Tax Issues

Prepare a three-page memo (at least 300 lecturing per page) to toilet and Jane smith addressing the issues presented: 1. washbowl Smith levy taxation issues: a. How is the $300,000 do by for purposes of federal official tax income? b. How is the $25,000 treated for purposes of federal tax income? c. What is your intent regarding reducing the taxable hail of income for some(prenominal) (a) and (b) above? d. Is it much beneficial to continue leasing the business aloofness or to acquire the building? FOR JOHN smith: FOR JANE SMITH 2. Jane raised 6 specific questions. What are the different tax consequences between stipendiary down the mortgage (debt) and assuming a modern mortgage (debt) for federal income tax purposes? Can John and Jane Smith h gray-haired a 1031 tax deepen to obtain a to a greater extent high-priced house using additional m whizzy from Johns fibre? Does Jane subscribe to a business or hobby? wherefore is this specialisation importa nt? Would Jane (and John) introduce better tax benefits if she had a unwrap business for her jewelry-making activities? 2 What tax benefits would John realize if he invested $15,000 in Janes jewelry making? Can Jane devalue her fomite or jewelry-making equipment? How?

Response: Issue: Different tax consequences between paying down the mortgage (debt) and assuming a impudently mortgage (debt) for Federal income tax purposes Applicable rectitude: IRC rule section 56(b) Conclusion: The only discernible struggle is the amount of interest that can be deducted, and without further dilate I cannot provide you a more definitive perform as to which route is bet! ter. To the question of what are the tax consequences of change a house the Smiths are allowed to deduct a tot of $500,000 have from gain every two years on the trade of a primary residence. It is better to take a hot mortgage only in case where the new one offers a rate of interest which is lower than the old one. Otherwise, at that place is not much sense in winning a new mortgage Issue: Can John and Jane Smith utilize a 1031 exchange tax to buy a more...If you want to get a full essay, evidence it on our website: OrderCustomPaper.com

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