Questions from Taxation

Q: Firm J purchased a depreciable business asset for $62,500

Firm J purchased a depreciable business asset for $62,500. Assuming the firm uses the half-year convention, compute its first-year MACRS depreciation if the asset is: a. A land irrigation system. b. D...

Q: Identify two reasons why a firm’s actual marginal tax rate for a

Identify two reasons why a firm’s actual marginal tax rate for a year could differ from the projected marginal tax rate for that year.

Q: Firm F is negotiating to purchase a multimillion-dollar computer system

Firm F is negotiating to purchase a multimillion-dollar computer system from the manufacturer. Under applicable state law, Firm F is exempt from sales tax on the purchase. Because the manufacturer dis...

Q: Does the after-tax cost of a deductible expense increase or

Does the after-tax cost of a deductible expense increase or decrease as the taxpayer’s marginal income tax rate increases?

Q: Firm A and Firm Z are in the same business. Both

Firm A and Firm Z are in the same business. Both firms considered spending $10,000 for the same reason. The expenditure would be deductible for both firms. Firm A decided that the expenditure was wort...

Q: Ms. P is considering investing $20,000 in a

Ms. P is considering investing $20,000 in a new business. She projects that this investment should generate $3,000 income each year. In estimating her tax on this future income stream, should Ms. P us...

Q: Corporation N must decide between two opportunities that will generate different cash

Corporation N must decide between two opportunities that will generate different cash flows over a five-year period. Describe the circumstances in which the tax cost of the opportunities is a neutral...

Q: Which assumption about the tax consequences of a future transaction is more

Which assumption about the tax consequences of a future transaction is more uncertain: an assumption based on a provision that has been in the Internal Revenue Code for 25 years or an assumption based...

Q: Mrs. K is about to begin a new business activity and

Mrs. K is about to begin a new business activity and asks you if she can reduce taxable income by operating the activity as a corporation rather than as a sole proprietorship. How do you answer Mrs. K...

Q: Assume that Congress amends the tax law to provide for a maximum

Assume that Congress amends the tax law to provide for a maximum 18 percent rate on rental income generated by single-family residences. What effect might this preferential rate have on the market val...