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- Ed borrowed $10,000 to purchase City of Valdosta bonds. This year, he received $600 in City of Valdosta Bond interest on the bonds purchased. He also paid $500 in interest on the $10,000 loan. How much of the interest on the loan is deductible?Betty borrowed $200,000 at an interest rate of 10% p.a. from XYZ bank to purchase the goodwill, premises, equipment and stock of a cookware shop. As security for the loan, she was required to mortgage her holiday home. Please discuss, with reference to case authority, whether the purchase of the goodwill, premises, equipment and stock would be deductible?Bran pays an adviser $1,000 to help manage his investments and provide investment advice. The adviser’s fee is not directly related to any particular investment owned by Bran. He owns $80,000 worth of municipal bonds that pay his $6,000 in interest and $20,000 worth of bonds that pay his taxable interest of $2,000. Determine the deductible investment expenses related to the $1,000 fee for investment advice. Use the relative investment income to allocate indirect expenses. $0 B. $250 C. $750 D. $800 E. $1,000
- Betty borrowed $200,000 at an interest rate of 10% p.a. from XYZ bank to purchase the goodwill, premises, equipment and stock of a cookware shop. As security for the loan, she was required to mortgage her holiday home. Please discuss whether the interest would be deductibleWally is employed as an executive with Pay More Incorporated. To entice Wally to work for Pay More, the corporation loaned him $25,000 at the beginning of the year at a simple interest rate of 1 percent. Wally would have paid interest of $3,000 this year if the interest rate on the loan had been set at the prevailing federal interest rate. Required: a. Wally used the funds as a down payment on a speedboat and repaid the $25,000 loan (including $250 of interest) at year-end. a-1. Does this loan result in any income to either party? a-2. Indicate the amount of income to either party that results from the loan. b. Assume instead that Pay More forgave the loan and interest on December 31. What amount of gross income does Wally recognize this year? Complete this question by entering your answers in the tabs below. Required A1 Required A2 Required B བིཀ Wally used the funds as a down payment on a speedboat and repaid the $25,000 loan (including $250 of interest) at year- end. Does this loan…Lorissa owes Waterbury State Bank $200,000. During the current year, she isunable to make the required payments on the loan and negotiates the followingterms to extinguish the debt. Lorissa transfers to Waterbury ownership ofinvestment property with a value of $90,000 and a basis of $55,000, and commonstock with a value of $50,000 and a basis of $70,000. Lorissa also pays Waterbury$5,000 cash, and Waterbury forgives the remaining amount of debt. Before theagreement, Lorissa's assets are $290,000, and her liabilities are $440,000.Determine how much gross income Lorissa has from the extinguishment of the debt.
- During the current year, Finn and Claire, a married couple who use the cash method of accounting purchased a principal residence for $325,000. They paid $39,000 down and financed the remaining $286,000 of the purchase price with a 30-year mortgage. At the closing, they also paid $350 for an appraisal, $425 for a title search, and 2.5 points representing additional interest over the term of the loan. At the end of the year, Finn and Claire received a statement from the mortgage company indicating that $11,500 of their total monthly payments made during the year represents interest and $1,100 is a reduction of the principal What is the total amount Finn and Claire may deduct in the current year arising from the purchase and ownership of their home? Finn and Claire may deduct . Part 2 b. What is the treatment of the other items that are not deductible? A. The other closing costs are added to the market value of the home. B. The other closing…Neils Bohr died with a receivable collectible from Ernest Rutherford. Ernest Rutherford has assets amounting to P400,000, and liabilities amounting to P1,000,000, and included among Ernest's liabilities is an obligation on unpaid taxes payable to the government amounting to P100,000. Neils also mortgaged his property to the bank in consideration for a loan worth P1,000,000. The property is worth P1,500,000. P300,000 of the loan was paid by Niels before her death. How much may Neils' estate claim as deduction for claims against insolvent persons? P100,000 P120,000 P180,000 P200,000Niels died with a receivable collectible from Ernest Rutherford. Ernest Rutherford has assets amounting to P400,000, and liabilities amounting to P1,000,000, and included among Ernest's liabilities is an obligation on unpaid taxes payable to the government amounting to P100,000. Neils also mortgaged his property to the bank in consideration for a loan worth P1,000,000. The property is worth P1,500,000. P300,000 of the loan was paid by Niels before her death. In relation to the mortgage, how much may be claimed as a deduction? P700,000 P1,000,000 P1,200,000 P1,500,000
- 28. John Jay paid interest expense of $12,000 on his personal residence original first mortgage this year and $5,000 on a $100,000 home equity credit line also secured by a mortgage on his home Half of the home equity credit line loan proceeds were used to put a new roof on the home and the other half was used to purchase a new car. Assuming the acquisition and home equity limits are not exceeded, how much of the total interest expense is deductible on John's Schedule A as qualified home mortgage interest? O$17,000 O$14,500. O$12,000 29 The Browns borrowed $30,000, secured by their home, to pay their son's college tuition. At the time of the loan, the fair market value of their home was $400,000, and it was unencumbered by other debt. The interest on the loan is treated for itemized deductions as ODeductible points. ONon-deductible home equity (mortgage) interest. ODeductible home equity (mortgage) interest.Helen Derby borrowed $150,000 to acquire a parcel of land to be held for investment purposes. During the current year, she reported AGI of $90,000 and paid interest of $12,000 on the loan. Other items related to Helen's investments include the following: Investment and annuity income $11,000 Long-term capital gain on sale of stock 3,500 Real estate tax on the investment land 800 Helen is unmarried, does not itemize her deductions and does not elect to treat the capital gain as investment income. Helen did not have a disallowed investment interest expense amount from the prior year. a. Helen's net investment income is s 10,200 V. Helen's investment interest expense deduction in the current year is 800 xWally is employed as an executive with Pay More Incorporated. To entice Wally to work for Pay More, the corporation loaned him $20,000 at the beginning of the year at a simple interest rate of 1 percent. Wally would have paid interest of $2,400 this year if the interest rate on the loan had been set at the prevailing federal interest rate. Required: Wally used the funds as a down payment on a speedboat and repaid the $20,000 loan (including $200 of interest) at year-end. a-1. Does this loan result in any income to either party? a-2. Indicate the amount below. Assume instead that Pay More forgave the loan and interest on December 31. What amount of gross income does Wally recognize this year?
