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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...

On March 31, 2010, Big Boats Company entered into a contract with Vacations Unlimited to produce a state of the art cruise ship, to be completed within three years. Big Boats estimated the total cost of building the ship at $300 million. The contract price was $400...

Ostrich Company makes gasoline storage tanks. Everything produced is under contract (that is, the company does not produce until it gets a contract for a product). Ostrich makes three basic models. However, the tanks must be adapted to each individual customer’s...

Siena Industries (a sole proprietorship) sold three § 1231 assets during 2012. Data on these property dispositions are as follows: Asset Cost Acquired Depreciation Sold for Sold on Rack $100,000 10/10/08 $62,000 $75,000 10/10/12 Forklift 35,000 10/16/09 23,000 5,000...