ACC 401 Week 1 Assignment Filing Status

Filing Status & Income. From Chapter 2, complete Problems 32, 33, & 38. From Chapter 3, complete Problems 35, 36, & 42.

1. List the five types of filing status and briefly explain the requirements for the use of each one.

2. In which of the following cases may the taxpayer claim head of household filing status?

a.The taxpayer is single and maintains a household that is the principal place of abode of her infant son.

b.The taxpayer is single, maintains a household for herself, and maintains a separate household that is the principal place of abode of her dependent widowed mother.

c.The taxpayer was married from January to October and lived with his spouse from January to May. From June 1 to December 31, the taxpayer maintained a household that was the principal place of abode of his married son and daughter-in-law, whom the taxpayer can claim as dependents.

d.Same as (c) except the taxpayer lived with his ex-spouse until August and maintained the household from September 1 to the end of the year.

1. Julio and Martina are engaged and are planning to travel to Las Vegas during the 2010 Christmas season and get married around the end of the year. In 2010, Julio expects to earn $45,000 and Martina expects to earn $15,000. Their employers have deducted the appropriate amount of withholding from their paychecks throughout the year. Neither Julio nor Martina has any itemized deductions. They are trying to decide whether they should get married on December 31, 2010, or on January 1, 2011. What do you recommend? Explain your answer (disregard the making work pay credit).

Chapter 3, complete Problems 35, 36, & 42.

1. Determine the amount of taxable income that should be reported by a cash-basis taxpayer in 2010 in each of the following independent cases:

a.A taxpayer completes $500 of accounting services in December 2010 for a client who pays for the accounting work in January 2011.

b.A taxpayer is in the business of renting computers on a short-term basis. On December 1, 2010, she rents a computer for a $200 rental fee and receives a $500 deposit. The customer returns the computer and is refunded the deposit on December 20, 2010.

c.Same facts as (b) except that the computer is returned on January 5, 2011.

d.On December 18, 2010, a landlord rents an apartment for $700 per month and collects the first and last months rent up front. It is customary that tenants apply the security deposit to their last months rent upon moving out.

An accountant agrees to perform $500 of tax services for an auto mechanic who has agreed to perform repairs on the car of the wife of the accountant. The mechanic repairs the car in December 2010 and the accountant starts and completes the tax work in March 2011.

1. A taxpayer who purchases a Series EE U.S. Savings Bond must report the interest income (i.e., increase in value) on the bond on the date the bond is redeemed, or the taxpayer can elect to report the interest currently in income. Under what circumstances should a taxpayer report income at maturity? Under what circumstances is it more advantageous to report income currently?

2. Sean, who is single, received social security benefits of $8,000, dividend income of $13,000, and interest income of $2,000. Except as noted, those income items are reasonably consistent from year to year. At the end of 2010, Sean is considering selling stock that would result in an immediate gain of $10,000, a reduction in future dividends of $1,000, and an increase in future interest income of $1,500. He has asked you for advice. What course of action do you recommend?