Reference no: EM13330218

Please Solve the following problems

1. In 2012, Firm A paid $50,000 cash to purchase a tangible business asset. In 2012 and 2013, it deducted $3,140 and $7,200 depreciation with respect to the asset. Firm A's marginal tax rate in both years was 35 percent. a. Compute Firm A's net cash low attributable to the asset purchase in each year. b. Compute Firm A's adjusted basis in the asset at the end of each year.

2. Ryland Company, a calendar year taxpayer, purchased commercial realty for $2 million and allocated $200,000 cost to the land and $1.8 million cost to the building. Ryland placed the real estate in service on May 21. a. Compute Ryland's MACRS deprecoiation with respect to the realty for the year of purchase. b. How would your answer change if Ryland placed the realty in service on September 2 instead of May 21? c. How would your answer to part a change if the building was a residential apartment complex instead of a commercial ofice?

3. Mr. and Mrs. FB, a retired couple, decided to open a family restaurant. During March and April, they incurred the following expenses.

Prepaid rent on commercial real estate

($2,100 per month from April through December) $ 18,900

Prepaid rent on restaurant equipment

($990 per month from April through December) 8,910

Advertising of upcoming Grand Opening 900

Staff hiring and training 11,500

TOTAL $ 40,210

Mr. and Mrs. FB served their first meal to a customer on May 1. Determine the tax treatment of the above expenses on their tax return.