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(1 point). For the following scenario, determine the dollar amount of book-tax difference (if any) written as a positive number. Ramco Tooling purchased new equipment on January 1, Year 1 for $97,500. In Year 1, Ramco took $27,000 in Sec. 179 expense on the equipment and $15,000 in bonus depreciation on the equipment. In addition, it took $21,000 in regular MACRS depreciation on the equipment in Year 1. For book purposes, Ramco estimates the useful life of the equipment is 10 years and uses straight-line depreciation.

(4 points) Total depreciation – A dentistry office purchased a new computer for the reception desk on February 5, 2024 and a new set of bookshelves (considered office furniture) for the dentist office’s front entryway on November 5, 2024. The computer and bookshelves each cost $3,100. Determine the total depreciation amount for 2024 assuming the taxpayer opted out of Sec. 179 and bonus (if available) in the year of purchase. In addition, assume all taxpayers use a calendar year tax period and that the property mentioned was the only property purchased in the year of acquisition. Use the appropriate depreciation table from your note sheet/textbook where necessary.

(4 points) Total depreciation – A hotel purchased a new office desk on April 15, 2022 and new executive style chairs for the office on August 5, 2022. The office desk cost $1,200 and the chairs cost $2,400. Determine the total depreciation amount for 2024 assuming the taxpayer opted out of Sec. 179 and bonus (if available) in the year of purchase. In addition, assume all taxpayers use a calendar year tax period and that the property mentioned was the only property purchased in the year of acquisition. Use the appropriate depreciation table from your note sheet/textbook where necessary.

(1 point). For the following scenario, determine the dollar amount of book-tax difference (if any) written as a positive number. Patriot Construction Co. received $11,500 in interest income on a municipal bond it holds for the city of Falls Church during the year.

(1 point) Cost Recovery Methods – What cost recovery method (if any) should be used for costs from the purchase of a patent?

(1 point) Cost Recovery Methods – What cost recovery method (if any) should be used for costs to extract oil and gas?

(3 points) Travis is single and works for Delta airlines as an accountant. For 2024, they paid him $117,500 in salary. In addition, Delta paid $7,800 for their portion of his medical and dental health insurance premiums, paid $570 for a group term life insurance policy for him, and paid $580 in employer contributions to his 401K. In addition to the above benefits he received during 2024 Travis had a number of major costs throughout the year. He paid $8,300 in mortgage interest on his personal residence and $2,800 in real estate taxes for the year. In addition, he paid $1,950 in professional dues (the AICPA dues, state CPA society dues, and local CPA chapter dues) and subscriptions to work publications that were not covered by his employer. Ignoring your answer in Parts 1 or 2 and instead assuming the total amount of itemized deductions Travis could claim was $19,050, will Travis choose to itemize or take the standard deduction?

(4 points) Ilona and Gordon are married and file jointly. They have one son, Gabe, who is 2 and goes to daycare throughout the week. The married couple earn $115,000 in total wages (together) throughout the year. The total cost for Gabe’s daycare throughout the year is 4,500. Ignoring your own awareness about different tax benefits that parents can use to claim a tax benefit for daycare costs and other child/dependent tax benefits, use only the information below in determining the appropriate daycare-related tax benefit(s) the couple should claim to give them the largest reduction in their Federal income tax bill for the year. Fictitious tax policy information for assessing the taxpayers’ decision: Assume there are only two Federal income tax benefits available related to daycare costs: The tax system allows each dollar of child care cost to be used to claim either a dollar of flexible spending account money (allowing an exclusion of that dollar from recognizable income) or a dollar of the tax credit. a flat $1,000 tax credit for child care costs called the “Helping Hands Childcare Credit” and a flexible spending account for child care costs up to $4,500, where parents are allowed to take $4,500 out of their salaries (combined) pre-tax for this specific use. The tax system allows each dollar of child care cost to be used to claim either a dollar of flexible spending account money (allowing an exclusion of that dollar from recognizable income) or a dollar of the tax credit. A taxpayer cannot claim the both a dollar of flexible spending account money and a dollar of credit for the same dollar of daycare costs incurred. However, if the taxpayer uses one of the tax benefits for the daycare costs, reaches the limit of that benefit that is available, and has excess daycare costs that didn’t receive this first benefit, it can use those excess daycare costs to claim the other benefit. Based on the information above, identify which of the below options for tax planning with Gabe’s daycare costs would give the most Federal income tax benefit (reduction in Federal income taxes due) for Ilona and Gordon that is allowed with the tax system outlined above. Assume the couple have no other For AGI deductions or itemized deductions for the year.

Determining Gross Income (4 points): Marta and her ex-husband Robbie divorced in 2023. Since then, Marta has maintained custody over their son Michael, who is 14. Before the start of 2024, Robbie moved across town to a townhouse. Marta is a middle school teacher, and Robbie is dentist. Marta earned $39,500 for the year in salary, and Robbie earned $95,750 in salary. As part of the divorce agreement, Marta was able to keep the house, which they originally paid $210,000 for in 2014 for but is now worth $325,000 in 2024. In the divorce agreement, Robbie agreed to pay $25,800 per year in support of their child Michael. Determine the total recognizable gross income for Marta in 2024.

(4 points) Mel and Tara are married and file jointly for 2024. They earned $195,000 in total salaries together for the year working for an architecture and construction firm. They moved across the country when Tara was offered a new job opportunity within the company this year, incurring $7,500 in moving expenses. The moving expenses were not reimbursed by their employer. As part of the move, Mel and Tara had to sell their house this year. They had purchased the home in 2018 and after making some improvements to the home its adjusted tax basis at the time of sale was $310,000. They sold it for $575,000. They also paid $1,500 in interest on loans Mel took out to pay for his tuition and fees as an undergraduate architecture major. After the move, Mel had some health issues which required the couple to pay $15,000 in medical expenses (part for health insurance premiums and part deductibles and other out-of-pocket expenses for hospital care). Mel and Tara’s AGI for 2024 is: