Taxation Law

In: Business and Management

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Unit 2 Assignments
Shelia Goodson
Kaplan University

Assignment 2-38 The purposeful error of $40,000 of gross income will generally be considered fraud. This means that the there is no limitations to when. However, the IRS can assess penalties of any kind if the money is proven to be fraud. If not proved fraud by the IRS then his part will be the statute of limitations would expire on April 14, 2017 (Escoffier, S., & Fortin, K. 2014).
Assignment 2-42
The company only reports debt and deduct interest and not dividends payments. The shareholder is responsible for reporting any payment of interest or dividends. If it is a dividend this is a bonus on taxes for the taxpayer by lowering the taxed rate. However, the company can pay the shareholder by repaying the debt with no tax penalty to the shareholder. If the stock is retired this allows the amount to be received and dividends can be unless redemption requirement. (Escoffier, S., & Fortin, K. 2014).
Assignment 2-59
To determine the answer to these questions, I decided to scope out the question, "Is it a business or a hobby" (Is It a Business or Hobby. n.d.).
According to the government,
1. Did his time and effort he put into it indicate an intention to make a profit? - Yes
2. Does the taxpayer depend on income from the activity? - No, not yet
3. If there are losses, are they due to circumstances beyond the taxpayers control or did they occur in the start-up of the business? - Yes.
4. Has the taxpayer changed methods of operation to improve profitability? - Yes
5. Has the taxpayer made a profit in similar activities in the past? - Yes
6. Does the activity make a profit in some years? - Not yet
7. Can the taxpayer expect to make a profit in the future? - Yes
I believe it is a business and he can show a loss.
Assignment 2-69
The reasons that the tax services standards were…...

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