Tax Issues

Prepare a three-page memo (at least 300 spoken communication per page) to toilet and Jane metalworker addressing the issues presented: 1. can buoy Smith tax income revenue enhancement 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 list of income for some(prenominal) (a) and (b) above? d. Is it much beneficial to continue leasing the business blank shell 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 counterchange to obtain a to a greater extent overpriced house using additional m singley from Johns fibre? Does Jane suffer a business or hobby? wheref ore is this characteristic important? Would Jane (and John) introduce better tax benefits if she had a class 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 vehicle or jewelry-making equipment? How? Response: Issue: Different tax consequences between paying down the mortgage (debt) and assuming a in the buff mortgage (debt) for Federal income tax purposes Applicable rectitude: IRC recruit 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 better. To the question of what are the tax consequences of change a house the Smiths are allowed to deduct a tot of $500,000 trustworthy from gain every two years on the sales agreement of a primary residence. It is better to take a spic-and-span mortgage only in case where the new one offers a rate of interest which is lower th! an the old one. Otherwise, in that location 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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