Taxation

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Taxation

Pedro is an employee at a large electronics retailer whose gross profit percentage is 36%. The employer offers a discount to its employees, and Pedro uses this program to purchase products with a retail value of $2,250. Pedro pays $1,050. Determine the amount Pedro must include in gross income with respect to this transaction.

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Pedro, a single taxpayer, operate a sole proprietorship that is not a Specified Service Trade or Business. For the taxable year, Pedro earns $110,000 in business income and incurs $40,000 in fully deductible business expenses (all W-2 wages paid to employees). In addition to the business income, Pedro earns $10,000 in qualified dividends. Determine the amount of any Qualified Business Income Deduction to which Pedro is entitled.

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The claim of right doctrine requires that a taxpayer not recognize income until it is certain that the taxpayer will not be required to repay the income.

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Pedro is a single taxpayer. On 30 April of 2019, Pedro sold his home for $799,000 and paid $47,000 in selling expenses. Pedro acquired the home in January of 2014 for $492,000 and has used it as his primary residence since 15 January 2017. Determine the amount of gain that Pedro must include in income as a result of this sale.

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