Question

In: Accounting

How does the tax benefit rule apply in the following cases? a. In 2017, the Orange...

How does the tax benefit rule apply in the following cases? a. In 2017, the Orange Furniture Store, an accrual method sole proprietorship, sold furniture on credit for $1,000 to Sammy. The cost of the furniture was $600. In 2018, Orange took a bad debt deduction for the $1,000. In 2019, Sammy inherited some money and paid Orange the $1,000 he owed. Orange's owner was in the 35% marginal tax bracket in 2017, the 12% marginal tax bracket in 2018, and the 35% marginal tax bracket in 2019.

Orange Furniture must include $ 1,000 in gross income as the recovery of a prior deduction. The timing of the income and deductions cost Orange $ .

Solutions

Expert Solution

ekkarill92 answered 2 years ago
Next > < Previous

Related Solutions

Apply the tax benefit rule to determine the amount of the state income tax refund included in gross income in 2020.
Exercise 5-26 (Algorithmic) (LO. 3)Apply the tax benefit rule to determine the amount of the state income tax refund included in gross income in 2020.If an amount is zero, enter "0".a.  Myrna and Geoffrey filed a joint tax return in 2019. Their AGI was $79,825, and itemized deductions were $31,800, which included $25,440 in state income tax and no other state or local taxes. In 2020, they received a $15,264 refund of the state income taxes that they paid in 2019....
What is Rule of 72? How does this implementation become a rule? In which cases is...
What is Rule of 72? How does this implementation become a rule? In which cases is it applicable? What are its advantegaes and disadvantages? Any comments of your own in order to improve this rule ?
Under the tax benefit rule, $ of the state income tax refund is included in gross...
Under the tax benefit rule, $ of the state income tax refund is included in gross income in 2017.Myrna and Geoffrey filed a joint tax return in 2016. Their AGI was $97,325, and itemized deductions were $21,200, which included $16,960 in state income tax. In 2017, they received a $10,176 refund of the state income taxes that they paid in 2016. The standard deduction for married filing jointly in 2016 was $12,600. Under the tax benefit rule, $ of the...
The following defined pension data of Stellar Corp. apply to the year 2017. Projected benefit obligation,...
The following defined pension data of Stellar Corp. apply to the year 2017. Projected benefit obligation, 1/1/17 (before amendment) $582,000 Plan assets, 1/1/17 566,900 Pension liability 15,100 On January 1, 2017, Stellar Corp., through plan amendment,    grants prior service benefits having a present value of 130,000 Settlement rate 9 % Service cost 59,500 Contributions (funding) 60,400 Actual (expected) return on plan assets 53,100 Benefits paid to retirees 40,500 Prior service cost amortization for 2017 15,400 For 2017, prepare a pension...
The following defined pension data of Stellar Corp. apply to the year 2017. Projected benefit obligation,...
The following defined pension data of Stellar Corp. apply to the year 2017. Projected benefit obligation, 1/1/17 (before amendment) $582,000 Plan assets, 1/1/17 566,900 Pension liability 15,100 On January 1, 2017, Stellar Corp., through plan amendment,    grants prior service benefits having a present value of 130,000 Settlement rate 9 % Service cost 59,500 Contributions (funding) 60,400 Actual (expected) return on plan assets 53,100 Benefits paid to retirees 40,500 Prior service cost amortization for 2017 15,400 For 2017, prepare a pension...
The following defined pension data of Coronado Corp. apply to the year 2017. Projected benefit obligation,...
The following defined pension data of Coronado Corp. apply to the year 2017. Projected benefit obligation, 1/1/17 (before amendment) $530,000 Plan assets, 1/1/17 516,700 Pension liability 13,300 On January 1, 2017, Coronado Corp., through plan amendment, grants prior service benefits having a present value of 131,000 Settlement rate 9 % Service cost 60,400 Contributions (funding) 67,100 Actual (expected) return on plan assets 52,700 Benefits paid to retirees 43,200 Prior service cost amortization for 2017 18,200 For 2017, prepare a pension...
How does the scope of review of courts in tax cases differ from the scope of...
How does the scope of review of courts in tax cases differ from the scope of judicial review described in Administrative Procedures Act ("APA")Section 706?
a. Briefly explain the tax benefit rule. b. Is a taxpayer required to report the reimbursement...
a. Briefly explain the tax benefit rule. b. Is a taxpayer required to report the reimbursement of a medical expense by insurance as income if the reimbursement is received in the year following the year of the​ expenditure? a. Briefly explain the tax benefit rule. A. A taxpayer who recovers an amount deducted in a previous year must report as gross income the recovered amount. The recovered amount need not be included in gross income if the taxpayer received no...
a. Briefly explain the tax benefit rule. A. A family can reduce its taxes by shifting...
a. Briefly explain the tax benefit rule. A. A family can reduce its taxes by shifting income from family members who are in high tax brackets to family members who are in low tax brackets. For​ example, children may own stock in the family business. Dividends on the stock are taxed to the children. B. A taxpayer who is the recipient of a disputed amount must include the amount received in gross income as long as the use of the...
Evaluate the 2017 Federal Tax Reform Act from a tax policy perspective. That is how does...
Evaluate the 2017 Federal Tax Reform Act from a tax policy perspective. That is how does it (or not) achieve simplicity, transparency, neutrality & stability.
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT