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McGraw-Hill's Taxation of Individuals and Business Entities 3rd Edition by Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver
Edition 3ISBN: 9780078111068McGraw-Hill's Taxation of Individuals and Business Entities 3rd Edition by Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver
Edition 3ISBN: 9780078111068 Exercise 38
Last year Acme paid Ralph $15,000 to install a new air-conditioning unit at its headquarters building.The air conditioner did not function properly, and this year Acme requested that Ralph return the payment.Because Ralph could not repair one critical part in the unit, he refunded the cost of the repair, $5,000, to Acme.a.Is Ralph required to include the $15,000 payment he received last year in his gross income from last year?
b.What are the tax implications of the repayment if Ralph was in the 35 percent tax bracket when he received the $15,000 payment from Acme, but was in the 28 percent tax bracket when he refunded $5,000 to Acme?
c.How would you answer part b.if Ralph refunded $2,500 to Acme and not $5,000?
b.What are the tax implications of the repayment if Ralph was in the 35 percent tax bracket when he received the $15,000 payment from Acme, but was in the 28 percent tax bracket when he refunded $5,000 to Acme?
c.How would you answer part b.if Ralph refunded $2,500 to Acme and not $5,000?
Explanation
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Gross Income
Generally the term gross i...
McGraw-Hill's Taxation of Individuals and Business Entities 3rd Edition by Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver
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