Saturday, 6/09/2012 1:15 – 4:30 p.m.12 questions must be answered in word format Document Preview: Individual Income TaxationTXX 5761 SPRING 2012 Final Exam: Saturday, 6/09/2012 1:15 – 4:30 p.m. The...

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Saturday, 6/09/2012 1:15 – 4:30 p.m.12 questions must be answered in word format
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Individual Income TaxationTXX 5761 SPRING 2012Final Exam: Saturday, 6/09/2012 1:15 – 4:30 p.m. The following areas will be important for you to study thoroughly to prepare for the Final Examination. The questions on the exam will draw from these areas although not ALL of the material will, necessarily, be tested on the exam. The Final Exam will consist of 12 Problems similar to those covered throughout the term in class and your class assignments. The Exam will be administered as a timed assignment on Blackboard – i.e. the identical format as we used in the Mid-Term. Students will download the Exam, prepare their answers in Word format and upload to Blackboard no later than 4:30 pm. Each of the Exam Problems will be worth 15 points. To earn maximum credit your answers will: (1) identify/explain the tax issue(s) raised by the question (maximum 7.5 points) and (2) apply the tax law(s) to resolve the question (maximum 7.5 points). As on the Midterm, most questions will have 2 subparts ((a) and (b) in which case the points will be evenly divided. Chapter 16General Scheme of Taxation of Capital gains and lossesDefinition of Capital AssetSale or exchange requirement for capital gain (loss) treatmentOptionsPatentsFranchises, Trademarks, Trade-namesLease Cancellation PaymentsHolding Period RulesTreatment of Capital Gains (Losses) of non-corporate taxpayersNetting processQualified Dividend IncomeTax on Net Capital GainTreatment of Capital LossesReportingTreatment of Capital Gains (losses) of Corporate TaxpayersChapter 5Gifts and Inheritances Life InsuranceTransfer for Value ruleAccelerationCompensation for injury and sicknessWhat may be excluded from incomeEmployer sponsored health insuranceWhat may be excluded from incomeEmployer’s after tax cost to provideForeign earned Income ExclusionCalculate exclusionState and Local BondsFederal tax treatmentAfter tax rate of returnTax Benefit Rule Income from...

Answered Same DayDec 20, 2021

Solution

David answered on Dec 20 2021
3 Votes
1. (a ) The issue in question is the treatment by Dr. Dan of the loan given by him to his good
friend, Tom, for his new business; at the time when such loan became bad debt. Now, the bad
debt is a non-business bad debt for Dr. Dan and it must be treated as short term capital loss in
the year in which the amount of its worthlessness is known with certainty. Its worthlessness is
known with certainty in the cu
ent year when Tom was unable to pay as the business had
failed. Thus, it will be treated as short term capital loss by Dr. Dan in the cu
ent year.
(b ) The issue in question is whether the amount owed to Te
y by P corporation in respect of
his salary for the 6 month period is a business or non-business bad debt. Further, it is also
known that the company finally went out of business this year. Now, a business bad debt is a
debt in respect of the taxpayer’s trade or business or where the taxpayer is in the business of
lending money. All other bad debts are non-business bad debts. Thus, Te
y has a non-
usiness bad debt.
2.
In the given problem, it is desired to know as to when C Corporation may accrue the
deduction for the $100,000 payout for Federal income tax purposes. It is intended to
determine the timing for the deduction; whether it is 2011 or 2012? In...
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