...History: * First tax in 1861 to fund Civil War * Repealed in 1865 * Income tax law passed in 1894 but rejected by Supreme Court * 16th amendment was passed in 1913 * 42% of revenue is raised from individual income tax * 40% from social security, 9% corporate income tax, 9% other Tax Structure: * Progressive tax structure: tax rate increases as the tax base increases * US income tax system is this way * Proportional tax structure (flat tax): tax rate remains the same regardless of tax base * Regressive tax structure: tax rate decreases as the tax base increases * Social security tax system is this way * Average tax rate: total tax paid on a certain amount of taxable income * Marginal tax rate: rate of tax paid on the highest dollar of income Calculation of Tax: Income - deductions = taxable income X tax rates = tax liability - tax payments/credits = tax refund or due with return * For TI up to $100,000 use tax tables * Use tax rate schedules for higher income * Tax rate tables are calculated at midpoint of range; rate schedules are precise Tax Forms: * 1040EZ must be: * Single or married filing jointly * Taxable income less than $100,000 * Have no dependents * May only have income from wages, unemployment and interest * 1040A must be: * Any of 5 filing statuses and have dependents * Income limited to $100,000 * May have more...
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...ACCT 324 Federal Tax Accounting I Entire Course http://www.devryguiders.com/downloads/acct-324-federal-tax-accounting-i-entire-course/ ACCT 324 Week 1 DQ 1 ACCT 324 Week 1 DQ 2 ACCT 324 Week 1 Quiz – Federal Tax Law and Process ACCT 324 Week 2 DQ 1 ACCT 324 Week 2 DQ 2 ACCT 324 Week 2 Quiz – Income Inclusions, Exclusions & Accounting Methods ACCT 324 Week 2 You Decide ACCT 324 Week 3 Course Project: Deductions, Losses & Depreciation ACCT 324 Week 3 DQ 1 ACCT 324 Week 3 DQ 2 ACCT 324 Week 3 Quiz – Deductions, Losses & Depreciation ACCT 324 Week 4 DQ 1 ACCT 324 Week 4 DQ 2 ACCT 324 Week 4 Midterm Exam – Deductions, Losses & Passive Activities ACCT 324 Week 5 Course Project ACCT 324 Week 5 DQ 1 ACCT 324 Week 5 DQ 2 ACCT 324 Week 5 Quiz – AMT, Tax Credits, & Tax Payments ACCT 324 Week 6 DQ 1 ACCT 324 Week 6 DQ 2 ACCT 324 Week 6 Quiz – Property Transactions ACCT 324 Week 7 DQ 1 ACCT 324 Week 7 DQ 2 ACCT 324 Week 7 Quiz – Capital Gains & Losses ACCT 324 Week 8 Final Exam ACCT 324 Federal Tax Accounting I Entire Course http://www.devryguiders.com/downloads/acct-324-federal-tax-accounting-i-entire-course/ ACCT 324 Week 1 DQ 1 ACCT 324 Week 1 DQ 2 ACCT 324 Week 1 Quiz – Federal Tax Law and Process ACCT 324 Week 2 DQ 1 ACCT 324 Week 2 DQ 2 ACCT 324 Week 2 Quiz – Income Inclusions, Exclusions & Accounting Methods ACCT 324 Week 2 You Decide ACCT 324 Week 3 Course Project: Deductions, Losses & Depreciation ACCT 324 Week 3 DQ 1 ACCT 324 Week 3 DQ 2 ...
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...Error Report For Lori Corp: o 1120 Warning: This Corporation should file forms for Tax Year 2011. o 1120 Error: The Business activity code no. is not valid; must be between 111100 and 813000 OR if applicable, enter "Inactive". o 1120 Warning: Determine whether the IRS may discuss this return with the preparer and select appropriate response box. o 1120 Warning: The amount entered as buildings and other depreciable assets at the end of tax year on Sch L does not equal the amount from Form 4562. o 1120 Warning: The amount entered as accumulated depreciation at the end of tax year on Sch L does not equal the amount from Form 4562. o 1120 Warning: The end-of-year unappropriated retained earnings reported on Sch L should equal the amount reported on Sch M-2. o 1120 Warning: The Corporation qualifies as a small corporation or is otherwise exempt from the alternative minimum tax. o 1120 Informational: Either the Yes or the No box should be checked. Override and Estimate Report For Lori Corp: o No results were found. Please review your return carefully. 2010 Tax Summary (1120) Federal Information Lori Corp 13-1928472 Total Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $700,000. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....... Total Deductions . . . . . . . . . . . . . . . . . . . . . . . . . . . $430,900. . . . ....
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...December 31, 2013 Corporate Tax Return Problem - first year of operation Cash $180,000 1,400,000 Other assets (fixed assets and bond investments) Accounts payable and other liabilities $250,000 Capital stock 1,000,000 Retained earnings Service revenue 700,000 Sec. 103 Interest income - State of North Carolina Bonds 50,000 Salary expense, payroll taxes, rent, depreciation, etc. 400,000 Sec. 1211, 1212 Loss on sale of capital assets 20,000 Trial Balance Total (before recording the income tax provision) $2,000,000 $2,000,000 Assume federal corporate income tax rate is 40% for all years, and there is no state income tax. 1 What is the amount of the corporation's GAAP net income before taxes? 3 Points Revenue $750,000 Note: Only two Expenses 420,000 accounts have bookNet income before income tax $330,000 tax differences. 2 Enter net income per books. Present adjustments needed to compute taxable income. 3 Points Net income per books $330,000 Less Municipal bond interest (50,000) Add capital loss 20,000 Taxable income $300,000 3 Compute the deferred tax account balance(s). 3 Points Capital loss $20,000 Tax rate 40% Deferred tax asset $8,000 4 Provide journal entry for income tax provision (current & deferred). Do not record an allowance account for the deferred tax account. Ignore uncertain positions when making this set of journal entries. 3 Points Current income tax expense 120,000 Current income tax payable 120,000 Deferred tax asset 8,000 Deferred tax benefit 8,000 5 Compute GAAP...
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...RESEARCH PAPER ACCOUNTING 483 - FEDERAL TAX Section 01 1st Research Paper Fall 2011 Due Wednesday, October 26, 2011 Speedy Karr is the used car sales manager of Fast Talking Ed's Car Sales, a local new and used car dealership in Moscow, Idaho. Speedy Karr’s income is about $80,000 a year from his salary and bonus (his bonus is a percentage of the net income of the dealership). In addition to his income from Fast Talking Ed's, Speedy also has income from rentals of about $15,000 a year. Speedy's wife, Holiday, is employed, earning about $65,000 a year. Several years ago, Speedy became interested in auto car racing. In 2008, Speedy purchased a used car, which he converted into a racing stock car. The cost of the car, and the modifications made to it, cost Speedy about $75,000, which is being depreciated over a fiveyear life (using I.R.C. § 168). Speedy incurred additional expenses for the purchase of small tools, racing supplies, travel costs, etc. In 2008, Speedy begin entering the Spokane auto races. Because his job at Fast Talking Ed's required him to work at least one Saturday every month, Speedy was not able to enter all of the races held in Spokane, but did enter as many as possible. Spokane holds races every weekend from the first part of April through the end of September. Speedy had some success in winning races, but because of the limited number of races Speedy could enter and the limited purse, his gross income was only about $50 the first year, $125 the second year...
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...ACCT 323 Week 4 Homework Click Link Below To Buy: http://hwaid.com/shop/acct-323-week-4-homework/ 1) In the current tax year, Gunther earned $125,000 from his job as a civil engineer. In addition, he received $30,000 of income from Activity A, and lost $40,000, and 20,000 from Activities B and C respectively. Activities A, B, and C are passive activities that Gunther acquired in the current year. What amount of loss may Gunther deduct on his current year taxes with respect to each activity? What amount of loss, if any, must be carried over to the subsequent year for each activity? 2) During the current year, Beth and Bill, who file a joint return, incurred the following items of income and loss: Salary $ 130,000 Activity A (passive) 10,000 Activity B (rental real estate/nontrade or business) (30,000) Activity C (rental real estate/nontrade or business) (20,000) Beth and Bill actively participate in activities B and C, and they own 100% of each rental property. a) What is their AGI for the year? b) What is the amount of suspended losses, if any, that may be carried over with respect to each activity? 3) In the current tax year, Neil’s personal automobile was totaled in a traffic accident. Neil had purchased the automobile two years earlier for $28,000. The FMV of the automobile just prior to the accident was $18,000. The automobile is now worthless. Neil received a $14,000 insurance check in settlement of his accident claim. Later that same...
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...ACCT 323 Homework 5 Solutions Click Link Below To Buy: http://hwaid.com/ . Umair sold some equipment he used in his business on August 29, 2014, that was originally purchased for $70,000 on November 21, 2013. The equipment was depreciated using the 7-year MACRS method for a total of $18,574. Assume there is no additional netting of gains and losses for this taxpayer. a. Assume Umair sold the equipment for $50,000: (1) What is the amount of realized gain or loss on the sale of the equipment? (2) Is the nature of the gain or loss considered ordinary or long-term? b. Assume Umair sold the equipment for $60,000: (1) What is the amount of realized gain or loss realized on the sale of the equipment? (2) Is the nature of the gain or loss considered ordinary or long-term? 2. Alice owns undeveloped land with an adjusted basis of $140,000. She sells the property to George for $185,000. a. What is Alice’s realized and recognized gain? b. What IRC section does the gain on the property apply? c. If the land is used in a trade or business, what IRC section does the gain on the property apply? 3. Using the following independent situations, answer the following questions: Situation 1 Clara received from her Aunt Sona property with an FMV at the date of the gift of $40,000. Aunt Sona purchased the property five years ago for $35,000. Clara sold the property for $43,000. Assume Aunt Sona does not have MAGI of over $200,000. a . Whaat .i s the basis to Clara? b . Whabt...
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...ACCT 340 Avoiding Penalties A common assumption is that the IRS is always right but that has been proven to be a myth. If one believes that the IRS has made an error, there are multiple actions that can be made to appeal their decision. According to a report prepared by Nina E. Olsen, a National Taxpayer Advocate (NTA), a major issue that was brought to the attention of Tax Court included the issue of “Failure to File and Pay Penalties”. Many cases have been brought to court because of this issue but depending on the cause of the prevention, there are a few things that a taxpayer can do to avoid the penalties awarded to them. This past year America has faced many disasters. There were 516 tornadoes that ravaged through the midwest and southeast. Power outages caused a widespread panic in the northeast in August. Hurricane Isabel battered the east coast in September and wildfires and mudslides devastated Southern California in October. The American Institute of Certified Public Accountants (AICPA) and the National Endowment for Financial Education (NEFE) created a guide that details steps that Americans can take to minimize financial loss associated with disaster. The guide also contains a section on tax considerations and if the guide is taken into consideration, the taxpayer may be eligible for a tax benefit. (AICPA) Suggestions when filing taxes include seeking expert advice from a CPA financial planner or other financial advisor because rules regarding casualty losses...
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...Week 7 Research Project (Set #1) DeVry University Acct 429 TAX RESEARCH MEMORANDUM ASSIGNMENT 2 It appears as though a couple of your clients have encountered an unfortunate development in their financial situation. Cindy and Ralph Edmonds own TidyCo., Inc. TidyCo, in turn, owns and operates several coin Laundromats in and around Dubuque, Iowa. Over the last two years, the Edmonds made weekly deposits of the Laundromat receipts to corporate and personal bank accounts. However, it now also appears (unknown to you!) they also siphoned off a portion of the weekly collections and took them home rather than depositing them. These amounts, which appear to total about $200,000 were hidden in shoeboxes around the house and (surprise!) were not reported as income. The IRS found out about these amounts and has notified them that it intends to bring criminal tax evasion charges against them under Section 7201 of the Code. The IRS has made quite clear that it believes that the Edmonds’ actions constitute prima facie evidence that they intended to defraud the government and should therefore be liable under the statute. As their accountant, you know that TidyCo has a deficit in both its accumulated and current E&P accounts and that this deficit has existed over the entire...
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...Manuel Marroquin Tax Regulation Summary Acct: 835 – Tax Research Payment of Internal Revenue Taxes by credit card and debit card: A taxpayer is allowed to pay their internal revenue taxes with their credit card and debit card. Payment of internal revenue taxes using a credit card or debit card must be approved by the Commissioner. In addition, tax payments must adhere to the manner and be in accordance with the forms, instructions and procedures prescribed by the Commissioner. Also, the Commissioner will specify the types of tax liabilities that may be paid by credit card or debit card. Furthermore, all references to tax also include interest, penalties, and additional amounts, and additions to tax. Credit Card and Debit Card Definitions: The term credit card includes any credit card as defined in section 103(k) of the Truth in Lending Act, which includes any credit card, charge card, or any other credit device issued for the purpose of acquiring money, labor, property, or services on credit. In addition, the term debit card includes any accepted card or any other means of accessing funds electronically as defined in section 903 of the Electronic Fund Transfer Act. This includes any debit card or similar device which has direct access to an account with the capability to initiate electronic fund transfers to obtain money, labor, services, or property. When the payment is deemed made: If the taxpayer decides to pay their taxes using a credit card or debit...
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...CPA Report ACCT 545 Deborah Asbury CPA Report Memo To: Outside CPAs From: Date: April 13, 2014 Re: CPA Report In response to the examination of the subsidiary that has been set up as a corporation, the explanations to the deferred tax methods, procedures for accounting changes and corrections, and the reasoning for setting up the corporation as a subsidiary will be addressed in the following memo. Deferred Tax Method Financial reporting and tax reporting create temporary differences between the amounts reported for income taxes and on the financial statements because an accrual basis is used for financial reporting and a modified cash basis is used for tax reporting. Deferred taxes reported contain a temporary difference between the tax basis of a liability or asset and its reported amount in the financial statements that will result in taxable or deductible amounts reporting years. Deferred tax liabilities and assets are recognized on the balance sheet based on the difference between the financial statement values and the tax basis (Kieso, Weygandt, & Warfield, 2007). The balance sheet approach and the guidelines of the Financial Accounting Standards (FAS No. 109) have been followed to account for this timing issue. Deferred tax assets are recorded when there are greater expenses for financial reporting than tax reporting. At some point the tax amount paid to the Internal Revenue Service (IRS) will be higher than the tax on the financial statements. Deferred...
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...------------------------------------------------- ACCT 358 ------------------------------------------------- Tutorial for Week Beginning 11 March 2013 ------------------------------------------------- Tutorial: Company Taxation: Imputation, RWT/NRWT (continued) Dividend Imputation 1. SpannerWorks Limited is a closely held private company incorporated on 1 April 2001. Its share capital comprises $40,000 $1 ordinary shares fully paid and 10,000 15% preference shares fully paid to $1.00. SpannerWorks Limited has provided you with a list of the following tax transactions it has entered into. The opening balance of the ICA account as at 31 March 2011 was $1,500. Imputation Transactions (a)(b) | 15 Apr. 2011 | SpannerWorks pays an interim dividend of 8% on the ordinary shares and makes payment of the dividend due on the preference shares. The maximum ratio of imputation credits allowable is allocated to each distribution. | (c) | 7 May 2011 | SpannerWorks pays the 3rd instalment of 2011 Provisional Tax of $900. | (d) | 28 Aug. 2011 | SpannerWorks pays 1st instalment of 2012 provisional tax of $1,000. | (e) | 7 Oct. 2011 | SpannerWorks pays fringe benefit tax of $5,000. | (f) | 10 Dec. 2011 | SpannerWorks pays a final dividend of 8% on ordinary shares. The imputation credits allocated are the maximum allowable. | (g) | 15 Jan. 2012 | SpannerWorks pays the 2nd instalment of 2012 provisional tax of $1,000. | (h) | 7 Feb. 2012 | SpannerWorks pays 2011 year terminal tax of $1,500. | (i)...
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...Solution - Main Transaction Set - Transactions List A SOLUTION - MAIN TRANSACTION SET TRANSACTIONS LIST A The next 23 pages (pages 56-78) are the solutions to the Systems Understand Aid main transaction set for transactions list A. Additional transaction sets are provided later in this manual . See page 234 for the document solutions summary page. Illustrations of completed documents for the main transaction set for transactions list A are included on pages 235-242. See page 259 for a description of the filing system. WAREN SPORTS SUPPLY BALANCE SHEET AT DECEMBER 31, 2009 AND 2008 ASSETS 2009 2008 CURRENT ASSETS Cash Accounts receivable - net Inventory Marketable securities Total current assets $103,141.67 42,506.08 192,593.00 24,000.00 362,240.75 $11,025.19 7,814.19 101,681.00 0.00 120,520.38 FIXED ASSETS - Net of accumulated depreciation 215,921.00 239,105.50 $578,161.75 $359,625.88 Total assets LIABILITIES & STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable Payroll taxes withheld and payable Federal income taxes payable Interest payable Total current liabilities $8,767.15 $11,279.35 4,262.22 51,429.77 201.37 64,660.51 3,284.54 29,797.00 0.00 44,360.89 NOTE PAYABLE Total liabilities 70,000.00 134,660.51 0.00 44,360.89 STOCKHOLDERS' EQUITY Common stock Retained earnings Total stockholders' equity 225,000.00 218,501.24 443,501.24 225,000.00 90,264.99 315,264...
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...Tax Law and Accounting University of Phoenix/ACCT 483 July 20, 2009 Tax Law and Accounting The history and time line of federal, state, and local tax systems within the United States follows events in history that have shaped the current tax laws of today. Today the law is almost inconceivable with so many interpretations and loopholes. In today’s business world not only are companies governed by federal income tax laws, but also accounting guideline established by the national framework of generally accepted accounting principles (GAAP). Due to the complexity of the guidelines and tax laws, many questions arise with regard to the interpretations. Taxpayers may ask are the practices used to reduce taxes, tax avoidance, or tax evasion. History of Income Tax Income taxes can be traced through history, in colonial times; individual taxpayers had nothing to do with the federal taxing authorities. The government, instead, received income from excise taxes, tariffs, and custom duties. Prior to the Revolutionary War, colonies held more responsibility; therefore, needing greater access to revenues. Post Revolutionary War, in 1781, the Articles of Confederation was adopted. The article gave full rights to each State as an entity allowing the state to levy tax as each state saw fit. The idea of central government was still strongly rejected [ (Unknown, n.d.) ]. In 1789, the Constitution was adopted. At this time in history, the governing powers recognized that a need for resources...
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...Look at basis for tax purposes, not FMV FMV is important for substantial economic effect Defining Entities I. History a. Corp used to be 4 factor analysis. Now check-the-box to opt in unless default in. i. Asked: Corporate resemblance test no longer relevant II. Classifying Partnerships for Tax Purposes a. Two or more members: pship or corporation 7701-2(a) i. Default = partnership 7701-3(b)(1)(i) 1. Applies to LLCs 2. To opt out of default Check-the-box 3. Look to state law; If state law corp = corp for tax 7701-2(b) b. One Member: Corp or DRE 7701-2(a) i. Default = Disregarded entity 7701-3(b)(1)(ii) 1. If state law corp = corp for tax 7701-2(b) 2. SMLLC can’t be Pship = DRE III. Reclassification a. 7701-3(g) Election to Convert PS to Corp for Tax i. No tax ii. Deemed contribution of pship assets to corp, followed by liquidation b. PTPs: taxed as corporations i. PTP – publicly traded partnership. 7704 c. Election to Convert Corp to PS i. Deemed liquidation and trigger tax at that time d. Add member to single member corp of LLC and subject to PS tax rules e. Lose member and become single member, then DRE...
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