Q1. Ryan, a lawyer, purchases shares of corporate stock for $20,000 in December of Year 1. At the end of Year 2, they are worth $17,000. He sells the shares in October of Year 3 for $13,000. Describe Ryan's tax consequences with respect to the purchase and ownership of the shares under both SHS notions of income and under current law.
Q2. Geier Textbook - Chapter 1 - Page 43
Use the information from this question (Sheila and Shane) to complete page 1 (only) of Form 1040. We will complete page 2 next week.
This form can be found at irs.gov. Use the form for 2015. You can hand write to complete the form or complete electronically. Make up address and social security numbers. Decide on filing status. The purpose of this exercise is to get you familiar with the irs.gov website and with form 1040.
Q3. Geier Textbook - Chapter 1 - Page 43
Use the information from this question (Sheila and Shane) to complete page 2 (only) of Form 1040. This form can be found at irs.gov. Use the form for 2015. You can hand write to complete the form or complete electronically. You completed page 1 of the Form 1040 last week. For page 2, you will need to become familiar with the tax tables. You may either take the standard deduction or itemize deductions (Schedule A). If you itemize deductions, assume that state tax withheld was $7,000. Assume that federal tax withheld is $30,000.
Question - Sheila and Shane are married and have two children: Erik, age 17, who is a junior in high school, and Becky, age 10. Sheila does not work outside the home, and Shane is an electrical engineer who earns $130,000 working as an employee of Tectronics, Inc., in 2015. Together, they also receive $10,000 in interest on corporate bonds and $5,000 in interest on Ohio state bonds. In Chapter 2, you will learn that the interest on the Ohio state bonds is excludable from Gross Income under the authority of § 103. They contribute $5,000 to the Cleveland Orchestra, which is a deductible contribution under § 170. They pay $7,000 in real property taxes on their personal residence to their local Ohio county jurisdiction, and they pay $8,000 in Ohio state income taxes for 2015, both payments of which are deductible under § 164(a). They also pay $6,000 in interest on their home mortgage, which satisfies the definition of "qualified residence interest" within the meaning of § 163(h)(3) and is thus deductible (as explored more fully in Chapter 18). Finally, Shane pays professional dues and travels to several professional association meetings in the field of electrical engineering out of his own pocket in order to keep up to date on the latest information in his field, even though Tectronics, Inc., does not reimburse these costs to Shane. The total amount that is deductible by Shane under § 162 is $2,500. Sheila and Shane file a joint tax return for 2015.
a. What is Sheila and Shane's AGI for 2015?
b. What is Sheila and Shane's Taxable Income for 2015?
c. Tectronics has already announced that there will be no employee raises for 2016 because of sluggish growth. Nevertheless, do you have any advice to Shane in negotiating next year's salary arrangement with Tectronics, Inc.?
d. Now for your first attempt at meaty statutory reading. Read §§ 24(a), (b)(1), (2), and (c)(1) very carefully. How much is Sheila's and Shane's child tax credit under § 24 for 2015?
Q4. From the Geier textbook, answer the Problem on page 175 of Chapter 6.
Problem -
High-Tech Corp pays the cost of air fare, hotel, taxis, meals, and incidental expenses for Joseph and Michael to fly from Cleveland, Ohio, to Palo Alto, California, so that Joseph can interview for a position as a software engineer with High-Tech. The total cost of the expense-paid trip is $3,000 ($1,500 for each). Michael, Joseph's spouse, is a lawyer, and he uses the time in Palo Alto to explore the local legal market and the potential for obtaining a lawyer position. Must Joseph, Michael, or both include the value of the expense-paid trip in their Gross Incomes? Would it make any difference if Michael were a stay-at-home spouse with three young children?
Geier Textbook link - https://www.cali.org/sites/default/files/2015Geier_Tax_0.pdf
Please answer 4 questions above.