Premium Essay

Taxation Questions

In: Business and Management

Submitted By msanjelladee
Words 323
Pages 2
AC553
Week 3 Home Work
Reading
Chapter 7: Deductions: Business/Investment Losses and Passive Activity Losses
Chapter 8: Deductions: Itemized Deduction
Homework
Questions: 7-7 and 7-13
Problems (Show your work.): 7-46, 8-34, and 8-40
Chp.7.
7. Differentiate between the following: active income, passive income, and portfolio income.
Sol.
1.Active Income
Income an individual earns through participating in some activity with the goal of earning income. Also referred to as earned income.
2.Passive Income
Income earned through a trade or investment in which the individual does through little or no effort.
Ex:Rental property income managed by management company.
3.Portfolio Income
Income is derived directly from investments such as stock earnings, mutual fund investments, or interest income.

13. Briefly, what is "material participation"? Why is the determination of whether a taxpayer materially participates important?
Sol.
Material participation is the point at which an individual becomes Actively or Continuously involved in a project . Earned revenue from the project is no longer considered passive income.
This is important as this determines whether income is active or passive inconsideration of how loses are deducted and how this income is taxed.

46. Mary Beth is a CPA, devoting 3,000 hours per year to her practice. She also owns an office building in which she rents out space to tenants. She devotes none of her time to the management of the office building. She has a property management firm make all management decisions for her. During 2011, she incurred a loss, for tax purposes, of $30,000 on the office building. How must Mary Beth treat this loss on her 2011 tax return?

Sol.
Mary must treat this as a passive loss because she is using a property management company. She makes no management decisions. Her rental activity does not...

Similar Documents

Free Essay

Taxation Question

...1. Salah satu fungsi pajak ialah sebagai sumber penerimaan pemerintah untuk membiayai pengeluaran baik rutin maupun pembangunan disebut fungsi budgetair 2. Pajak yang harus dipikul atau ditanggung sendiri oleh wajib pajak dan tidak dapat dilimpahkan atau dibebankan kepada orang lain atau pihak lain disebut pajak langsung 3. Tariff berupa persentase tertentu yang sifatnya tetap terhadap berapa pun dasar pengenaan pajaknya disebut tarif proporsional (sebanding) 4. Orang pribadi atau badan, meliputi pembayar pajak, pemotong pajak, dan pemungut pajak, yang mempunyai hak dan kewajiban perpajakan sesuai dengan ketentuan peraturan perundang-undangan perpajakan disebut wajib pajak 5. Pengusaha yang melakukan penyerahan barang kena pajak dan/atau penyerahan jasa kena pajak yang dikenai pajak berdasarkan Undang-undang Pajak Pertambahan Nilai Tahun 1984 dan perubahannya disebut Pengusaha Kena Pajak 6. Nomor yang diberikan kepada WP sebagai sarana dalam administrasi perpajakan yang dipergunakan sebagai tanda pengenal diri atau identitas WP dalam melaksanakan hak dan kewajibannya disebut NPWP (Nomor Pokok Wajib Pajak) 7. Jangka waktu yang menjadi dasar bagi wajib pajak untuk menghitung, menyetor, dan melaporkan pajak yang terutang dalam suatu jangka waktu tertentu sebagaimana ditentukan dalam undang-undang disebut masa pajak 8. Jangka waktu 1 (satu) tahun kalender kecuali bila WP menggunakan tahun buku yang tidak sama sengan tahun kalender disebut tahun pajak...

Words: 645 - Pages: 3

Premium Essay

Taxation Assignment

...In particular, note: LAWS7012 Business Taxation | Assignment | Semester 1 - 2014 Where a non-examination item of assessment (including essays, assignments, take-home tests, etc.) is not submitted by the due date and time, a penalty will be levied at the rate of 10% of the marks available for the assessment item per day that the assessment is overdue. Example: Where a piece of assessment is due at...

Words: 3176 - Pages: 13

Premium Essay

Causes of Tax Evasion in Paksitan

.... & Progressive taxation. Findings: Most of the population agrees that these causes play a vital role in the tax evasion in the Pakistan. Conclusion: Tax evasion is main problem of Pakistan which needs to be eliminating by following the recommendations that tax system must base on ground realities, tax rates should be low. There should be proper check & balance of government, tax awareness in public should arise by different channels. Keywords: Pakistan, Tax Evasion, Progressive Taxation, Corrupt govt., Tax system. 273 www.macrothink.org/ijafr International Journal of...

Words: 5355 - Pages: 22

Free Essay

A Study for Implementation of Electronic Government

...Chapter One: Introduction 9 1.1 Introduction 9 1.2 Research Title 10 1.3 Research Question 10 1.4 Aims of Research 10 1.5 Research Background 10 1.6 Research Scope and Limitations 11 1.7 Research Objectives 12 1.8 About Libya 13 2. Chapter Two: Literature Review 14 2.2 E-Government Benefits 14 2.3 E-Government for Developing Countries 16 2.4 Characteristics of Electronic government Services 17 2.5 E-Administration___ A part of e-government 18 2.6 Existing Administration System of Libya 19 2.8 E-Government in Libya 26 2.9 ICT Knowledge in Libya 28 2.10 E-Government Problems in Libya 30 2.12 Stages of E government Development 32 2.17.2 Training Public Employees for E-Government 41 2.18 Risks associated with E-government 42 2.19 Summary of Literature Review 42 3. Chapter Three: Research Methodology 48 3.1 Research Design 48 3.2 Research Methodology 49 3.3 Conceptual Framework 50 4. Chapter Four: Research Analysis 63 4.1 Research Limitation 63 4.2 Analysis Plan 64 4.3 Analysis of Employees Questionnaire 65 4.3 Analysis of Citizens Questionnaire 90 Do you know the use of computer? 90 Do you know the usage of internet? 92 Do you have the facility of internet at home? 94 5. Chapter Five: Conclusion and Recommendations 109 5.1 Conclusion 109 5.2 Recommendations 111 5.3 Future Research 112 7. Chapter Seven: Appendices 121 7.1 Annexure-I...

Words: 20901 - Pages: 84

Premium Essay

Challenges and Prospects of Taxation in Ghana

...Tax payment is a voluntarily contribution imposed by the Government on personal income earners, companies, investors, exporters, importers etc. revenue realised from taxation is a major source of revenue to the Government of Ghana, and as such is an important tool used in the development of Ghana and her economy. However, tax evasion which is the wilful and deliberate violation of the law in order to escape payment of tax, posses a big threat to income taxation in Ghana as it reduces tax revenue to the Government, thereby hampering economic growth and development. However, this research was undertaken to help increase revenue generated from income tax to the government, by pointing out the challenges faced by tax officials in discharging their lawful duties. Various challenges such as tax evasion on the part of the income taxpayers drastically reduce income tax revenue to the government. This has been a big problem for decades and needs to be properly addressed. 1.1 BACKGROUND OF THE STUDY AND PROFILE OF THE ORGANIZATION After a thorough research on the revenue structure of Ghana, it became evident that revenue from tax was a big source of income to the government of Ghana, and needed much attention because; taxation in Ghana like most West African Countries faced numerous challenges such as Tax Evasion (which is the biggest challenge of Taxation)....

Words: 12173 - Pages: 49

Premium Essay

Tx1- Introduction

...Course Schedule Course Modules Review and Practice Exam Preparation Resources Introduction to Personal & Corporate Taxation [TX1] Course description and purpose Personal & Corporate Taxation [TX1] is the first of two courses in taxation in the CGA program of professional studies. It is a level four course that focuses on topics that aim to ensure you achieve a good understanding of the general principles and concepts of the Canadian Income Tax Act (ITA), as encountered by most individuals and corporations help you develop professional skills in the application of ITA principles and concepts to solve tax problems of individuals and corporations introduce you to the basic principles of income tax planning and international taxation, and introduce you to tax preparation software to aid in tax planning and in the preparation of individual T1 income tax and benefit returns. TX1 is designed to assist you in developing professional competence and skills to determine a taxpayer’s taxation requirements, exposure, and liability evaluate tax implications of proposed and completed transactions ensure compliance with all taxation reporting and filing requirements, and analyze and advise on tax planning issues. The CGA Program of Professional Studies is designed to help you develop the competencies that are essential to a professional accountant....

Words: 2652 - Pages: 11

Premium Essay

Tax Law: a Broader Perspective

...Taxation influences everything from wages to inheritance. Given this, one is compelled to inquire as to how this balance works and what constitutes its existence. That is where understanding the effects of tax law and how they are accounted for have great import. As with any other facet of life, rules accompany the application and processing of taxes, and how they are required to be paid. This sounds rather rigid, but there are many benefits to taxation as well as the normal mandatory sacrifices. This means that taxes can change to ease financial hardship just as they can be altered to increase individual expenditure. For instance, FS-2006-2 - Publication 4492 has created tax breaks for Katrina, Rita, and Wilma victims. Those who have been affected may now exclude from income certain cancellations of debt and extends, from two years to five years, the replacement period for converted properties. At this point a logical question to ask is who governs taxation, and how are benefits and penalties decided? Modern taxation extends all the way back to Section I of both Articles 8 and 9 in the constitution, and has been heavily influenced by America's sixteenth amendment to the constitution. Amendment sixteen gave Congress the power to tax any entity regardless of census or enumeration. At first glance, Amendment sixteen appears to grant supreme Paper 3 power to Congress to tax; however, that it not the exact case....

Words: 838 - Pages: 4

Premium Essay

Business Plan

...RE 280 Mortgage Loan Broker/Lend-- Final Project Mortgage Business Plan Xuejiao Chen Saddleback College Summit Mortgage, LLC Company Background Summit Mortgage, LLC was founded in 2014 and locate in the city of Irvine. The company was a California limited liability corporation founded by John Chen who is the current president. We are the mortgage broker company specialized in residential and commercial mortgages. The president John Chen has more than ten years experiences in mortgage industry. He has been helping plenty of people get their dream houses, as well as the company loan. After the 2008 recession, the whole economic was down to the bottom, as well as the mortgage industry. Thousands of people lost their homes. Even right now it is still in the recovery period. Summit Mortgage company was opened in the summer of 2014 because we believe American market will be getting better and stronger. No matter what loan products you are looking for, no matter what credit score you have, and no matter what race you are, we believe we can work this out. We will find the best loan to fit the right person. Our company is like the city of Irvine. We are young, but we have talents in California to provide the best loan recommendations and delivery the best services. In addition, we partner with Maya Real Estate Corporation and Anne Tax solutions, LP. From cradle to grave, we can handle all the loan issues for you. Leave all the dirt work and headache to us. You deserve a......

Words: 1827 - Pages: 8

Premium Essay

Be a Man

...Up to 30 questions For the first Elective examination, candidates can expect to see approximately 15 objective-format questions based on the time estimated for the two cases. Other Information The exam is designed to be completed by an average candidate in three (3) hours; however, candidates will be allowed four (4) hours to write. Time estimates for the questions are based on a three-hour examination. Candidates are responsible for managing the time allocation between the objective-format portion and the case portion as it will not be controlled as part of the examination. Until otherwise advised, for the Elective examinations, candidates can expect two cases for a total of 150 minutes, where the maximum time for any one case is 90 minutes and the minimum is 60 minutes. Candidates will be advised if and when the cases begin to exceed 90 minutes. Chartered Professional Accountants of Canada, CPA Canada, CPA are trademarks and/or certification marks of the Chartered Professional Accountants of Canada. © 2015, Chartered Professional Accountants of Canada. All Rights Reserved. Elective Modules Blueprint – Jan 2015 update FOR THE OBJECTIVE-FORMAT PORTION: ASSURANCE ELECTIVE COMPETENCY AREA WEIGHTINGS CPA Competency Range 1. Financial Reporting 20-40% 2. Strategy & Governance 0-10% 4. Assurance 50-70% 5. Finance 0-10% The objective-format questions will...

Words: 1891 - Pages: 8

Premium Essay

Cheap Wine the Biggest Culprit

...This essay is to explain three questions mentioned following by the article. Specifically, it further examines the suggestion for heavy tax on alcohol concerning the elasticities of demand for alcohol. Question 1: Using the data provided in the article, calculate the price elasticity of demand for alcohol. According to Jackson, McIver and Wilson (2012, p.153), own-price elasticity of demand which is simply know as elasticity of demand is a way to measure the sensitiveness of consumers’ demand to a change in the product’s price, and the formula to calculate it is the percentage change in quantity demanded of a good divided by the percentage change in its price. The law of demand illustrates that the price and quantity demanded are inversely related verifying from the down-sloping demand curve, therefore the own-price elasticity must be negative. However, it is conventional to ignore the negative sign, and simply use the absolute form of the elasticity of demand. In this article, it shows that for a 10 percent increase in price of alcohol could have about 5 percent decrease in consumption. According to above formula, the price elasticity of demand for alcohol is 0.5 (5%/10%). Moreover, one (1) is an important value for elasticity of demand by using absolute form. If the elasticity of demand is more than 1, it shows a relatively larger change in quantity demanded for a given change in price and the product is elastic demand....

Words: 1224 - Pages: 5

Free Essay

Economics - Market Failure

...the consumption or production of the good (the external cost)  Divergence between private and social cost  MSC=MPC+MEC  The MEC = the negative externality  The free market price is less than the optimum price leading to over consumption  Welfare loss Q: The market generated quantity (where privates crosses private) Q1: The optimum quantity (where social crosses social) Over consumption of Q-Q1 Unequal Distribution Effects  Citizens in poor countries are more likely to be affected by the consequences of global warming that those in rich countries  E.g. drought/flooding  They are also a lot less likely to have consumed the goods and services which caused the global warming  And a loss less able to protect them selves e.g. through insurance policies  There are inequities between those who contribute to global warming and those who suffer from it  Citizens of developed (polluting) countries pay less for their goods and services than the social costs of their production  MSC=MPC+MEC Government Intervention to correct Environmental Market Failure 2 main types:  Market based measures Designed to modify the price mechanism using strategies such as taxes and subsidies  Government regulation Sometimes referred to as “Command and Control”, designed to create incentives for firms to reduce harmful emissions, such as pollution permits which allow pollution to a certain level Environmental......

Words: 1530 - Pages: 7

Premium Essay

Business Aspect

...Efficiency, Equity, and Progressive Taxation Reuven S. Avi-Yonah† Does Atlas Shrug? The Economic Consequences of Taxing the Rich. Edited by Joel B. Slemrod.∗ Cambridge: Harvard University Press, 2000. Pp. 524. $57.95. In Greek mythology, Atlas was a giant who carried the world on his shoulders. In Ayn Rand’s 1957 novel Atlas Shrugged, Atlas represents the “ prime movers” —the talented few who bear the weight of the world’s economy.1 In the novel, the prime movers go on strike against the oppressive burden of excessive regulation and taxation, leaving the world in disarray and demonstrating how indispensable they are to the rest of us (the “ second handers” ). Rand wrote in a world in which the top marginal federal income tax rate in the United States was 91% (beginning at taxable income of $400,000).2 This is an unimaginably high rate by today’s standards, when the dominant view in Washington is that a marginal rate of 39.6% (the top † Irwin I. Cohn Professor of Law, University of Michigan. I would like to thank Yossi Edrey, Allen Graubard, David Hasen, Judy Herman, Don Herzog, Jim Hines, Bob Kuttner, Doron Lamm, Jeff Lehman, Kyle Logue, Dan Shaviro, Joel Slemrod, Dennis Ventry, and Larry Zelenak for their extremely helpful suggestions. All errors are mine. * Paul W. McCracken Collegiate Professor of Business Economics and Public Policy, University of Michigan. 1. AYN RAND, ATLAS SHRUGGED (1957). 2. Joel B....

Words: 13482 - Pages: 54

Premium Essay

Global Leadership

...CPA Program Guide— professional level 2011 © CPA Australia 2011 CPA PROGRAM GUIDE—PROFESSIONAL LEVEL i Foreword Since its inception in 1986, the CPA Program has undergone many changes to maintain its relevance to the business world and ensure graduates are equipped to be leaders in finance, accounting and business advice. The CPA Program continues to be recognised as a leading professional program and receives strong endorsement by graduates. Over 75 000 members have completed the CPA Program to date. The CPA Program provides graduates with a world class, internationally recognised professional qualification. Employers need good strategists from a wide range of areas, whose skills are complemented by excellent business training. The CPA Program you are undertaking delivers top quality graduates who provide advice of the highest order to the business world. Approximately 23 000 CPA Australia members hold the position of General Manager, Financial Controller, Chief Financial Officer or Chief Executive Officer. CPA Australia strives to continually enhance the CPA Program’s global relevance and provide more ways for people to develop a career built on professional accounting skills. The CPA Program ensures candidates develop the appropriate skills, knowledge and values required of a CPA through a combination of coherent learning experiences. As shown in the following CPA Program diagram, the CPA Program formal education model consists of two levels: ■ The......

Words: 32319 - Pages: 130

Premium Essay

Project

...Journal of Public Economics 6 (1976) 55-75. 0 North-Holland Publishing Company THE DESIGN OF TAX STRUCTURE: DIRECT VERSUS INDIRECT TAXATION* A.B. ATKINSON University of Essex, Wivenhoe Park, Colchester, England J.E. STIGLITZ Stanford University, Stanford, CA 94305, U.S.A. Revised version received February 1976 1. Introduction The recent literature on optimal taxation may be seen as attempting to clarify the structure of the arguments advanced to support changes in the tax system, tracing the implications of taxes and quantifying (analytically) the trade-offs between the various objectives of tax policy. This literature has examined the optimal structure for particular types of taxation taken in isolation, such as the optimal rates of excise tax and the optimal income tax schedule. Our purpose, on the other hand, is to provide a broader framework and to consider the interaction between different kinds of taxation. To illustrate this, we reexamine the age-old question of direct versus indirect taxation and the relationship of these taxes to the goals of efficiency, vertical equity and horizontal equity. After describing in section 2 the general framework of the analysis, and arguing that any treatment of the choice of tax structures must be centrally concerned with distributional considerations, we begin in section 3 with the extension of the classic Ramsey formula for optimal excise taxation to include vertical equity objectives....

Words: 9114 - Pages: 37

Premium Essay

Debate on Slavery

...Since America’s beginning, there has been intense debate about slavery, precisely because it raises questions about the nation’s dedication to liberty and human equality. Slavery in the Americas had a contentious history, dating back to the Aztecs. It played a major role in our history triggering at least one revolution, one civil war, and many rebellions. At the time of the America’s beginning, there were about half a million slaves in the United States, mostly in the southern states, where they made up about forty percent of the population. Slavery is a system which people are treated as property to be bought and to be sold. Slaves were held against their will from the time of capture, time of purchase or sale, or at birth, and most of them were forced to work without having any right to refuse work or the right to demand compensation. Most slaves worked long hours, they weren’t properly fed by some, didn’t get enough rest, and weren’t treated fairly as a human being. At a young age, Thomas Jefferson took the honorable but challenging task of drafting the Declaration of Independence. This was around the time when the American colonies had conflicts with their British colonies. The Declaration of Independence states some of the grievances that the American colonies had against the British....

Words: 1469 - Pages: 6