Questions from Individual Taxation

Q: Hyundai is considering opening a plant in two neighboring states. One

Hyundai is considering opening a plant in two neighboring states. One state has a corporate tax rate of 10 percent. If operated in this state, the plant is expected to generate $1,000,000 pretax profi...

Q: Bendetta, a high-tax-rate taxpayer, owns several

Bendetta, a high-tax-rate taxpayer, owns several rental properties and would like to shift some income to her daughter, Jenine. Bendetta instructs her tenants to send their rent checks to Jenine so Je...

Q: Using the facts in the previous problem, what are some ways

Using the facts in the previous problem, what are some ways that Bendetta could shift some of the rental income to Jenine? What are the disadvantages associated with these income-shifting strategies?...

Q: Laurie is thinking about investing in one or several of the following

Laurie is thinking about investing in one or several of the following investment options: Corporate bonds (ordinary interest paid annually) Dividend-paying stock (qualified dividends) Life insurance (...

Q: Dennis is currently considering investing in municipal bonds that earn 6 percent

Dennis is currently considering investing in municipal bonds that earn 6 percent interest, or in taxable bonds issued by the Coca-Cola Company that pay 8 percent. If Dennis’ tax rate is 20 percent, wh...

Q: Helen holds 1,000 shares of Fizbo Inc. stock that

Helen holds 1,000 shares of Fizbo Inc. stock that she purchased 11 months ago. The stock has done very well and has appreciated $20/share since Helen bought the stock. When sold, the stock will be tax...

Q: Anne’s marginal income tax rate is 30 percent. She purchases a

Anne’s marginal income tax rate is 30 percent. She purchases a corporate bond for $10,000 and the maturity, or face value, of the bond is $10,000. If the bond pays 5 percent per year before taxes, wha...

Q: Irene is saving for a new car she hopes to purchase either

Irene is saving for a new car she hopes to purchase either four or six years from now. Irene invests $10,000 in a growth stock that does not pay dividends and expects a 6 percent annual before-tax ret...

Q: Komiko Tanaka invests $12,000 in LymaBean, Inc.

Komiko Tanaka invests $12,000 in LymaBean, Inc. LymaBean does not pay any dividends. Komiko projects that her investment will generate a 10 percent before-tax rate of return. She plans to invest for t...

Q: Alan inherited $100,000 with the stipulation that he “

Alan inherited $100,000 with the stipulation that he “invest it to financially benefit his family.” Alan and Alice decided they would invest the inheritance to hel...