...The purpose of this tax research problem is to solve the following scenario presented by Rupert, Pope, & Anderson: “Mark Hancock is a self-employed attorney who operates his law practice as an unincorporated sole proprietorship. In 2012, the IRS disallowed several business deductions he took in 2010 and 2011. In addition to paying the deficiency and assessed penalties, he also pays $18,000 in interest on the tax owed. Can he deduct that interest in the current year?” (p. 7-45). This is a highly controversial subject that has been contested many times over the years. “Prior to the Tax Reform Act of 1986, the tax court in several cases had deemed an income tax deficiency to be an ordinary and necessary business expense for purposes of determining a taxpayer's adjusted gross income, net operating loss carryover, and net operating carryback, so long as that deficiency was attributable to the ordinary operation of the taxpayer's business” (Rovner, 2015, para. 6). Therefore, businesses could deduct the interest they paid for IRS penalties from previous years as a business expense before 1986. The decision of whether or not a business could deduct interest incurred as a result of IRS imposed penalties was brought to the spotlight in the 1990’s. “On their income tax returns for 1992 and 1994, Nick and Helen Kikalos deducted as a business expense the interest they paid on tax deficiencies that had been assessed for prior years. The Internal Revenue Service disallowed the deduction...
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...Mark Hancock, a self-employed attorney owns his own law practice as an unincorporated sole proprietorship. Hancock is having to pay $18,000 in interested on tax that he owes because in 2012 the IRS disallowed several business deductions that he used in 2010 and 2011. He is now having to pay the deficiency, assessed penalties, and $18,000 in interest on the tax he owed. Mark Hancock is wondering if he can deduct the interest he owes in the current year. Sec 162 states “Section 162(a) allows a deduction for all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business. Section 262, however, provides that no deduction is allowed for personal, living, or family expenses.” Sec. 163 states “There shall be allowed as a deduction all interest paid or accrued within the taxable year on indebtedness”. The case Kikalos v Comm., in 1997 Nick and Helen Kikalos underreported their income and they owed more than tax then they had paid. They petitioned with the court to deduct their interest payments from the previous years that was filed incorrectly. They owed more than $300,000 from penalties. The court denied their request because it is a personal expense not a business expense because underpayment does not constitute as a business expense. Even though Mark Hancock’s interest of $18,000 is in relation to his business, it is considered non-deductible personal interest because it was an underpayment that was owed due to filing his...
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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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...M aking Sense of Deferred Tax Assets and Liabilities Facebook (http://www.facebook.com /sharer.php?u=http%3A%2F %2Fquickbooks.intuit.com%2Fr%2Ftaxes%2Fmakingsense-of-deferred-tax-assets-and-liabilities) + POSTED IN TAXES (HTTP://QUICKBOOKS.INTUIT.COM/R/TAXES/) by Patricia Poladian (http://quickbooks.intuit.com/r/author /patriciapoladian/) on Jun 29, 2015 If you have your financial statements prepared for lenders or investors, your accountant may have noted deferred tax assets or deferred tax liabilities on your balance sheet. These assets and liabilities can directly affect your company’s cash flow for subsequent years, so it’s important to understand what yours represent and how likely you are to realize them. What Creates Deferred Tax Assets and Liabilities The revenue and expenses you report on your income statement don’t always translate into income and deductions for tax purposes. Tax accounting and financial accounting have slightly different rules, which is why your business's taxable income isn’t always the same as the net income on your financial statements. Some of these instances result in permanent tax differences. For example, interest income from municipal bonds is excluded from taxable income, and half of meals and entertainment expense is always disallowed. Other differences are temporary. These differences have to do with timing. You’ll end up recognizing the income and expenses eventually, but you just may recognize them sooner under one system than you...
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...Tax Accounting Career Path Intermediate Accounting II- Spring 2014 Submitted to Dr. Jeffery Hillard Dante Pennix Sr. April 21, 2014 My goal is to become a Certified Public Accountant while achieving the goal of owning a lucrative CPA firm. One of the great benefits of choosing tax accounting as a career is that you will always have a job when you graduate. Tax accountants and CPAs will always be in high demand as long as the globalizations of marketplaces continue to develop. Tax accountants also create tax strategies to reduce the amount of taxes a client owes while remaining compliant with GAAP and tax laws. The qualities of a tax accountant consist of begin able to be organized, competent, have an attention to detail, ethical, and most in important effective communications, both written and verbal. For example, common responsibilities for tax accountants include preparing and filing taxes, financial planning, completing continuing education credits, and researching and reviewing past tax filings. In summary, the career path of a tax accountant and CPA is very tedious and technical but overall, the journey is worthwhile. The reason why I elected tax accounting as a career path was because of the stability and longevity that it holds. Another reason I choose this career choice was for the challenging and gratifying work that it brings. Tax accounting is a specialized field because of the ever changing rules in the accounting arena as with new regulations and laws of the tax...
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...Common Sense Approach to Reforming the Federal Tax System On February 3, 2013 marked the 100th birthday of the 16th Amendment. The 16th Amendment paved the way for the creation of the federal income tax that continues to this day to have far reaching repercussions on the American tax payer. Before the ratification of the 16th Amendment, the birth of the federal income tax dates back to the Civil War. In order to finance the Civil War, President Abraham Lincoln signed into law Revenue Act of 1861 on August 5, 1861. The Revenue Act consisted of a flat tax rate of 3% on income above $800 and 5% on individuals living outside of the United States. On July 1, 1861 United States Congress repealed the Revenue Act of 1861 and replaced it with the Revenue Act of 1862. The Revenue Act of 1862 introduced a progressive tax and established the Bureau of Internal Revenue. In 1872 Congress repealed the Revenue Act of 1862. One again elected officials tried to revive the federal income tax in 1894. However, in 1895 the federal income tax was declared unconstitutional by the U.S. Supreme Court because the tax was not apportioned according to the population of each state. In an address to Congress on June 16, 1909 President Howard Taft proposed that Congress consider a new amendment to the Constitution. “I recommend, then, first, the adoption of a joint resolution by two-thirds of both Houses, proposing to the States an amendment to the Constitution granting to the Federal Government...
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...TAX COMPETENCIES, COMPLIANCE COSTS AND INCOME TAX COMPLIANCE AMONG SMEs IN UGANDA BY ANNET NAKIWALA 2007/HD10/11264U A DISSERTATION SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENT S FOR THE AWARD OF THE DEGREE OF MASTER OF SCIENCE IN ACCOUNTING AND FINANCE OF MAKERERE UNIVERSITY September, 2010 TAXCOMPETENCIES, COMPLIANCE COSTS & INCOME TAX COMPLIANCE DECLARATION I, Annet Nakiwala, declare that this dissertation is my own work and that it has never been presented for a degree award at any other university. Signature: ………………………………………… Date: ……………………………………………… ii TAXCOMPETENCIES, COMPLIANCE COSTS & INCOME TAX COMPLIANCE APPROVAL This is to certify that this dissertation has been submitted in partial fulfillment of the requirement for the award of a Masters of Science degree in Accounting and Finance of Makerere University with my approval as University Supervisor. Joseph Ntayi (PhD) Supervisor Signature: ………………… Date: ……………………… Arthur Sserwanga Supervisor Signature: ………………… Date: …………………….. iii TAXCOMPETENCIES, COMPLIANCE COSTS & INCOME TAX COMPLIANCE DEDICATION I dedicate this entire effort to my late Mother Gorreth Nabagereka. We miss you dearly. iv TAXCOMPETENCIES, COMPLIANCE COSTS & INCOME TAX COMPLIANCE ACKNOWLEDGEMENTS Completion of this research has been a result of both direct and indirect support of many people to whom I owe acknowledgement. I owe profound gratitude to my supervisors Dr. Joseph Ntayi and...
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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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...overseeing the US Tax Code The Internal Revenue Code IRC), formally the Internal Revenue Code of 1986, is the domestic portion of Federal statutory tax law in the United States. IRC was published in various volumes of the United States Statutes at Large, and separately as Title 26 of the United States Code (USC). The primary role of the federal tax code is to raise sufficient revenue to pay for government services, benefits, programs, and investments. I am in favor of a tax reform. I believe it is important to have a simplified, transparent tax code that eliminates hidden tax exemptions, credits and deductions that benefit only a few. By improving our tax code, we will be able to incentivize employers to start hiring while also reducing taxes for all. The US Congress needs to do a better job on the current tax code. First, the tax code needs to be more simplified for any American can read and understand it. After I review the current tax code I was more confused. Our current tax code should reflect our current economy. US Congress should not should our code based on who is in office but rather what is best for our economy. Since 1986, Congress has made 15,000 changes to the tax code. So simplifying the tax code, theoretically, would cut back on compliance costs and put more money into the pockets of ordinary taxpayers. Two Major Tax changes America’s tax code is broken and must be reformed. In the quarter century since the last comprehensive tax reform, Washington...
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...Financial Aid Office 2012–2013 Verification Worksheet Independent Student Your 2012–2013 Free Application for Federal Student Aid (FAFSA) was selected for review in a process called verification. The law says that before awarding Federal Student Aid, we may ask you to confirm the information you reported on your FAFSA. To verify that you provided correct information the financial aid administrator at your school will compare your FAFSA with the information on this worksheet and with any other required documents. If there are differences, your FAFSA information may need to be corrected. You must complete and sign this worksheet, attach any required documents, and submit the form and other required documents to the financial aid administrator at your school. Your school may ask for additional information. If you have questions about verification, contact your financial aid administrator as soon as possible so that your financial aid will not be delayed. A. Independent Student’s Information _____________________________________________________________ Student’s Last Name Student’s First Name Student’s M.I. _____________________________________________________________ Student’s Street Address (include apt. no.) _____________________________________________________________ City State Zip Code _____________________________________________________________ Student’s Home Phone Number (include area code) ____________________________________ Student’s Social Security Number ____________________________________...
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...VALUE ADDED TAX (VAT) SCHEME ON THE REVENUE GENERATION CAPACITY IN GHANA A LONG ESSAY PRESENTED TO THE SCHOOL OF ARTS AND SOCIAL SCIENCES (SASS), REGENT UNIVERSITY COLLEGE OF SCIENCE AND TECHNOLOGY, IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE AWARD OF BACHELOR OF SCIENCE DEGREE IN ACCOUNTING AND INFORMATION SYSTEMS NII TORTO QUAO (022 0207) DECEMBER 2009 DECLARATION I hereby declare that this long essay is the original research undertaken by me, including all references from other books, handouts, internet, magazines, textbooks, etc under the supervision of the under signed lecturer. Mr. Albert Akanferi …………………………….. ……………………………….. (Supervisor) Signature Date Nii Torto Quao …………………………….. ………………………………. (Student) Signature Date i ABSTRACT A strong and efficient tax system provides the basis for enhanced economic growth and development. Ghana’s fiscal structure prior to 1983 had generally been characterised by low tax revenue. As a result Ghana undertook a number of reforms prescribed by the International Monetary Fund and the World Bank under the Economic Recovery Programme (ERP) and the Structural Adjustment Programme (SAP). Tax reforms constituted one of the essential ingredients of SAP. The tax reform process has assumed diverse dimensions over the pass two and half decades. One of those tax reforms was the Value Added Tax scheme (VATs). The purpose of this study is to assess the impact of the VATs on revenue mobilisation in Ghana using tax buoyancy...
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...The alternative minimum tax (AMT) won’t be used to lower Hastings Printing’s tax liability. According to the Tax Policy Center, the AMT was put into tax code in 1969 and a part of the Tax Reform Act of 1986. This type of tax would be in addition to the normal tax requirement. It’s generally used to ensure that no one gets out of paying their taxes with excessive incentives. Hastings would be subject to a 20% corporate rate and that would be applied to the alternative taxable income. Overall, this idea won’t save the Hasting Printing Corporation any money and shouldn’t be considered in the future unless they want to pay more in taxes. REFERENCES Lyon, A. (N.D.). Alternative Minimum Tax, Corporate. Tax Policy Center. Retrieved from: http://www.taxpolicycenter.org/taxtopics/encyclopedia/Alternative-Minimum-Tax-corporate.cfm. Dennis-Escoffier, S. & Fortin, K. (2014). Taxation for Decision Makers (2015 Ed.). Wiley Custom Learning Solutions. Hoboken, NJ. a.) According to the Tax Foundation, Tax Freedom Day is when the nation has enough money to pay the year’s total tax bill. b.) The Tax Freedom Day in 2013 it was April 13th, in 2014 it was April 21st and in 2015 it was April 24th. c.) Using the above information I would guess that April 30th. I chose this date because every year the date gets a little farther away from the previous years’. d.) The state of Ohio’s Tax Freedom Day was April 17th, 2015 (The Courier, 2015). There could a multitude of reason such...
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...introduction to the Income Tax Act (ITA). It reviews the reason for its existence and the principles that govern its interpretation. It then focuses on the ITA structure and explains how to search for and interpret its provisions. The module concludes with the study of two basic concepts: first, who must pay tax in Canada; second, what is the concept of income for purposes of the ITA. • The most desirable characteristics of an income tax are: o horizontal equity o vertical equity o neutrality o flexibility o certainty o feasibility and efficiency • The most important guidelines for evaluating tax policy are: o equity/fairness o simplicity and compliance o balance o stability o economic growth o international competitiveness • Since the ITA is used not only to collect taxes, but also to implement social, economic, and monetary policies, it is amended regularly, which explains its complexity. • Accountants are often faced with ethical questions when preparing tax returns or providing tax advice. • Tax advisers and preparers should be aware of third party civil penalties under the ITA (section 163.2 — Third Party Civil Penalties and IC 01-1). • The administration of the ITA is Canada Revenue Agency's (CRA) responsibility. CRA has specific legislated enforcement and administrative responsibilities. • The Canadian tax system is based on self-assessment. Taxpayers must file T1 income tax and benefit returns on specified dates. Since the Canadian tax system is self-assessing...
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...product. A tax is a “pecuniary burden laid upon individuals or property owners to support the government… a payment exacted by legislative authority” according to Black’s Law Dictionary. Taxes are also consisted the other levy imposed upon a taxpayer by a state or financial charges. According to the law of a state, taxpayers have to pay the percentage of the total amount of payments of taxes that the state law had stipulated when purchasing spending their money. Taxpayers are usually had to pay taxes from the salaries they are earning. Taxes may be paid in money or as its labor equivalent and they are consisting of direct or indirect taxes. For example, if taxes are levied on corporate or personal income directly, then it is called a direct tax. If taxes are levied on the service or the price of goods, then it is called an indirect tax. Financing government expenditure is the purpose of taxation. One of the most important uses of taxes is to finance services and public goods, for example, street cleaning and lighting are considered public services. Because that there can’t be a market in the service and goods, since public services and goods don’t allow exclusion by a consumer, or a non-payer to be excluded, so they need to proved by the government or an agency, which tend to finance themselves through taxes. Also, there are several kinds of taxes in the category, including income tax, negative income tax, capital gains tax, corporate tax, property tax, inheritance tax, expatriation...
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...government will offer a higher rate of interest on these bonds. In addition, government bonds are seen to be safer than private sector investments, especially if the government has a triple A credit rating. Therefore when the government offers bonds, investors provide their money to the government, reducing the potential investment for the private sector. Moreover, if the government borrows through the banks then the increased demand for repayable loans will increase, pushing up interest rates and also increasing the cost of borrowing to the private sector and further reducing investment ability. So by cutting expenditure, this is avoided, enabling the private sector to invest more and provide longer term economic growth and increasing future tax returns. Furthermore, it can be argued that the public sector in some countries, such as the UK, is too big. As the public sector is less profit-centric, their allocation of...
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