Tax problem
Homework 1 –
Chapter 1
1. In the following independent situations, is the tax position of the tax payer likely to change? Explain why or why not.
a) Yes, this is likely to change John’s tax position because of capital gains and losses on the disposition because of property now convert to ordinary income and losses.
b) Yes, this is likely to change Theresa’s tax position because now she is self employed and has to deal with the safe harbor of withholdings is lost and new quarterly payments on income and self employment taxes must be made.
c) Paul purchased a personal residence will have a tax position change because you will have a new mortgage interest and property tax deductions cause the standard deductions to be replaced by itemization on Schedule A.
7. Distinguish between taxes that are proportional and those that are progressive.
Proportional taxes – The tax rate remains constant for any given income level.
Progressive taxes-The tax rate is a higher rate of tax applies as the tax base increases. The Federal income tax, Federal gift and estate taxes, and most state income tax rate structures are progressive. 12. The Morgan family lives in Massachusetts. They moor their sailboat in Rhode Island. What might be a plausible reason for the possible inconvenience? A plausible reason for the possible inconvenience would be Rhode Island has no Property tax, and sale s & use taxes. 26. a) Yes, it has relevance to state income tax. It is a being asked because some states require individuals a use tax on purchase that were not originally taxed. b) I would say: This will in pack your state income tax and federal tax and your preparer of your tax return that is my job. 32. a) Severance Taxes – are transaction taxes that are based ib the notion that the state has an interest in its natural resources. Taxes are
Chapter 1
1. In the following independent situations, is the tax position of the tax payer likely to change? Explain why or why not.
a) Yes, this is likely to change John’s tax position because of capital gains and losses on the disposition because of property now convert to ordinary income and losses.
b) Yes, this is likely to change Theresa’s tax position because now she is self employed and has to deal with the safe harbor of withholdings is lost and new quarterly payments on income and self employment taxes must be made.
c) Paul purchased a personal residence will have a tax position change because you will have a new mortgage interest and property tax deductions cause the standard deductions to be replaced by itemization on Schedule A.
7. Distinguish between taxes that are proportional and those that are progressive.
Proportional taxes – The tax rate remains constant for any given income level.
Progressive taxes-The tax rate is a higher rate of tax applies as the tax base increases. The Federal income tax, Federal gift and estate taxes, and most state income tax rate structures are progressive. 12. The Morgan family lives in Massachusetts. They moor their sailboat in Rhode Island. What might be a plausible reason for the possible inconvenience? A plausible reason for the possible inconvenience would be Rhode Island has no Property tax, and sale s & use taxes. 26. a) Yes, it has relevance to state income tax. It is a being asked because some states require individuals a use tax on purchase that were not originally taxed. b) I would say: This will in pack your state income tax and federal tax and your preparer of your tax return that is my job. 32. a) Severance Taxes – are transaction taxes that are based ib the notion that the state has an interest in its natural resources. Taxes are