Reference no: EM132858247

Question -

1) JBC Corporation is owned 20 percent by John, 30 percent by Brian, 30 percent by Charlie, and 20 percent by Z Corporation. Z Corporation is owned 80 percent by John and 20 percent by an unrelated party. Brian and Charlie are brothers. Answer each of the following questions about JBC under the constructive ownership rules of Section 267:

a. What is John's percentage ownership?

b. What is Brian's percentage ownership?

c. What is Charlie's percentage ownership?

d. If Brian sells property to JBC for a $6,000 loss, what amount of that loss can be recognized for tax purposes (before any annual limitations)?

2) Otto and Monica are married taxpayers who file a joint tax return. For the current tax year, they have AGI of $80,300. They have excess depreciation on real estate of $67,500, which must be added back to AGI to arrive at AMTI. The amount of their mortgage interest expense for the year was $25,000, and they made charitable contributions of $7,500.

If Otto and Monica's taxable income for the current year is $47,800, determine the amount of their AMTI.

3) Sally hires a maid to work in her home for $250 per month. The maid is 25 years old and not related to Sally. During 2020, the maid worked 9 months for Sally.

Do not round immediate computations and round your final answers to two decimal places.

a. What is the amount of Social Security tax Sally must pay as the maid's employer?

b. What is the amount of Medicare tax Sally must pay as the maid's employer?

c. What is the amount of Social Security and Medicare tax which must be withheld from the maid's wages?

4) Rachel is single and has wages of $150,000 and dividend income of $90,000. She has no investment expenses. Calculate the amount of the 3.8 percent net investment income tax she must pay.