For each tax treatment described below, explain the income tax concepts) which is are) responsible for the treatment.
a. Leon sells stock to his sister Margie at a loss of $3,000. Leon is not allowed to deduct the
$3,000 loss.
Jorge owns an appliance repair business. During the current year, he pays $5,000 of
b. interest on the van he uses to call on customers and $5,000 of interest on his personal automobile. Jorge can deduct $5,000 of the interest.
Pepper Corporation, an accrual basis taxpayer, rents lawn equipment. In May of the
c. current year, Pepper receives $4,000 from the rental of lawn equipment on 2-year rental contracts. Pepper must recognize the $4,000 income from the contracts in the current year.
Todd sells stock for $2,000 that he paid $3,500 for several years ago. After remodeling his
d. residence, he sells all of his old furniture at a garage sale for $800. The furniture cost
$4,000. Todd can deduct the $1,500 loss on the sale of the stock, but cannot deduct the loss
on the furniture sale.
Marsha is single and earns $80,000 per year in her job as an executive vice-president for
e. County Bank. Hasid is married, has two dependent children and earns $80,000 per year as
a professor of history. Marsha's tax liability is $14,470. Hasid's tax liability is $7,780

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The Answer of For each tax treatment described below, explain the income tax concepts) which is are) responsible for the treatment.
a. Leon sells stock to his sister Margie at a loss of $3,000. Leon is not allowed to deduct the
$3,000 loss.
Jorge owns an appliance repair business. During the current year, he pays $5,000 of
b. interest on the van he uses to call on customers and $5,000 of interest on his personal automobile. Jorge can deduct $5,000 of the interest.
Pepper Corporation, an accrual basis taxpayer, rents lawn equipment. In May of the
c. current year, Pepper receives $4,000 from the rental of lawn equipment on 2-year rental contracts. Pepper must recognize the $4,000 income from the contracts in the current year.
Todd sells stock for $2,000 that he paid $3,500 for several years ago. After remodeling his
d. residence, he sells all of his old furniture at a garage sale for $800. The furniture cost
$4,000. Todd can deduct the $1,500 loss on the sale of the stock, but cannot deduct the loss
on the furniture sale.
Marsha is single and earns $80,000 per year in her job as an executive vice-president for
e. County Bank. Hasid is married, has two dependent children and earns $80,000 per year as
a professor of history. Marsha's tax liability is $14,470. Hasid's tax liability is $7,780

For Each Tax Treatment Described Below, Explain the Income Tax