ACC 555 Entire Course Individual Tax
Research and Planning
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ACC 555 Entire Course
Individual Tax Research and Planning
ACC 555 Assignment 1
– Tax Research
Imagine that the Internal
Revenue Service (IRS) has selected your client for an audit. Your client and
the IRS disagree about the amount of tax revenue owed. You agree with your
client’s position. You must provide a defense for the client that requires you
to research the issues in order to render an educated opinion on a course of
action for your client. Note: You may create and/or make all necessary
assumptions needed for the completion of this assignment.
Write a three to four (3-4) page paper in which you:
1. Prepare a defensible strategy for the client by using the six (6) steps in the tax research process. Propose how each of the steps provides support for the client’s position.
2. Create a fact-based argument that you plan to propose to the client as a defense of his / her position with the IRS.
Write a three to four (3-4) page paper in which you:
1. Prepare a defensible strategy for the client by using the six (6) steps in the tax research process. Propose how each of the steps provides support for the client’s position.
2. Create a fact-based argument that you plan to propose to the client as a defense of his / her position with the IRS.
ACC 555 Assignment 2
– Tax-Deductible Losses
Write a six to eight (6-8)
page paper in which you:
1. Research the manner in which tax-deductible losses originally became part of the U.S. Tax Code. Conclude whether or not tax-deductible losses overall are reasonable. Provide support for your conclusions.
2. Suggest what you believe to be a significant tax-deductible loss. Discuss whether or not the deductibility of this loss harms other taxpayers in general. Recommend changes to this tax-deductible loss you would make that would be fairer to all taxpayers.
3. Choose a type of loss that is not deductible, and argue whether these losses should continue to be disallowed, or why they should be allowed. Provide support for the rationale.
1. Research the manner in which tax-deductible losses originally became part of the U.S. Tax Code. Conclude whether or not tax-deductible losses overall are reasonable. Provide support for your conclusions.
2. Suggest what you believe to be a significant tax-deductible loss. Discuss whether or not the deductibility of this loss harms other taxpayers in general. Recommend changes to this tax-deductible loss you would make that would be fairer to all taxpayers.
3. Choose a type of loss that is not deductible, and argue whether these losses should continue to be disallowed, or why they should be allowed. Provide support for the rationale.
ACC 555 Assignment 3 – Tax
Periods and Method
Imagine that you have
always wanted to own a business and have now created a new start-up company.
Write an eight to ten (8-10) page paper in which you:
1. Analyze the start-up company you created. Include in your analysis the type of company you have created, its business objectives, and other factors that you believe are important to the success of the business.
2. Determine the types of accounting periods that you could choose from for the company. Choose the type of accounting period that would provide the greatest tax benefit. Provide example(s) to support your proposal.
3. Evaluate the appropriateness of the types of accounting methods that would be available for your business. Recommend the method that would minimize the tax liabilities for the company. Provide support for your rationale.
4. Choose at least two (2) specific transactions, and then propose one (1) special accounting method which your company would use to account for these transactions. Indicate any significant tax consequences that may result from the method you proposed.
Write an eight to ten (8-10) page paper in which you:
1. Analyze the start-up company you created. Include in your analysis the type of company you have created, its business objectives, and other factors that you believe are important to the success of the business.
2. Determine the types of accounting periods that you could choose from for the company. Choose the type of accounting period that would provide the greatest tax benefit. Provide example(s) to support your proposal.
3. Evaluate the appropriateness of the types of accounting methods that would be available for your business. Recommend the method that would minimize the tax liabilities for the company. Provide support for your rationale.
4. Choose at least two (2) specific transactions, and then propose one (1) special accounting method which your company would use to account for these transactions. Indicate any significant tax consequences that may result from the method you proposed.
ACC 555 Week 5 Midterm Exam Answers
1) The federal income tax
is the dominant form of taxation by the federal government.
2) The Sixteenth Amendment
permits the passage of a federal income tax.
3) When a change in the tax
law is deemed necessary by Congress, the entire Internal Revenue Code must be
revised.
4) A progressive tax rate
structure is one where the rate of tax increases as the tax base increases.
5) The terms “progressive
tax” and “flat tax” are synonymous.
6) A proportional tax rate
is one where the rate of the tax is the same for all taxpayers, regardless of
income levels.
7) Regressive tax rates
decrease as the tax base increases.
8) The marginal tax rate is
useful in tax planning because it measures the tax effect of a proposed transaction.
9) A taxpayer’s average tax
rate is the tax rate applied to an incremental amount of taxable income that is
added to the tax base.
10) If a taxpayer’s total
tax liability is $30,000, taxable income is $100,000, and economic income is
$120,000, the average tax rate is 30 percent.
11) If a taxpayer’s total
tax liability is $4,000, taxable income is $20,000, and total economic income
is $40,000, then the effective tax rate is 20 percent.
12) All states impose a
state income tax which is generally based on an individual’s federal adjusted
gross income (AGI) with minor adjustments.
13) The unified transfer
tax system, comprised of the gift and estate taxes, is based upon the total
property transfers an individual makes during lifetime and at death.
14) Gifts between spouses
are generally exempt from transfer taxes.
15) The primary liability
for payment of the gift tax is imposed upon the donee.
16) For gift tax purposes,
a $14,000 annual exclusion per donee is permitted.
17) Property is generally
included on an estate tax return at its historical cost basis.
18) Property transferred to
the decedent’s spouse is exempt from the estate tax because of the estate tax
marital deduction provision.
19) Gifts made during a
taxpayer’s lifetime may affect the amount of estate tax paid by the taxpayer’s
estate.
20) While federal and state
income taxes as well as the federal gift and estate taxes are generally
progressive in nature, property taxes are proportional.
21) Adam Smith’s canons of
taxation are equity, certainty, convenience and economy.
22) The primary objective
of the federal income tax law is to achieve various economic and social policy
objectives.
23) Individuals are the
principal taxpaying entities in the federal income tax system.
24) The various entities in
the federal income tax system may be classified into two general
categories, taxpaying
entities (such as individuals and C [regular] corporations)
and flow-through
entities such as sole proprietorships, partnerships, S corporations,
and limited liability companies.
25) In 2013, dividends paid
from most U.S. corporations are taxed at the same rate as the recipients’
salaries and wages.
26) Flow-through entities
do not have to file tax returns since they are not taxable entities.
27) S Corporations result
in a single level of taxation.
28) In a limited liability
partnership, a partner is not liable for his partner’s acts of negligence or
misconduct.
29) Limited liability
companies may elect to be taxed as corporations.
30) Limited liability
company members (owners) are responsible for the liabilities of their limited
liability company.
31) The tax law encompasses
administrative and judicial interpretations, such as Treasury regulations,
revenue rulings, revenue procedures, and court decisions, as well as statutes.
32) Generally, tax legislation is
introduced first in the Senate and referred to the Senate Finance Committee.
33) The Internal Revenue Service is the
branch of the Treasury Department responsible for administering the federal tax
law.
34) Generally, the statute
of limitations is three years from the later of the date the tax return is
filed or the due date.
35) Arthur pays tax of
$5,000 on taxable income of $50,000 while taxpayer Barbara pays tax of $12,000
on $120,000. The tax is a
- A) progressive tax.
- B) proportional tax.
- C) regressive tax.
- D) None of the above.
36) Which of the following
taxes is progressive?
- A) sales tax
- B) excise tax
- C) property tax
- D) income tax
37) Which of the following
taxes is proportional?
- A) gift tax
- B) income tax
- C) sales tax
- D) Federal Insurance Contributions Act (FICA)
38) Which of the following
taxes is regressive?
- A) Federal Insurance Contributions Act (FICA)
- B) excise tax
- C) property tax
- D) gift tax
39) Sarah contributes
$25,000 to a church. Sarah’s marginal tax rate is 35% while her average tax
rate is 25%. After considering her tax savings, Sarah’s contribution costs
- A) $6,250.
- B) $8,750.
- C) $16,250.
- D) $18,750.
40) Helen, who is single,
is considering purchasing a residence that will provide a $28,000 tax deduction
for property taxes and mortgage interest. If her marginal tax rate is 25% and
her effective tax rate is 20%, what is the amount of Helen’s tax savings from
purchasing the residence?
- A) $5,600
- B) $7,000
- C) $21,000
- D) $22,400
ACC 555 Week 11 Final Exam
Answers
1) For individuals, all
deductible expenses must be classified as deductions for AGI or deductions from
AGI.
2) In 2013, medical
expenses are deductible as a from AGI deduction to the extent
that they exceed 7.5 percent of the taxpayer’s AGI.
3) Medical expenses paid on
behalf of an individual who could be the taxpayer’s dependent except for the
gross income or joint return tests are deductible as itemized deductions.
4) Medical expenses
incurred on behalf of children of divorced parents are deductible by the parent
who pays the expenses but only if that parent also is entitled to the
dependency exemption.
5) The definition of
medical care includes preventative measures such as routine physical
examinations.
6) Due to stress on the
job, taxpayer Charlie began to experience chest pains. In order to relax and
relieve the pains, he and his spouse went on an ocean cruise. The cost of the
cruise to alleviate this medical condition is tax deductible.
7) Expenditures for a
weight reduction program are deductible if recommended by a physician to treat
a specific medical condition such as hypertension caused by excess weight.
8) In order for a taxpayer
to deduct a medical expense, the amount must be paid to a certified medical
doctor (M.D.).
9) Jeffrey, a T.V. news
anchor, is concerned about the wrinkles around his eyes. Because it is
job-related, the cost of a face lift to eliminate these wrinkles is a
deductible medical expense.
10) Expenditures for
long-term care insurance premiums qualify as a medical expense deduction
subject to an annual limit based upon the age of an individual.
11) Capital expenditures
for medical care which permanently improve or better the taxpayer’s property
are deductible to the extent the cost exceeds the increase in fair market value
to the property attributable to the capital expenditure.
12) Expenditures incurred
in removing structural barriers in the home of a physically handicapped individual
are deductible only to the extent the cost exceeds the increase in fair market
value to the property attributable to the capital expenditure.
13) If the principal reason
for a taxpayer’s presence in an institution is the need and availability of
medical care, the entire cost of lodging and meals is considered qualified
medical expenditures.
14) A medical expense is
generally deductible only in the year in which the expense is actually paid.
15) If a prepayment is a
requirement for the receipt of the medical care, the payment is deductible in
the year paid rather than the year in which the care is rendered.
16) If a medical expense
reimbursement is received in a year after a deduction has been taken on a
previous year’s return, the previous year’s return must be amended to eliminate
the reimbursed expense.
17) Assessments or fees
imposed for specific privileges or services are not deductible as taxes.
18) Foreign real property
taxes and foreign income taxes are not deductible as itemized deductions.
19) A personal property tax
based on the weight of the property is deductible.
20) Assessments made
against real estate for the purpose of funding local improvements are not
deductible in the year paid but rather should be added to the cost basis of the
property.
21) Self-employed
individuals may deduct the full self-employment taxes paid as a for AGI
deduction.
22) Finance charges on
personal credit cards are considered interest and are, therefore, deductible.
23) In general, the deductibility
of interest depends on the purpose for which the indebtedness is incurred.
24) Interest expense
incurred in the taxpayer’s trade or business is deductible as a for AGI
deduction without limitation if the taxpayer materially participates in the business.
25) Investment interest
expense which is disallowed because it exceeds the taxpayer’s net investment
income may be carried over and treated as incurred in subsequent years.
26) Investment interest
includes interest expense incurred to purchase tax-exempt securities.
27) Taxpayers may elect to
include net capital gain as part of investment income.
28) Taxpayers may not
deduct interest expense on personal debt including credit card debt, car loans,
and other consumer debt.
29) Qualified residence
interest consists of both acquisition indebtedness and home equity interest.
30) Acquisition
indebtedness for a personal residence includes debt incurred to substantially
improve the residence.
31) A taxpayer is allowed
to deduct interest expense incurred on home equity indebtedness limited to the
lesser of $100,000 or the home equity (FMV of the residence less the
acquisition indebtedness).
32) While points paid to
purchase a residence are deductible as interest in the period paid, points
associated with the refinancing of a residence must be amortized and deducted
over the life of the loan.
33) Christopher, a cash
basis taxpayer, borrows $1,000 from ABC Bank by issuing a 3-month note on
December 1, 2013. Christopher receives $940 but must repay $1,000 on the due
date. The amount of interest expense deductible in 2013 is $20.
34) Charitable
contributions made to individuals are deductible if the individuals can show
extreme financial need.
35) For charitable
contribution purposes, capital gain property includes property which, if sold,
would produce a long-term capital gain.
36) A charitable
contribution deduction is allowed for the FMV of services rendered to a
qualified charitable organization.
37) A charitable
contribution in excess of the deduction limit for one taxable year can be
carried forward five years.
38) If a taxpayer makes a
charitable contribution to a university and in return receives the right to
purchase tickets to athletic events, the taxpayer may deduct only 80% of the
payment.
39) Corporate charitable
deductions are limited to 10% of the corporation’s taxable income for the year.
40) Legal fees for drafting
a will are generally deductible.
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