Bill, a plant​ manager, is suffering from a serious ulcer.​ Bill's doctor recommends that he spend three weeks fishing and hunting in the Colorado Rockies

QI:7-7
Bill, a plant​ manager, is suffering from a serious ulcer.​ Bill's doctor recommends that he spend three weeks fishing and hunting in the Colorado Rockies. Can Bill deduct the costs of the trip as a medical​ expense?


QI:7-9
What is the limit placed on medical expense​ deductions? When can a deduction be taken for medical​ care? What if the medical care is​ prepaid?


QI:7-10

a.	Which taxes are specifically deductible for federal income tax purposes under Sec.​ 164?
b.	If a tax is not specifically listed in Sec.​ 164, under what circumstances may it still be​ deductible?

Jake is a​ single, self-employed individual who owns his own business. During 2016 JakeJake reported $240,000 gross income and $75,000 expenses

QI:6-1
Why is the distinction between deductions for AGI and deductions from AGI important for​ individuals?


QI:6-2
Sam owns a small house that he rents out to students attending the local university. Are the expenses associated with the rental unit deductions for or from ​AGI?


QI:6-3
During the​ year, Sara sold a capital asset at a loss of​ $2,000. She had held the asset as an investment. This is the only capital asset she sold during the year. Is her deduction for this capital loss a deduction for or a deduction from ​AGI?


QI:6-4
Jake is a​ single, self-employed individual who owns his own business. During 2016 JakeJake reported $240,000 gross income and $75,000 expenses from his business. He also paid $28,000 in alimony to his former​ spouse, $4,600 mortgage interest on his personal​ home, $7,500 for health insurance​ premiums, and $2,400 for medicine and doctors. Ignoring any​ self-employment tax on the business​ income, what is Jake​'s AGI for 2016?


QI:6-7
If an activity does not generate a profit in three out of five consecutive​ years, is it automatically deemed to be a​ hobby? Why or why​ not?

In 2001​, Ethel purchased a house for $50,000 to use as her personal residence. She paid $10,000 and borrowed $40,000

QI:5-1
What problem may exist in determining the amount realized for an investor who exchanges common stock of a publicly traded corporation for a used​ building? How is the problem likely to be​ resolved?


QI:5-2
In 2001​, Ethel purchased a house for $50,000 to use as her personal residence. She paid $10,000 and borrowed $40,000 from the local savings and loan company. In 2005 she paid $19,000 to add a room to the house. In 2007 she paid $800 to have the house painted and $1,100 for​ built-in bookshelves. As of January 1 of the current​ year, she has reduced the $40,000 mortgage to $36,000. What is her basis for the​ house?
Her basis for the house is $ 70100      (10000+40000+19000+1100)


QI:5-3
Vincent pays​ $20,000 for equipment to use in his trade or business. He pays sales tax of​ $800 as a result of the purchase. Must the​ $800 sales tax be capitalized as part of the purchase​ price?


QI:5-9
A corporate taxpayer plans to build a​ $6 million office building during the next 18 months. How must the corporation treat the interest on debt paid or incurred during the production​ period?


QI:5-10
Andy owns an applicance store where he has merchandise such as refrigerators for sale.​ Roger, a​ bachelor, owns a​ refrigerator, which he uses in his apartment for personal use. For which individual is the refrigerator a capital​ asset?

There is no specific statutory exclusion for welfare benefits.​ Nevertheless, the IRS has ruled that such benefits are not taxable

There is no specific statutory exclusion for welfare benefits.​ Nevertheless, the IRS has ruled that such benefits are not taxable. Is this within the authority of the​ IRS?


QI:4-4
Most exclusions exist for one of two reasons. What are those​ reasons? Give examples of exclusions that exist for each.


QI:4-5

a. If a gift of property is​ made, who is taxed on income produced by the​ property?

b. How can interfamily gifts reduce a​ family's total tax​ liability?

QI:4-6

a. What role does intent play in determining whether a transfer is a gift and therefore not subject to the income​ tax?

b. Are tips received by employees from customers excludable from gross income as​ gifts? Explain.

QI:4-7
What is the tax significance of the face amount of a life insurance​ policy?


QI:4-10

Answer each of the​ following:

a.	Define the term scholarship as it is used in Sec. 117.
b.	If a scholarship covers room and​ board, is it​ excludable?
c.	If an employer provides a scholarship to an employee who is on leave of​ absence, is that scholarship​ taxable?
d.	Is the amount paid by a university to students for services excludable from the​ students' gross​ income?

QI:4-13

Answer the following questions relative to​ employer-financed medical and​ health, disability, and life insurance plans.

a. May employers deduct premiums paid on employee​ insurance?

b. Do employees have to include such premiums in gross​ income?

c. Are benefits paid to the employee included in the​ employee's gross​ income?

QI:4-16
What conditions must be met if an employee is to exclude meals and lodging furnished by an​ employer?


QI:4-18
Are the same fringe benefits that are available to employees also available to​ self-employed individuals?

Office space is often rented without​ carpet, wall​ covering, or window covering.​ Furthermore, many rental agreements specify that these improvements cannot be removed

Explain the meaning of the term wherewithal to pay as it applies to taxation.

The concept of​ wherewithal-to-pay means that a tax should be imposed when the taxpayer can most easily pay. A taxpayer who owns property that has increased in value does not necessarily have the funds needed to pay any tax. Taxing the gain when it is realized often means that the tax becomes due at the same time the taxpayer collects the sales price.

QI:3-6

A landlord who receives prepaid rent is required to report that amount as gross income when the payment is received. Why would Congress choose to do​ this? What problem does this create for the​ taxpayer?

QI:3-7

Office space is often rented without​ carpet, wall​ covering, or window covering.​ Furthermore, many rental agreements specify that these improvements cannot be removed by a tenant if removal causes any damage to the property. What issue does this​ raise?

QI:3-8

Does the fact that an item of income is paid in a form other than cash mean it is​ nontaxable? Explain.

QI:3-9

Explain the significance of Lucas v. Earl and Helvering v.

Horst.

Tax rules are often very precise. For​ example, a taxpayer must ordinarily provide​ "over 50%" of another​ person's support in order to claim

QI:2-1

a.	The tax law refers to gross​ income, yet the term gross income is not found on Form 1040. Explain.

b. Why is it important to understand the concept of gross income even though the term is not found on Form​ 1040?


QI:2-3
Answer the following​ questions:

a. Explain the distinction between a deduction and a credit.

b. Which is worth​ more, a​ $10 deduction or a​ $10 credit?

c. Explain the difference between refundable and nonrefundable credits.

QI:2-7

a.	What determines who must file a tax​ return?
b.	Is an individual required to file a tax return if he or she owes no​ tax?

QI:2-9
Tax rules are often very precise. For​ example, a taxpayer must ordinarily provide​ "over 50%" of another​ person's support in order to claim a dependency exemption. Why is the threshold​ "over 50%" as opposed to​ "50% or​ more"?

Carmen has computed that her average tax rate is​ 16% and her marginal tax rate is​ 25% for the current year. She is considering whether to make a charitable contribution

Why was​ pay-as-you-go withholding needed in​ 1943?




The governor of your state stated in a recent political speech that he has never supported any income tax increases as the tax rates have remained at the same level during his entire term of office.​ Yet, you believe that you are paying more tax this year than in previous years even though your income has not increased. How can both you and the governor be​ correct? In other​ words, is it possible for the government to raise taxes without raising tax​ rates?




Carmen has computed that her average tax rate is​ 16% and her marginal tax rate is​ 25% for the current year. She is considering whether to make a charitable contribution to her church before the end of the tax year. Which tax rate is of greater significance in measuring the tax effect for her​ decision? Explain.



Indicate which of the following taxes are generally​ progressive, proportional, or​ regressive: