For Each Tax Treatment Described Below,explain the Income Tax Concept(s)which

question 94

Essay

For each tax treatment described below,explain the income tax concept(s)which is (are)responsible for the treatment.
a.Leon sells stock to his sister Margie at a loss of $3,000.Leon is not allowed to deduct the $3,000 loss.
b.Jorge owns an appliance repair business.During the current year,he pays $5,000 of interest on the van he uses to call on customers and $5,000 of interest on his personal automobile.Jorge can deduct $5,000 of the interest.
c.Pepper Corporation,an accrual basis taxpayer,rents lawn equipment.In May of the current year,Pepper receives $4,000 from the rental of lawn equipment on 2-year rental contracts.Pepper must recognize the $4,000 income from the contracts in the current year.
d.Todd sells stock for $2,000 that he paid $3,500 for several years ago.After remodeling his residence,he sells all of his old furniture at a garage sale for $800.The furniture cost $4,000.Todd can deduct the $1,500 loss on the sale of the stock,but cannot deduct the loss on the furniture sale.
e.Marsha is single and earns $80,000 per year in her job as an executive vice-president for County Bank.Hasid is married,has two dependent children and earns $80,000 per year as a professor of history.Marsha's tax liability is $14,470.Hasid's tax liability is $7,780.

Calculate the standard deductions and tax liabilities for individuals based on their income and filing status.

Know the threshold for underpayment penalties and how to avoid them.

Understand the implications of early withdrawal penalties and how they can be claimed on tax returns.

Be familiar with the Social Security wage limitation and its application.