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Instructions – PLEASE READ THEM CAREFULLY
• The Assignment must be submitted on Blackboard (WORD format only) via allocated
• Assignments submitted through email will not be accepted.
• Students are advised to make their work clear and well presented, marks may be
reduced for poor presentation. This includes filling your information on the cover
• Students must mention question number clearly in their answer.
• Late submission will NOT be accepted.
• Avoid plagiarism, the work should be in your own words, copying from students or
other resources without proper referencing will result in ZERO marks. No exceptions.
• All answers must be typed using Times New Roman (size 12, double-spaced) font.
No pictures containing text will be accepted and will be considered plagiarism.
• Submissions without this cover page will NOT be accepted.
Q.1- Mr. A and Mrs. B are married and have two dependent children. X & Y, They also fully support
Mrs. B’s mother who lives with them and has no income. Their 2012 tax and other related
information is as follows: (2.5 marks)
Amount in $
Value of premiums for $ 100000 of group term life insurance provided by employer
Gift from A’S parents
Dividend income—from ABC stock,
Loan from A’S parents
Bank account interest income
Gain from the sale of qualified small business stock acquired in 2010
Total itemized deductions
Municipal bond interest income
Value of employer provided medical insurance
Required: Compute Mr. A and Mrs.B Taxable income. (Show all calculations in proper /good form.)
Q.2- Mr. Abdullah’s medical and personal expenses include the following: (2.5 mark)
Food for personal use (expenses)
General purpose vitamins
Amount in $
Abdullah’s AGI for the year is $ 132,000. He is single and age 56. Insurance company reimburses
none of the medical costs and other related items.
After considering the AGI floor, what will be Abdullah’s medical expense deduction?
Q.3 In the year 2013, PQR Corporation had the following items of income, expense, gains, and
losses: (2 mark)
Interest on savings account
Plant & Machinery
Furniture and Fixture
Gain on sale of AT&T stock
Loss on sale of IBM stock
Cost of sales
Amount in $
What is taxable income of PQR Corporation’s for the year?
Q-4-To make income taxable, income must be realized and recognized. Explain in your own words
the difference between income realization and income recognition, and then provide a short
numerical example to indicate the difference (Don’t copy the same numerical example from other
students. Numerical example must be differ). (2 mark)
Q5. If a NOL (net operating loss) is incurred, when would a taxpayer elect to forgo the carryback
period and only carry the loss deduction forward? (1 marks)
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