Reference no: EM13972760
Determine whether the taxpayer in each of the following situations has realized income. Explain why there has or has not been a realization, and determine the amount of income to be reported:
a. Ramrod Development Company purchases land costing $230,000. Ramrod subdi- vides the land into 100 lots, incurring legal fees of $20,000. It also spends $50,000 to install utility and sewer connections to each lot. The lots are priced to sell at $50,000 each, but none sold during the year.
b. Eugene is a computer consultant. Rashid is an accounting professor. Rashid needs help installing new software on his home computer. Eugene offers to install the software if Rashid will help him set up the books for a new company he is forming. Eugene installs the software in December. Rashid sets up the books in February.
c. Sasha is an employee of Chasteen Hair Products. Chasteen provides all employees with free medical coverage. During the current year, the cost of Sasha's coverage is $1,900.
d. In November, Ira wins an all-expense-paid trip for two to the Super Bowl in Janu- ary. He plans to take his best friend to the game. The estimated value of the trip is $4,300.
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: The contract stipulates that if Shannon does not produce an acceptable plan, she must repay any portion of the advance not earned to date. Does Shannon have any income from the receipt of the advance? Explain in terms of the income tax concepts p..
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: Determine whether the taxpayer in each of the following situations has realized income. Explain why there has or has not been a realization, and determine the amount of income to be reported:
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