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. backside Smith appraise issues: a. How is the $300,000 treated for purposes of Federal measure income? It is habitual income. b. How is the $25,000 treated for purposes of Federal impose income? It would be ordinary income. c. What is your expiration regarding reducing the valuateable amount of income for both (a) and (b) above? They could set up retirement plans or buy note equipment to victimisation expenses. 2. Jane Smith tax issues: a. What are the different tax consequences amongst remunerative(a) down the owe (debt) and assuming a wise mortgage (debt) for Federal income tax purposes? You get a import for returning 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(prenomina l) house using surplus money from Johns case? No. A 1031 only would be viable for business property. Not their in-person residence. c. Does Jane have a business or hobby? why is this distinction important? If there is a loss it burn not be indite off if it is a hobby. d.

Would Jane (and John) examine better tax benefits if she had a break open business for her jewelry making activities? Yes. She may not have to pay self employment taxes if she incorporated and nonrecreational a wage. However, she would deficiency to pay taxes on a salary. e. What tax benefits would John insure if he invested $15,000 in Janes jewelry making? Nothing. However, he could write it off if t! he investment became worthless. f. Can Jane depreciate her fomite or jewelry making equipment? How? Yes. It is business equipment. However, she will contend 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, club it on our website: BestEssayCheap.com

If you want to get a full essay, visit our page: cheap essay