b. Deb needed $ 10,000 to make a down payment on her house. She instructed her broker to sell some stock to raise the $ 10,000. Deb’ s cost of the stock was $ 3,000. Based on her broker’ s advice, instead of selling the stock, she borrowed the $ 10,000 using the stock as collateral for the debt.
c. Deb’ s boss gave her two tickets to the Rabid Rabbits rock concert because she met her sales quota. At the time she received the tickets, each ticket had a face price of $ 200 and was selling on eBay for $ 300. On the date of the concert, the tickets were selling for $ 250 each. Deb and her son attended the concert.
40. LO. 3 Rusty has been experiencing serious financial problems. His annual salary was $ 100,000, but a creditor garnished his salary for $ 20,000; so the employer paid the creditor( rather than Rusty) the $ 20,000. To prevent creditors from attaching his investments, Rusty gave his investments to his 21-year-old daughter, Rebecca. Rebecca received $ 5,000 in dividends and interest from the investments during the year. Rusty transferred some cash to a Swiss bank account that paid him $ 6,000 interest during the year. Rusty did not withdraw the interest from the Swiss bank account. Rusty also hid some of his assets in his wholly owned corporation that received $ 150,000 rent income but had $ 160,000 in related expenses, including a $ 20,000 salary paid to Rusty. Rusty reasons that his gross income should be computed as follows:
53. LO. 4 The LMN Partnership has a group term life insurance plan. Each partner has $ 150,000 of protection, and each employee has protection equal to twice his or her annual salary. Employee Alice( age 32) has $ 90,000 of insurance under the plan, and partner Kay( age 47) has $ 150,000 of coverage. Because the plan is a“ group plan,” it is impossible to determine the cost of coverage for an individual employee or partner.
Chapter 5
5. LO. 2 Dolly is a college student who works as a part-time server in a restaurant. Herusual tip is 20 % of the price of the meal. A customer ordered a piece of pie and said that he would appreciate prompt service. Dolly abided with the customer’ s request. The