Question

You receive a gift from your friend. Your friend bought it for $10,000 and, therefore, your friend’s cost basis in the asset is $10,000. The FMV of the gift is $20,000 on the date of the gift. You own the asset for 2 years and then you sell it for $30,000.

**What are the tax consequences for your friend? Your
friend asks you to advise them of any and all potential tax
consequences for him/her, now and/or in the future. Is there any
reporting obligation for your friend?**

**Discuss fully in a memo that you would send to your
friend. Remember, even if you are providing him/her with
free advice, you have a professional responsibility to provide them
with complete and accurate information, and your friend may
ultimately bring your memo to a paid tax advisor who will
undoubtedly judge you on your work product.**

**What is your basis when you receive the gift? State
fully any applicable rule, and show your work in an easy to read,
organized fashion. (My postings provide good examples as to format.
Note that formulas are easier to read, and for your boss to check
your work, than paragraphs.)**

**What is your gain or loss when you dispose of the asset?
State any applicable rules fully, and show your work in an easy to
read, organized fashion. (My postings provide good examples as to
format. Note that formulas are easier to read, and for your boss to
check your work, than paragraphs.)**

Answer #1

You receive a gift from your friend. Your friend bought it for
$10,000 and, therefore, your friend’s cost basis in the asset is
$10,000. The FMV of the gift is $20,000 on the date of the gift.
You own the asset for 2 years and then you sell it for $30,000.
a.What are
the tax consequences for your friend? Your friend asks you to
advise them of any and all potential tax consequences for him/her,
now and/or in the future....

You receive a gift from your friend. Your friend bought it for
$10,000 and, therefore, your friend’s cost basis in the asset is
$10,000. The FMV of the gift is $5,000 on the date of the gift. You
own the asset for 2 years and then you sell it for $2,000.
a.What is your
basis when you receive the gift? State fully any applicable rule,
and show your work in an easy to read, organized
fashion.
b.What is your
gain...

You receive a gift from your friend. Your friend bought the
asset for $10,000 and, therefore, your friend’s cost basis in the
asset is $10,000. The FMV of the asset is $5,000 on the date of the
gift. You own the asset for 2 years and then you sell it for
$6,000.
a.What is your
basis when you receive the gift? State fully any applicable rule,
and show your work in an easy to read, organized
fashion.
b.What is your...

Q4 Your friend wants to borrow some money from you but he can
only afford to pay a monthly installment of $250 at the end of each
of the next 36 months. If the interest rate is 12% APR (i.E.
compounded monthly), what is the most you can lend him (to the
nearest $100) if the loan is to fully repaid at the end of month
36.
Select one:
a. $6,500
b. $7,500
c. $8,000
d. $9,000
e. None of...

The Bonwire Kente Company Case
Your friend, Kwame Nkrumah from Ghana knows that you are taking
graduate classes and asks for your opinion on an issue he faces as
owner/manager of the Bonwire Kente
Company which he started 5 years ago with 20
employees. The Company has grown by leaps and bounds to the point
where it now employs over five hundred persons and has become a
nightmare to manage.
The Company weaves the cotton it grows on its 4,000-...

Tax Research Memorandum #1
Jerry always wanted to run his own manufacturing business. Jerry
needed a special machine that cost $40,000. After all of the other
startup expenses, Jerry only had $30,000 remaining to purchase this
machine. Jerry’s good friend Mike came to the rescue and loaned him
$10,000 to help Jerry buy the machine. The loan was a simple loan
with a balloon payment of $11,000 at the end of two years. This
represents approximately a 5% annual interest...

An analysis of company performance using DuPont
analysis
A sheaf of papers in her hand, your friend and colleague,
Madison, steps into your office and asked the following.
MADISON: Do you have 10 or 15 minutes that you can spare?
YOU: Sure, I’ve got a meeting in an hour, but I don’t want to
start something new and then be interrupted by the meeting, so how
can I help?
MADISON: I’ve been reviewing the company’s financial statements
and looking for...

It is now late May 2018 and you, CPA, have just finished meeting
with your partner, Ms. Wong. Ms. Wong wants your help with some
clients of hers.
One client, Garden Supplies Co. (GSC) has had a new shareholder
buy shares. Ms. Wong wants you to tell her if GSC is a resident of
Canada for tax purposes in 2018 and describe the personal tax
consequences that Mrs. Gardiner will have from her 2018 share sale.
You can ignore the...

It is now late May 2018 and you, CPA, have just finished meeting
with your partner, Ms. Wong. Ms. Wong wants your help with some
clients of hers.
One client, Garden Supplies Co. (GSC) has had a new shareholder
buy shares. Ms. Wong wants you to tell her if GSC is a resident of
Canada for tax purposes in 2018 and describe the personal tax
consequences that Mrs. Gardiner will have from her 2018 share sale.
You can ignore the...

Scott E. Miller, CPA, CVA has given an example of an expert
witness in his article entitled “You Got the Litigation Engagement,
So Now What,” in The Value Examiner. Read his example and then
prepare a list of mistakes that the expert made in his expert
witnessing engagement.
Let’s assume there is a CPA, Calvin P. Anderson. Calvin has been
a practicing CPA for 15 years. He has a successful CPA firm
providing a full range of traditional accounting and...

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