Question

A). Rasheed works for Company A, earning $357,000 in salary during 2017. Assuming he is single and has no other sources of income, what amount of FICA tax will Rasheed pay for the year? (Round your intermediate calculations to the nearest whole dollar amount.)

B). This year Amber opened a factory to process and package landscape mulch. At the end of the year, Amber’s accountant prepared the following schedule for allocating manufacturing costs to the mulch inventory, but her accountant is unsure of what costs need to be allocated to the inventory under UNICAP. Approximately 25 percent of management time, space, and expenses are spent on this manufacturing process. At the end of the year, Amber’s accountant indicated that the business had processed 18,700 bags of mulch but only 5,610 bags remained in the ending inventory.

What is Amber’s tax basis in her ending inventory after applying the UNICAP rules to allocate indirect costs to inventory? (Assume direct costs are allocated to inventory according to the level of ending inventory. In contrast, indirect costs are first allocated by time spent and then according to level of ending inventory.) (Round your answers to 2 decimal places. Leave no answers blank. Enter zero if applicable.)

C). Emily purchased a building to store inventory for her business. The purchase price was $800,000. Beyond this, Emily incurred the following necessary expenses to get the building ready for use: $2,000 to repair minor leaks in the roof, $6,000 to make the interior suitable for her finished goods, and $710 in legal fees.

What is Emily’s cost basis in the new building?

Answer 1