Question

The following italicized and bold questions I can't figure out how to solve them. Could you show how to solve this problems?

Problem 5-47 (LO. 2)

Sparrow Corporation would like you to review its employee fringe benefits program with regard to the tax consequences of the plan for the company's president (Polly), who is also the majority shareholder.

For the following items, indicate what amount, if any, is included in Polly's gross income.

If an amount is zero, enter "0".

a. The company has a qualified retirement plan. The company pays the cost of employees attending a retirement planning seminar. The employee must be within 10 years of retirement, and the cost of the seminar is $1,500 per attendee. $ b. The company owns a parking garage that is used by customers, employees, and the general public. Only the general public is required to pay for parking. The charge to the general public for Polly's parking for the year would have been $3,600 (a $300 monthly rate). $

Problem 8-34 (LO. 2)

Weston acquires a new office machine (seven-year class asset) on August 2, 2017, for $75,000. This is the only asset Weston acquired during the year. He does not elect immediate expensing under § 179. He claims the maximum additional first-year depreciation deduction. On September 15, 2019, Weston sells the machine.

Click here to access the depreciation tables in the textbook.

If required, round your answers to the nearest dollar.

a. Determine Weston’s cost recovery for 2017 and 2018.
2017: $ 42,859
2018: $

b. Determine Weston’s cost recovery for 2019.
$

Problem 8-46 (LO. 4)

On June 5, 2018, Leo purchased and placed in service a new car that cost $75,000. The business use percentage for the car is always 100%. Leo does not claim any available additional first-year depreciation or any § 179.

If required, round your answers to the nearest dollar.

Click here to access the depreciation table to use for this problem. Click here to access the limits for certain automobiles.

a. What MACRS convention applies to the new car?
Half-year

b. Is the automobile considered "listed property"?
Yes

c. Leo's cost recovery deduction in 2018 is $ and for 2019 is $ .

Answer 1

Solution:-

Problem 5 -47 (LO. 2) :-

(a) Ans. 0. The 1,500 dollars’ cost of the retirement planning seminar can be excluded from Polly’s gross income since it is provided on a non discriminatory basis.

(b) Employee parking is explicitly excluded from gross income but the value of Polly’s free parking of 3,600 ($3,60 0/12 =300 dollars per month). Exceed the permitted exclusion amount (3,600/12- 300 dollars per month). In conclusion, Polly must include 0 dollars (3,600-3,600) in her gross income.

Problem 8-34 (LO. 2):-

a. What MACRS convention applies to the machine? Half-year Weston's cost recovery for 2017 is $ 42,859 . b. Westin's 2018 is $ 4,592 .

Explanation :-

Check My Work Under the modified accelerated cost recovery system (MACRS), the cost of an asset is recovered over a predetermined period that is generally shorter than the useful life of the asset or the period the asset is used to produce income. MACRS provides separate cost recovery tables for realty (real property) and personalty (personal property).

.Answer:The mid-quarter convention must be used. The office machine is 7-year class

Additional first-year depreciation($75,000 × 0.50)$37,500

MACRS cost recovery[($75,000 − $37,500) × 14.290%=$5,359

Total cost recovery($37,500+$5,359) $42,859