Tax 5015 (Spring 2011) – Chapter Review Exercise #7

Topic:Distinguishing a hobby from a business, explaining how legislation and case laws determines whether an activity is a business or hobby. Further to make a comment on the impact of a determination by the ATO on whether a taxpayer’s activity is actually a business.

Section 152(a) provides that for a taxpayer to take a dependency exemption, the potential dependent must satisfy either the qualifying child requirement or the qualifying relative requirement. Section 152(b)(2) indicates that the taxpayer is not permitted a dependency exemption for a married dependent if the married individual files a joint return. Pursuant to section 152(c), the term “qualifying child” refers to an individual who has not furnished over one-half of his or her own support and who has not attained the age of 19 or who has not attained the age of 24, if a full-time student, as of the close of such calendar year. The term “qualifying relative” under section 152(d) includes, but is not limited to, an individual whose gross income is less than the exemption amount and to whom the taxpayer provides over-half of the total individual’s support for the calendar year in which such taxable year begins. Under Reg. Sec. 1.152 (a), support received from the taxpayer is compared to the entire amount of support which the potential dependent received from all sources, including support which the individual supplied himself. Support includes food, shelter, medical and dental care, education, recreation,

Write an APA-formatted response of no more than 200 words for each the following questions:

The question at hand is whether or not the brief exchange held between Jay and Emma led to the formation of a legally binding business entity. Now of all the different entity options available, the only viable option this exchange could possibly represent is that of a general partnership. A general partnership is relatively easy to form and doesn’t necessary look at the intentions of the individuals to form a partnership, but rather their actions. So as long there is a desire to carry on a business as co-owners for profit, there really is no other formal requirement involved in forming a legally recognizable partnership.

Jill (45,000 – 500 – 2000 * 75%, yr1/ 134,500 – 1,000 – 2,500 * 75%,

CHAPTER 21 PARTNERSHIPS SOLUTIONS TO PROBLEM MATERIALS | | | | |Status: | Q/P | |Question/ |Learning | | |Present |in Prior | |Problem |Objective |Topic | |Edition |Edition | | | | | | | | | | | | 1 LO 1 Partnership definition New 2 LO 2 General partnership versus LLC New 3

Peaceful Pastures Funeral Home Inc. is an accrual basis taxpayer who sells prepaid goods and services to clients that will be provided for them at the time of their death. Goods and services are refundable upon the purchasers request at any time until the contracts are fulfilled. Peaceful Pastures Funeral Home Incorporated is in need of determining the period of recognition for income provide from a prepaid service for which they are an accrual basis taxpayer.

1. All distributions (excluding reasonable salary) to Paula and Mary will be taxed as dividends to them. And the corporation could not deduct this part of distribution.

A 1099C form is issued as a cancellation of debt. Amounts incurred in dealing with a delinquency and foreclosure, such as attorney fees, etc., are added to the debt under the terms of the Note and Mortgage executed at closing.

. (TCO 2) Barry owns a 30% interest in a partnership that earned $300,000 this year. He also owns 30% of the stock in a C corporation that earned $300,000 during the year. The partnership did not make any distributions, and the corporation did not pay any dividends. How much income must Barry report from these businesses? (Points : 2)

Basing my around the Unit 2 video engager, my advise towards my companions situation would be to take the job that pays more. This advise is based upon tax breaks specifically. If you are able to take advantage if government tax incentives then you become eligible for a tax break. During the video engager, it states that “We [the United States] include tax breaks for charitable donations or retirement savings to encourage people to donate or save. We offer an earned income tax credit for those who work but don 't make very much money to encourage them to keep working rather than relying on assistance”(Unit 2 Video Engager). Tax breaks, which is a marginal reduction of your taxes, makes the higher income more advantageous. The improved income looks better after a tax break, because you are likely to take away more cash than you were prior to the promotion even if you 're participating in the same tax break system. This only works if the friend is willing and able to take advantage of the government issued incentives, failing to do so would cause him to receive less of a salary after the taxes from the new bracket are applied to his paycheck. Marginal Tax rates are an efficient way to allow people to pay different amounts of taxes based upon their income, but do not force the tax payer to receive less currency based upon their tax bracket. The first X dollars is taxed at one percentage and the amount over it is taxed at another percent and is added

To identify if “The Money Doctors” is a partnership and if so, who are the partners of the business.

The business will be run under a limited liability partnership, the partners will include; Rebecca Dent, Daniel Frisk, Rylee Kane, Louis Duncan, Leah Searfoss, and Eric Shellock. Our team of consultants will provide skill and direction in key areas. This board consists of

According to Jones (2011) a joint ventures is a “strategic alliance among two or more organizations that agree to establish and share the ownership jointly of a

(2000, p. 6) a joint venture is a “business partnership in which two or more companies agree to invest […] in a particular business activity. The main purpose of many join ventures is to create a strategic alliance between separate companies with common interests and complementary skills or experience.”