the audit was going to continue for eight more months due to an SEC investigation. How much of his expenses may Carl deduct if Carl's employer reimburses him for all of the expenses and includes the reimbursements in his income in years 1 and 2? How much may the employer deduct for these expenses in years 1 and 2?
3. A taxpayer has the following gains and losses from property transactions completed in 2011. What is the effect on the taxpayer's taxable income and income tax if the taxpayer is (a) an individual or (b) a corporation?
Long-term capital gain $21,000
Section 1231 gain 10,000
Section 1231 loss 12,000
Short-term capital gain 3,000
Short-term capital loss 18,000
4. Ardbeg Corporation has $800,000 of taxable income on which it pays a tax of $272,000. In determining its earnings and profits for the year, the accountant used the following information:
a. Ardbeg received a dividend of $20,000 from a company in which it has a 60 percentinterest.
b. It used a $30,000 capital loss carryover to offset its entire capital gain.
c. It was unable to deduct $12,000 of its charitable contribution due to the limitation.
d. It had a loss of $20,000 on the sale of some investments to its sole shareholder.
e. It received $10,000 in interest on City of Cleveland bonds
What is the corporations current earnings and profits?