Assignment: Accounting/Tax
Provide work to show you researched and details of how you came to the answer (include references as needed) and use 2020 tax guidelines and regulations.
• Rachel, a medical doctor, purchases a painting to hang on the wall of her living room (i.e., for personal enjoyment) for $15,000 in February of Year 1 from an up-and-coming artist, Randy Borehall. At the end of Year 1, the painting is appraised at $17,000. At the end of Year 2, after a particularly nasty piece of publicity regarding Borehall's antics, the painting is appraised at $10,000. When Borehall dies in Year 3, Rachel is able to sell the painting in November for $20,000 in cash (you know what death can do to the value of an artist's work) to Jacob.
o What does Rachel include in Gross Income (or deduct in reaching Taxable Income) in each of Years 1, 2, and 3 under current law?
• Tired of all of the clutter in her home, Rachel holds a garage sale where she sells a bunch of old furniture, clothes, dishes, toys, small appliances, etc., which she had used in her home over the years. Nothing that she sold was valuable. When she counted the money in her till at the end of the day, she had $300 in cash.
o Does Rachel include this $300 in her Gross Income under current law?
o Why or why not?
• David and Daphne are married and have no children. David is a police sergeant who earns $65,000 this year, and Daphne is a registered nurse who earns $75,000. They earn no investment income this year, but they did receive a $10,000 gift from Daphne's mom. See § 102(a). David and Daphne file a joint return and take the Standard Deduction.
o What is Daphne's and David's Adjusted Gross Income (AGI) and Taxable Income for this year?
o What is Daphne's and David's marginal tax rate?
o Their effective tax rate (using AGI)?
Format your assignment according to the following formatting requirements:
o The answer should be typed, using Times New Roman font (size 12), double spaced, with one-inch margins on all sides.
o The response also includes a cover page containing the title of the assignment, the student's name, the course title, and the date. The cover page is not included in the required page length.
o Also include a reference page. The Citations and references must follow APA format. The reference page is not included in the required page length.