James Smith is the owner of a once profitable used car business. However, there was a...

James Smith is the owner of a once profitable used car business. However, there was a downturn in the economy and Mr. Smith is in a position where he can hardly pay his debts. He was recently divorced from his wife and in compliance with court order; he is paying her child support for his 2 children. He has numerous creditors seeking payment for services and supplies requested by his company. The total amount owed to his is $200,000. He has a life insurance, which he has had for 35 years. It is a whole life insurance. He also owns an antique 1965 Ford Mustang and a 1964 F 150. He owns a Rolex watch, which is valued at $170,000 because it was made in 1933. Mr. Smith does not want to be declared bankrupt, but he may have no other choice. Advise Mr. Smith as to what he can do not to be declared bankrupt and explain the process if one or more of his creditors approach the court.

Expert Solution

jeff jeffy answered 8 months ago

An admitted call girl once said that prostitution is a profitable business if you market it...

An admitted call girl once said that prostitution is a profitable business if you market it correctly and properly screen your clients. The U.S. Department of Commerce claims that the underground economy (especially illegal gambling and prostitution) represents between 3 and 40 percent beyond the legal economy. Fifi defends the right to sell sex between consenting adults and argues that a person has the right to use his or her body in any way that maximizes income. “We allow people...

James Smith had a successful auto repair business. There has been a downturn in business and...

James Smith had a successful auto repair business. There has been a downturn in business and he is unable to pay his creditors. James is also divorced from his wife and is paying alimony to her and child support for their two children. His possessions/assets are his home; vehicle at $5,000 Don't let in tools of his trade at $7,500; personal jewelry at $6,800: personal household furnishings valued at $10,000; an un-matured life insurance at $25,000. James also serves as...

James Jones is the owner of a small retail business operated as a sole proprietorship. During...

James Jones is the owner of a small retail business operated as a sole proprietorship. During 2018, his business recorded the following items of income and expense. Revenue from Inventory Sales $147,000 Cost of Goods Sold 33,500 Business License Tax 2,400 Rent on Retail Space 42,000 Supplies 15,000 Wages Paid to Employees 22,000 Payroll Taxes 1,700 Utilities 3,600 A.) Compute taxable income attributable to the sole proprietorship by completing Schedule C to be included in James's 2018 Form 1040. You...

Donald Wilson has a great deal of experience with respiratory therapy. James Smith has the business...

Donald Wilson has a great deal of experience with respiratory therapy. James Smith has the business connection and knowledge. They have decided to start a partnership that sells respiratory equipment, employing several sales representatives. They have decided to share equally in the net income and net losses. After two years, the business is thriving having sold more than 1,000 units this year. One day, Donald receives a call from the Internal Revenue Service (IRS). Unknown to Donald, James has not...

John Payne is the sole owner of a classic car restoration business that specializes in the...

John Payne is the sole owner of a classic car restoration business that specializes in the restoration of classic and muscle cars for individuals. It is not incorporated at this time. John has called his company the GAS MONKEE CAR RESTORATION. John believes there might be an advantage to creating a corporation for limited liability reasons. John has assets to transfer for the stock in Gas Monkee totaling approximately $250,000.00. In addition, he manages Gas Monkee's operations on a full-time...

Brad Pitt, owner of a small car repair and engine service business, operates his business as...

Brad Pitt, owner of a small car repair and engine service business, operates his business as a C corporation with a December 31 year-end. He has three employees, including himself. The following expenses, along with $565,000 of gross income, are reported in the corporation’s financial statements. Employee 1 salary $ 28,000 Employee 2 salary 28,000 Brad Pitt’s salary 45,000 Building rent 24,000 New Machinery purchased for the year 100,000 Depreciation of machinery for the year 10,000 Insurance...

Tim Smith is shopping for a used luxury car. He has found one priced at $...

Tim Smith is shopping for a used luxury car. He has found one priced at $ 27000. The dealer has told Tim that if he can come up with a down payment of $5 600, the dealer will finance the balance of the price at a 7% annual rate over 3 years (36 months). (Hint: Use four decimal places for the monthly interest rate in all your calculations.) a. Assuming that Tim accepts the dealer's offer, what will his monthly...

CREATION OF CORPORATION John Payne is the sole owner of a classic car restoration business that...

CREATION OF CORPORATION John Payne is the sole owner of a classic car restoration business that specializes in the restoration of classic and muscle cars for individuals. It is not incorporated at this time. John has called his company the GAS MONKEE CAR RESTORATION. John believes there might be an advantage to creating a corporation for limited liability reasons. John has assets to transfer for the stock in Gas Monkee totaling approximately $250,000.00. In addition, he manages Gas Monkee's operations...

James got into a car accident. When the ambulance arrived, James was sitting on the flood...

James got into a car accident. When the ambulance arrived, James was sitting on the flood next to his car with blood covering him. His car was hit a truck who came wrong way and hit face-to-face. James looks dazed, and as the paramedics approach he says with a mixture of panic and relief, “I am covered with blood!” James is only semi-lucid as he babbles on about pushing out the broken glass in his car window. The paramedic reports...

10. Jack, Jill and James own a CPA firm (Smith, Smith, Bond and Co., LLC), which...

10. Jack, Jill and James own a CPA firm (Smith, Smith, Bond and Co., LLC), which is taxed as a partnership, and where each work full-time. Each contributed cash of $100,000 to the firm in 2019 at its beginning. The firm in the first year made $40,000 in profit in its first year. Profits and losses are split three ways. The partnership has the following forms of debt: Nonrecourse: $30,000 Recourse: $150,000 (The recourse debt was secured 100% by James)...

Question