Wiley Individual Tax 2 Questions Need Help

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  • #172529

    Hiya,

    On Wiley textbook Individual #104 the question reads:

    “During 2011, George (age 9 and claimed as a dependency exemption by his parents) received dividend income of $3700 and had wages from an after-school job of $1700. What is the amount that will be reported as George’s taxable income for 2011?”

    Answer explanation reads: “since George is eligible to be claimed as a dependency exemption by his parents, there will be no personal exemption on George’s return and his basic standard deduction is limited to the greater of $950 or George’s earned income of $1700 plus $300.

    dividends 3700

    +wages 1700

    =AGI 5400

    -exemptions 0

    -standard deduction (2000)

    =Taxable income $3400

    How exactly did the $300 come from?

Viewing 9 replies - 1 through 9 (of 9 total)
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  • #356370

    2nd question I am stumped on is #80

    “Corp a calendar year taxpayer, purchased used furniture and fixtures for use in business and placed in service on november 1, 2010. the furniture and fixture costs $56,000 and represented Corp's only acquisition of depreciable property during the year.

    Corp did not elect to expense any part of the cost of the property under section 179. what is the amount of corp's depreciation deduction for the furniture and fixtures under the MACRS for 2010?”

    The furniture and fixture is a 7 year property and depreciated using the 200% declining balance method under MACRS.

    Midquarter convention will be used becuare more than 40% of all personal property placed in service during last quarter and their only acquisition during the calendar year.

    But I don't understand their calculation= 56,000 x 2/7 x 1/8 = $2000

    The 2/7 would be from 1/7yr x 200%

    But how did they come with 1/8?

    Thank you in advance.

    #356371

    Question 1 – there is an additional $300 added to someone's earned income if they are being claimed by someone else and their earned income is more than $650. See link below and skip down to “Tax, credits, and Payments” Line 24 Standard deduction

    https://www.irs.gov/instructions/i1040a/ar01.html#d0e5970

    CA CPA - All because of the journey listed below
    -----------------------------------------------------------------------
    FAR - 53('10), 8/25/12 79 PASSED!
    REG - 66('11), 69('12), 12/06/12 77 PASSED!!
    BEC - 58('10), 74('12), 01/05/13 77 PASSED!!!
    AUD - 43('11), 66('12), 69('13), 74('13) 7/29/13 85 PASSED!!!!!

    (Combinations of Roger, Yaeger, Wiley Book, Wiley TB, & NINJA Notes)

    Ethics 90%

    #356372

    Question #3: Is Partnership automatic extension for 5 months or 6 months?

    Textbook and the IRS form 7004 shows as a 5 months extension but other tax websites shows as 6 months.

    #356373

    Organizational expense under $5000= Fully deductible

    Organizational expense $41,000 and began operations on July 1st.

    41,000

    -5000

    =36,000 / 180 months = $200 x 6 months = $1,200 + 5,000 = $6,200 deductible

    Organizational expense $75,000 and began operations on July 1st.

    75,000 x 6/180 = $24,975?

    Question #4: Can anyone teach me how to calculate if organizational expenses was over $50,000?

    I understand that if organizational expenses under $5,000 all of it is fully deductible. If over $5,000 and up to $50,000, you calculate it like above. But I'm confused when org expense over $50,000. Thank you in advance.

    #356374
    scottiet
    Member

    Q2 – Typically a company will use Half-Year convention for depreciable assets besides real property. But if a certain amount of assets are PURCHASED IN Q4 then you would use MID-quarter convention. In the question you provided, $56k of tangible fixtures were purchased in November (Q4). What I did what take $56k * 7yrs = 8,000*.25= $2000 depreciation exp.

    Looks like the the calculation they provided they use 2years (16k) then divided by 1 out of 8 quarters. WHY? no idea. If I were you I wouldn't look at that calulation again.

    There's many ways to calulate problems and get to the correct answer. I agree that their calculation is a little mind boggling. If you can get to the correct answer using another way, then use what you feel comfortable with.

    FAR- 88 2/28/2012
    AUD- 88 5/3/2012
    REG- 84 7/31/12
    BEC- 83 10/19/12

    #356375

    Question 4- I dont think you are able to expense any in current year (except for the amortization expense) when the start up costs exceed $50K

    “Business Start-Up and Organizational Costs

    Business start-up and organizational costs are generally capital expenditures. However, you can elect to deduct up to $5,000 of business start-up and $5,000 of organizational costs paid or incurred after October 22, 2004. The $5,000 deduction is reduced by the amount your total start-up or organizational costs exceed $50,000. Any remaining costs must be amortized. ”

    https://www.irs.gov/publications/p535/ch07.html#en_US_2011_publink1000208919

    IRS website is very helpful for some tax questions.

    CA CPA - All because of the journey listed below
    -----------------------------------------------------------------------
    FAR - 53('10), 8/25/12 79 PASSED!
    REG - 66('11), 69('12), 12/06/12 77 PASSED!!
    BEC - 58('10), 74('12), 01/05/13 77 PASSED!!!
    AUD - 43('11), 66('12), 69('13), 74('13) 7/29/13 85 PASSED!!!!!

    (Combinations of Roger, Yaeger, Wiley Book, Wiley TB, & NINJA Notes)

    Ethics 90%

    #356376
    forever4
    Member

    so for org amort

    if up to 5k fully deduct

    if 5k<x<50k -> 5k + (x-5k)/180 x y month

    if x>50k -> 50k/180 x y month

    Hope it helps!

    FAR 5/14 88 PASSED!
    REG 7/13 74 :((((((((....! I cant believe it!!!! I studied so hard...
    REG retake 11/29 -> 89!!!!!!!!!!!!!!!!!!!
    BEC 10/11/12 -> 84!!!!!!!!!!!!!
    AUD 10/25/12 -> 95!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

    I'm DONE! OMG 8 months of hard work.

    I SHALL PASS. BECAUSE IT'S ME, SO EVERYTHING WILL BE OK!

    #356377

    Thank you all, it really helped.

    forever4: best of luck on Friday.

    littlenumberrobot: I had similar scores to you when I first started. What really helped me pass two sections so far is to stop following the cpa review course schedule, apply for only 1-2 section NTS and concentrate on passing that section. You won't have to worry about the NTS expiring when you've paid for like 3-4 sections.

    #356378

    @ Wherefore…Yes, that was hindering me for awhile. Studying a lot more now and am more motivated. One thing I regret so far is not retaking a section quickly after failing. Especially with the scores in the mid-high 60's. I will be changing this time around.

    Glad I could help. I work in tax so I frequent the IRS website often.

    CA CPA - All because of the journey listed below
    -----------------------------------------------------------------------
    FAR - 53('10), 8/25/12 79 PASSED!
    REG - 66('11), 69('12), 12/06/12 77 PASSED!!
    BEC - 58('10), 74('12), 01/05/13 77 PASSED!!!
    AUD - 43('11), 66('12), 69('13), 74('13) 7/29/13 85 PASSED!!!!!

    (Combinations of Roger, Yaeger, Wiley Book, Wiley TB, & NINJA Notes)

    Ethics 90%

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