Problem I 1-48Pedro Bourbone can reduce his current tax rate by giving gifts up to $12,000 each year to his children in bonds and stocks. Pedro tax rate is very high and his children do not have any income, he could shift the dividends and interest income to his children at a lower rate of tax. There is kiddle tax regulations that apply to children only with an age limit up to 14, the youngest child will still pay taxes at the parents’ higher rate, but the other children will pay tax atthe lower tax rate. Now since, these financial assets will be moved to the children, they will not be part of the transfer of assets from Mr. Bourbone’s estate upon his death and will reduce the taxes on the estate.Problem I-49The reason for the $10,000 loss was it was not rented or it was for major repairs. I would need toverify that he or she is immediate family, and if they did not go over the allow time of renter for the cottage. If so this would cause a loss and it could not be deducted. Also is does he have receipts of the rent and all expenses to prove there was a loss. The painting donation there needs to be an appraised before the donation becomes charity whether it is a large deduction or is valuable. If it has not been appraised there is no proof of how much it is worth, so John may not be able to claim the deduction due to no proof. Anytime there are valuable and it is not cash donation proof must be showed.The cattle breeding ranch needs to e a company not a hobby. John needs to have proof of all expenses and sales with other ranches. John need to show prove it is a business and keep his financial records up to date and pay taxes for current and past taxes.The research procedures would be to look at all current events or cases and tax codes to determine if there are any changes in donation values, rental income, and losses that are allowed for the business, it could be the number of years allowed for the business loss until the IRS determines it is not a business. If John did not have the paint appraised it may be possible to havethe charity appraise it or get proof from the charity of an appraisal value for it to resell. I think a certified appraiser must do this transaction. The rental cottage should have some type of gain in the previous years, this could be compared and prove if there was a loss. Proof from the rental contracts could be compared with expenses of upkeep and damage that need to be
View Full Document
Unlocking...