If Congress reduces the corporate income tax rates, how would this affect deferred tax liabilities and deferred tax assets?
> 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?
> Identify three tax planning strategies.
> 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?
> 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.
> Walter used the cash method to account for income from his cattle ranch. During an audit in year 3, the IRS auditor discovered a document from a customer indicating that Walter sold 115 head of cattle to the customer two years earlier for $77,000. The do
> What is the maximum income tax rate that applies to the employee salary, the employment tax rate(s) on the salary, and the capital gain rate(s) on the long-term capital gains, for these four single individual taxpayers in 2017 (excluding Medicare surtaxe
> Joe owes Willy $5,000 from an old gambling debt. Joe knows that there is no way he can repay the debt in the near future. He asks Joe if he will take a $25,000 life insurance policy that has a cash surrender value of $4,200 and release him from the debt.
> How do rulings issued by the IRS benefit both the IRS and taxpayers?
> Revenue-raising bills (such as tax bills) are supposed to originate in the House of Representatives. How could a senator initiate a tax bill?
> Tax law provisions change over time. Explain how this affects tax planning and tax research.
> Briefly describe the basic elements of the tax model.
> When Keith created a new corporation as the sole shareholder, he was advised by his accountant to treat 50 percent of the amount invested as a loan and 50 percent as a purchase of stock. Explain the advantages and disadvantages of this structure rather t
> What do you think the effect would be if Congress changes the law so that retirement plan contributions are included in taxable income at the time they are made rather than taxing the payment when received in retirement?
> From the perspective of both the taxpayer and the IRS, what are the advantages and disadvantages of the statute of limitations?
> The scandal on backdating stock options introduced new terminology to describe these controversial practices. Describe what you think each of these terms means. a. Backdating b. Repricing c. Reloading d. Spring-loading e. Bullet-dodging
> Construct a scenario in which the tax treatment of stock options is very unfavorable for the employee.
> What tax planning should be done before exercising incentive stock options?
> Cindy is president and sole shareholder of Chipsmart Corporation. Through her hard work (frequently putting in 70 hours per week), she has managed to triple the number of clients and revenue in the past year. Chipsmart has never paid a dividend to Cindy,
> Go to the IRS Web site (www.irs.gov) and locate Publication 502: Medical and Dental Expenses. What expenses qualify for impairment-related work expenses? How do employees deduct these expenses, and does an AGI floor (percentage) limit apply to them?
> Go to the IRS Web site (www.irs.gov) and locate Publication 501: Exemptions, Standard Deduction, and Filing Information. What documentation is necessary for a taxpayer with impaired vision to qualify for the additional standard deduction for blindness?
> Go to www.taxfoundation.org (the Web site for the Tax Foundation). a. What is Tax Freedom Day? b. When were Tax Freedom Days in 2015 and 2016?
> What is a tax service?
> Where would you find information about the IRS
> Briefly describe the statistical information available when you search the IRS website for statistics.
> Go to www.legalbitstream.com and locate Announcement 2002–18. What is the IRS’s policy on taxing frequent flyer miles?
> Go to the IRS Web site (www.irs.gov) and locate Publication 915: Social Security and Equivalent Railroad Retirement Benefits. Determine how much of the Social Security benefits must be included in income for a single individual who had $20,000 in dividen
> Go to www.irs.gov/irb/ (the IRS site containing Internal Revenue Bulletins). Locate the Definition of Terms section in a recent IRB. Differentiate between the following terms as used by the IRS in its rulings: amplified, modified, clarified, and distingu
> Go to www.aicpa.org (the AICPA’s Web site) and search for Statements on Standards for Tax Services. Read the history section of the most recent version of the Statements on Standards for Tax Services. What reasons were provided for revising the SSTS?
> Go to the IRS site (www.irs.gov) and search for “Circular No. 230.” Download a copy of Treasury Circular 230: Regulations Governing Practice before the Internal Revenue Service. a. Read §10.33 and then list four best practices for tax advisors. b. Read
> Go to www.irs.gov/irb/ (the IRS site containing Internal Revenue Bulletins). Locate and read IRS Notice 2008-14, 2008-4 IRB 310 and answer the following questions. a. What is the penalty for filing a frivolous tax return? b. What are the first three br
> Go to Gap Inc.’s Web site (www.gapinc.com) and locate its annual report. Find the note on income taxes. a. What was Gap’s effective tax rate for its two most recent fiscal years? b. How much was Gap’s valuation allowance for its two most recent fiscal
> Find an article on the Internet that describes how a traditional IRA can be converted into a Roth IRA. Summarize the process explaining any tax costs associated with the conversion. Include the URL for the article.
> What is the rationale for taxing unemployment compensation?
> Go to www.legalbitstream.com. Locate and read Revenue Ruling 2003–102. What type of medicines and drugs can be reimbursed through a flexible spending arrangement (FSA) according to this ruling? What change took effect in 2011?
> Go to www.legalbitstream.com. Locate and read Regulation Section 1.62–2(j), example 6. If an employer has an otherwise accountable plan but reimburses employees at 60 cents per mile, how is the reimbursement treated?
> Sarah pays $800 per month for her five-year-old daughter to attend a private kindergarten from 8:30 A.M. until 2:30 P.M. and after-school care until 5:30 P.M. The price of the kindergarten without the after-school care is $300 per month. Assuming Sarah p
> Howard is a single parent with an 11-year-old dependent son. The son currently attends sixth grade at public school. Howard accepts a temporary foreign assignment from his employer, which is expected to last from August through December. Because of the u
