SEU Accounting Taxable income Question
Description
Q.1- Mr. A and Mrs. B are married and have two dependent children. X & Y, They also fully support Mrs. Bs mother who lives with them and has no income. Their 2012 tax and other related information is as follows: (2.5 marks)
|
Particulars |
Amount in $ |
|
Value of premiums for $ 100000 of group term life insurance provided by employer |
2,000 |
|
Gift from AS parents |
60,000 |
|
Dividend incomefrom ABC stock, |
8,000 |
|
Loan from AS parents |
20,000 |
|
Total salaries |
640,000 |
|
Bank account interest income |
14,000 |
|
Gain from the sale of qualified small business stock acquired in 2010 |
60,000 |
|
Total itemized deductions |
64,000 |
|
Municipal bond interest income |
6,000 |
|
Value of employer provided medical insurance |
22,000 |
Required: Compute Mr. A and Mrs.B Taxable income. (Show all calculations in proper /good form.)
Solution:
Q.2- Mr. Abdullahs medical and personal expenses include the following: (2.5 mark)
|
Particulars |
Amount in $ |
|
Prescription drugs |
2,400 |
|
Eyeglasses |
1,400 |
|
Doctors fees |
8,000 |
|
Hospital fees |
13,400 |
|
Food for personal use (expenses) |
4,000 |
|
Travel allowances |
10,000 |
|
General purpose vitamins |
400 |
|
Medical premiums |
43,400 |
|
Visitors fees |
2,000 |
|
Recreation fees |
5,000 |
|
Club fess |
2,000 |
Abdullahs AGI for the year is $ 132,000. He is single and age 56. Insurance company reimburses none of the medical costs and other related items.
After considering the AGI floor, what will be Abdullahs medical expense deduction?
Answer:
Q.3 In the year 2013, PQR Corporation had the following items of income, expense, gains, and losses: (2 mark)
|
Particulars |
Amount in $ |
|
Sales |
2,000,000 |
|
Account payable |
600,000 |
|
Interest on savings account |
56,000 |
|
Plant & Machinery |
600,000 |
|
Equipment |
300,000 |
|
Operating expenses |
400,000 |
|
Furniture and Fixture |
400,000 |
|
Gain on sale of AT&T stock |
24,000 |
|
Loss on sale of IBM stock |
60,000 |
|
Building |
400,000 |
|
Motor vehicle |
200,000 |
|
Cost of sales |
1,080,000 |
What is taxable income of PQR Corporations for the year?
Answer: –
Q-4-To make income taxable, income must be realized and recognized. Explain in your own words the difference between income realization and income recognition, and then provide a short numerical example to indicate the difference (Dont copy the same numerical example from other students. Numerical example must be differ). (2 mark)
Answer
Q5. If a NOL (net operating loss) is incurred, when would a taxpayer elect to forgo the carryback period and only carry the loss deduction forward? (1 marks)
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