...Mr. Smith has been severely injured an automobile accident, which has damaged both of his legs. As a part of the rehabilitative treatment, he has been prescribed, by his doctor, a regimen of exercise, specifically, daily swimming. In the current tax year, Mr. Smith purchases, for $175,000, a house with an existing pool. He spends $1800 in other medical expenses, and $500 on pool maintenance. Since the accident was last year, he has no further expenses, except for the purchase of the house with the pool. Of course this $2300 total ($1800 on medical expenses and the $500 on the pool maintenance) is deductible, if he can meet the 7.5% of Adjusted Gross Income threshold. So the crux of the question is, can he deduct anything for the purchase of the home with pool, and thus push himself over the threshold, into the happy land of itemized minimum deductions. Unfortunately, and counter-intuitively, the answer is no. Admittedly, Mr. Smith purchased a house with an asset, in this case, the pool, primarily for his own rehabilitative care. Quite possibly, Mr Smith would never have thought of buying a house, with such an aquatic appliance, had it not been for the accident. He may even detest the darn thing as a nuisance. He may also loathe the vampiric drain upon his income, from the myriad of maintenance expenses incurred by owning a pool. All those concerns are of no consequence. The governing determination, in this matter, may be found in the IRS Publication 502, Medical and...
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...Tax Research Memorandum To: Lauren Smith From: Date: May 18, 2012 Re: Tax Treatment of MBA education expenses Facts You incurred $15,000 in educational expenses in the course of earning a MBA. You want to deduct these expenses as an employee business expense in your tax return since your employer does not have an education expense reimbursement program. Issue The issue is (1) whether the education was required to keep your present salary, status or job and/or the education maintains or improves skills needed in your present work, and (2) whether the education was needed to meet the minimum educational requirements of your present trade or business, and (3) whether the education is part of a program of study that will qualify you for a new trade or business. Rule It has been established that education expenses can be deducted as business expenses when the education maintains or improves skills needed in your current work but the education was not needed to meet minimum requirements and did not qualify you for a new trade or business. Publication 970 (2011) Tax Benefits for education Federal Tax Regulations, Regulation, §1.162-5., Internal Revenue Service, Expenses for education Singleton-Clarke v. Commissioner, T.C. Summary Opinion 2009-182, Allemeier v. Commissioner, T.C. Memo. 2005-207 Blair v. Commissioner, T.C. Memo. 1980-488 Sherman v. Commissioner, T.C. Memo. 1977-301 Link v. Commissioner, 90 T.C. 460, 463-464 (1988) Schneider v. Commissioner...
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...knowledge from across the globe. It also derives major strength from the reservoir of knowledge, experience and research activities of its parent body, TERI. The Vision behind TERI University TERI University was conceived to cater to the need of disseminating the vast reservoir of knowledge created by TERI, a not for profit, independent research institute recognized globally for its contribution to scientific and policy research in the realms of energy, environment, and sustainable development. Since its inception, the University offers not just world-class education, but also an environment that enables its students to develop fresh perspectives on their subjects of study. This includes regular interactions with researchers, scientists and academicians. Dr R. K. Pachauri Chancellor, TERI University Origin TERI University's roots can be traced back to 1998, when 'TERI School of Advanced Studies' was established. The School was subsequently renamed as the TERI University in October 2006. TERI University was conceived to cater to the need of disseminating the vast reservoir of knowledge created by TERI, a not for profit, independent research institute recognized globally for its contribution to scientific and policy research in the realms of energy, environment, and sustainable development. The genesis of TERI University is rooted in the comprehensive research, consultancy and outreach activities of TERI. The relationship with TERI has propelled and influenced the evolution...
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...RELEVANT TO ACCA QUALIFICATION PAPER P5 Economic value added versus profit-based measures of performance A successful performance measure evaluates how well an organisation performs in relation to its objectives. Since the primary objective of commercial organisations is normally assumed to be the maximisation of the wealth of its shareholders, it follows that performance measures should evaluate this. In practice, many organisations use profit-based measures as the primary measure of their financial performance. Two problems relating to profit in this area are: • Profit ignores the cost of equity capital. Companies only generate wealth when they generate a return in excess of the return required by providers of capital – both equity and debt. In financial statements, the calculation of profit does take into account the cost of debt finance, but ignores the cost of equity finance. • Profits calculated in accordance with accounting standards do not truly reflect the wealth that has been created, and are subject to manipulation by accountants. Economic Value Added – or EVATM – is a performance measurement system that aims to overcome these two weaknesses. EVATM was developed by the US consulting firm Stern Stewart & Co, and it has gained widespread use among many well-known companies such as Siemens, Coca Cola and Herman Miller. Residual income EVATM is based on the residual income technique that has been used since the early 20th century. Residual income...
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...………………………………… 1.3 Research Questions / Hypothesis ……………………… 1.4 Hypothesis …………………………………………….. 1.5 Purpose of the study …………………………………… 1.6 Significance of the study ……………………………… 1.7 Scope of the study …………………………………….. CHAPTER TWO Review of literatures 2.1 Fundamental concept of Nigeria Taxation ……………. 2.1.1 History of Nigeria Taxation …………………………… 2.1.2 Laws governing Income tax in Nigeria …..…………… 2.1.3 Importance of Taxation …………………………………. 2.1.4 Categories of Taxes …………………………………….. 2.2 Basis of tax Imposition (major provisions) ……………… 2.2.1 A review of major assessment provision ………………… 2.2.2 Relevant tax authorities ………………………………….. 2.3 Problems of tax collection ……………………………….. 2.3.1 In adequate qualified man power, poor motivation and corruption ……………………………………………… 2.3.2 Poor attitude to tax generation and usage………………… 2.3.3 Lack of management audit and unrealistic budgeting……. CHAPTER THREE Research methodology 3.1 Design of the study ………………………………………. 3.2 Area of the study ………………………………………… 3.3 Population ……………………………………………….. 3.4 Sample size ……………………………………………… 3.5 Sampling techniques ……………………………………. 3.6 Instrument of data collection ……………………………. 3.7 Validity and reliability of instrument …………………… 3.8 Techniques for data analysis ……………………………. CHAPTER FOUR Data presentation and Analysis………………………………… CHAPTER FIVE 5.1 Discussion of the study ………………………………….. 5.2 Summary of findings ……………………………………. 5.3 Implication of the research ………………………………. 5...
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...CHAPTER THREE 3.0 RESEARCH METHODOLOGY 3.1 INTRODUCTION Research is the process of arriving at dependable solution through the systematic investigation into a subject or problem, event or phenomenon. This project is an examination of the effects of taxes on pricing, profitability and goals of manufacturing companies. The objective of this chapter is basically to present a comprehensive description of the means by which necessary data are derived and the methods that were adopted for the presentation and also subsequent analysis of the project data. 3.2 METHODOLOGY The chapter entails the method used in the collection of data. The information derived from this research work was classified into primary and secondary data. This method of classification was found convenient for the presentation of this research work. The primary data constituted personal interview, which aim at providing fresh information valuable to this research. The secondary data constituted an intensive study of related literature, which actually made the research work conclusive. An extensive desk research was carried out on publication, newspaper, journals, internet, government gazettes and published materials on taxation. Libraries were also visited in the course of information gathering, libraries visited includes Lagos state Polytechnic Library and Library of The Institute of Chartered Accountant (ICAN) Lagos. 3.3 RESEARCH QUESTIONS i. Does company tax affect the profitability of manufacturing...
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...Part B : theoretical method NO TAX requirement ! Valuation method .. NPV, IRR , Payback method. NPV – A rule that company use whether accept or reject the project. Based on discount factor , interest rate. Study guide! – NPV (number of calculation, examples) IRR – a discount rate that gives a zero NPV… cash flow tend to zero. NPV you know initial initial investment , cash flow, discount rate IRR you know initial initial investment , cash flow, but predict your discount rate You cant rely excel ! (don’t use the functioin) Pay back method : how long it takes your initial investment … ? 2 years etc Pay back period --- every company can decide their payback period. Whether they accept and reject the project. Two companies in the same sector.. they may have two payback period. Evaluation method.. accounting measure. NPV rule : accept investment project which cash flow worth more than the cost of financing the projects. IRR rule : accept the project if IRR Is greater than the cost of capital. If your IRR higher than discount rate , accept the project. Pay back : payback period is less than specified payback period. | If se NPV .. you should accept the project..and IRR rule.. but payback period not really.. it depends to the company Depreciation vs capital allowance. (not related to assignment) Depreciation: using the asset, reducing the value. (non cash expense) .. reflective to the tax. Cash flow calculation. After tax cash flow. (tax you pay reduce the depreciation...
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...Auckland City Council has proposed an integrated package of major transport projects over the next 30 years. These projects require additional funding of $10-$15 billion dollars. The existing funding sources are already committed therefore alternative source of funding needs to be found. Council has come up with various options which can fund this future transport projects. This essay will examine three major options tolls, rates and taxes on the basis of equity and efficiency. Tolling new and existing roads is one of the options which can fund the transport projects in Auckland. In terms of equity dilemmas faced by the policy makers, under the current legislation, an existing un-tolled alternative road must be available. Therefore, it will be essential to only toll roads (existing or new) which have an alternative free route available. Hence the driver will have a choice to use the tolled road alternative free route. Therefore, toll will be only paid by those who are willing to pay to use the road; others can use the alternative free route. Available options will not impose burden on the drivers to pay. But it will be important to consider that the toll roads may be less used compared to the free route available which may lead to less collection of tax. According to Cr Brewer, “It is going to get very expensive to live in Auckland by adding tolls to road.” At the same time, toll will be a regressive tax as people using the roads can be a higher income earner and lower income earner...
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...Tax incentives Singapore is well positioned to maintain its economic competitiveness in today’s global environment with a low headline corporate tax rate of 17%, generous tax exemptions for small-to-midsize companies, and industry-specific tax incentives. The Government of Singapore provides a comprehensive package of tax concessions and incentives to businesses whose business activities reflect the direction in which the state plans to steer economic development. 1. Development and Expansion Incentive (DEI) The DEI encourages Singapore-based companies to move into high value-addition business activities, expand their operations in the country, and procure advanced machinery and equipment by offering a reduced tax in the range of 5%-10% on incremental income derived from qualifying activities. 2. International / Regional Headquarters Award (IHQ / RHQ) The Regional Headquarters Award and International Headquarters Award provide a reduced corporate tax rate on incremental income from qualifying activities. * Regional Headquarters Award: Under the (RHQ) Award, qualifying companies can enjoy a concessionary tax rate of 15% for five (3+2) years on incremental qualifying income from abroad, instead of the regular Singapore corporate tax rate of 17%. In other words, if applicant company satisfies all the minimum requirements by the third year of the incentive period, it will enjoy the 15% concessionary tax rate for an additional 2 years on qualifying income. This scheme applies...
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...INTERIM REPORT TAX SAVING SCHEMES (ANALYSIS AND COMPARISION) ICFAI BUSINESS SCHOOL HYDERABAD MUTUAL FUNDS AT A GLANCE Mutual Fund is an instrument of investing money. Nowadays, bank rates have fallen down and are generally below the inflation rate. Therefore, keeping large amounts of money in bank is not a wise option, as in real terms the value of money decreases over a period of time. One of the options is to invest the money in stock market. But a common investor is not informed and competent enough to understand the intricacies of stock market. This is where mutual funds come to the rescue. A mutual fund is a group of investors operating through a fund manager to purchase a diverse portfolio of stocks or bonds. Mutual funds are highly cost efficient and very easy to invest in. By pooling money together in a mutual fund, investors can purchase stocks or bonds with much lower trading costs than if they tried to do it on their own. Also, one doesn't have to figure out which stocks or bonds to buy. But the biggest advantage of mutual funds is diversification. Diversification means spreading out money across many different types of investments. When one investment is down another might be up. Diversification of investment holdings reduces the risk tremendously. On the basis of their structure and objective, mutual funds can be classified into following major types: • Closed-end funds • Open-end...
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...Rahman, Executive Director, CPD were in overall charge of preparing this report as the Team Leaders. Lead contributions were provided by Dr Fahmida Khatun, Research Director; Dr Khondaker Golam Moazzem, Additional Research Director and Mr Towfiqul Islam Khan, Research Fellow, CPD. Valuable research support was received from Mr M Shafiqul Islam, Additional Director, Administration & Finance; Ms Khaleda Akhter, Senior Research Associate; Mr Muhammad Al Amin, Senior Research Associate; Mr Kishore Kumer Basak, Senior Research Associate; Mr Md. Zafar Sadique, Senior Research Associate; Ms Mehruna Islam Chowdhury, Senior Research Associate; Mr Uttam Kumar Paul, Deputy Director, Accounts; Mr Mashfique Ibne Akbar, Research Associate; Ms Farzana Sehrin, Research Associate; Ms Saifa Raz, Research Associate; Ms Umme Salma, Research Associate; Ms Umme Shefa Rezbana, Research Associate; Ms Mahenaw Ummul Wara, Research Associate; Dialogue Associate; Mr Md. Naimul Gani Saif, Research Associate; Mr Mohammad Afshar Ali, Research Associate; Ms Shahida Pervin, Research Associate; Ms Afnan Ashfaque, Research Associate; Mr Mostafa Amir Sabbih, Research Associate; Ms Kashfi Rayan, Research Associate; Ms Shahzeen Hafiz, Programme Associate; Mr Ziad Quader, Research Intern; Ms Nadee Naboneeta Imran, Research Intern and Mr Ali Ishraq Khabir, Research Intern, CPD. Mr Towfiqul Islam Khan was the Coordinator of the CPD IRBD 2014 Team. CPD (2014): An Analysis of the National Budget for FY2015 2 ACKNOWLEDGEMENT ...
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...spurring economic growth, this stands that government must have the necessary tools in her kit to achieve this role. This attracted the attention of the researcher to evaluate the Personal Income Tax in Enugu state, taking the Enugu state Board of Internal Revenue as a case study.The primary objective of this research work is to investigate the mechanism, policies and other factors being applied by Enugu Board of Internal Revenue in other to highlight why they are not effective and efficient.In pursuant of the stated goal, primary data was collected by questionnaires and direct interview with both tax payers and tax officials. Secondary data was collected from published materials including textbooks and other relevant literature.The statistical analysis of the data showed among other things that the tax generation on income, is not increasing alongside with the expenditure of the state because of lack of proper machinery and method used by the board of Internal Revenue in collecting income tax due, ignorance, dishonesty and other factors working against effective tax administration in the state.On the basis of these identified problems, a number of recommendations would be made, which it is hoped that if implemented, would improve revenue generation through tax generally, and Personal Income Tax in particular. CHAPTER ONE INTRODUCTION 1.1 BACKGROUND OF THE STUDY Government has a primary duty of raising the standard of living of the people, maintain law and order and to defend...
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...to last five years with zero salvage value. It will generate expected annual cost savings of $30,000. The current machine will last for another 10 years. The discount rate is 10 percent. Assume that tax rate is zero and the present machine is fully depreciated with a zero salvage value. A. Should the firm replace the old machine? Show NPV calculations. (2 Points) | | |T=0 |T=1 |T=2 |T=3 |T=4 |T=5 | |1 |Cash Flow |(110,000) | $ 30,000 | $ 30,000 | $ 30,000 | $ 30,000 | $ 30,000 | |3 |NPV |3,721 | | | | | | B. Assume that existing equipment was bought for $80,000 five years ago and is being depreciated on a straight line over ten years towards a zero book value. It continues to have zero salvage value. Should the firm replace the machine? (No calculations are necessary). Limit your answer to 20 words or less. (2 Points) As tax rate is Zero hence the Loss of Depreciation (Tax Shield) of Old machine and the tax shield due to Depreciation on New machine have no effect of the relevant cash inflow related to project. Decision relating to replacement will still be the same C. The firm replaces the old machine with new machine. Two years later, an improved machine becomes available which makes the “existing”...
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...earnings in the determination of income tax liability. Even in the simplest of times, thus, a firm can attain income tax savings to the extent that it can successfully classify intangible assets as something other than goodwill. Thus, it is entirely possible that the GEC Ltd. auditors reclassified some portion of the goodwill account of AEI Ltd. to some other form of intangible asset, and then effected further adjustments to reclassify some of that amount from an asset to an expense. The issue of accounting for intangible assets has expanded in several directions. One of these directions concerns branded products. Some firms claim that the establishment of brands creates an intangible value for a company, and that such value should be able to be amortized for tax purposes. In turn, some auditors (both private and governmental) contend that the value of a brand is a form of goodwill, and as such may not be amortized and deducted from income taxes. In the traditional conception of goodwill, the claim is that a brand has no recordable value until it is sold, and that when it is sold it reflects goodwill that is neither amortizable nor tax deductible. Many firms contend, however, that brands have a current and intangible value. Thus, it is also within the realm of possibility that GEC Ltd. judged that some brand owned by AEI Ltd. possessed an intangible value that could be amortized and deducted. Accounting For Research and Development All research and development costs not directly...
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...Evaluation of R&D relief and Patent Box scheme in the UK and Belgium | Content 1. Introduction 1 2. UK’s Research and development relief 1 2.1 definition and schemes 1 2.1.1 Small or medium-sized enterprise (SME) scheme 1 2.1.2 Large company schemes 2 2.2 Qualifications 2 2.3 Consultation and appraisement 3 2.3.1 Equity 3 2.3.2 Externalities 3 2.3.3 Further evaluation 4 3. UK’s Patent Box scheme 4 3.1 Definition and Objective 4 3.2 When and how to claim 5 3.3 Qualification 5 3.3.1 Patent Box 6 3.3.2 Qualified Income 6 3.4 Consultation and appraisement 6 3.4.1 Equity 6 3.4.2 Efficiency 7 3.4.3 Further-Evaluation 7 4. Belgium’s Research and Development relief 8 4.1 Nature of incentives 8 4.1.1 Super deduction 8 4.1.2 Notional Interest Deduction (NID) 8 4.1.3 Income tax withholding incentives 8 4.1.4 Incentives for staff 9 4.2 Compare and contrast with UK R&D relief 9 4.2.1 Tax Deduction 9 4.2.2 Notional interest deduction 10 4.2.3 Wage Tax Exemption (WTE) 10 5. Belgium’s Patent Box scheme 11 5.1 Definition and Objective 11 5.2 Compare and Contrast with UK Patent Box scheme 11 5.2.1 Effective Tax Rate 13 5.2.2 Qualified IP rights 13 6. Conclusion 14 7. Bibliography 15 1. Introduction Under the impact of globalization and revolutions in knowledge and technology fields, innovation, which...
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