FINALS EXAM REVIEWER FOR INCOME TAX 211 PDF

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FINALS EXAM REVIEWER INTXQ Spartan Corporation had office supplies valued at 40,000 on January 1 2020. At the end of the first calendar quarter it had 80,000 worth of office supplies. Total supplies purchased were 250,000 during the period. Compute the supplies expense to be deducted during the firs...

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FI NALSEXAM REVI EWERI NTX Q11

1.Spar t anCor por at i onhadofficesuppl i esv al uedat40, 000onJanuar y12020.At t heendoft hefir stcal endarquar t eri thad80, 000wor t hofofficesuppl i es.Tot al suppl i es pur chased wer e 250, 000 dur i ng t he per i od.Comput et he suppl i es expenset obededuct eddur i ngt hefir stquar t er .210k 2.A nonr esi dental i en notengaged i n busi nessi ncur r ed busi nessexpensesof 100, 000 and per sonalexpensesof20, 000.How much i sexpense deduct i bl e f r om hi sgr ossi ncome?0 3. t axpayerpai dt hef ol l owi ngsal ar i esdur i ngt heyear : Sal ar i esofadmi ni st r at i v eempl oy ees

80, 000

Sal ar i es of sal es and mar k et i ng 70, 000 empl oy ees Sal ar i esoff act or ypr oduct i onwor k er s

120, 000

Comput et hededuct i bl es al ar yexpens e.150k 4.On Jul y 1 2018,a t axpay erpur c hased equi pmentf or500, 000 whi ch was est i mat ed t o be us ef ulunt i lJ ul y1 2023,wi t h an ex pect ed 100, 000 r es i dual v al ue.Comput et he 2018depr eci at i onexpens e us i ng t hest r ai ght l i ne met hod. 40k 5.OnSept ember302020,at axpay erbor r owed1mi l l i onat10% annuali nt er es tt o fi nancehi sacqui s i t i onofal uxur ycar .Comput et hededuc t i bl ei nt er es texpens e i n2020.0 6.Mr .Jun,apr of es si onalpr act i t i oner ,i nc ur r edt hef ol l owi ngexpens esdur i ngt he per i od:

Sal ar i esofhous ehol dmai ds Sal ar i esofoffic es t aff

50, 000 30, 000

Offic eut i l i t i es

12, 000

Offic esuppl i es

8, 000

Depr ec i at i onofper s onal car Depr ec i at i onofofficeequi pment

15, 000 20, 000

Comput et het ot al deduct i bl eexpens es .70k 7.At ax pay erpai d45, 000pr oper t yi ns ur ancehavi nga12mont hcov er agest ar t i ng Mar ch1,2018.Comput et hededuc t i bl ei ns ur anc eexpens ei n2018.37, 500 8.Dr agonci t ycor por at i oni sar es i dentf or ei gncor por at i ones t abl i s hedi nc hi nabut i soper at i ngi nt hePhi l i ppi nes .Dur i ngt hey eari tpai df or300, 000f orsal ar i esof Phi l i ppi ne empl oy ees and 1, 200, 000 f orChi nes e empl oy ees .Comput et he deduct i bl ecompens at i onex pense.300k 9.Ber muda I nc .I ns ur ed t o ofi t sk eyempl oy eespay i ng t he f ol l owi ng pr emi ums annual l y : Mr .Cr ock er ,t hepr es i dent

40, 000

Mr .J ani er o,t he vi ce pr esi dent f or 34, 000 oper at i ons I nMr .Cr ock er ' spol i cy ,Ber mudaI nc .i st hebenefic i ar y .I nMr .J ani er o' spol i c y ,hi swi f ei s t hebenefi c i ar yoft hepol i c y .Comput et het ot aldeduct i bl eexpens e.34k 10. Sapphi r eCi t yCor por at i oni sadomes t i ccor por at i onest abl i shedi nchi nabuti s oper at i ngi nt hePhi l i ppi nes.Dur i ngt hey eari tpai df or300, 000f ors al ar i esof Phi l i ppi ne empl oy ees and 1, 200, 000 f orChi nes e empl oy ees .Comput et he deduct i bl ecompens at i onex pense.1. 5M 11. Gol dCi t yCor por at i oni sanonr es i dentf or ei gncor por at i onest abl i shedi nchi na buti soper at i ngi nt hePhi l i ppi nes .Dur i ngt hey eari tpai df or300, 000f ors al ar i es ofPhi l i ppi ne empl oy eesand 1, 200, 000 f orChi nes e empl oy ees .Comput et he deduct i bl ecompens at i onex pense.0 12. At axpay erhadt hef ol l owi ngl oss esdur i ngt hey ear : Est i mat edbaddebt sexpens e

300, 000

Wr i t eoffofuncol l ect i bl eaccount s

150, 000

Car r yi ng v al ue ofpr oper t ydest r oy ed by fi r e( t he pr oper t yi scov er ed by 1, 200, 000 i ns ur ance) Unr eal i z edl os sonf or ei gnc ur r encyr ecei v abl es

12, 000

As sumi ngt het ax pay eri sundert hecashbas i s,comput et het ot al deduct i on.0 13. Abccompanyi ncur r edandpai dt hef ol l owi ngex pensesi n2020: Sal ar i es( 1/ 8unpai d)

400, 000

Pr epai dr ent( 2020t o2022)150, 000

Depr ec i at i onex pense

80, 000

Pur c haseofsuppl i es

60, 000

Suppl i esused

25, 000

Comput et het ot al deduct i onsundert heaccr ualbas i sf ort hey ear2020.555k 14. Cat al an Cor por at i on boughtequi pmentcos t i ng 500, 000.The equi pmentwas expect edt ohav e50, 000r es i dualv al ueatt heendofi t s5y earex pect edl i f e,but t heyf ai l edt owi t hhol dt hecr edi t abl ewi t hhol di ngt axont heequi pment .Comput e t hedepr ec i at i onex pensei nt hefir s ty ear .0 15. At axpay erpayt hef ol l owi ngdi s bur s ement sandexpensesf ort hecur r enty ear : Tui t i onf eesofchi l dr en

50, 000

Donat i ont of r i ends

20, 000

Pur c haseofofficeequi pmentats t ar tof t hey ear( equi pmentexpect edt ol astf or100, 000 5y ear s) Offic er ent( f ort hr eey ear si nc l udi ngt he 90, 000 c ur r enty ear ) Offic esuppl i es( 1/ 2us ed)

20, 000

Comput et het ot al deduct i bl eexpens ef r om t heabov ei t ems .60k 16. ThorSemi c onduct ori s an ex por t eroft r ans i s t or st ot he uni t ed s t at es.On December152019i tmadeas i ngl es hi pmentwor t h$1, 000, 000pay abl eJanuar y 212020.Thev al ueoft hesal esi npesoequi v al entwasasf ol l ows : Dec ember152019

42, 000, 000

Dec ember312019

41, 800, 000

J anuar y212020

41, 700, 000

Comput et hededuct i bl ef or ei gnc ur r enc yl oss .300ki n2020

17. Theper s onal caroft het ax pay erhadt hef ol l owi ngdat a Fai rmar k etv al ue

6, 000, 000

Pur c hasepr i ce

5, 000, 000

Est i mat edusef ul l i f e

10y ear s

0

18. Thet ax pay eri ncur r edt hef ol l owi ngi n2020: Loss on s al e of equi pment t o a 400, 000 s ubsi di ar ycompany Loss on sal e ofequi pmentt o a si st er 100, 000 company Loss on l i qui dat i on of an affil i at e 200, 000 company Whati st hededuct i bl eamountofl ostt oar el at edpar t y ?200k 19. The account ant of Tr i ni t y Cor por at i on pr ovi des f or an al l owanc e agai ns t unr ecov er abl e account s equi v al entt o 3% ofTr i ni t y' st ot alr ec ei v abl es .The al l owancef orbaddebt shadabal anceof45, 000and50, 000att hes t ar tandend oft hey ear ,r es pect i v el y ,whi l e30, 000ofpr ev i ousaccount swer eact ual l yf oundt o bewor t hl essandwer ewr i t t enoff.Whati st hededuct i onagai nstgr ossi ncomef or pur posesoft ax at i on?30k 20. Abccompanyi ncur r edandpai dt hef ol l owi ngex pensesi n2020: Sal ar i es( 1/ 8unpai d)

400, 000

Pr epai dr ent( 2020t o2022)

150, 000

Depr ec i at i onex pense

80, 000

Pur c haseofsuppl i es

60, 000

Suppl i esused

25, 000

Comput et het ot al deduct i onsundert hecas hbasi sf ort hey ear2020.505k 21. Thef ol l owi ngr el at et oat r ansact i onbet weenas soc i at edent er pr i seswhi chwas s ubj ect edt ot r ans f erpr i ci ngors t at ementbyt heBI R. Amountofex pens ec l ai med

800, 000

Ar m' s l engt h v al ue i n compar abl e 500, 000 t r ans act i ons

Whati st hededuct i bl eamountofexpense ?500k

22. At axpay erhadt hef ol l owi ngl oss esdur i ngt hey ear : Est i mat edbaddebt sexpens e

300, 000

Wr i t eoffofuncol l ect i bl eaccount s

150, 000

Car r yi ngv al ueofpr oper t ydes t r oy edby fi r e ( t he pr oper t y i s cov er ed b 1 y , 200, 000 i ns ur ance) Unr eal i z ed l os s on f or ei gn c ur r enc y 12, 000 r ecei v abl es

As sumi ngt het ax pay eri sundert heaccr ualbas i s ,comput et het ot al deduct i on.150k 23. Bar neycompanyhadt hef ol l owi ngs ummar i esofexpens es : Ex pens eswi t houtsuppor t i ngdocument at i on

200, 000

Ex pens eswi t hsuppor t i ngdocument at i on I ncomepayment ss ubj ectt oc r edi t abl ewi t hhol di ngt ax : Wi t hwi t hhel dCWT

600, 000

Wi t houtwi t hhel dCWT

400, 000

Pay ment snotsubj ectt oc r edi t abl ewi t hhol di ngt ax Det er mi net heamountofdeduc t i ons.800k 24. Thef ol l owi ngr el at et ot hebui l di ngofat ax pay er Fai rmar k etv al ue

6, 000, 000

Pur c hasepr i ce

5, 000, 000

Car r yi ngamount

4, 500, 000

Remai ni ngus ef ul l i f e

9y ear s

Depr ec i at i onmet hod

St r ai ghtl i ne

200, 000

Whati st hededuct i bl eamountofdepr ec i at i onexpens e ?500k 25. Thef ol l owi ngr el at et oat r ansact i onbet weenas soc i at edent er pr i seswhi chwas s ubj ect edt ot r ans f erpr i ci ngors t at ementbyt heBI R. Amountofex pens ec l ai med

800, 000

Ar m' sl engt hv al uei nc ompar abl et r ansac t i ons500, 000 Whati st her equi r edadj us t mentt ot ax abl eneti ncome?300ki ncr eas e 26. A cer t ai nt axpay erpai dt hef ol l owi ngbi l lf r om aVATr egi st er edsuppl i erofoffice s uppl i es .Theofficesuppl i eswer eal lus edi noper at i ondur i ngt heper i od: Sel l i ngpr i ce

400, 000

Pl us :out putv at

48, 000

Les s:wi t hhol di ngt ax( 1%)

4, 000

Netc ashdue

444, 000

Whati st hededuct i bl esuppl i esexpens eass umi ngt het axpay eri saVAT t ax pay er ? 400k 27. Thef ol l owi ngr el at et ot hei nv ent or yoft ool shel dbyt het ax pay er I nv ent or yoft ool s ,Januar y1,2019

120, 000

Pur c hasesoft ool s

300, 000

I nv ent or yoft ool s ,December31,2019 140, 000 Whati st heamountofdeduct i bl et ool sexpens e ?280k 28. OnJanuar y2,2019,anonv att axpay erpur chaseandequi pmentwi t hest i mat ed us ef ul l i f eof5y ear s. Sel l i ngpr i ce

150, 000

Pl us :out putv at

18, 000

Les s:wi t hhol di ngt ax( 1%)

1, 500

Netamountdue

166, 500

Whati st hec l ai mabl edepr ec i at i onex pensef ort hey ear ?33, 600 29. As t or mr es ul t edi nt hel ossoft hef ol l owi ngl i v est ock : Val ue of t wo hei f er s( pur chas ed at 40, 000 15, 000each)

Val ueofabul l ( pur chas edf or18, 000) 24, 000 Val ueof12c al v eswor t h6, 000eac h

72, 000

Tot al v al ueofl os tl i v es t oc k

136, 000

Det er mi net hededuct i bl el os sf ort ax at i onpur poses .48k

30. As t or mr es ul t edi nt hel ossoft hef ol l owi ngl i v est ock : Val ue of t wo hei f er s( pur chas ed at 40, 000 15, 000each) Val ueofabul l ( pur chas edf or18, 000) 24, 000 Val ueof12c al v eswor t h6, 000eac h

72, 000

Tot al v al ueofl os tl i v es t oc k

136, 000

Det er mi net hededuct i bl el os sf ort ax at i onpur poses .112k Q13. 1.Rankandfil eempl oy eesmaybesubj ectt of r i ngebenefitt ax .F 2.Fr i ngebenefit sar eal way ssubj ectt of r i ngebenefi tt ax .F 3.Theper s onal expens esoft heempl oy eesshoul der edbyt heempl oy erar ef r i ngebenefit s . T

4.Manager i alorsuper v i sor yempl oy eesar es ubj ec tt of r i ngebenefi tt ax .T 5.Thet axbas eoft hef r i ngebenefi tt axi st hegr os sedupmonet ar yv al ueoft hef r i nge benefi t .T

6.Thef r i ngebenefi tt axi sac r edi t abl ewi t hhol di ngt axpr es umedt ohav ebeenwi t hhel dat s our cebyt heempl oy erf r om t hef r i ngebenefit sofs uper vi sor yormanager i alempl oy ees . F

7.Thet ax abl ef r i ngebenefits ubj ectt ot hef r i ngebenefitt axi st heex cessoft hedemi ni mi s benefi t sov er90, 000.F

8.Hal foft he benefit st hatar e neces sar yt ot he t r ade oft he empl oy er ' s busi nes s ar e s ubj ectt of r i ngebenefitt ax .F

9.Benefit si nt hef or m ofpr oper t i est r ans f er r edt ot henameoft heempl oy eear es ubj ectt o f r i ngebenefitt axi nf ul l .T

10. Benefi t spr ov i dedbyt heempl oy erf orhi sconv eni encear eex emptf r om f r i ngebenefi t t ax .T

11. Theannualdepr ec i at i onv al ueofar ealpr oper t yi spr esumedt obe10% oft hev al ueof t hepr oper t y .F

12. Themonet ar yv al ueofbenefit sgi v eni ncas hi st hecashpai d.T 13. Themonet ar yv al ueofbenefit sgi v eni nk i ndi s100% oft hev al ueoft hepr oper t ygi v en. T

14. Themonet ar yv al ueoff r i ngebenefit si nt hef or m off r eeusageofpr oper t yi s50% oft he r ent alordepr eci at i onv al ueoft hepr oper t y .T

15. Empl oy eebenefi t sar eempl oy eeexpens ebynat ur et hatar epai dbyt heempl oy er .F 16. Whent i t l eov erpr oper t yi st r ans f er r ed,t hemonet ar yv al uest hef ai rv al ueoft hepr oper t y gi v en.T

17. Whent heempl oy erl eas esahouseandl otast heusualr esi denceoft hes uper vi sor yor manager i al empl oy ee,t hemonet ar yv al ueoft hebenefiti s50% oft her ent alpayment s .T

18. Theexpens esoff ami l ymember soft heempl oy eeshoul der edbyt heempl oy ercons t i t ut e t ax abl ef r i ngebenefi ti nf ul l .T t h mont hpay 19. Whi chi snotpar tofdemi ni mi sbenefi t s ?1 3

20. Demi ni mi sbenefi t snotex ceedi ngt het hr es hol dar e.Ex emptf r om i ncomet ax 21. Sel ectt heans werwhi chmor eacc ur at el ycompl et est hest at ement .Thet ax abl ef r i nge benefi tofas uper v i sor yempl oy eei s .Subj ectt of r i ngebenefi tt ax

22. Whoi ss ubj ec tt of r i ngebenefi tt ax ?Manager i al orsuper v i s or yempl oy ees 23. Whi choft hesei t emsi ssubj ectt of r i ngebenefitt ax ? Fr i ngebenefitofmanager i al . . 24. Thef r i ngebenefi tt axbynat ur ei s .Fi nalt ax 25. Whi chst at ementi scor r ect ?Theper sonalex pens esofmanager i al orsuper v i sor yempl oy ee s houl der edbyt heempl oy erorsubj ec tt of r i ngebenefi tt ax

26. Asar ul e,hy br i dex pens esar epr es umed.50% f r i ngebenefi t 27. Whi choft hef ol l owi ngphr asesi snotanex empt i onc r i t er i onf orpur pos esoft hef r i nge benefi tt ax ?Fort hef ur t her anc eoft heempl oy er ' sbusi ness

28. Whatper cent ageoft hedepr ec i at i onv al uei scons i der edf r i ngebenefi ti nt hef r eeus age ofempl oy er sr eal pr oper t i es ?50%

29. Whenf r i ngebenefi ti si nt hef or m off r eeus eofr ealpr oper t yus e,whatper cent ageof t hei rf ai rv al ueoft hepr oper t yi scons i der edf r i ngebenefi t ?5%

30. Whenf r i ngebenefiti si nt hef or m off r eeuseofper sonal pr oper t i es,whi chper cent ageof depr eci at i onv al ueoft hepr oper t yi scons i der edf r i ngebenefi t s ?50%

31. Whenf r i ngebenefiti si nt hef or m off r eeuseofper sonal pr oper t i es,whi chper cent ageof depr eci at i onv al ueoft hepr oper t yi scons i der edf r i ngebenefi t s ?100%

32. Whenf r i ngebenefiti si nt hef or m off r eeuseofper sonal pr oper t i es,whi chper cent ageof depr eci at i onv al ueoft hepr oper t yi scons i der edf r i ngebenefi t s ?20%

33. Forpur poses ofcomput i ng t he annualv al ue oft he benefi t si nv ol vi ng f r ee use of i mmov abl epr oper t i es ,whatper cent ageoft hev al ueoft hepr oper t yi sused?5%

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