Identify three tax planning strategies.
> Tropical Patios Corporation manufactures patio furniture in a factory with 24 employees. The office staff consists of 4 employees who handle personnel, accounting, and other office responsibilities. The sales staff includes 6 employees who travel extensi
> Makai Corporation has a potential deduction of up to $1,000 that it would like to claim on its current-year tax return. Its tax position meets the recognition threshold of more likely than not, but the deduction cannot be measured by a single amount. The
> Denise files her 2017 tax return on February 4, 2018. If there is no material understatement of income on her return and the return is properly signed and filed, when does the statute of limitations expire for Denise’s 2017 tax return?
> In the current year, Melbourne Corporation pays the $2,000 annual premium for a life insurance policy on its president, for which Melbourne Corporation is the beneficiary. Melbourne also pays $20,000 in annual premiums for group term life insurance for i
> Luis, a self-employed individual, flies from New York to Rome. He spends seven days in Rome on business and stays in Rome for an additional three days to vacation. Transportation costs incurred were $1,400; his hotel cost $200 per day for a total of $2,0
> John is a teacher at a local high school. During 2017, he travels three days per week to a school in the next county to work with gifted children in an after-school program that does not end until 6:30 p.m. He normally eats dinner before driving home. If
> Dan’s employer assigned him to the New York office for 18 months. During this 18-month assignment, Dan spent $18,000 for apartment rent and $8,500 for meals, because his family remained in St. Louis. At the end of the 18-month assignment, Dan returns to
> What information is found in a citator?
> Martha lives with her husband in Los Angeles but works in San Diego. During the week she stays in a hotel in San Diego and eats in nearby restaurants. On weekends, she flies home to Los Angeles. During the year, Martha spent $5,000 for the hotel, and $2,
> Jim, a self-employed individual, takes an important customer to the hockey playoffs. Although the face value of a ticket is only $70, he pays a scalper $400 for each ticket. Assuming all other requirements are met, how much can Jim deduct for the two tic
> Elisa spends $1,000 on business lunches to entertain her customers at the local country club. The club charges an annual membership fee of $800. Elisa uses the facility 80 percent of the time for business. Her employer does not reimburse her for any of t
> On December 15, Simon Corporation (a cash-basis, calendar-year corporation) paid $5,000 for five months of supplies and $9,000 for an insurance policy covering its office building for the next three calendar years. How much can Simon deduct this year for
> Mary, a taxpayer in the 33 percent marginal tax bracket, borrows $500,000 at 10 percent interest to invest in 7 percent tax-exempt municipal bonds. The annual interest expense on the loan is $50,000. Mary earns $35,000 interest income on the bonds. What
> Randy gave one of his best customers a $150 bottle of wine. How much can he deduct for this business gift?
> In its first year of operations, Bell Corporation paid its attorney $4,000 and its accountant $2,000 for services related to the organization of the corporation. In its second year of operations, Bell paid the attorney $700 to handle contract negotiation
> Aloha Airlines is required by law to have its aircraft engines tested and recertified after 5,000 flight hours. Molokai Maintenance performs the engine tests and recertification for $2,200 per aircraft. For financial accounting purposes, Aloha accrues ma
> Marvin, an attorney, is a cash-basis, calendar-year taxpayer. Marvin’s two daughters each own 50 percent of the stock of Marvil Corporation, a calendar-year, accrual-basis corporation. During year 1, Marvin completes some legal work for Marvil Corporatio
> Which of the following costs must be included in inventory by a manufacturer under the UNICAP rules? a. Factory insurance b. Advertising c. Payroll taxes for factory employees d. Research and experimentation costs e. Repairs to factory equipment
> Explain the Golsen rule.
> Which itemized deductions must exceed a basic minimum (floor) before the taxpayer’s taxable income is reduced for the excess?
> How do alternative minimum tax itemized deductions differ from the regular income tax itemized deductions?
> How do alternative minimum tax rates compare to the regular income tax rates?
> What is the overall charitable contribution deduction limitation? How are charitable contributions in excess of the current year’s limit treated?
> Gabor Family Enterprises, a closely-held family corporation, plans to offer a stock option plan as an incentive to its employees, but it does not want its stock owned by anyone who is not a member of the Gabor family. What type of plan should Gabor consi
> In which of the following cases should the employees report income? a. The employer provides an annual picnic for employees and their families to celebrate Independence Day. b. Employees can use the company photocopier for small amounts of personal cop
> Murphy Company, a cash-basis, calendar-year taxpayer, received a call on December 28, year 1, from a client stating that a check for $9,000 as payment in full for their services can be picked up at their offices, two blocks away, any weekday between 1:
> Jabba Company uses the cash method of accounting. Jabba received a computer from a customer as payment for a $2,000 bill. Can Jabba avoid recognizing income because it received payment in a noncash form? Explain.
> Michelle (a calendar-year individual) begins a new business as a sole proprietorship. She would like to use an October 31 fiscal year-end for her business because the calendar year ends during her busy season. What must Michelle do to use a fiscal tax ye
> What are two major categories of differences between financial accounting income and taxable income?
> What is the difference between a legislative regulation and an interpretative regulation?
> What is the purpose of the United States establishing a tax treaty with a foreign country?
> While walking through the park, Jane finds a $100 bill. No one is around to claim it, so she keeps it. Does Jane have any gross income as a result of this?
> 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 price of $7,000. At the end of the year, $840 of interest had accrued. How much income does Martha report fo
> Why is interest income on state and local bonds tax exempt?
> Virginia gave her 14-year-old grandson, Tommy, $10,000 in common stock. One month later, Tommy receives a $100 dividend on the stock. How much income is taxed to Tommy and how much to Virginia?
> Explain how community property laws can affect the allocation of income between spouses.
> Ryan’s annual salary is $120,000 per year. He asked his employer to pay $20,000 of his salary to his elderly grandmother who is in a nursing home. The employer pays $20,000 directly to the grandmother and the balance to Ryan. What is Ryan’s gross income?
> Do taxpayers face only monetary fines or can they be sentenced to jail?
> What are the two documents that practitioners use to communicate the results of their tax research?
> What does it mean when a Tax Court decision says that the decision has been entered under Rule 155?
> What is the difference between a letter ruling and a revenue ruling?
> Explain the meaning of hazards of litigation.
> If the taxpayer does not agree with proposed adjustments, what are the alternatives available to a taxpayer who receives a 30-day letter?
> What signal does the IRS give taxpayers to indicate that a court decision will not be followed?
> What uniquely numbered part of the Internal Revenue Code does a tax researcher usually cite?
> Describe the basic steps in performing tax research.
> What is the difference between primary authority and secondary authority?
> In the citation Reg. §1.247-3, what do the 1 and the 247 indicate?
> What are the basic tax rates for an individual and a corporation?
> As a bill proceeds through Congress, various committee reports are generated. What three committee reports typically are generated as a result of this process?
> Compare a C corporation to an S corporation.
> Describe the various types of audits.
> Define gross income.
> Which three taxable persons pay all of the income taxes?
> Differentiate horizontal from vertical equity.
> Explain the business purpose doctrine.
> What tax rates apply to an individual’s capital gains and to which tax brackets do each of these rates apply?
> Maria is a single individual with taxable income of $75,000 in 2017. What marginal tax rate should she use to determine the tax savings from a $2,000 deductible expense?
> Beta Corporation anticipates $800,000 of taxable income for the year before considering additional projects. What marginal tax rate should it use in evaluating a project that may generate $200,000 of additional income?
> Name three sources of guidance for tax professionals.
> What is a use tax?
> Statement on Standards for Tax Services No. 4 states that a CPA may use estimates in completing a tax return. When would using estimates be appropriate in tax return preparation?
> What are three characteristics of a sole proprietorship? Do these characteristics differ from those of a partnership? What are three characteristics of a limited liability company that differ from those of a partnership?
> What is the difference between tax avoidance and tax evasion?
> What are the Statements on Standards for Tax Services? Who issues them?
> What property is subject to the intangible tax?
> What is the most common wealth tax and how is it levied?
> What employment taxes are imposed on an employee and an employer?
> What three factors are generally used to determine the percentage of corporate income allocated to a particular state?
> How does a franchise tax differ from an income tax?
> Suntan Corporation sells its products nationwide over the Internet. It has production facilities, warehouses, and offices only in the state of Florida. It has sales in excess of $600,000 for the year to customers in Arizona. It has no physical presence i
> What is nexus?
> What is a SALT practice?
> What are two fiduciary entities and how are they created? Differentiate the grantor, trustee, and beneficiary of a trust.
> Define tax expenditure?
> Which version of the tax code is applicable today?
> Explain the realization principle.
> What is a tax? How does a tax differ from a fine?
> Discuss the factors to consider when choosing between taking the child and dependent care credit and participating in an employer-sponsored qualified dependent care assistance program.
> Assume a modification to the tax law is proposed that allows taxpayers with no dependent children to claim a $500 dependency deduction per pet (up to a maximum of two pets) if the taxpayer spends at least $2,000 per year maintaining each animal. Would yo
> Prior to 1986, all consumer interest expense was deductible. In 1986, Congress eliminated the deduction for consumer interest expense, including interest paid on car loans and credit card balances. Why do you think Congress made this change?
> If Congress reduces the corporate income tax rates, how would this affect deferred tax liabilities and deferred tax assets?
> Your friend recently read a newspaper article that said the largest of the Fortune 500 companies do not pay the federal income tax expense reported on their financial statements. The tax they pay is frequently a lower number. Your friend asks you to expl
> List three types of expenses or allowances that can cause temporary differences between book and taxable income and explain how their financial accounting treatment differs from their tax treatment. Why do you think the treatments differ?
> Why are committee reports useful to a tax researcher?
> Michael’s friend suggests that he file Form 5213: Election to Postpone Determination to Whether the Presumption Applies That an Activity Is Engaged in for Profit if he expects to incur losses in his new activity. If he files this form within the first th
> Orlando purchased a time-share property in Hawaii that he can use for five weeks each year. If Orlando uses this property for his vacations during the year and rents the property to others when he chooses not to use it, can he deduct any expenses related
> 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 corporation. He expects that the business will have gross income of $130,000 in the first year with expens
> Would an employee who first becomes a participant in a pension plan at age 52 generally prefer to have a defined benefit plan or a defined contribution plan? Explain.
> On O’s Favorite Giveaway Show, the host gave 100 audience members debit cards, each one for $15,000, with the stipulation that the audience members donate the money to their favorite charitable cause (they cannot keep the money for themselves or give it
> John and Mary are divorcing. John demands that Mary pay him $75,000 alimony in the first year after the divorce, $50,000 in the second year, and $25,000 in the third and all subsequent years until he dies or remarries. What are the income tax ramificatio
> Congress has the power to tax income “from whatever source derived.” Do you believe that this allows Congress the discretion to tax municipal bond interest (or other tax-exempt income) earned throughout a tax year retroactively if the law to make this in
> Some politicians have proposed changing the way Social Security benefits are taxed. One proposal would increase the amount of Social Security benefits included in gross income to 100 percent. A tax rate of 100 percent would then apply for some high-incom
> Compare the benefits of a $4,000 deduction and a $4,000 tax credit for two single taxpayers, one with taxable income of $50,000 and the other with taxable income of $200,000.
> What is the after-tax interest rate that a corporation in the 38 percent tax bracket pays on a loan of $100,000 at 7 percent interest?
> Differentiate the tax treatment of an individual’s capital losses from the tax treatment of corporate capital losses.
> Evaluate allowing married individuals with dual incomes to choose to file a joint tax return or to file as two single individuals as a remedy for the marriage penalty.
> Evaluate the sales tax and the income tax using Adam Smith’s four canons of taxation.
> If the Congress were to enact a flat tax, do you believe that there should be any exclusions or deductions from income before the single tax rate is applied? Explain
> Is a property tax generally a progressive, proportional, or a regressive tax? Explain.
