Question

3. Blake is a limited partner in Kling-On partners. This year Kling-On reported that Blake's share of dividend income was $3,700 and his share of municipal interest was $2,750. Early, this year Blake found a bundle of $100 bills in the alley outside his apartment. When no one claimed the money, the cash (a total of $2,400) was returned to BLake. Finally, Blake earned a salary of $42,000 but almost $6,500 was withheld for income taxes and FICA tax. Compute Blake's realized income and gross income.

4. Henry works part-time on auto repairs and restoration projects. This year Henry was paid $5,400 for repairs he made to his neighbor's auto. Henry's neighbor promised to pay Henry another $2,200 in cash next year. Henry's brother borrowed $4,100 in cash in December of this year and gave him a negotiable promissory note for $4,300, due in three months with interest. Henry sold the note in January of next year for $3,500. Finally, Henry restored a car for the football coach. The coach paid him this year with a pass to next year's football games. The pass is worth $750. Compute Henry's gross income for this tax year, assuming that he uses the cash basis of accounting.

5. Juan works as a landscaper for local businesses on weekends, and he often provides services in exchange for property. This year Juan provided lawn-mowing services in exchange for $1,275 of car repair services, $3,570 of groceries, and a certificate of deposit (CD) for $4,050. The CD matures next year with interest . Finally, Juan received a gift card that can only be applied for $850 of clothing at a local mall. Juan has only applied the gift card to purchase $100 of clothing. Compute Juan's gross income, assuming that he uses the cash basis of accounting.

Answer 1

ANSWER

3)

Dividend Income $3,700
Other Income $2,400
Salary $42,000

Gross Income is $48,100
Realized Income $41,600

Municipal Interest only comes into play for certain voluntary contributions and credits.

5)

All events are satisfied to recognize income. Now it is in the control of john to apply the coupon or not. Thus, his income includes $850 coupon.

Gross income is:

Particulars	Amount
Car repair service	1275
Groceries	3570
CD	4050
Gift card	850
Gross income	9745