(TCOs 1, 2, 4, & 7) Brown Corporation had consistently reported its income by the cash method. The corporation should have used the accrual method because inventories are material to the business. In 2011, Brown timely filed a request to change to the accrual method. At the beginning of 2011, Brown had accounts receivable of $60,000. Also, Brown had merchandise on hand with a cost of $80,000 and accounts payable for merchandise of $25,000. The accounts receivable, inventory, and accounts payable balance per books were zero. Determine the adjustment to income due to the change in accounting method and the amount that is allocated to 2011

 

 

 

 

 

 

(TCOs 1, 3, & 10) Margaret is trying to decide whether or not to place funds in a qualified tuition program. Her son will be attending college in four years. She is in the 35% marginal tax bracket and she believes she can earn 7% before tax return on alternative investments. Thus, $10,000 will accumulate to $11,948 (after-tax) in four years. Margaret expects tuition to increase at the rate of 5% each year to $12,155 in four years. Her son will be in the 15% marginal tax bracket in all relevant years. Given these assumptions, should Margaret participate in the qualified tuition program?

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1.Explain the ethical implications where a tax preparer knowingly prepares a return with false information

 

 

 

2. Steve has a tentative general business credit of $85,000 for the current year. His net regular tax liability before the general business credit is $95,000, and his tentative minimum tax is $90,000. Compute Steve's allowable general business credit for the year.

 

 

 

 

1. A large municipality is considering the enactment of an ad valorem tax on personal jewelry. What, if any, problem would you anticipate with such a tax

 

 

2. (TCOs 2, 3, & 11) Discuss the computation of percentage depletion.