Questions from Federal Taxation

Q: a. Is the interest received from government obligations taxable? Explain

a. Is the interest received from government obligations taxable? Explain. b. What impact does the fact that some bond interest is tax exempt have on interest rates? c. Is an investor always better o...

Q: Corporations are taxed on the income they earn, and shareholders are

Corporations are taxed on the income they earn, and shareholders are taxed on the dividends they receive. What provisions in the tax law reduce this “double tax” burden?

Q: Explain the relationship between dividends and earnings and profits.

Explain the relationship between dividends and earnings and profits.

Q: The primary objective of the federal income tax law is to raise

The primary objective of the federal income tax law is to raise revenue. What are its secondary objectives?

Q: a. Are items of income not listed in Sec. 61

a. Are items of income not listed in Sec. 61 taxable? Explain. b. Because there is no specific exclusion for unrealized income, why is it not taxable? c. Can income be realized even when a cash meth...

Q: a. Briefly explain the tax benefit rule. b.

a. Briefly explain the tax benefit rule. b. Is a taxpayer required to report the reimbursement of a medical expense by insurance as income if the reimbursement is received in the year following the y...

Q: What opportunities are available for a taxpayer to defer the recognition of

What opportunities are available for a taxpayer to defer the recognition of certain types of prepaid income? That is, what advice could you give someone who wishes to defer the reporting of prepaid in...

Q: George, a wealthy investor, is uncertain whether he should invest

George, a wealthy investor, is uncertain whether he should invest in taxable or tax-exempt bonds. What tax and nontax factors should he consider?

Q: Lisa and her daughter Jane are equal shareholders in Lisa’s Flooring,

Lisa and her daughter Jane are equal shareholders in Lisa’s Flooring, Inc. Lisa founded the corporation and was the sole owner for over twenty years. The company is very successful and Lisa has accumu...

Q: Larry’s Art Gallery sells oil paintings, lithographs, and bronzes to

Larry’s Art Gallery sells oil paintings, lithographs, and bronzes to collectors and corporations. Customers often come to Larry looking for special pieces. In order to meet customer needs, Larry often...