Martin has a home office for his business as an agent for rock-and-roll bands. The business shows a loss of $2,000 before home office expenses. How should the home office expenses be treated? Choose one answer. a. Because of the business loss, home office expenses can not be deducted and are lost forever b. Because of the business loss, home office expenses can not be deducted in the current year but can be carried forward to the next year c. The home office expenses increase the business loss in the year they are incurred and are fully deductible in that year d. The home office expenses increase the business loss in the year they are incurred and are 50% deductible in that year

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Martin and Williams, two business partners, agreed that each would insure his life for the benefit of the other. On his application for insurance, Martin stated that he had never had any heart trouble when in fact he had had a mild heart attack some years before. Martin’s policy contained a two-year incontestable clause. Three years later, after the partnership had been dissolved but while the policy was still in force,Martin’s car was struck by a car being negligently driven by Peters. Although Martin’s injuries were superficial, he suffered a fatal heart attack immediately after the accident—an attack, it was established,that was caused by the excitement. The insurer has refused to pay the policy proceeds to Williams.

Does the insurer have a valid defense based on Martin’s misrepresentation? Explain.

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Martha realizes that the microwave she bought is faulty after a month of purchase. The manufacturer of the microwave asks Martha to pay the repair expenses as the fault was with a part that was out of warranty. Martha was unaware of this warranty condition. What should Martha do to resolve her grievance? 

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Martha participated in a qualified tuition program for the benefit of her son. She invested $5,000 in the fund. Four years later her son withdrew $7,500, the entire balance in the program, to pay his college tuition.

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Martha is serving as Executrix of her late mother’s estate. The estate is taxable as it exceeds the sum of $11.4 million. Due to the volume of work and complexity involved in settling the estate, Martha plans to collect a fee of $110,000 for the three-year period she estimates it will take to settle the estate. What options does Martha have to deduct this fee? When must she collect the fee to be able to deduct the fee? Does she have to collect the fee in one lump sum? Is the fee income taxable to Martha?

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