I need help with the following questions. Please note that these
questions are not current homework or exam questions. They are
questions from past exams that are available to all students in the
library. I need the answers to check to make sure the answers I came
up with are correct.
To the extent possible please answer citing specific Internal Revenue
Code and/or Regulation Sections. Case cites would also be helpful.
Beyond the basic answer to each question, I would also like to
understand WHY the question is worded the way it is. In other words,
what specific issues does the question raise, and are there any
underlying policy issues and/or conflicts.
I have a full set of class notes and a course outline that would
probably help in terms of formulating the type of answer I am looking
for - only problem is we are talking about 90+ pages of MS word docs
and Google won't let me post my e-mail. If the answers can be reached
without the notes/outline great - but if you can think of a way for me
to get that to you please let me know.
Also - and as if this assignment wasn't tough enough - I need the
answers by 3am on 12/14. I am spending the day doing the practice
exams and I will need to check them by 9am on 12/14 since my in class,
proctored exam is later that day.
Dorothea, age 40, is the life tenant of a trust created by her
deceased father. The trust
generate income of $20,000 a year. Dorothea doesn?t need the income at
present, so she assigns
to her son, Ladislaw, by gift the right to receive all the trust
income for the next 5 years.
Ladislaw, a medical student, has large credit card debts, which he is
desperate to pay off.
Accordingly, he sells his 5-year income right to a local investor for
$65,000 cash, paid in a single
lump sum.
What are the tax consequences of these events to Dorothea and Ladislaw? Explain.
Andrew was injured in an auto accident and sued the other driver for
$10,000. The other
driver?s insurance company offered to settle Andrew?s claim for
$2,000, but Andrew rejected
that offer. Pierre, Andrew?s tailor, has presented Andrew with a bill
for making two new suits in
the amount of $3,000. Unable to pay, Andrew persuades Pierre to accept
an assignment of his
damage claim in full satisfaction of Pierre?s bill. Ultimately, and to
everyone?s surprise, the
insurance company agrees to settle Andrew?s claim for $9,000 and pays
that amount over to
Pierre as assignee.
What are the tax consequences of these events to Andrew and Pierre? Explain.
Brangwen owns Glenview, investment property, with a value of $110,000
and a basis of
$100,000, which is subject to a mortgage of $20,000. Rupert owns
Harborview, also investment
property, with a value of $60,000 and a basis of $40,000. Brangwen and
Rupert exchange their
properties and Rupert pays Brangwen $30,000.
What are the tax consequences of the exchange to Brangwen and Rupert?
Under a special Code provision, breeders of llamas are allowed to
report the profit realized
on the sale of their animals as long-term capital gain. The initial
cost of breeding a llama is
about $5,000, and the breeder can usually get $15,000 for the creature
at the end of four years
when the llama is an adult. Taxed as long-term capital gain, the
breeder pays a tax of 20%, or
$2,000, on his $10,000 profit, having treated the initial breeding
cost as a non-deductible capital
expenditure. The US Treasury, which regards the llamas as ?inventory?
in the hands of a
breeder, has urged Congress to change the law and treat the gain on
llama sales as ordinary
income. As a sop to the llama lobby, the Treasury has stated that if
this change is made, it will
allow breeders to deduct the initial breeding cost as a current expense.
How should llama breeders feel about the Treasury?s proposal? Explain.
Odette is the owner of a movie theater in Omaha, which she has
operated with moderate
success for many years. Last year the Omaha City Council adopted a new
fire passageway
regulation, of which the effect was to require Odette to tear out
several rows of seats and make
certain changes in the width of windows and exit doors. The cost of
all this was $25,000.
How should Odette treat the $25,000 outlay? Explain.
Knowing you to be a tax specialist, a friend writes you a letter,
saying ?The charitable
deduction is unfair because it treats taxpayers who donate money to
charity more favorably than
it treats taxpayers who donate their own services. My services as a
dental technician are worth
$40 an hour. I work one day a week for no pay at a charity clinic, and
when I tried to deduct the
value of my donated services, the IRS disallowed the deduction. Not fair!!?
What is your reply?
Tom, an amateur cook, is famous among gourmets for inventing five
delicious dishes using
fresh horsemeat (stew, fricassee, kabob, etc.). Nobody knows Tom?s
secret recipes. Tired of
cooking, Tom gives the recipes to his daughter, Sophie, who puts them
in a bank vault for safekeeping.
A couple of years later, Sophie receives an offer from a cookbook
publisher to buy the
recipes for $5,000. Sophie accepts.
What are the tax consequences of these events to Tom and Sophie? Explain.
Tom, an amateur cook, is famous among gourmets for inventing five
delicious dishes using
fresh horsemeat (stew, fricassee, kabob, etc.). Nobody knows Tom?s
secret recipes. Tired of
cooking, Tom gives the recipes to his daughter, Sophie, who puts them
in a bank vault for safekeeping.
A couple of years later, Sophie receives an offer from a cookbook
publisher to buy the
recipes for $5,000. Sophie accepts.
What are the tax consequences of these events to Tom and Sophie? Explain.
Tom, an amateur cook, is famous among gourmets for inventing five
delicious dishes using
fresh horsemeat (stew, fricassee, kabob, etc.). Nobody knows Tom?s
secret recipes. Tired of
cooking, Tom gives the recipes to his daughter, Sophie, who puts them
in a bank vault for safekeeping.
A couple of years later, Sophie receives an offer from a cookbook
publisher to buy the
recipes for $5,000. Sophie accepts.
What are the tax consequences of these events to Tom and Sophie? Explain.
A quick and decisive solution (supported by some academics) to the
so-called marriage
penalty problem would be to require all individual taxpayers, married
or single, to file separate
tax returns.
Is that a good idea? Explain. |
