Individual Income Taxes
43rd Edition
ISBN: 9780357109731
Author: Hoffman
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Question
Chapter 7, Problem 16DQ
To determine
Identify the relevant tax issue for Person A.
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Galileo Lantanas, sole proprietor of GALLANT Enterprises, started business operations in 2019 as a non-VAT taxpayer. By the end of the year his sales exceeded P3,000,000 prompting him to register as a VAT taxpayer starting January 2020. The following information appeared in his records as of December 31, 2019:
Goods for sale (purchased from VAT suppliers)
Inventory value
P
120,000
Actual input tax paid
3,500
Supplies used in business (purchased from VAT suppliers)
Inventory value
P
65,000
Actual input tax paid
1,100
Goods and supplies (purchased from non-VAT suppliers)
Inventory value
P
35,000
Cost
30,000
For the month of January 2020, sales and purchases amounted to P650,000 and P330,000, respectively, VAT not yet included.
How much is the VAT payable as at January 31, 2020?
In 2021, Wilma Way’s sole proprietorship, WW Bookstore, generated $135,000 net profit. In addition, Wilma recognized a $6,500 Section 1231 gain on the sale of business furniture. The business checking account earned $450 interest income.
Required:
A. Which of these income items are subject to self-employment tax?
B. Compute Wilma’s 2021 self-employment tax, assuming Wilma has no other earned income.
C. Compute Wilma's allowable QBI deduction, assuming $55,000 of W-2 wages and $110,000 unadjusted basis of tangible depreciable property. Further assume the overall taxable income limitation on QBI does not apply and Wilma’s overall taxable income is sufficiently high that the W-2 wage limitation applies.
D. Compute the overall impact of the bookstore activity on Wilma’s 2021 taxable income.
Chanda is employed in a local accounting company (ABC accounting) that specialises in providing tax return to individuals. On 1st April, 2020 ABC provided a car for Chanda to use both for business and private purposes.
ABC Purchased the car on 1st January, 2020 for the amount of $28,000. During the year, repairs and maintenance costs amounted to $2,000. Chanda contributes $1,000 towards the cost.
Required:
Please calculate the fringe benefits taxable (FBT) amount for the car using the statutory method in this case for the FBT year 2020-2021.
Chapter 7 Solutions
Individual Income Taxes
Ch. 7 - Prob. 1DQCh. 7 - Prob. 2DQCh. 7 - Prob. 3DQCh. 7 - Prob. 4DQCh. 7 - Many years ago, Jack purchased 400shares of Canary...Ch. 7 - Scan is in the business of buying and selling...Ch. 7 - Prob. 7DQCh. 7 - Prob. 8DQCh. 7 - Prob. 9DQCh. 7 - Prob. 10DQ
Ch. 7 - Prob. 11DQCh. 7 - Prob. 12DQCh. 7 - Prob. 13DQCh. 7 - Prob. 14DQCh. 7 - Prob. 15DQCh. 7 - Prob. 16DQCh. 7 - Prob. 17DQCh. 7 - Prob. 18DQCh. 7 - Prob. 19DQCh. 7 - Prob. 20DQCh. 7 - Last year Aleshia identified 15,000 as a...Ch. 7 - Prob. 22CECh. 7 - Prob. 23CECh. 7 - Prob. 24CECh. 7 - Prob. 25CECh. 7 - Belinda was involved in a boating accident in...Ch. 7 - Prob. 27CECh. 7 - Prob. 28CECh. 7 - Prob. 29CECh. 7 - Phillis and Trey are married and file a joint tax...Ch. 7 - Emily, who is single, sustains an NOL of 7,800 in...Ch. 7 - Prob. 32PCh. 7 - Monty loaned his friend Ned 20,000 three years...Ch. 7 - Sally is in the business of purchasing accounts...Ch. 7 - Prob. 35PCh. 7 - Prob. 36PCh. 7 - Olaf lives in the state of Minnesota. In 2019, a...Ch. 7 - Prob. 38PCh. 7 - On July 24 of the current year, Sam Smith was...Ch. 7 - Prob. 40PCh. 7 - During 2019, Leisel, a single taxpayer, operates a...Ch. 7 - Prob. 42PCh. 7 - Prob. 43PCh. 7 - Xinran, who is married and files a joint return,...Ch. 7 - During 2019, Rick and his wife, Sara, had the...Ch. 7 - Soong, single and age 32, had the following items...Ch. 7 - Prob. 47PCh. 7 - Prob. 48PCh. 7 - Assume that in addition to the information in...Ch. 7 - Jed, age 55, is married with no children. During...Ch. 7 - Prob. 51CPCh. 7 - Mason Phillips, age 45, and his wife, Ruth, live...Ch. 7 - During 2019, John was the chief executive officer...Ch. 7 - Prob. 2RP
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