Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Taxation Expert

Jack and Jill (two unrelated individuals who are citizens of the US) found an interesting script for a movie in 2010, and they decided to produce it in Nevada. It was a "low budget" film, so they estimated production cost at $250,000. Jack has experience as a movie producer, but no experience in distribution, and he does not have any capital. Jill has capital and also has experience distributing movies. While both have had experience in these activities, neither one has ever had or been a partner in any business, so no accounting methods have been established for their movie making activities. It is now June 2011, and neither Jack nor Jill has yet filed tax returns for 2010 or 2011.

They signed a contract with each other in 2010 under which Jill lent Jack $250,000 to produce the movie. The contract stated that when Jack provided the movie, Jill would forgive the loan and also pay Jack $50,000. The contract also stated that Jill would pay to Jack 30% of any amount that Jill received for the movie in excess of $500,000. The movie was made in 2010 and 2011. The costs incurred by Jack to make the movie were: $10,000 paid in 2010 for the script, $50,000 paid each year to actors and crew, and $70,000 paid each year for props, etc. Then, following the terms of the contract, in 2011 Jack provided the completed movie which met all of the required specifications. Jill then forgave the $250,000 loan and also paid Jack $50,000. In that same year Jill sold the move to a company which distributed DVDs and received total payment of $550,000. Accordingly, she paid Jack $15,000 in 2011 representing 30% of the amount in excess of $500,000.

Jack and Jill each had substantial income from other activities, so each of them is concerned with tax consequences. They have heard about the Domestic Production Activities Deduction and wonder if their movie making qualifies.

How much may be deducted, when it is allowed, who could get the deduction.

Taxation, Accounting

  • Category:- Taxation
  • Reference No.:- M9128

Have any Question? 


Related Questions in Taxation

Baafm tax assignment real life case study - write briefly

BAAFM TAX ASSIGNMENT Real Life Case study - Write briefly about a RECENT COURT case that happened in Singapore or any other country where the issue was about income  and Capital. EXECUTIVE SUMMARY [ONE PAGE ONLY] INTRODU ...

Corporate tax return projectusing the following information

Corporate Tax Return Project Using the following information, prepare a corporate tax return for 2015. You can download the tax forms from the IRS website (www.irs.gov). In addition to the basic Form 1120 (all 5 pages), ...

Assignment tax issues associated with financial

Assignment: Tax Issues Associated with Financial Planning Understanding the tax consequences of your financial planning decisions is very important. These decisions may sometimes have life-long consequences in addition t ...

Alternative minimum tax please resppond to the

"Alternative Minimum Tax" Please resppond to the following: • Analyze the rules concerning the alternative minimum tax for individual taxpayers. Based on your analysis, recommend at least two changes to the alternative m ...

Preferred stock bailouts and personal holding company

"Preferred Stock Bailouts and Personal Holding Company" Please respond to the following: From your analysis of Section 306 in the e-Activity, differentiate between the tax treatment of earnings and profit on the distribu ...

Tax projectour tax project has changed slightly due to the

TAX PROJECT: Our tax project has changed slightly due to the Presidential Election Year. Your project is to prepare a document, no longer than five pages, reviewing and addressing the following: - Tax policy of Democrati ...

Organization forms and taxationthere are several forms of

Organization Forms and Taxation There are several forms of business organizations. The Internal Revenue Code (IRC) taxes different forms in different ways. The tax implications can sometimes be important enough to determ ...

Taxone paragraph of writing is required at a minimum for

Tax One paragraph of writing is required at a minimum for each question. Two paragraphs is the maximum 1. How is a single-member LLC taxed for federal income tax purposes? 2. What is a three-factor formula and how does i ...

Assignment1you are the tax director for a fortune 500

Assignment 1. You are the tax director for a FORTUNE 500 company and the new CFO comes to you and asks you what ASC 740 is? He also asks you to tell him what a deferred tax asset is and when it can be reflected on the co ...

Issue questions1 cable corporation which operates a fleet

ISSUE QUESTIONS 1. Cable Corporation, which operates a fleet of motorized trolley cars in a resort city, is undergoing a complete liquidation. John, who owns 80% of the Cable stock, plans to continue the business in anot ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen