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Mac, an inventor, obtained a patent on a chemical process to clean old aluminum siding so that it can be easily repainted. Mac has a $500,000 tax basis in the patent. Mac does not have the capital to begin manufacturing and selling this product, so he has done nothing...

Keshara has the following net § 1231 results for each of the years shown. What would be the nature of the net gains in 2011 and 2012? Tax Year Net § 1231 Loss Net § 1231 Gain 2007 $16,000   2008 33,000   2009 32,000   2010   $41,000 2011  ...

Ashley Panda lives at 1310 Meadow Lane, Wayne, OH 23412, and her Social Security number is 123–45–6789. Ashley is single and has a 20 year old son, Bill. His Social Security number is 111–11–1111. Karl lives with Ashley, and she fully supports him. Bill spent 2011...

Justin Stone was an employee of Data Care Services, Inc. His salary was $45,000 through November 10, 2011, when he was laid off. He received $7,000 of unemployment compensation from November 11, 2011, through December 31, 2011. FICA withholdings were as follows:...

Clean Corporation runs a chain of dry cleaners. Borax is used heavily in Clean’s dry cleaning process and has been in short supply several times in the past. Clean Corporation buys a controlling interest in Dig Corporation—a borax mining concern. Clean’s sole reason...

Celine will be subject to the AMT in 2012. She owns an investment building and is considering disposing of it and investing in other realty. Based on an appraisal of the building’s value, the realized gain would be $85,000. Ed has offered to purchase the building from...

Matt, who is single, always has elected to itemize deductions rather than take the standard deduction. In prior years, his itemized deductions always exceeded the standard deduction by a substantial amount. As a result of paying off the mortgage on his residence, he...

Josepi’s construction company uses the completed contract method. During the three year period 2012–2014, Josepi recognized the following income on his two construction contracts. Year Contract 1 Contract 2 2012 $700,000* $ –0– 2013 –0– –0– 2014 –0– 800,000** If...

Alicia owns two investment properties that she acquired several years ago. Her adjusted basis in the assets is as follows.   Regular Income Tax AMT Land $100,000 $100,000 Apartment building 450,000 490,000 Alicia sells the land for $250,000 and the building for...