Purchase Solution

Taxation: for each problem, calculate the taxable amount.

Not what you're looking for?

Ask Custom Question

1. Mr. Z, a nondealer, sold assets on an installment plan. Determine Mr. Z's gross income for 2008. Relevant data include:

Year Installment sales Gross profit 2008 collections
2008 $200,000 50,000 25,000
2007 300,000 81,000 80,000
2008 400,000 96,000 125,000

2. Tom is a cash-basis, calendar year taxpayer. Which of the following December items result in gross income or deductions for the current year?

A. Check received for December rent, $700 not deposited until January 4.

B. Check for $1,100 to pay Tom's state income taxes mailed Dec 28, cashed Jan 7.

C. Cash received in the amount of $500 for services to be rendered the following year.

D. Interest of $800 credited to his savings account, added to Tom's account balance.

E. Check received for Jan rent, $700 deposited on Jan 9.

F. Charitable contribution of $300, charged to mastercard.

G. Tom's totaling $2,000 sent for services rendered during the year, uncollected as of year-end.

Purchase this Solution
Solution Summary

The solution shows the calculations, as necessary, for each of the problems together with an explanation to support the answers.

Solution Preview

1. First we calculate the gross profit percentages for each:
2008 = 50,000/200,000 = 25%
2007 = 81,000/300,000 = 27%
2008 = 96,000/400,000 = 24%

We calculate the amount that will be taxable based on 2008 collections for installment sales based on the gross profit percentages:
2008 = 25,000 x 25% = ...

Purchase this Solution
Free BrainMass Quizzes
Transformational Leadership

This quiz covers the topic of transformational leadership. Specifically, this quiz covers the theories proposed by James MacGregor Burns and Bernard Bass. Students familiar with transformational leadership should easily be able to answer the questions detailed below.

Employee Orientation

Test your knowledge of employee orientation with this fun and informative quiz. This quiz is meant for beginner and advanced students as well as professionals already working in the HR field.

Cost Concepts: Analyzing Costs in Managerial Accounting

This quiz gives students the opportunity to assess their knowledge of cost concepts used in managerial accounting such as opportunity costs, marginal costs, relevant costs and the benefits and relationships that derive from them.

Organizational Behavior (OB)

The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.

Paradigms and Frameworks of Management Research

This quiz evaluates your understanding of the paradigm-based and epistimological frameworks of research. It is intended for advanced students.

View More Free Quizzes
Related BrainMass Solutions

  • Calculate the taxable amount for Herbert's annuity payments

    The excluded amount is calculated as 96,000/480,000 = 20%. Therefore 20% of each payment is non-taxable (or excluded from taxation) because it is a recovery of the original amount deposited.

  • Taxation: calculate taxable income in two scenarios

    202709 Taxation: calculate taxable income in two scenarios The tax rates are as shown. Your firm currently has taxable income of $79,400. How much additional tax will you owe if you increase your taxable income by $21,000?

  • Foreign tax credit calculations

    If Valencia's foreign taxes are creditable, then we need to calculate the extent of income that is covered by the credit. This is 60,000 X (100/34) = $176,471. However, the maximum amount of credit allowable is the amount of the foreign income.

  • Taxation: Key employee insurance, depreciation, gain on sale

    The solution responds to each question with explanations and answers.

  • Canadian Taxation Accounting 2012/13

    are neither taxable or deductible Hence net income for tax purposes = 59700 - 7150 = 52550 http://blog.taxresource.ca/how-canadian-income-tax-is-calculated/ This solution discusses Canadian taxation and provides steps necessary to solve the problem

  • AMT Amounts

    You would not adjust for personal exemptions. I can't calculate this for you, without knowing which year it is applicable to. There are different AMT exemption amounts based on the year. You are correct in how you are approaching this problem.

  • Taxation Advantages and Disadvantages - Consolidated Group

    Accordingly, the parent company will reduce the taxable base by an amount corresponding to the taxable portion of the distributed dividends, even if they originate from profits taxed in years prior to the beginning of the option.

  • Chapter 10 - Application Problem 8

    If Valencia's foreign taxes are not creditable, calculate its U.S. tax liability for 2003.

  • The Taxation of Annuity Income and Debt Cancellation

    This solution discusses the computation of the taxable portion of annuity income when the holder has invested in the annuity contract, as well as the taxability of the amount of debt forgiveness.

View More Related Solutions