Question

17. Dr. Payne Phull is a cash basis taxpayer. Normally, his patients pay his fee on the day they see him in the office. For some customers, his office processes a medical reimbursement claim and bills the insurance company for the visit. In the current year, his records reveal the following: Cash received at time of office visit . $ 70,000 Collections on insurance receivables 88,000 Total accounts receivable, January 1 5,000 Total accounts receivable, December 31 15,000 All of the receivables outstanding at the beginning of the year were collected during the year. What amount should Dr. Phull report as his income this year? a. $70,000 b. $158,000 c. $168,000 d. $173,000 e. Some other amount

18. Fast-Heat, an accrual basis calendar year taxpayer, sells furnaces. With each sale, the corporation also sells a one-, two-, or three-year contract to service the furnace. On November 1 of this year, the corporation sold a one-year con¬tract for $120 and a two-year contract for $240. The taxpayer wants to post¬pone income for as long as possible. Due to these sales, the corporation will report income for the current year of a. $360 b. $140 c. $260 d. $40 e. Some other amount

19. F has a son, C, who earns a $50,000 salary and has $500 interest income. During 2017 F loaned C $95,000 without interest to purchase a boat. Assume interest imputed at the IRS rate is $15,000. Which of the following statements is true about interest deemed earned by F or the amount of taxable gift remaining after the annual exclusion? a. F has interest income of $15,000. b. F is charged with a taxable gift of $15,000. c. F has no interest income. d. F is charged with a taxable gift of $1,000. e. Both c. and d.

20. R received cash income in the current year from the following investments: bank savings account interest, $43; municipal bond interest, $88; Canadian corporate stock dividend, $112; U.S. public utility stock dividend, $58; and corporate bond interest, $196. All amounts received on stock were paid from current earnings. The amount included in gross income of R is a. $497 b. $439 c. $409 d. $351

Answer 1

17. Dr. Payne Phull is a cash basis taxpayer. Normally, his patients pay his fee on the day they see him in the office. For some customers, his office processes a medical reimbursement claim and bills the insurance company for the visit. In the current year, his records reveal the following: Cash received at time of office visit . $ 70,000 Collections on insurance receivables 88,000 Total accounts receivable, January 1 5,000 Total accounts receivable, December 31 15,000 All of the receivables outstanding at the beginning of the year were collected during the year. What amount should Dr. Phull report as his income this year? a. $70,000 b. $158,000 c. $168,000 d. $173,000 e. Some other amount	Reported Income = Cash received at time of office visit + Collections on insurance receivables = $70,000 + $88,000 = $158000	b. 158000
18. Fast-Heat, an accrual basis calendar year taxpayer, sells furnaces. With each sale, the corporation also sells a one-, two-, or three-year contract to service the furnace. On November 1 of this year, the corporation sold a one-year con¬tract for $120 and a two-year contract for $240. The taxpayer wants to post¬pone income for as long as possible. Due to these sales, the corporation will report income for the current year of a. $360 b. $140 c. $260 d. $40 e. Some other amount	Current year income = $120/12 x 2 months + $240/24 x 2 months= $40	d.$40
19. F has a son, C, who earns a $50,000 salary and has $500 interest income. During 2017 F loaned C $95,000 without interest to purchase a boat. Assume interest imputed at the IRS rate is $15,000. Which of the following statements is true about interest deemed earned by F or the amount of taxable gift remaining after the annual exclusion? a. F has interest income of $15,000. b. F is charged with a taxable gift of $15,000. c. F has no interest income. d. F is charged with a taxable gift of $1,000. e. Both c. and d.	c. F has no interest income. F is charged with a taxable gift of $1,000. Annual gift tax exclusion amount = $14000 so $1000 is taxable.	Both c and d
20. R received cash income in the current year from the following investments: bank savings account interest, $43; municipal bond interest, $88; Canadian corporate stock dividend, $112; U.S. public utility stock dividend, $58; and corporate bond interest, $196. All amounts received on stock were paid from current earnings. The amount included in gross income of R is a. $497 b. $439 c. $409 d. $351	$43+$112+$58+$196	c.$409.00