What incentives exist for taxpayers to shift income from one party to another? Are there costs associated with such income shifting? Give examples of such costs in a family planning situation. How would the elimination of the assignment of income doctrine affect the costs of shifting income? What could taxpayers do to ease these costs?
Answer to relevant QuestionsWhy do the tax laws sometimes discriminate against related party contracts? Is this always in society’s best interest? A taxpayer owns two separate companies. Company A is in the 35% marginal tax bracket and company B is in the 15% tax bracket. Company A sells all its output to B at cost, and B sells to outsiders at a markup of 50%. Company ...A taxpayer uses borrowed funds to acquire non dividend paying corporate stock. Interest on borrowed funds may be deducted in the period paid, up to the amount of net investment income from other stocks or investments (that ...Why do a pension account and the savings portion of a life insurance product provide the same after tax rates of return if tax rates are constant over time? In comparing these two savings vehicles, is it appropriate to have ...A taxpayer can invest $ 5,000 in a common stock that pays no dividends but appreciates at a rate of 8%. The taxpayer’s tax rate is 30%. He plans to sell the stock after 30 years. a. Find the after tax accumulation and the ...
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