Question
In: Accounting
Ralph owns a building that he is trying to lease. Ralph is a calendar-year, cash-method taxpayer...
Ralph owns a building that he is trying to lease. Ralph is a calendar-year, cash-method taxpayer and is trying to evaluate the tax consequences of three different lease arrangements. Under lease 1, the building rents for $700 per month, payable on the first of the next month, and the tenant must make a $700 security deposit that is refunded at the end of the lease. Under lease 2, the building rents for $7,700 per year, payable at the time the lease is signed, but no security deposit is required. Under lease 3, the building rents for $700 per month, payable at the beginning of each month, and the tenant must pay a security deposit of $1,400 that is to be applied toward the rent for the last two months of the lease. (Leave no answers blank. Enter zero if applicable.)
a. What amounts are included in Ralph’s gross income this year if a tenant signs lease 1 on December 1 and makes timely payments under that lease?
b. What amounts are included in Ralph’s gross income this year if the tenant signs lease 2 on December 31 and makes timely payments under that lease?
c. What amounts are included in Ralph’s gross income this year if the tenant signs lease 3 on November 30 and makes timely payments under that lease?
Solutions
ekkarill92 answered 1 year agoRelated Solutions
Ralph owns a building that he is trying to lease. Ralph is a calendar-year, cash-method taxpayer...
Ralph owns a building that he is trying to lease. Ralph is a
calendar-year, cash-method taxpayer and is trying to evaluate the
tax consequences of three different lease arrangements. Under lease
1, the building rents for $680 per month, payable on the first of
the next month, and the tenant must make a $680 security deposit
that is refunded at the end of the lease. Under lease 2, the
building rents for $7,480 per year, payable at the time the...
Trevor is a single individual who is a cash-method, calendar-year taxpayer. For each of the next...
Trevor is a single individual who is a cash-method,
calendar-year taxpayer. For each of the next two years (year 1 and
year 2), Trevor expects to report AGI of $80,000, contribute $8,000
to charity, and pay $2,800 in state income taxes.
A. Assume that Trevor combines his anticipated charitable
contributions for the next two years and makes the combined
contribution in December of year 1. Estimate Trevor’s taxable
income for each of the next two years using the 2018 amounts...
Trevor is a single individual who is a cash-method, calendar-year taxpayer. For each of the next...
Trevor is a single
individual who is a cash-method, calendar-year taxpayer. For each
of the next two years (year 1 and year 2), Trevor expects to report
AGI of $104,000, contribute $8,450 to charity, and pay $3,400 in
state income taxes.
Required:
Estimate Trevor’s taxable income for year 1 and year 2 using
the 2019 amounts for the standard deduction for both years.
Now assume that Trevor combines his anticipated charitable
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Reese, a calendar-year
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1. Manny, a calendar-year taxpayer, uses the cash method of accounting for his sole proprietorship. In...
1. Manny, a calendar-year taxpayer, uses the cash method of
accounting for his sole proprietorship. In late December he
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2.Jonah...
Hank, a calendar-year taxpayer, uses the cash method of accounting for his sole proprietorship. In late...
Hank, a calendar-year taxpayer, uses the cash method of
accounting for his sole proprietorship. In late December, he
performed $21,000 of legal services for a client. Hank typically
requires his clients to pay his bills immediately upon receipt.
Assume his marginal tax rate is 32 percent this year and will be 37
percent next year, and that he can earn an after-tax rate of return
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Isabel, a calendar-year taxpayer, uses the cash method of accounting for her sole proprietorship. In late...
Isabel, a calendar-year taxpayer, uses the cash method of
accounting for her sole proprietorship. In late December she
received a $75,000 bill from her accountant for consulting services
related to her small business. Isabel can pay the $75,000 bill
anytime before January 30 of next year without penalty. Assume her
marginal tax rate is 37 percent this year and next year, and that
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José, a cash method taxpayer, is a partner in J&T Accounting Services, a calendar year partnership....
José, a cash method taxpayer, is a partner in J&T
Accounting Services, a calendar year partnership. Under the
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Reese, a calendar-year taxpayer, uses the cash method of accounting for her sole proprietorship. In late...
Reese, a calendar-year taxpayer, uses the cash method of
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Manny, a calendar-year taxpayer, uses the cash method of accounting for his sole proprietorship. In late...
Manny, a calendar-year taxpayer, uses the cash method of
accounting for his sole proprietorship. In late December he
performed $24,000 of legal services for a client. Manny typically
requires his clients to pay his bills immediately upon receipt.
Assume Manny’s marginal tax rate is 37 percent this year and next
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a. What is the after-tax income if Manny sends his client the
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