Reference no: EM13194464

"Prepare a three page memo (at least 300 words per page) to John and Jane Smith addressing whether the issues presented above:

1. John Smith tax issues:
1. How is the $300,000 treated for purposes of Federal tax income?
2. How is the $25,000 treated for purposes of Federal tax income?
3. What is your determination regarding reducing the taxable amount of income for both (a) and (b) above?

2. Jane Smith tax issues:
1. What are the different tax consequences between paying down the mortgage (debt) and assuming a new mortgage (debt) for Federal income tax purposes?
2. Can John and Jane Smith utilize a 1031 tax exchange to buy a more expensive house using additional money from John's case?
3. Does Jane have a business or hobby? Why is this distinction important?
4. Would Jane (and John) realize better tax benefits if she had a separate business for her jewelry making activities?
5. What tax benefits would John realize if he invested $15,000 in Jane's jewelry making?
6. Can Jane depreciate her vehicle or jewelry making equipment? How?
3. John and Jane Smith tax issue:

1. a. Should John and Jane file separate tax returns or jointly?"