Federal Taxation

All the information is not provided in the question. I am assuming the $300,000 is the lawyers income from his trade and the $25,000 is his wife`s jewelry concern. 1. croupe Smith appraise issues: a. How is the $300,000 treated for purposes of Federal levy income? It is world(a) income. b. How is the $25,000 treated for purposes of Federal appraise income? It would be ordinary income. c. What is your closure regarding reducing the revenueable amount of income for both (a) and (b) above? They could constitute up retirement plans or buy moving in equipment to phylogeny expenses. 2. Jane Smith tax issues: a. What are the different tax consequences amongst salaried down the mortgage (debt) and assuming a wise mortgage (debt) for Federal income tax purposes? You get a import for stipendiary the interest. Assuming a mortgage has no federal tax consequences. b. git rear and Jane Smith utilize a 1031 tax exchange to buy a more(prenominal) big-ticket(prenomin al) house using excess money from Johns case? No. A 1031 only would be viable for business property. Not their private residence. c. Does Jane have a business or hobby? why is this distinction important? If there is a loss it poop not be indite off if it is a hobby. d.

Would Jane (and John) commit better tax benefits if she had a break open business for her jewelry making activities? Yes. She may not have to allowance self employment taxes if she incorporated and nonrecreational a wage. However, she would consume to pay taxes on a salary. e. What tax benefits would John recognize if he invested $15,00 0 in Janes jewelry making? Nothing. However,! he could write it off if the investment became worthless. f. Can Jane depreciate her fomite or jewelry making equipment? How? Yes. It is business equipment. However, she will necessitate to document the business use of the vehicle. 3. John and Jane Smith tax issue: a. Should John and Jane file separate tax returns or jointly? No. Typically, married individuals more tax benefits by filing jointly.If you want to get a full essay, bon ton it on our website: BestEssayCheap.com

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