Determine the status of the case and is it still valid

Assignment Help Accounting Basics

Reference no: EM133252217

Question 1 - Ed is a professional photographer. He has been very successful over the years and has been retained to do professional advertising photo layouts for products like polo equipment, sports clothing, and golf equipment. He maintains a studio in an industrial warehouse where he does most of the photography. In early January of 202X, he acquired two exotic cars: a new McLaren 600LT and a 2017 Ferrari 488 Spider. He acquired the McLaren for $275,000 and the Ferrari for $290,000. The exotic automobiles did not have license plates and were not set up to be used on the street. They were not driven and were used exclusively for his photo shoots. Ed would like to depreciate the cars to reduce his 202X tax burden. He has come to you to see if he can take a cost recovery deduction on his tax return for these autos.

In answering this question, use only CCH AnswerConnect. Provide answers to the following:

a. Your conclusion, based on the court's decision in the case you found.

b. The search terms used to arrive at your conclusion

c. At least one court case supporting your conclusion (cite in proper form)

d. Use the citator feature in CCH AnswerConnect:

e. Determine the status of the case. Is it still valid?

f. List at least two citing cases (other cases that cited the one you found)

Question 2 - Lu Tang has finally found her "dream" house and is ready to buy. She will move in right away and plans to make this her home for many, many years. After making a $160,000 down payment, she will need to borrow $600,000 to close the deal. Her investment advisor, Baldev, suggests that rather than seeking a conventional mortgage (currently at 3-1/2%), she should borrow the funds from her brokerage firm using the value of her portfolio as collateral. This alternative is called a margin loan which currently has a 3% rate. Lu Tang is really interested because the interest rate is ½ percentage point lower. However, she wants to run this idea by you, her tax advisor, before making a decision.

a. What is your recommendation and why?

b. Support your recommendation with primary sources.

Reference no: EM133252217

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