What is a tax? How does a tax differ from a fine?
Differentiate the tax treatment of an individual's capital losses from the tax treatment of corporate capital losses.
What are the basic tax rates for an individual and a corporation?
What are two fiduciary entities and how are they created? Define grantor, trustee, and beneficiary for a trust.
Which version of the tax code is applicable today?
If a taxpayer has $140,000 of employee salary, how much will be withheld for the Social Security and Medicare taxes in 2016?
Determine Amy's taxable income for 2016 if she has $40,000 of salary income, is single, and has $10,350 in total allowable deductions.
Marlee is a single parent with $25,450 in total allowable deductions and qualifies as head of household for 2016. Determine her taxable income if she
Determine George and Mary's taxable income and tax liability for 2016 if George has $65,000 and Mary has $45,000 of salary income, they have $36,200
Refer to the information in problem 34. Determine Warner Corporation's income tax liability.
Data from problem 34
The Warner Corporation has gross
Define tax expenditure?
Explain the integration of the gift and estate taxes.
Sally and Jim are married and have taxable income in 2016 of $160,000. If they could file their income tax as single individuals, each of them would
Conrad and Anita (a college student with no income) plan to marry on December 21, 2016. Filing jointly, they expect to have $180,000 of taxable
Carrie and Stephen have gross salary and wages of $76,000 in 2016 and file a joint return. They have $27,150 of total allowable deductions and a $240
An estate has $20,000 of taxable income in 2016. What amount of tax will the estate pay if it fails to distribute the income to the beneficiaries?
Lilikoi Corporation began business in 2014. Lilikoi earned taxable income of $40,000 in 2014 and $120,000 in 2015. For 2016, Lilikoi Corporation has
June and John decide to form a business. They each plan to contribute $20,000 in exchange for a 50 percent interest in the business. They will then
John and Martha are planning to be married. Both are professionals each with taxable incomes of $89,700 annually. They are deciding on a wedding
Jeremy is setting up a service business. He can either operate the business as a sole proprietorship or he can incorporate as a regular C
Carol has recently incorporated her sole proprietorship and is considering making an S election. The corporation has $200,000 of gross revenue and
What is the maximum income tax rate that applies to the employee salary, the employment tax rate(s) on the salary, and the capital gain rate(s) on
Differentiate a consumption based tax from an income tax and illustrate with an example.
How does a franchise tax differ from an income tax?
Go to www.taxfoundation.org (the Web site for the Tax Foundation).
a. What is Tax Freedom Day?
b. When were Tax Freedom Days in 2014 and 2015?
What employment taxes are imposed on an employee and an employer?
Over what ranges of taxable income in 2016 will the total income tax liability two persons with equal incomes who file as single individuals equal
Differentiate a progressive tax system from a proportional and a regressive system and give examples of each.
What basic tax rates apply to the ordinary income, dividend income, and interest income of an individual? What are they for a corporation?
What tax rates apply to an individual's capital gains and to which tax brackets do each of this rates apply?
Briefly explain Adam Smith's four canons of taxation.
What Constitutional Amendment allowed implementation of an income tax? In what year was it ratified?
Explain the business purpose doctrine.
In the citation Reg. §1.247-3, what do the 1 and the 247 indicate?
What does it mean when a Tax Court decision says that the decision has been entered under Rule 155?
What are the four sections of a memo to the file? Explain what each section should include.
Kevin deliberately omitted $40,000 of gross income from his restaurant on his 2016 tax return. The return indicated gross income of $200,000 when
Alison accidentally omitted $40,000 of gross income from the restaurant she owned on her 2015 tax return. The return showed gross income of $150,000
Thomas received $30,000 in a legal settlement in 2016. The tax treatment of the item is not certain. Thomas's research results were ambiguous and he
Cynthia and Howard, married taxpayers filing a joint return, have $100,000 in taxable income in 2016. They have 4 children (ages 4 through 12) who
What are the three courts in which a taxpayer initiates tax litigation to settle a dispute with the IRS? To which courts can adverse decisions from
Go to www.aicpa.org (the AICPA's Web site) and search for Statements on Standards for Tax Services. Read the history section of the most recent
Jim was reviewing several of a client's prior tax returns in preparation for completing the current year's return. Jim discovered a serious error on
Your client, Ms. I.M. Gorgeous, is an aspiring actress. She has managed to earn a living doing television commercials but was unable to get the
Last year your client, Barney Bumluck, worked part-time for Timely Tax Return Preparation Service. Barney was promised an hourly wage plus a
Your clients, Sonny and his wife Honey, believe in worshiping Ta-Ra, the Sun God. To practice their religious beliefs, they take a weeklong trip to
Fred Fisher is a licensed scuba diver who lives in Key Largo. He is employed full-time as an engineer. Five years ago he had been employed as a
Locate and read Greg McIntosh, TC Memo 2001-144, 81 TCM 1772, RIA TC Memo ¶2001-144 (6/19/2001). Answer the following questions. a. What
Locate and read the following two cases:
J.B.S. Enterprises, Inc., T.C. Memo 1991-254,61 TCM. 2829, 1991 PH T.C. Memo ¶91,254
Explain the realization principle.
Explain how the community property laws can affect the allocation of income between spouses.
At the beginning of the current year, Martha, a cash-basis taxpayer, purchased a $10,000 three-year bond from Lauderhill Corporation at its issue
Provide three reasons why generally accepted accounting principles are not allowed for tax purposes.
At the end of October, year 1, Dunbar Corporation hired Specialty Training, an accrual-basis, calendar-year taxpayer, to provide a six-week training
Mac's 24-year-old daughter, Alana, is a full-time student. In 2016, Mac gives Alana 600 shares of Highgrowth stock. Mac purchased the stock 10 months
What are two major categories of differences between financial accounting income and taxable income?
What types of investments are favored by tax law and why?
Krystyna, a single individual, invested $20,000 in corporate bonds with a stated interest rate of 5 percent and another $20,000 in tax-exempt
Justin's 24-year-old son, Carlos, is a full-time student. In April 2016, Justin gave Carlos 450 shares of Striker Oil stock. Justin purchased the
Some politicians have proposed changing the way Social Security benefits are taxed. One proposal would increase the amount of Social Security
U.S. citizens residing in certain countries are exempt from U.S. tax on their social security benefits. Go to the IRS Web site (www.irs.gov) and
Gamma Corporation, a calendar-year accrual-basis taxpayer, operates department stores. Alpha Corporation and Beta Corporation are wholly-owned
Thomas ran for Congress, raising $2 million for his campaign. Six months after losing the election, auditors discovered that Thomas kept $160,000 of
Samantha has been unemployed for some time and is very short of money. She learned that the local blood bank has a severe shortage of her type of
Alice and Manny agree to divorce. Alice proposes that Manny purchase and assign to her a life insurance policy on his life as part of the divorce
A minister receives an annual salary of $16,000 in addition to the use of a church parsonage with an annual rental value of $6,000. The minister
John is a single individual who works for Auto Rental Cars in Japan during the entire calendar year. His salary is $140,000. How much of this salary
Nick, age 53, is single and has AGI of $63,000. He contributes $5,000 to his IRA in 2016.
a. How much can Nick deduct if he is not covered by an
Jennifer, age 35, is single and is an active participant in her employer's qualified retirement plan. Compute the maximum Roth IRA contribution that
Carrie owns a business that she operates as a sole proprietorship. The business had a net profit of $25,000 in 2016. This is Carrie's only earned
George has $83,000 in salary from his full-time position and $43,000 in net income in 2016 from his sole proprietorship. What is his self-employment
Luis operates a bakery as a sole proprietorship which generated $280,000 in net income. He has four bakers whom he employs on a full-time basis and
Global Corporation is looking for a new CEO. The board of directors selected Miguel as the top candidate. During negotiations, Miguel indicated he
Evan is setting up a new business. He can operate the business as a sole proprietorship or he can incorporate as a regular C corporation or as an S
Go to www.legalbitstream.com. Locate and read Revenue Ruling 2003-102. What type of medicines and drugs can be reimbursed through a flexible spending
Martin Martindale, the 40-year-old founder and President of Martindale Corporation (an accrual-basis calendar-year C corporation), owns 60 percent of
McGuire Corporation is planning to acquire a corporate jet to increase the efficiency and security of its executives who will use the jet for both
Robert, age 35, has accumulated $36,000 in his traditional IRA. He recently married and would like to withdraw $25,000 from his IRA for a down
Jennifer, age 40, has accumulated $40,000 in her traditional IRA. She would like to withdraw $22,000 from her IRA to pay for her daughter's college
Elena is single but her mother, Maria, lives with her. Maria's sole income is $7,000 in Social Security (which she saves for unexpected medical
Mark and Patricia report adjusted gross income of $380,500 and itemized deductions of $64,000 for the interest on home acquisition mortgage
Cindy files as head of household and has three dependent children ages 12, 14, and 16. Her AGI is $80,000. How much can Cindy claim for the child tax
Greg and Barbara, a married couple with an AGI of $80,000, have three children who are full-time college students. They pay $6,000 for tuition
Doris is a single individual with modified AGI of $56,000. During the year, she paid $11,000 tuition for a master's in taxation program. How much can
Roland worked for Sorbonne Company for the first four months of 2016and earned $40,000 from which his employer withheld $3,060 for payroll taxes. In
Linda received $90,000 in salary income for 2016. She has no dependents. Determine her income tax liability under each of the following independent
Andrew, a single individual, has $220,000 in salary and $60,000 in self-employment income in 2016. How much must he pay for his additional Medicare
Lenora and Sam are married and file a joint tax return. Lenora has $180,000 in salary and Sam has $190,000 in self-employment income in 2016. How
During 2016, Raymond, a single individual, earned a salary of $196,000. He also had the following items of investment income: $40,000 net short-term
Michelle, a single individual, reports 2016adjusted gross income of $280,000 and has the following itemized deductions before applicable
Which of the following individuals must file a tax return in 2016?
a. Carolyn is single and age 66. She receives $2,000 of interest income, $3,000 of
Kelly Martin is divorced; her dependent child, Barbara, lives with her and is her dependent. Kelly has the following items of income and
Differentiate between an abandoned spouse and a surviving spouse.
Jennifer and Jason Greco are married and file a joint tax return. Their two dependent children (Jim, age 14 and Jessica, age 16); both live at home.
Lauren is single, age 60, and has an annual salary of $68,000. She paid off her mortgage in December 2015 but expects that her annual real estate
Manuel plans to make a significant contribution to his favorite charity with one of the following assets. Which asset would you recommend Manuel
When would a taxpayer claim the standard deduction rather than itemizing deductions?
Don has a very painful terminal disease and has learned that marijuana may mitigate his pain. Don lives in a state in which it is legal to use the
Charlene provides 100 percent of the support for her elderly handicapped mother, Amanda. Amanda insists on living alone in her own apartment even
Howard is a single parent with an 11-year-old dependent son. The son currently attends sixth grade at public school. Howard accepts a temporary
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