(2 points) Which of the following generally produces a taxable temporary difference in the year the activity occurs?

(4 points) On January 1, Ryan and James decided to open a Peruvian chicken restaurant (yum!). Ryan contributed the building and land for the restaurant that had a fair market value of $178,000 and adjusted tax basis of $128,000 for a 50 percent profits interest and capital interest. Ryan had a $35,000 business loan. James contributed $47,000 of cash for a 50 percent profits interest and capital interest. The new partnership relieves Ryan by taking on the loan. Should the partnership fail to pay the loan, the creditor is only able to claim potential future profits of the company but cannot go after the personal assets of either partner. The company uses a calendar year tax period. In the above scenario, what is the partnership’s inside basis on the restaurant and cash contributed?

(4 points) Regal Corporation assessed that $280,500 of its research tax credit on its current year tax return was uncertain, but that it was more likely than not to be sustained on audit. Management at Regal determined the following assessment of the company’s potential tax benefit from the credit and its probability of occurring. Potential Estimated Benefit Individual Probability of Occurring (%) Cumulative Probability of Occurring (%) $280,500 21% 21% 265,000 13 34 175,000 19 53 121,000  25 78 0 22 100   Based on the above scenario, what is the portion of the $325,000 credit that will be unrecognized (require a liability) for uncertain tax positions?

(4 points) Green Bank Corporation claimed $250,000 in Sec. 179 expense and $250,000 in bonus depreciation in 2024 and the following is the remaining basis for each asset purchased in 2024 after applying Sec. 179 and bonus depreciation: Desks and chairs purchased on March 15, remaining basis: $175,000. Computers purchased on April 3, remaining basis: $165,000. What is the total depreciation expense for the taxpayer in 2024?

(4 points) Total depreciation – A hotel purchased a new office desk on April 15, 2022 and new executive style chairs for the office on August 5, 2022. The office desk cost $1,200 and the chairs cost $2,400. Determine the total depreciation amount for 2024 assuming the taxpayer opted out of Sec. 179 and bonus (if available) in the year of purchase. In addition, assume all taxpayers use a calendar year tax period and that the property mentioned was the only property purchased in the year of acquisition. Use the appropriate depreciation table from your note sheet/textbook where necessary.

(4 points) Total depreciation – An accounting firm bought an office building on October 15, 2019, which cost $710,000. Determine the total depreciation amount for 2024 assuming the taxpayer opted out of Sec. 179 and bonus (if available) in the year of purchase. In addition, assume all taxpayers use a calendar year tax period and that the property mentioned was the only property purchased in the year of acquisition. Use the appropriate depreciation table from your note sheet/textbook where necessary.

Use the following tax structure to answer Part 1 and Part 2. Taxpayer Taxable Income Total Tax Chandler $80,000 $25,000 Monica $60,000 $25,000 Phoebe $35,000 $25,000 Joey $35,000 ? Rachel $60,000 $25,000 Ross $80,000 $25,000   For this system to be fair in terms of horizontal equity, how much tax should the tax system require Joey to pay? (4 points)

(3 points) Travis is single and works for Delta airlines as an accountant. For 2024, they paid him $117,500 in salary. In addition, Delta paid $7,800 for their portion of his medical and dental health insurance premiums, paid $570 for a group term life insurance policy for him, and paid $580 in employer contributions to his 401K. In addition to the above benefits he received during 2024 Travis had a number of major costs throughout the year. He paid $8,300 in mortgage interest on his personal residence and $2,800 in real estate taxes for the year. In addition, he paid $1,950 in professional dues (the AICPA dues, state CPA society dues, and local CPA chapter dues) and subscriptions to work publications that were not covered by his employer. Ignoring your answer in Parts 1 or 2 and instead assuming the total amount of itemized deductions Travis could claim was $19,050, will Travis choose to itemize or take the standard deduction?

Determining Gross Income (4 points): Stewart works for Toyota and earns a $48,200 salary each year. On the first day of 2024, his employer sold him an SUV at the same price it normally charges its customers, $41,500. Stewart purchased the car from Toyota with $12,050 in cash and a $29,450 car loan from Toyota’s Financial Services (TFS). Normally, TFS charges customers a 6.00% interest rate on car loans. However, because he was an employee, they gave him the loan charging only 2.00% interest rate instead, which he paid all throughout 2024. Determine the total recognizable gross income for Stewart in 2024.

Determining Gross Income (4 points): Marta and her ex-husband Robbie divorced in 2023. Since then, Marta has maintained custody over their son Michael, who is 14. Before the start of 2024, Robbie moved across town to a townhouse. Marta is a middle school teacher, and Robbie is dentist. Marta earned $39,500 for the year in salary, and Robbie earned $95,750 in salary. As part of the divorce agreement, Marta was able to keep the house, which they originally paid $210,000 for in 2014 for but is now worth $325,000 in 2024. In the divorce agreement, Robbie agreed to pay $25,800 per year in support of their child Michael. Determine the total recognizable gross income for Marta in 2024.