Chapter 8 - Business Income, Deductions, and Accounting Methods

period to complete each in-class quiz. Each quiz will be graded based on 50 points.

Any personal expenditures not specifically allowed as itemized deductions by the tax law are nondeductible.

In Mason, the taxpayer suffered a severe attack of paralytic poliomyelitis. The cost of installation of a specially designed swimming pool, installed on the advice of a physician to provide hydrotherapeutic treatment for the taxpayer was found by jury to constitute a deductible medical expense and not a nondeductible capital expenditure. The swimming pool in Mason covered an area of thirty by fifteen feet, had a depth of four to six feet, and included a ramp designed to facilitate entry by wheel chair. The jury held for the taxpayer and allowed a deduction of the pool as a medical expense because the design of the pool catered to the taxpayer’s medical needs.

This reflection learning log and essay guide is a helpful learning tool for you to access when you are completing your learning log and also your reflection essay. It provides you with an introduction to the purpose for setting a reflective piece of work and the benefits this produces for you. It provides activities to help you along the way (see separate guide “ACCG 399 Developing a Reflective Capacity Guidance”) and clearly sets out the requirements that are expected of you, including what you will need to hand in at the end of the semester.

Tax rate schedules are provided for use by (relatively) higher income taxpayers while the tax tables are provided for use by (relatively) lower income taxpayers.

3. If a cost is identical under each alternative under consideration within a given decision context, the cost is considered:

inventory using the cost method and did not change the method used during the current

Ann paid $500 for her books and supplies and she incurred living expenses of $7,400.

Thus, a capital expenditure which is related only to the sick person and is not related to permanent improvement or betterment of property, if it otherwise qualifies as an expenditure for medical care, shall be deductible; for example, an expenditure for eye glasses, a seeing eye dog, artificial teeth and limbs, a wheel chair, crutches, an inclinator or an air conditioner which is detachable from the property and purchased only for the use of a sick person, etc. Moreover, a capital expenditure for permanent improvement of property may qualify as a medical expense to the extent that the expenditure exceeds the increase in the value of the related property, if the particular expenditure is related directly to medical care. Such a situation could arise, for example, where a taxpayer is advised by a physician to install an elevator in his residence so that the taxpayer's wife who is afflicted with heart disease will not be required to climb stairs. If the cost of installing the elevator is $1,000 and the increase in the value of the residence is determined to be only $700, the difference of $300, which is the amount in excess of the value enhancement, is deductible as a medical expense. If, however, by reason of this expenditure, it is determined that the value of the residence has

Facts: Murray Taxpayer was previously employed by a company who was illegally dumping chemicals into a river. Murray had knowledge concerning these illegal activities of his employer and made an ethical decision to report this to the Environmental Protection Agency. Upon inspection, the Environmental Protection Agency determined that Murrays employer was in fact illegally dumping and was appropriately fined for the charges. Murray’s employer reacted to his whistleblowing by firing him and making deliberate efforts to prevent Murray from gaining employment elsewhere. Murray then sued his former employer for damaging

CASE 7 ARMSTRONG HELMET COMPANY 1. Item Administrative salaries Advertising for helmets Depreciation on factory building Depreciation on office equipment Insurance on factory building Miscellaneous expenses— factory Office supplies expense

b. The inventory write down recorded, as an expense by the company is $4.4 million. It is measured at lower of cost and net realizable value. Cost is measured by weighted average using standard cost method or

Ronald J. Ebert & Ricky W. Griffin, (2011). Business Essentials. 8th ed. New Jersey: Pearson. Pg 133

Accounting Information Systems Controls and Processes, 1st Edition_Leslie Turner, Andrea Weickgenannt (SM+TB+IM +Spatteli,s Pizzeria Solutions+Process

cost-of-goods-sold section might be in relation to the sales total. In the case of a merchandising firm,