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LO.2 Tim is the vice president of western operations for Maroon Oil Company and is stationed in San Francisco. He is required to live in an employer-owned home, which is three blocks from his company office. The company-provided home is equipped with high-speed internet access and several telephone lines. Tim receives telephone calls and e-mails that require immediate attention any time of day or night because the company’s business is spread all over the world. A full-time administrative assistant resides in the house to assist Tim with the urgent business matters. Tim often uses the home for entertaining customers, suppliers, and employees. The fair market value of comparable housing is $9,000 per month. Tim is also provided with free parking at his company’s office. The value of the parking is $355 per month. Calculate the amount associated with the company-provided housing and free parking that Tim must include in his gross income for 2019.
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Chapter 5 Solutions
Individual Income Taxes
- Denis Frederick owns Never Leak, Inc., which is a small plumbing supply company that employs 16 workmen who perform plumbing tasks and 3 office staff. One of the office staff is John Higgins who has been with the company since it opened its doors. During that time, he has earned the trust of the owner and has proven to be a diligent employee who often works late, occasionally comes in on weekend for no additional pay, and hasn't taken a substantial vacation in over 10 years. Instead, he staggers his vacation days throughout the year to avoid the need for a replacement and ensuring that none of the other office staff is burdened with his work. John's primary tasks include: Responsible for POS cash and credit sales; Bills the customers who purchase on credit; Opens the mail and posts to AR records; and Prepares the daily cash deposits for the business. Another office worker, Larry Jones, handles ordering inventory and supplies from vendors, stocking, shipping merchandise, updating…arrow_forwardOur client performs bookkeeping work for her clients. She performs most of her client work at the client's office. She has about ten clients and spends about 4 hours per client each week at the client's office. She also has a dedicated office at her home where she does all of her administrative work for her business. The administrative work she performs is at her home office to include billing, record keeping, and training. Area of her home used for business - 500 square feet 5,000 square feet Total area of home Annual indirect costs o Gross income from business $100,000 o Deductible mortgage interest $25,000 o Real estate taxes $1,500 o Utilities $2,500 Ignore depreciation for this assignment. Questions: 6. Does the IRS provide a publication on this topic? If so, please cite. Do not attach the publication as support for this memorandum.arrow_forwardPT. Alakishia has been operating in Jakarta for more than 10 years. Aries is one of the employees who is responsible for recording transactions in the purchasing department when ordering raw materials from suppliers. Once, Wilson as the party who made the payments and received the invoices, resigned from the office, so for the moment everything was in Aries' charge. Jenni as COO of PT. Alakitashia really trusts Aries because by seeing the contribution of Aries for a long time, it is also due to the close friendship between them, thus leaving the work entirely and the internal control to Aries itself. This has caused a lack of segregation of duties, so that since it was fully managed by Aries, the number of purchases has increased and it can be seen how the expenses are higher than before, so it is feared that fraud could occur. In addition, Aries has also collaborated with all suppliers and the production department to harmonize the transaction record in the form of the number of units…arrow_forward
- PT. Alakishia has been operating in Jakarta for more than 10 years. Aries is one of the employees who is responsible for recording transactions in the purchasing department when ordering raw materials from suppliers. Once, Wilson as the party who made the payments and received the invoices, resigned from the office, so for the moment everything was in Aries' charge. Jenni as COO of PT. Alakitashia really trusts Aries because by seeing the contribution of Aries for a long time, it is also due to the close friendship between them, thus leaving the work entirely and the internal control to Aries itself. This has caused a lack of segregation of duties, so that since it was fully managed by Aries, the number of purchases has increased and it can be seen how the expenses are higher than before, so it is feared that fraud could occur. In addition, Aries has also collaborated with all suppliers and the production department to harmonize the transaction record in the form of the number of units…arrow_forwardSarat Sethi, a professional criminal, took a job as a mail room clerk at Benson & Abernathyand Company, a large department store. The mail room was an extremely hectic workenvironment consisting of a supervisor and 45 clerks. The clerks were responsible forhandling promotional mailings, catalogs, and interoffice mail, as well as receiving anddistributing a wide range of outside correspondence to various internal departments.One of Sethi’s jobs was to open cash receipts envelopes from customers making paymentson their credit card balances. He separated the remittance advices (the bills) and thechecks into two piles. He then sent remittance advices to the accounts receivabledepartment, where the customer accounts were updated to reflect the payment. He sentthe checks to the cash receipts department, where they were recorded in the cash journaland then deposited in the bank. Batch totals of cash received and accounts receivableupdated were reconciled each night to ensure that…arrow_forwardIris Plant owns and operates three floral shops in Magnolia, Texas. The accounting functions are performed manually. Each of the shops has a manager who oversees the cash receipts and purchasing functions for the shop. A clerk at the central shop pays all the bills and also prepares payroll checks and maintains the general journal. Iris is seriously considering switching to a computerized system. With so many information system packages on the market, Iris is overwhelmed. Advise Iris as to which business modules you think her organization could find beneficial. Discuss advantages, disadvantages, and internal control issues.arrow_forward
- PT. Alakishia has been operating in Jakarta for more than 10 years. Aries is one of the employeeswho is responsible for recording transactions in the purchasing department when ordering rawmaterials from suppliers. Once, Wilson as the party who made the payments and received theinvoices, resigned from the office, so for the moment everything was in Aries' charge. Jenni asCOO of PT. Alakitashia really trusts Aries because by seeing the contribution of Aries for a longtime, it is also due to the close friendship between them, thus leaving the work entirely and theinternal control to Aries itself. This has caused a lack of segregation of duties, so that since itwas fully managed by Aries, the number of purchases has increased and it can be seen how theexpenses are higher than before, so it is feared that fraud could occur. In addition, Aries has alsocollaborated with all suppliers and the production department to harmonize the transaction recordin the form of the number of units of goods…arrow_forward> Mary Tan is the controller for Duck Associates, a property management company in Portland, Oregon. Each year, Tan and payroll clerk Toby Stock meet with the external auditors about payroll accounting. This year, the auditors suggest that Tan consider outsourcing Duck Associates's payroll accounting to a company specializing in payroll processing services. This would allow Tan and her staff to focus on their primary responsibility: accounting for the properties under management. At present, payroll requires 1.5 employee positions-payroll clerk Toby Stock and a bookkeeper who spends half her time entering payroll data in the system. meniups/l Tan considers this suggestion, and she lists the following items relating to out- sourcing payroll accounting: a. The current payroll software that was purchased for $4,000 three years ago would not be needed if payroll processing were outsourced. b. uck Associates's bookkeeper would spend half her time preparing the weekly payroll input form that…arrow_forwardFor the past 11 years, Elaine Wright has been an employee of the Star-Bright Electrical Supply store. Elaine is a very diligent employee who rarely calls in sick and staggers her vacation days throughout the year so that no one else gets bogged down with her tasks for more than one day. Star-Bright is a small store that employs only four people other than the owner. The owner and one of the employees help customers with their electrical needs. One of the employees handles all receiving, stocking, and shipping of merchandise.Another employee handles the purchasing, payroll, general ledger, inventory, and AP functions. Elaine handles all of the point-of-sale cash receipts and prepares the daily deposits for the business. Furthermore, Elaine opens the mail and deposits all cash receipts (about 30 percent of the total daily cash receipts). Elaine also keeps the AR records and bills the customers who purchase on credit.Point out any control weaknesses you see in the scenario. List some…arrow_forward
- James, your big brother just graduated with a second class degree in software engineering. He has been employed by Total Ghana. On the first day of work, as part of his orientation, he was introduced as the new manager in charge of the fleet management software department. During lunch time he had a call from your mum about his new job. James told mum he is the manager of fleet management software department. Your mum called you on phone and asked you to explain the following: (i) who is a manager? (ii). what are his functions? (iii) are the any levels?arrow_forwardMary Tan is the controller for Duck Associates, a property management company in Portland, Oregon. Each year, Tan and payroll clerk Toby Stock meet with the external auditors about payroll accounting. This year, the auditors suggest that Tan consider outsourcing Duck Associates' payroll accounting to a company specializing in payroll processing services. This would allow Tan and her staff to focus on their primary responsibility: accounting for the properties under management. At present, payroll requires 1.5 employee positions—payroll clerk Toby Stock and a bookkeeper who spends half her time entering payroll data in the system. Tan considers this suggestion, and she lists the following items relating to outsourcing payroll accounting: The current payroll software that was purchased for $4,000 three years ago would not be needed if payroll processing were outsourced. Duck Associates' bookkeeper would spend half her time preparing the weekly payroll input form that is given to the…arrow_forwardMary Tan is the controller for Duck Associates, a property management company in Portland, Oregon. Each year, Tan and payroll clerk Toby Stock meet with the external auditors about payroll accounting. This year, the auditors suggest that Tan consider outsourcing Duck Associates’ payroll accounting to a company specializing in payroll processing services. This would allow Tan and her staff to focus on their primary responsibility: accounting for the properties under management. At present, payroll requires 1.5 employee positions: payroll clerk Toby Stock and a bookkeeper who spends half her time entering payroll data in the system. Tan considers this suggestion, and she lists the following items relating to outsourcing payroll accounting: a. The current payroll software that was purchased for $4,000 three years ago would not be needed if payroll processing were outsourced. b. Duck Associates’ bookkeeper would spend half her time preparing the weekly payroll input form that is…arrow_forward
- Individual Income TaxesAccountingISBN:9780357109731Author:HoffmanPublisher:CENGAGE LEARNING - CONSIGNMENT
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