On February 28, Master, Inc. had total assets with a fair market value of 1,200,000 and total liabilities of $990,000. On January 15,m Master made am monthly installment note payment to Acme Distributors Corp., a creditor holding a properly perfected security interest in equipment having a fair market value greater than the balance due on the note. On March 15, Master voluntarily filed a petition in bankruptcy under the liquidation provisions of Chapter 7 of the Federal Bankruptcy Code. One year later, the equipment was sold for less than the balance due on the note to Acme.
If a creditor challenged master's right to file, the petition would be dismissed.
a. If mater had less than twelve creditors at the time of filing.
b. Unless Master can show that reorganization under Chapter 11 of the Federal Bankruptcy Code would have been unsuccessful.
c. Unless master can show that it is unable to pay its debts in the ordinary course of business or as they come due.
d. If Master is an insurance company.
Answer: D
Tax
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- Which of the following taxpayers may use the cash method of accounting?
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- Lake Corp., an accrual basis calendar-year corporation, had the following 2015 receipts. Advanced Rental payments where the lease ends in 2017 : $125,000 Lease cancellation payment from a five-year lease tenant $50, 000 Lake had no restrictions on the use of the advanced rental payments and renders no services. What amount of income should Lake report on its 2015 tax return?
- In 2015, Emil Gow won $5,000 in a state lottery. Also in 2015, Emil spent $400 for the purchase of lottery tickets. Emil elected the standard deduction on his 2015 income tax return. The amount of lottery winning that should be included in Emil's 2015 taxable income is
- Pierre, a headwaiter, received tips totaling $2,000 in December 2014. On January 5, 2015, Pierre reported this tip income to his employer in the required written statement. At what amount, and in which year, should this tip income be included in Pierre's gross income?
- Mr. and Mrs. Alvin Charak took a foster child, Robert, into their home in 2015. A state welfare agency paid the Charaks $3,900 during the year for related expenses. Actual expenses incurred by the Charaks during 2015 in caring for Robert amounted to $3,000. The remaining $900 was spent by the Charaks in 2015 towards their own personal expenses. How much of the foster child payments is taxable income to the Charaks in 2015?
- Income in respect of a cash-basis decedent
- Ed and Ann Ross were divorced in January of the current year. In accordance with the divorce decree, Ed transferred the title in their home to Ann. The home, which had a fair market value of $150,000, was subject to a $50,000 mortgage that had twenty more years to run. Monthly mortgage payments amount to $1,000. Under the terms of settlement, Ed is obligated to make the mortgage payments on the home for the full remaining twenty-year term of the indebtedness, regardless of how long Ann lives. Ed made twelve mortgage payments during the current year. What amount is taxable as alimony in Ann's current year return?
- In 2010, Ross was granted an incentive stock option (ISO) by her employer as part of an executive compensation package. Ross exercised the ISO in 2013 and sold the stock in 2015 at a gain. Ross was subject to regular tax for the year in which the
- Darr. an employee of Sorce C corporation, is not a shareholder. Which of the following would be included in a taxpayer's gross income?
- Bob and Sue Stewart were divorced in 2013. Under the term of their divorce decree, Bob paid alimony to Sue at the rate of $50,000 in 2013, $20,000 in 2014, and nothing in 2015. What amount of alimony recapture must be included in Bob's gross income for 2015?
- In July 1996, Dan Farley leased a building to Robert Shelter for a period of fifteen years at a monthly rental of $1,000 with no option to renew. At that time the building had a remaining estimated useful life of twenty years. Prior to taking possession of the building, shelter made improvements at a cost of $18,000. These improvements had an estimated useful life of twenty years at the commencement of the lease period. The lease expired on June 30, 2015, at which point the improvement had a fair market value of $2,000. The amount that Farley, the landlord, should include in his gross income for 2015 is
- Daniel Kelly received interest income from the following sources during the current year - New York Port Authority Bonds : $1,000 - Puerto Rico Commonwealth bonds : $1,800 What portion of such interest is tax exempt?
- Charles and Marcia are married cash-basis taxpayers. In 2015, they had interest income as follows: - $500 interest on federal income tax refund - $600 interest on state income tax refund - $800 interest on federal government obligations. - $1,000 interest on state government obligations. What amount of interest income is taxable on Charles and Marcia's 2015 joint income tax return?
- During the current year Hal Leff sustained a serious injury in the course of his employment. As a result of this injury, Hal received the following payments during the year: Worker's compensation ------------ $2,400 Reimbursement from his employer's accident and health plan for medical expenses paid by Hal and not deducted by him --------------------$1,800 Damages for physical injuries ----------------------$8,000 The amount to be included in Hal's gross income for the current year should be
- Silo Corp. was organized on March 1, 2015, began doing business on September 1, 2015, and elected to file its income tax return on a calendar-year basis. The following qualifying organizational expenditures were incurred in organizing the corporation: July 1, 2015 : $3,000 September 3, 2015: $5,600 The maximum allowable deduction for organizational expenditures for 2015 is