Reference no: EM132328038

Taxation Questions -

Question 1 - Matt recently deposited $30,750 in a savings account paying a guaranteed interest rate of 5 percent for the next 10 years.

Required:

a. If Matt expects his marginal tax rate to be 22.00 percent for the next 10 years, how much interest will he earn after-tax for the first year of his investment?

b. How much interest will he earn after-tax for the second year of his investment if he withdraws enough cash every year to pay the tax on the interest he earns?

c. How much will he have in the account after four years?

d. How much will he have in the account after seven years? For all requirements, do not round intermediate calculations and round your final answers to the nearest whole dollar amount.

Question 2 - Dana intends to invest $50,000 in either a Treasury bond or a corporate bond. The Treasury bond yields 5 percent before tax and the corporate bond yields 6 percent before tax.

a-1. Assuming Dana's federal marginal rate is 24 percent and her marginal state rate is 5 percent, which of the two options should she choose? Assume that Dana itemizes deductions.

Choose One from below

• Corporate bond
• Treasury bond

a-2. How much interest after-tax would Dana earn by investing in the corporate bond? (Do not round intermediate calculations and round your final answer to the nearest whole dollar amount.)

b-1. If she were to move to another state where her marginal state rate would be 10 percent, which of the two options should she choose? Assume that Dana itemizes deductions.

Choose One from Below

• Corporate bond
• Treasury bond

b-2. How much interest after-tax would Dana earn by investing in the corporate bond as per requirement b-1? (Do not round intermediate calculations and round your final answer to the nearest whole dollar amount.)

Question 3 - At the beginning of his current tax year, David invests $11,700 in original issue U.S. Treasury bonds with a $10,000 face value that mature in exactly 10 years. David receives $560 in interest ($280 every six months) from the Treasury bonds during the current year, and the yield to maturity on the bonds is 3.6 percent. (Round your intermediate calculations to the nearest whole dollar amount.)

a. How much interest income will he report this year if he elects to amortize the bond premium?

b. How much interest will he report this year if he does not elect to amortize the bond premium?

Question 4 - Seth invested $33,000 in Series EE savings bonds on April 1. By December 31, the published redemption value of the bonds had increased to $34,090. How much interest income will Seth report from the savings bonds in the current year absent any special election?

Question 5 - At the beginning of her current tax year, Angela purchased a zero-coupon corporate bond at original issue for $41,000 with a yield to maturity of 6 percent.

Given that she will not actually receive any interest payments until the bond matures in 20 years, how much interest income will she report this year assuming semiannual compounding of interest? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Question 6 - John bought 1,500 shares of Intel stock on October 18, 2014, for $40 per share plus a $750 commission he paid to his broker. On December 12, 2018, he sells the shares for $57.50 per share. He also incurs a $1,000 fee for this transaction.

a. What is John's adjusted basis in the 1,500 shares of Intel stock?

b. What amount does John realize when he sells the 1,500 shares?

c. What is the gain/loss for John on the sale of his Intel stock?

Question 7 - Dahlia is in the 32 percent tax rate bracket and has purchased the following shares of Microsoft common stock over the years:

Date Purchased	Shares	Basis
7/10/2008	450	$15,750
4/20/2009	350	14,280
1/29/2010	550	15,730
11/02/2012	300	10,260

If Dahlia sells 950 shares of Microsoft for $52,250 on December 20, 2018, what is her capital gain or loss in each of the following assumptions? (Do not round intermediate calculations.)

a. She uses the FIFO method.

b. She uses the specific identification method and she wants to minimize her current year capital gain.

Question 8 - Karyn loaned $25,500 to her co-worker to begin a new business several years ago. If her co-worker declares bankruptcy on June 22 of the current year, how much of the bad debt loss will Karyn be able to deduct this year?

Question 9 - Larry recently invested $28,500 (tax basis) in purchasing a limited partnership interest. His at-risk amount is also $28,500. In addition, Larry's share of the limited partnership loss for the year is $2,425, his share of income from a different limited partnership is $1,170, and he has $3,850 of dividend income from the stock he owns. How much of Larry's $2,425 loss from the limited partnership can he deduct in the current year?

Question 10 - Molly Grey (single) acquired a 30 percent limited partnership interest in Beau Geste LLP several years ago for $60,000. At the beginning of year 1, Molly has tax basis and an at-risk amount of $29,000. In year 1, Beau Geste incurs a loss of $195,500 and does not make any distributions to the partners.

• In year 1, Molly's AGI (excluding any income or loss from Beau Geste) is $74,400. This includes $11,000 of passive income from other passive activities.
• In year 2, Beau Geste earns income of $30,600. In addition, Molly contributes an additional $25,670 to Beau Geste during year 2. Molly's AGI in year 2 is $78,300 (excluding any income or loss from Beau Geste). This amount includes $8,460 in income from her other passive investments.

a. Based on the above information, complete the following table: (see attached file)

b. Based on the above information, complete the following table: (see attached file)

What are the cumulative total passive suspended losses at the end of year 2?

Based on the above information, complete the following table: (see attached file)

Question 11 - Anwer owns a rental home and is involved in maintaining it and approving renters. During the year he has a net loss of $17,400 from renting the home. His other sources of income during the year are a salary of $112,250 and $18,700 of long-term capital gains.

How much of Anwer's $17,400 rental loss can he deduct currently if he has no sources of passive income?

Attachment:- Assignment File.rar