Why is it important for the tax planner to know the tax consequences of a particular transaction not only to the entity employing the tax planner but also to the other party (or parties) to the transaction? Provide a real world example to illustrate your answer.
Answer to relevant QuestionsWe generally think that taxes lower returns, which means that after tax returns are lower than pretax returns. Is this always true, or can you provide counterexamples? A taxpayer works at a corporation nearing the end of its fiscal year. The company has had a very successful (profitable) year and has decided to award the employee a cash bonus of 20% of annual salary (a bonus of $ 30,000). ...Suppose the United States were to convert its tax system from an income tax to a flat tax. For individuals, there would be no itemized deductions allowed, a high standard exemption (thus low income taxpayers would not have ...Should the taxing authority always agree to provide a private revenue ruling requested by a taxpayer to clarify the tax treatment of a proposed transaction? Should taxpayers requesting rulings be assessed a fee to cover the ...Taxpayer A earned $ 50,000 working as a carpenter during the year. Taxpayer B, also a carpenter by trade, worked the entire year renovating her house. Comment on the after tax position of both carpenters. Does it matter if ...
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