1.What limits exist on the deductibility of executive compensation? Do the limits apply to all types of business entities? Are there any exceptions to the limitations? Explain.
2.Hank was transferred from Arizona to North Dakota on March 1 of the current year. He immediately put his home in Phoenix up for rent. The home was rented May 1 to November 30 and was vacant during the month of December. It was rented again on January 1 for six months. What expenses related to the home, if any, can Hank deduct on his return? Which deductions are for AGI, and which ones are from AGI?
3.Vella owns and operates an illegal gambling establishment. In connection with this activity, he has the following expenses during the year: Rent $ 24,000 Bribes 40,000 Travel expenses 4,000 Utilities 18,000 Wages 230,000 Payroll taxes 13,800 Property insurance 1,600 Illegal kickbacks 22,000 What are Vella’s total deductible expenses for tax purposes?
4.A list of the items that Faith sold and the losses she incurred during the current tax year is as follows: Yellow, Inc. stock $ 1,600 Faith’s personal use SUV 8,000 Faith’s personal residence 10,000 City of Newburyport bonds 900 She also had a theft loss of $1,500 on her uninsured business use car. Calculate Faith’s deductible losses.
5.During the year (not a leap year), Anna rented her vacation home for 30 days, used it personally for 20 days, and left it vacant for 315 days. She had the following income and expenses: Compute Anna’s net rent income or loss and the amounts she can itemize on her tax return, using the court’s approach to allocating property taxes and interest. How would your answer in part (a) differ using the IRS’s method of allocating property taxes and interest?
Please complete the assigned problems using MS-Excel.