...In the case, the married couple Ted and Ruth are planning to sell their principal residence in Richmond and purchase a new one after that. Meanwhile, they and their families use their vacation home in Maryland on a frequent basis. The main tax issues we need to examine here are (1) How much gain should Ted and Ruth realize and recognize on sale of their principle residence? What is the nature of such gain? Should they include the gain in their gross income? (2) Are Ted and Ruth allowed to deduct expenses for their vacation home on the joint tax return? According to Internal Revenue Code section 121 (a) & (b), individuals can exclude up to $250,000 gain from gross income on sale of a main home (or $500,000 for joint returns) as long as they have owned the home and used the home for a minimum of two years. The two years are aggregating which means your living period in the house does not need to be consecutive. However, the $500,000 limitation does not apply to the married couple in our case since Ted fails the use requirements mentioned above (section 121 (b) (2) (A) (ii)). Since Ted moved into the Richmond home on December 13 of 2010 and that the sale date is September 1 of 2012, his stay in the house is less than two years. The amount they can exclude should be the sum of each spouse’s limitation amount determined on a separate basis as if they had not been married (section 121 (b) (2) (B)). Since Ted would not have owned the house if he had not married to Ruth, the amount of...
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...Remain Tax Exempt? Should Churches Remain Tax Exempt: Pro Side Debate Summary This week’s Learning Team B discussion was initiated by team members' research and posting of several arguments to support our debate topic of churches remaining tax exempt. The list of arguments reflects a comprehensive range of vantage points that include constitutionality, fiscal advantage and impact to community. Subsequent team member posts articulated individual posture or provided supplemental commentary from public opinion polls and notable expert quotes. Requiring churches to pay taxes would endanger the free expression of religion and violate the Free Exercise Clause of the First Amendment of the US Constitution. Supporting comments: Being a nonprofit 501(c)(3) organization directly limits the control that the government can have on how the organization is run. If churches are stripped of their 501(c)(3) status, then the government can control them and essentially force them to do and say what the government wants (Retrieved from Debate.org opinion poll on the question: Should churches and other religious organizations remain tax exempt?) A tax exemption for churches is not a subsidy to religion, and is therefore constitutional. Supporting Quote: "The grant of a tax exemption is not sponsorship, since the government does not transfer part of its revenue to churches, but simply abstains from demanding that the church support the state. No one has ever suggested that tax exemption...
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... COURSE READINGS: Gruber, Public Finance and Public Policy, 4th edition Additional readings as listed on the course outline COURSE PREREQUISITES: Econ 206 and Econ 207 COURSE DESCRIPTION: Public Finance deals with the taxing and spending activities of government. It is alternatively called Public Sector Economics or Public Economics. The focus of the course is on the microeconomic functions of government, and in particular the way that government affects the allocation of resources and the distribution of income. The analysis of the spending activities of government will include a discussion of public goods, externalities, education, welfare programs, Social Security and health care. On the tax side, we will build a framework for tax analysis, and then apply this framework to the personal income tax, the corporation income tax, and other U.S. taxes. COURSE OBJECTIVES: 1. To understand the economic rationale for government involvement in a market economy. 2. To learn about the major sources and uses of revenue in the United States fiscal system. 3. To develop your ability to analyze the equity and efficiency effects of government spending and taxation programs. 4. To learn how economic principles can be applied in an analysis of political decision-making. 5. To understand the...
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...the draft Direct Tax Code (‘DTC’) along with a Discussion Paper in August 2009 for public comments. Various stakeholders have provided their feedback and the Government subsequently released a Revised Discussion Paper in June 2010 addressing some of the key concerns on the DTC. The DTC would replace the existing direct tax legislation constituted by the Income Tax Act, 1961 and the Wealth Tax Act, 1957 with effect from April 1, 2011. It aims to simplify the language with an intention to remove uncertainty in interpretation of the tax law and mitigate undue litigation. While most of the provisions in the DTC meet these objectives, there are certain provisions relating to Minimum Alternate Tax (‘MAT’), General Anti-Avoidance Rules (‘GAAR’) and Determination of Residential Status of Foreign Corporate, which could have adverse and undesirable consequences. This term paper provides an overview of the key proposals in the DTC and their impact on both domestic and international businesses in India. Introduction The compatibility and conduciveness of a taxation system plays an important lubricating role in the overall growth and direction of an economy. Tax laws are often seen not as a mere framework for the government to collect revenues, but as an effective tool to direct and propel the economy to higher levels, more so in a developing economy like Indian economy. The government of India proposed several changes in the tax system from time to time. The new Direct Tax...
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... Introduction • • Presentation Group discussion 2. Profits tax • Group exercise 3. Negotiation • • Role play Group exercise 4. Tax for individuals • • Case study Group discussion 5. Reboot • • Presentation Group discussion 6. Tax cases / Anti-avoidance • Group discussion Ch.3, 4, 8, 9 & 11 7. Cross border tax issues • Group discussion Ch.3, 4, 12 & 13 8. Tax planning • • Case study Group reflection Ch.3, 4, 5, 9, 11 & 12 9. Conclusion • • Presentation Group discussion Ch.3 & 11 Ch.2, 5 & 11 Workshop 2 You are expected to have studied the relevant chapters of the Learning Pack thoroughly prior to attending the workshops in order to actively participate in the case studies and group discussions throughout the workshops. The main topics covered in the workshops are listed below. Workshop 1 Profits tax computation, addition and disposal of property plant and equipment, depreciation allowance – plant and machinery, commercial building allowance, interest income and expenses, gain from sale of product design and trademark, investment income, share award costs, and other deductible expenses Trade versus investment, source of profit/income Salaries tax computation, share grants, accommodation, living allowance, home leave, contribution to MPF, charitable donation, personal allowances, individual tax return Additional assessment and penal...
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...Structure: Basic Concepts The purpose of this chapter is to introduce the student to the foundations of capital structure concepts. The chapter first discusses capital structure decisions in an ideal world without taxes or transaction costs. This discussion leads to the famous Modigliani-Miller Propositions I and II that show that a firm's capital structure is a matter of indifference. The discussion next adds corporate taxes and the tax deductibility of interest. Under these conditions, the MM Propositions are modified to show that capital structure does matter, and that the firm's value depends directly on its level of debt. The deductibility of interest creates a debt tax shield whose value accrues to stockholders. The key concepts presented in Chapter 15 are outlined below. • Financing objective o maximizing firm value o maximizing shareholder value • MM Proposition I (no tax) o leverage and firm value o choice between debt and equity o key assumptions • MM Proposition II (no tax) o cost of equity o weighted average cost of capital o market value balance sheet • Capital structure irrelevance • MM Proposition I (corporate tax) o deductibility of interest o interest tax shield • MM Proposition II (corporate tax) o cost of equity o weighted average cost of capital • Stock prices and leverage Financial and key ratios Bankers' Almanac Credit Risk provides financial spreads and key ratios on banks and financial institutions from the last three years,...
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...1120S U.S. Income Tax Return for an S Corporation S Corporations or nominated S Corporations by filing or enclosing form 2553 are authorized to file their income tax returns with 1120S U.S. Income Tax Return for an S Corporation. This five-page form requires various financial particulars in Schedule B, K, L, M1, and M2. You may choose to terminate the nomination for being an S corporation using the provision in this form. Please provide accurate and truthful particulars of income, deductions, and tax as and when requested by the form. Steps to Prepare 1120S U.S. Income Tax Return for an S Corporation Form 1120S Enter the tax year, effective date of S selection, business activity code, mark box if Schedule M3 is enclosed, enter the employer identification number, and date incorporated and total assets. Continue by typing or printing the name and address....
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...Accounting 421 Course Discussion Packet Winter 2012 Tyee Carr Study Guide, Midterm Exam Review and Final Exam Review ***These notes are provided to assist in your own note taking. They are not a substitute for reading the recommended textbook or for taking your own notes during class discussion. The information and examples provided here are subject to technical corrections or other revisions which you won't have without taking notes in class. Contents Taxable Entities, Sources of Tax Law and Tax Administration 5 Case: Firefighting Aircraft 6 Discussion questions 7 Review questions 8 The Individual Income Tax Model 10 Case: George and Sheena Jungle’s 1040 Tax Return 10 Discussion Questions 10 Review questions 11 Gross Income 13 Case: Commissioner v. Glenshaw Glass Co.\William Goldman Theatres Inc. (U.S. 1955) 13 Discussion questions 19 Case: Lucas v. Earl United States Supreme Court. 1930 20 Discussion questions 21 Review questions 21 Exclusions 22 Case study: Tom Daschle withdraws from nomination as HHS Secretary, 2009 23 Discussion questions 23 Case: Sam and Julie 24 Discussion questions 24 Case: Ralph and Betsy are landlords 25 Discussion questions 26 Case: Mark who lives in unit 6 27 Discussion questions 27 Case: Jack’s Restaurants 28 Discussion questions 28 Review questions 29 Tax Basis and Capital Transactions 32 Case: What’s my income on selling this stock? 32 Discussion questions 34 Case:...
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...Assignment 1.2: Forum Discussion − Macroeconomic Theory and Current Events Ra’Quell Yarbrough Jones International University October 6th, 2011 Although New Zealand’s industrial sector has expanded vastly over twenty years, it still depends heavily on its extremely efficient agricultural sector. New Zealand is still profoundly reliant on on the primary sector with commodities accounting for half of total goods exports, and exports account for about one third of New Zealand’s GDP. The recession arose with a drought between 2007 and 2008 which led to lesser production of dairy products for the first half of 2008. Consumption and investment decelerated significantly due to high fuel and food prices, high interest rates and falling real estate prices. New Zealand was already at a shortcoming before the global financial crisis hit and by September of 2008 the economy only got worse. As of 2010 the unemployment rate floated around 6.8% and was lower than the OECD average of 8.6% and was ranked 12th of 27 OECD countries with standardized unemployment rates. New Zealand is a leader in economic freedom due to its diversified and modern economy, with high levels of prosperity and institutional strengths that include strong protection of property rights and an efficient legal structure. In spite of the recent stress on the economy, New Zealand remained relatively unharmed, with public debt, increased by crisis spending and now above 20% of GDP, remains moderate compared to other...
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...Assess the types of changes and new developments in technology and government regulations that should be considered in long-range planning requirements for updating or replacing a HRIS. When a company decides to purchase a HRIS system they should always consider the long-range requirements for updating and replacing the system. Technology is always changing so an HRIS system can become outdated in no time. In order for the system to be sufficient and suitable for the company the company will have to keep the system updated. A company will purchase software and use it until it needs to be upgraded, but it’s easier to upgrade the entire system then the software, due to the fact that the new system offers even more than the previous system. As new technology changes and government regulations are enforce a company should consider this when purchasing an HRIS system. “Before purchasing an HRIS a company long-range planning should look beyond the present and focus on their needs in the future 1, 5, and 10 years from now (Kavanagh, Thite & Johnson, 2012)”. One government regulation a company should consider when purchasing a new HRIS are the changes the government is making towards healthcare. With the Affordable Care Act (ACA) approaching employers will have to keep more detailed and accurate personnel and payroll records what they are currently used to doing (IRS, 2014). HRIS are influential in attaining, tracing and archiving information that is vital to the company and that...
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...A Report on “Pre-Budget discussion And its reflection in National Budget 2015-16” SUBMITTED TO Taher Jamil Course Instructor Business Taxation Course no: F-203 Lecturer Department of Finance Faculty of Business Studies University of Dhaka SUBMITTED BY group # Date of Submission: 11th August, 2015 Group Members Name | ID No. | Bodrun Nesa Ali | 20-008 | Pronab Saha | 20-110 | Ratila Haque | 20-124 | Tamanna Jahan Toma | 20-128 | Aleya Hossain Lima | 20-219 | Letter of Transmittal August 11, 2015 Taher Jamil, Lecturer & Course Teacher, Department of Finance, Faculty of Business Studies, University of Dhaka. Dear Sir, It is a great pleasure for us to submit the report on “Pre-Budget discussion And its reflection in National Budget 2015-16” , which is prepared as a fulfillment of the requirement of the course named “Business Taxation” of BBA program under ‘Department of Finance’ of the Faculty of Business Studies, University of Dhaka. This study has given us the opportunity to learn the basics of tax and also given us the practical Knowledge through the discussion on budget. The analysis that we observed through this report will help us in our future, indeed. We would like to convey our special thanks and gratitude to you for patronizing our effort & for giving us proper guidance and valuable advice. You will be delighted to know that, we have tried our best to make this report more & more informative and factual. Sincerely Yours, Bodrun...
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...THE GAAR & INCOME TAX REGULATIONS INTRODUCTION: GAAR stands for “General Anti-Avoidance rule. Countries impose taxes on various types with the objective of raising revenue for Government spending. Taxpayers may be expected to minimize their tax liabilities by arranging their affairs in a manner that is termed tax efficient i.e. through tax mitigation. GAAR: Tax avoidance is the legal usage of the tax regime to one's own advantage, to reduce the amount of tax that is payable by means that are within the law. Its original use was by tax advisers as an alternative to the pejorative term tax avoidance. Most countries impose taxes on income earned or gains realized within that country regardless of the country of residence of the person or firm. Most countries have entered into bilateral double taxation treaties with many other countries to avoid taxing nonresidents twice—once where the income is earned and again in the country of residence, however there are relatively few double-taxation treaties with countries regarded as tax havens. INCOME TAX: The government of India imposes an income tax on taxable income of all persons including individuals, Hindu Undivided Families (HUFs), companies, firms, association of persons, body of individuals, local authority and any other artificial judicial person. Levy of tax is separate on each of the persons. The levy is governed by the Indian Income Tax Act, 1961. The Indian Income Tax Department is governed...
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...question we must face when deciding how much of our tax dollars and the federal government's dollars are spent on space exploration versus things such as education, social security, medicare and health. Although space exploration could eventually make a difference in the way we live our lives and life as we know it here on Earth, we should be focused on the things that could change our lives now. Things like a cure for cancer, and a cure for HIV and AIDS. Our money needs to stop being spent on space exploration, and be put towards something that’s been proven to benefit the people of our nation. It would not be wrong to say that maybe one day space exploration could provide us with something miraculous here on earth, but in the meantime the extensive amount of money being spent on space exploration should stay here where we can make a difference now. In February of 2006, Margaret Mclean published an article on a web page dedicated to ethics called To Boldly Go: Ethical Considerations for Space Exploration. The article stated, “almost $17 billion will fly into NASA’s coffers with around $5.3 billion dedicated to space exploration” (source E). I don’t know about you, but to me this seems like an awful lot of money to be spending on something that has no supporting evidence of benefiting the United States and its people. Our government is responsible for how our tax money is spent and it is clear to see that our hard earned tax dollars should be going towards a much more beneficial...
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...Contents Deferred Tax Assets…………………………………………………….Page 3 Temporary Differences and Income Tax Provision……………………. Page 4 Defined Benefit Plan and Defined Contribution Plan………………….. Page 5 Share Based Compensation and Direct/Indirect Method………………. Page 6 Investing and Financing Activities and Noncash Transactions……....... Page 7 References……………………………………………………………… Page 8 Deferred tax assets are created when there are taxes paid or carried forward but are not yet recognized on the income statement. The amount of the deferred tax assets are calculated by taking into account the financial reporting standards for book income and the jurisdiction’s tax rules for taxable income. A deferred tax asset will only be recognized when the difference between the loss-value or depreciation of the asset is expected to offset future profit. A deferred tax liability is created as a result of temporary differences between the company’s accounting and tax carrying values, the anticipated and enacted income tax rate, and the estimated taxes payable for the current year. The liability may or may not be realized during any given year which is what makes it a deferred tax liability. Amazon is a huge company with many different parts to their balance sheet. It can be easily notices that Amazon does well at showing each item and including footnotes to fully explain their position for each item. Upon reviewing Amazon’s balance sheet there is an amount of deferred tax assets and liabilities...
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...January 21, 2013 Mr. Jones’s Settlement Considerations Memorandum This memorandum discusses tax information in relation to Mr. Jones’s potential settlement against Bilbo Feed. There are multiple items that should be considered from Mr. Jones’s case that may have important tax exclusion implications. Guidance on how parts of Mr. Jones’s settlement may be tax excluded can be found in the Tax Court rulings from Kenneth R. Harris v. Commissioner. Holdings of this case include some similarities to the loss that Jones incurred. Harris received a large settlement amount from a fire that destroyed his bee farm just as Jones lost a significant portion of his miniature giraffe business. The Tax Court concluded that Harris was not entitled to have his settlement excluded from his taxable income under Code Sec. 104(a)(2), however I believe that Jones may be able to avoid the same outcome if he brings some of the following points to his settlement meeting. The IRC § 104 (a)(2) states that any damages received on account of personal physical injuries or physical sickness can be excluded from gross income. This is the main discussion point that Mr. Jones should bring to his settlement agreement. Harris was not able to use this exclusion because he could not provide evidence that any part of his settlement was for physical injuries as he argued they were. Mr. Jones would likely be able to avoid this same fate if his doctor provides evidence that his extended hospitalization was due...
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