...BUY vs. RENT INTRODUCTION: We are pleased to submit the accompanying analysis of two properties in the desirable Cottonwood Valley subdivision area. The purpose of this report is to develop an opinion of the market value for the potential purchase of property one and the benefits of renting potential property two. The opinions of value expressed in this report are based on estimates and forecasts that are prospective in nature and the data obtained from third party sources. PURCHASE PROPERTY ONE - 1809 Crockett Circle: The subject purchase property is in an upscale, gated community located in the Cottonwood Valley subdivision. The square footage of this house is 2,535 sq. ft. and features three bedrooms, two full baths and one half bath. This home was recently renovated with exotic birch hardwood floors and paint. The listed price for this property is $299,000. Property Analysis: Square Footage: | 2,535 | Year Built: | 1984 | Bedrooms: | 3 | Style of House: | Contemporary | Full Baths: | 2 | Acres: | 0.189 | Half Baths: | 1 | Garage Space | 2 | Living Room: | 17x21 | Construction: | Brick | Dining Room: | 13x12 | Foundation: | Slab | Breakfast Room: | 7x10 | Roof: | Metal | Kitchen: | 14x13 | Cooling: | Central Air-Elec | Master Bedroom: | 20x15 | Heating: | Central Heat-Gas | Bedroom: | 15x12 | HOA Dues: | $1,500 Annual | Bedroom: | 12x12 | Features: | Gated Entrance | Library/Study: | 12x11 | | | RENTAL PROPERTY TWO - 809 W...
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...Project 4 Written Outline Even in this economy it is still better to buy a home then rent. I. Why pay rent and make the landlord richer when you can own your own home for basically the same monthly payment and reap the tax benefits yourself. II. In 2006 I was faced with having to make the decision to buy or rent. After researching found I could buy a 4 bedroom house in a good area for same price of renting a 2 bedroom apartment. Also working for the government I knew the tax advantages I would get so I don’t have to tell you which decision I went with. III. Today I am going to show you that buying a house is a better choice then renting even in this unstable economy. IV. There are many programs that help people purchase a home. First time homebuyers even with bad credit can qualify. Do you know where to look? I will provide you with some internet sights that can be of assistance. V. There are many reasons why home buying is better than renting; the few that I will talk about are 1. Long term buying costs less on a yearly basis then renting. 2. Good financial investment and low interest rates and 3. Tax advantages Now that we are coming to a close on the semester some of you are going to be faced with the decision upon graduation as to whether you should buy or rent. I. If you have already decided that you will be staying in a certain area for at least 7 years it is shown that buying is cheaper than renting. a. On April...
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...T.C. Memo. 2009-93 UNITED STATES TAX COURT THOMAS J. WOODY, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No. 30077-07. Filed April 30, 2009. P alleges that during tax year 2004 he had a real estate investment and rental business. P deducted expenses associated with this activity as business expenses under I.R.C. sec. 162. R disallowed the business expense deductions. On the basis of this disallowance, R determined a deficiency in P’s Federal income tax for 2004. P petitioned this Court for redetermination of that deficiency. Held: P was not actively engaged in a real estate investment and rental business when he incurred and paid the expenses he deducted as Schedule C business expenses in 2004. Therefore, the costs P deducted are pre-operational start-up expenditures and may not be deducted as business expenses under I.R.C. sec. 162. - 2 Bruce E. Gardner, for petitioner. Scott L. Little, for respondent. MEMORANDUM FINDINGS OF FACT AND OPINION GUSTAFSON, Judge: This case is before the Court on petitioner Thomas J. Woody’s petition for redetermination of his Federal income tax deficiency for 2004 which the Internal Revenue Service (IRS) determined to be $4,955. The issue for decision is whether Mr. Woody is entitled under section 1621 to deductions claimed on his 2004 Schedule C, Profit or Loss From Business. As a threshold matter, we must decide whether Mr. Woody was actively engaged in the trade or business of real estate investment and rental at...
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...Cost Approach Formula: Cs – Ds + Vsl = V Value: An object, product or service that: has utility or usefulness, Is scarce, Is desired by people (is in demand),Is transferable from one person to anotherLand Appraisal Methods: Market or Direct Sales Comparison, Allocation, Abstraction, Development, Land Residual Which Method to Use? 1)Market Method is considered most reliable, but not practical if lot sales are not occurring in a neighborhood.(2)Allocation Method is quick and easy, but only reliable if based on ample, recent data.(3)Abstraction Method is the one you will use most often.(4)Development Method is a special case…appropriate for unimproved land.(5)Land Residual Method uses Income Method, leads to circular reasoning. Replacement vs. Reproduction (Cost to build a structure of similar utility vs. Cost to build a replica) Depreciation is defined as the loss of or reduction in value of an asset. Types: Physical, Functional, Economic Adjustments: Goal is to add or subtract some dollar amount to get the Comp more in line with the Subject with respect to one attribute for both properties Categories of Elements: Terms of sale, date of sale, location elements, physical elements. FNMA Guidelines: Total dollar amount of adjustments should not exceed 15% of Comp’s price. Total gross dollar amount (absolute value) should not exceed 25%. Remember, you’re making the Comp become more similar to the Subject, so if the Subject has a feature the Comp does not, you ADD...
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...required return rate. After that, by using the net income we calculated beforehand and with the required return rate of 11.9%, we got both NPVs of online and traditional grocery store are positive, $3,768,359 for traditional store and $4,020,441 for online store. Meanwhile, the IRRs of traditional store and online store are 55% and 47% accordingly. The NPV of online store is approximately 6.7% higher than that of traditional store. For reason that NPV rule is the most important criteria, we recommend Crisp Markets setting up online grocery store. 1. Pro Forma Income Statement * The relevant cash flows associated with setting up traditional grocery store are: up-front renovation costs, sales, salaries, other operating expenses, rent, depreciation and taxes. Pro Forma Income Statement of Traditional Grocery Store * Sales are estimated to be $5,750,000 at the first year of operation and are expected to grow at 5% per year. Sales of each year=sales of last year*1.05 * Salaries for traditional store are 25% of sales. Salaries=sales of each year*0.25 * Other operation expense for traditional store is 40% of sales. Other...
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...Equity follows the law. Discuss Equity has no clash with law neither it overrides the provisions of law. Nor it is the enemy of law. It adopts and follows the basic rules of law. It is said that equity is not a body of jurisprudence acting against the law but rather a supplement to law. it is a well-known rules that equity follows the analogies of law The equity came not to destroy the law but to fulfil it , to supplement it , to define it .Equity respects every word of law. Equity is intended to supplement the law and not to supersede it. Maxims of equity are principles developed by the English Court of Chancery and other courts who have administered equity jurisdiction, including the law of trusts. They were expressed in Latin but are translated into English. The role of the maxims is simple , they are general principles which can be deviated from specific cases. “He who comes into equity must come with clean hands.” This is one of the many maxims of equity. This maxim “bars relief”* that anyone guilty of improper conduct in the matter at hand .It operates to prevent any affirmative recovery* for the person with “dirty hands” no matter how unfairly the person’s adversary has treated him or her . The maxim’s purpose is to protect the integrity of the court. This rule is not meant to punish carelessness or a mistake .Another notable maxim is “Equity looks on that as done which ought to be done” , this maxim means that when individuals are required , by their agreements or...
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...approaches is called statistical discrepancy or residual error of estimate= well under 1% of GDP. -to produce a single value for GDP the statistical discrepancy is divided into 2, 1/2 is added to the lower estimate while ther other 1/2 is subtracted from the higher estimate. -measurement of GDP is based on a very simple principle: value of prod. is amount of money you spend to buy it. Conversely, the value of a prod. is the amount of money you were paid to produce it. -to find GDP using expenditure approach: add together total amount of money that is spent by all sectors in the economy to purchase the nation’s production. -There are 4 major components of aggregate expenditure: personal consumption expenditures (C) fixed capital investment expenditures (I) current government expenditures (G) net exports (X-M) Personal consumption expenditure (C): money spent by households to buy newly produced final goods and services such as food, clothing, appliances, shelter, transportation, entertainment, and other household living expenses. Fixed capital investment (I): money spent by firms & government to buy newly prod. machinery & equipment, including tools , trucks, & scientific instruments as well as money spent on the construction of residential, commercial, industrial and institutional buildings including diff. structures (Airport runways, port facilities, pipe lines, power lines) Current government expenditures (G): money spent by...
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...COST ACCOUNTING II MARGINAL COSTING AND DECISION MAKING Prepared by Teddy Ossei Kwakye Lesson Objectives Distinguish between relevant and irrelevant revenues and costs Analyze relevant costs and indicate how they differ under alternative decision scenarios Apply differential analysis to decision scenarios, including discontinuation decisions; to accept a special order; to make or buy and to sell or further process a product Allocate limited resources for purposes of maximizing short-run profit Decision Making Process Objectives Setting • Relates to the future, hence decisions are future oriented Determination of Alternatives • Different alternatives to achieving the objectives, hence decision is a choice of alternatives Evaluating the alternatives • Requires complete, timely, relevant and reliable information Choosing the best alternative • Alternative chosen should be the one that maximizes the objectives Relevant Information Information that is affected by a decision • Information that is independent or has nothing to do with decision is irrelevant Types / Kinds • Quantitative information - Elements that can be expressed in monetary terms • Qualitative information - Factors that are difficult to quantify in monetary terms e.g. moral of employees, customer goodwill etc. Quantitative Relevant Information Relevant Costs and Revenues • Costs (revenues) that flow from the decision • Future or expected costs (revenues) • Must...
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...text is used in full without amendment [extracts may be used for criticism or review]; (4) the work is not re–sold; (5) the link for any online use is sent to info@adamsmith.org. The views expressed in this report are those of the author and do not necessarily reflect any views held by the publisher or copyright owner. They are published as a contribution to public debate. © Adam Smith Research Trust 2011 Published in the UK by ASI (Research) Ltd. ISBN: 1–902737–77–6 Some rights reserved Printed in England Contents 1 Introduction 2 The Condensed Wealth of Nations Book I: Economic efficiency and the factors of production Book II: The accumulation of capital Book III: The progress of economic growth Book IV: Economic theory and policy Book V: The role of government 3 The Incredibly Condensed Theory of Moral Sentiments 4 Further reading 9 32 42 47 59 77 84 4 7 1 Introduction Adam Smith’s pioneering book on economics, The Wealth of Nations (1776), is around 950 pages long. Modern readers find it almost impenetrable: its language is flowery, its terminology is outmoded, it wanders into digressions, including one seventy pages in length, and its numerous eighteenth-century examples often puzzle rather than enlighten us today. And yet, The Wealth of Nations is one of the world’s most important books. It did...
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...Econ 201 Tutorial #1 Date: Week 3 Coverage: Chapters 1 and 2 Introduction and Tools of Analysis Multiple Choice Questions: 1. Which of the following would not promote economic growth within a society? A) Increasing the skill level of the workforce. B) An increase in technological expertise. C) More people looking for jobs than there are jobs available. D) An increase in the stock of machines and productive equipment. 2. The opportunity cost of attending college is likely to be highest for a high school graduate: A) who has access to student loans. B) whose family is extremely wealthy. C) who will attend a more expensive college. D) who started a successful business in high school. 3. Benny has one hour before bedtime and he can either watch TV or listen to his new Korn CD. He chooses to listen to the CD. The scarcity problem's influence on Benny is seen in: A) a the decision to listen to music. B) the decision not to watch TV. C) the fixed amount of time before bed. D) the decision to choose between TV and music. 4. All of the following statements are false except: A) Normative economic statements are statements of fact. B) In positive economics, we are detached scientists and personal values do not enter our description of economic events.z C) "The unemployment rate for September, 1987 was 5.9 percent" is a normative statement. D) "The government should provide a minimum income to every citizen" is a positive statement. 5. Economists...
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...Portfolio income (interest, dividend, annuities, sales of stocks and bonds, royalties not derived from an ordinary course of a trader business) 2. In –class quiz d. Owned a apartment complex ii. What is gross rental income 1. Tenant improvements in lieu of rent 2. Tenant improvement are not in lieu of rent iii. Two troublesome tenants, one comes and tell the landlord that they can’t pay the rent. Gives an interest bearing 90 day note in lieu of the rent. This note is treated as property and should be valued at FMV (fair market value) iv. Tenant hasn’t been in the apartment the entire month of December and has not paid rent. Paid late, landlord received in January 3. Include the rent in previous year’s taxable income v. Own a ten-flat in the city. Landlord lives in one of the ten, rent the other nine out. What is the net rental income? What about the deductions 4. What fractions of the building can you depreciate? 90% vi. Had inside information down in Springfield that a third airport was going to be built in the Chicagoland area. With this inside the information, goes and buys land, pays $50K for it. Thinks the land will appreciate in value. However due to decrease in flights, the airport is never built, the land declines in value to $40K. Can you take a deductible loss? No you cannot take deductible loss. 5. For a deductible loss, there must be...
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...1. The Linton family faces a very common decision. Their landlord has raised their monthly rent substantially and they must make a decision about whether to stay or leave given the increase. They have narrowed the decision to two options – stay in the current home and accept the increased rent or buy the home next door. Rent If they choose to rent, they are incurring a substantial rent increase over 5 years that is essentially a sunk cost. Mr. Linton is a resident so we can assume that his paycheck is modest and that Mrs. Linton would bare the majority of the rent increase. On the other hand, continuing to rent would eliminates the time, cost, upfront investment and risk of considering a home purchase. The landowner has also promised that this will be the only large rent increase. Exhibit one also indicates steady rent prices and modest increases. Since the Lintons plan to move in the medium term, a home purchase is just one more thing they would have to manage and settle at the end of the 5 years. If the Lintons are risk averse, have limited time, and need a large nest egg for other uses, continuing to rent would avoid those potential issues. Buy In considering a purchase, the Lintons are accepting increased risk, upfront cost, and time. Their risk is that their investment will not reap rewards at the end of the 5 years. The market is not expected to appreciate substantially in the next 5 years so the Lintons must consider if their investment is worth the risk of the...
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...Kamran Burki Build-A-Bear Case – Lease a. Companies lease assets rather than by them because the company might need the asset for only a short period of time. The company might also not want to report an asset or liability or the company simply might not have enough cash to buy the asset. In addition, the company also might have difficulty getting a loan to finance the purchase. b. An operating lease is very similar to a rental agreement. The company does not have ownership of the asset and all the risk and benefits of ownership stay with the lessor. The lessor only transfers the right to use the asset. A lease is considered a capital lease if it meets the following rules: 1) lease life must be greater than 75% of the life of the asset 2) transfer of ownership at the end of the lease term 3) bargain purchase at end of lease term 4) present value of minimum lease payments exceeds 90% of the FMV of the asset A direct financing lease is is defined as a lease where the present value of the lease payments is equal to the cost of the asset. The lessor does not report a gain/loss at the beginning of the lease, but earns interest revenues. A sales type lease is a lease where the present value of the lease payments is greater than the cost of the asset. The lessor records a profit at the beginning of the lease and also earns interest revenue. c. As discussed above, all leases are not the same. Hence, the need to distinguish between different types...
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...Unit 5 – business accounting Jane walker Jessica Ordish Assignment 1 – C & V fashions. 1) What is the purpose of accounting and will the purpose vary in different types of organisation? The purpose of accounting can vary in different types of organisations such as recording transactions, monitoring activity, control and management of a business. Recording transactions involves the recording of finical transactions, weather the recording is a prediction or actual records this will help the owner or manager of the organisation see what money is coming in and out of the business and will help them plan for future, it also helps allows the business owner to see if the business is a success or failing if failing the owner can make changes to make the business more success and earn more money. Recording transactions also helps the business if they are paying bills or owed money they can recognise bills or payments to them haven’t been paid and they can chase them up. If payments are not paid the business can get into trouble with the HMRC (Human Management Revenue and Customs) Monitoring accounting within an organisation will be updated on a regular basis, doing this will provide a clear indication of how the business is doing on terms of sales, receiving payments and paying out payments. Monitoring activity should involve keeping an eye on the bank balance to ensure there are sufficient funds to meet day to day expenses. The owner of the organisations would notice if the...
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...Conveyancer and Property Lawyer 2009 Occupation rents and the Trusts of Land and Appointment of Trustees Act 1996: from property to welfare? Susan Bright Subject: Real property. Other related subjects: Trusts Keywords: Co-ownership; Occupation; Rent; Trustees' powers and duties Legislation: Trusts of Land and Appointment of Trustees Act 1996 s.13 (6) *CONVPL 378 This article considers what changes have been made in relation to occupation rents following the enactment of the Trusts of Land and Appointment of Trustees Act 1996 (“TLATA”). The two particular questions focused on are “liability”, that is, the circumstances in which a co-owner can be required to pay an occupation rent (or “compensation” as it is called under TLATA) to a non-occupying co-owner, and “quantum”, that is how the amount of this rent should be assessed. The issues commonly arise in the residential context, when a property initially bought as a shared home is occupied by only one of the co-owners following relationship breakdown, but can equally occur in a commercial context, for example, as part of the dissolution of a business partnership run from co-owned premises.1 Prior to the Act, most claims arose in the context of claims for equitable accounting when the property came to be sold. The apportionment of the proceeds of sale between the co-owners would reflect not simply a division based on the size of their respective shares, but could be adjusted to take account of the fact that whilst the...
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