Posted: December 20th, 2021

Mark and Del were residents of Texas. In 2013, Del left Mark, and he has been unable to find her even

5.   5 Mark and Del were residents of Texas. In 2013, Del left Mark, and he has been unable to find her even though he hired a private investigator to do so. Mark and Del are still married at year-end. Both Del and Mark were employed. Mark is aware of the fact that Del inherited dividend-paying stocks in early 2013. They did not have any children.How will Del’s absence complicate Mark’s 2013 income tax return?16. LO.4 What are the tax consequences if the alimony recapture rules apply to a cash payment to a former spouse?17. LO.4 Evaluate the following statement: “In dividing up assets when a couple divorces, the basis of the assets is not relevant because the property division is nontaxable.”18. LO.4, 5 Williamand Abigail, who live in San Francisco, have been experiencing problems with their marriage. They have a 3-year-old daughter, April, who stays withWilliam’s parents during the day because both William and Abigail are employed. Abigail worked to supportWilliam while he attended medical school, and now she has been accepted by a medical school in Mexico. Abigail has decided to divorce William and attend medical school. April will stay in San Francisco because of her strong attachment to her grandparents and because they can provide her with excellent day care. Abigail knows that William will expect her to contribute to the cost of raising April. Abigail also believes that to finance her education, she must receive cash for her share of the property they accumulated during their marriage. In addition, she believes that she should receive some reimbursement for her contribution to William’s support while he was in medical school. She expects the divorce proceedings to take several months. Identify the relevant tax issues for Abigail.19. LO.4, 5 Patrick and Eva are planning to divorce. Patrick has offered to pay Eva $12,000 each year until their 11-year-old daughter reaches age 21. Alternatively, Patrick will transfer to Eva common stock that he owns with a fair market value of $100,000.What factors should Eva and Patrick consider in deciding between these two options?20. LO.4, 5 Brenda loaned her son Bart $250,000 to purchase a new home. Brenda did not charge interest on the loan. Brenda was required to recognize imputed interest income, and Bart had imputed home mortgage interest expense that he deducted as an itemized deduction. Would Brenda’s and Bart’s combined total income taxes likely increase or decrease as a result of the imputed interest? Explain.21. LO.4 In 2013, the Rose Corporation made a $400,000 interest-free loan to John Rose, the corporation’s controlling shareholder. Mr. Rose is also the corporation’s chief executive officer and receives a salary of $300,000 a year. What are the tax consequences of classifying the loan as a compensation-related loan rather than as a corporationshareholder loan?22. LO.2, 4 Brad is the president of the Yellow Corporation. He and other members of his family control the corporation. Brad has a temporary need for $50,000, and the corporation has excess cash. He could borrow the money from a bank at 9%, and Yellow is earning 6% on its temporary investments. Yellow has made loans to other employees on several occasions. Therefore, Brad is considering borrowing $50,000 from the corporation.He will repay the loan principal in two years plus interest at 5%. Identify the relevant tax issues for Brad and the Yellow Corporation.

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