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Question(s) / Instruction(s):

1. For the tax year 2010 Olga reported gross income of $800,000 on her timely Federal income tax return.
a. Presuming the general rule applies, when does the statute of limitations on assessments normally expire?

b. Suppose Olga inadvertently omitted gross income of $225,000. When does the statute of limitation on assessments expire?

c. Suppose the omission was deliberate and not inadvertent. When does the statute of limitations on assessments expire?

2. Several years ago, Brayden purchased extra grazing land for his ranch at a cost of $90,000. In 2010 the land is condemned by the state for development as a highway maintenance depot. Under the condemnation award, Brayden receives $160,000 for the land. Within the same year, he replaces the property with other grazing land. What is Brayden’s tax situation if the replacement land cost:
a. $80,000?
b. $110,000?
c. $170,000?
d. Why?

3. Flo had the following transactions during 2010
Interest income on bond
Issued by City of Philadelphia_____________$1,000
Issued by Verizon Coprporation____________$2,000 _______$3,000
Alimony received________________________________________$2,000
Child support received____________________________________$7,000
City and state income taxes paid____________________________$4,000
Bank loan obtained to pay credit card debt____________________$20,000
What is Flo’s AGI for 2010?

4. What age 16, is claimed as a dependent by his mother. In 2010 Wade has dividend income of $1,300 and earns $500 form a part-time job.
a. What is Wade’s taxable income for 2010?
b. Suppose Wade earned $1,100(not $500) form the part-time job. What is Wade’s taxable income for 2010?

5. Glen, single and age 66, is claimed as a dependent by his daughter. In 2011, Glen has interest income of $2,000, social security benefits of $3,000, and income from a part-time job of $300. What is Glen’s taxable income for 2010?

6. Pablo is married to Elena, who lives with him. Both are U.S. citizens and residents of Kansas. Pablo furnishes all of the support of his parents, who are citizens of Nicaragua and residents of Mexico. He also furnishes all of the support of Elena’s parents, who are citizens and residents of Nicaragua. Elena has no gross income for the year. If Pablo files as a married person filing separately, how many personal and dependency exemptions can he claim on his return?

7. Robin earns a salary of $25,000, has capital gains of $3,000, and interest income of $2,000 in 2010. Her husband died in 2009 Robin has a dependent son, Sam, is age 4. Her itemized deductions are $4,000.
a. Calculate Robin’s taxable income for 2010

b. What is her filing status?

8. During the year, Keith has the following transactions:
Loss from the sale of a business computer ------------------$3,500
Loss from the sale of a personal use auto -------------------- 1,500
Long-term loss from the sale of the land held for investment -----$5,000
Short-term gain from the sale of a stock investment ----------------$1,000
How are these transactions handled for income tax purposes?

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