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Larry is single and records the following items for 2012. Compute Larry’s tax liability before credits or prepayments. Income—   Salary $145,000 Interest from bank savings account 12,000 Interest on corporate bonds 7,000 Short term capital gain 8,000 Expenses—...

Gold, Inc., is an accrual basis taxpayer. In 2012, an employee accidentally spilled hazardous chemicals on leased property. The chemicals destroyed trees on neighboring property, resulting in $30,000 of damages. In 2012, the owner of the property sued Gold, Inc., for...

Compute Mary’s income or deductions for 2012 using (1) the cash basis and (2) the accrual basis for each of the following: a. In May 2012, Mary paid a license fee of $1,200 for the period June 1, 2012, through May 31, 2013. b. In December 2012, Mary collected $10,000...

How do the all events and economic performance requirements apply to the following transactions by an accrual basis taxpayer? a. The company guarantees its products for six months. At the end of 2012, customers had made valid claims for $600,000 that were not paid...

Ross Company is a computer consulting firm. The company also sells equipment to its clients. The sales of equipment account for approximately 40% of the company’s gross receipts. The company has consistently used the cash method to report its income from services and...

Kay, who is not a dealer, sold an apartment house to Polly during 2012. The closing statement for the sale is as follows: Total selling price   $ 160,000 Add: Polly’s share of property taxes (6 months) paid by Kay   2,500 Less: Kay’s 8% mortgage assumed by...

George sold land to an unrelated party in 2011. His basis in the land was $45,000, and the selling price was $120,000: $30,000 payable at closing and $30,000 (plus 10% interest) due January 1, 2012, 2013, and 2014. What would be the tax consequences of the following?...

The Wren Construction Company reports its income by the completed contract method. At the end of 2012, the company completed a contract to construct a building at a total cost of $800,000. The contract price was $1.2 million, and the customer paid Wren $900,000....

Rust Company is a real estate construction company with average annual gross receipts of $4 million. Rust uses the completed contract method, and the contracts require 18 months to complete. a. Which of the following costs would be allocated to construction in...