SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN: 9780357391266
Author: Nellen
Publisher: Cengage
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A. Propose a tax measure in order for the government to eaarn addtional revenue with emphasis ont he following items:
1. Indicate the type of your proposed taxwhat is the name, nature and purpose of the tax?2. what is/are covered transactions and who are the taxpayers? any tax exemption?
Which of the following statements regarding
political contributions made by a corporation is
CORRECT?
a. Political contributions are allowed as a
deduction in the computation of taxable
income, therefore they are deducted on
Schedule 2.
b. Corporations receive a tax credit equal
to 15% of political contributions made in
the year.
O c. Political contributions are not allowed as
a deduction in the computation of
business income, therefore they are
added back on Schedule 1.
O d. The total deduction for political
contributions is limited to 75% of the
corporation's net income in the year.
Which of the following is not a tax preference or adjustment item for the individual alternative minimum tax computation?
a. Depreciation of certain assets
b. State income taxes
c. State income tax refunds
d. Private activity bond intereste.
e. All of the above are adjustments or tax preference items
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- Which one of the following statements is NOT correct about taxation? (A) Taxes produce revenue for government operations. (B) Itemized deductions provide a larger deduction amount than the standard deduction. (C) Taxation is used to influence the behavior of individuals, businesses, nonprofit entities, and even the government. (D) Tax rates and deductions are impacted by a taxpayer’s filing status.arrow_forwarda) Explain the difference between pretax financial income and taxable income. b) What are the two objectives of accounting for income taxes? c) Interest on governmental bonds is often referred to as a permanent difference when determining the proper amount to report for deferred taxes. Explain the meaning of permanent differences, and give two other examples. d) Explain the meaning of a temporary difference as it relates to deferred tax computations, and give four examples. e) Bridgeton Company started its operations at the beginning of 2018. The following information relates to its operations for the year. The differences between the 2018 income statement and tax return are listed below: Fines incurred for pollution violations of $7,320 were deducted in computing pretax financial income. Warranty expense accrued for financial reporting purposes amounts to $15,910. Warranty deductions per the tax return amount to $8,730. Interest revenue earned on an investment in tax-exempt bonds…arrow_forwardA corporation's taxable income is taxed at the federal, state, and local levels. It is customary for an agency to deduct the taxes paid to the other agencies before computing the company's tax liability. For example, the federal taxes are based on the income that remains after the state and local taxes are deducted. Similarly, the state taxes are based on the income that remains after federal and local taxes are deducted; the local taxes are based on the income that remains after state and federal taxes are deducted. A corporation has a taxable income of $7,604,330. At this income level, the federal income rate is 46%, the state tax rate is 16%, and the local tax rate is 14%. If each tax rate is applied to the the total taxable income, the resulting tax liability for the corporation would be (46 + 16 + 14)%. Luckily for the corporation, the taxes paid are deducted as described above. What is the tax liability (as a percentage of taxable income) if the customary deductions are…arrow_forward
- A corporation's taxable income is taxed at the federal, state, and local levels. It is customary for an agency to deduct the taxes paid to the other agencies before computing the company's tax liability. For example, the federal taxes are based on the income that remains after the state and local taxes are deducted. Similarly, the state taxes are based on the income that remains after federal and local taxes are deducted; the local taxes are based on the income that remains after state and federal taxes are deducted. A corporation has a taxable income of $1,022,508. At this income level, the federal income rate is 51%, the state tax rate is 16%, and the local tax rate is 15%. If each tax rate is applied to the the total taxable income, the company would have to pay $1,022,508 * 0.51 in federal taxes. Luckily for the corporation, the taxes paid are deducted as described above. How much is paid in federal taxes if the customary deductions are taken into consideration? $…arrow_forwardWhich of the following statements is (are) correct? (x) Part of the administrative burden of a tax is the cost of implementing and administering government programs that use the tax revenue that is collected (y) A tax loophole occurs when tax laws give preferential treatment to specific types of behavior. (z) A mortgage interest deduction would be considered a tax loophole because it allows home purchasers to reduce their tax liability when they pay mortgage interest. A. (x), (y) and (z) B. (x) and (y) only C. (x) and (z) only D. (y) and (z) only E. (y) onlyarrow_forwardWhich of the following tax remedies is both beneficial to the government and taxpayer? a. Tax lien b. Compromise C. Injunction D. Forfeiturearrow_forward
- A “tax” has been defined as a compulsory payment which is made to a governmental authority and a. Which is not penalty or fine b. Which is paid in exchange for specific benefit to the taxpayer c. Which is to be used for the public good. d. Two of the above.arrow_forwardAn S corporation is subject to the following tax(es). a.Corporate income tax. b.Built-in gains tax. c.Alternative minimum tax. d.None of these choices are correct.arrow_forwardAbility-to-pay principle supports that tax should be * A. Proportionate in character B. Levied for public purpose C. Levied by the lawmaking body of the state D. Levied on persons and properties within the limitsarrow_forward
- These are involuntary fees levied on individuals or corporations and imposed by the government —whether local, regional, or national to finance government activities. a. Taxes b. Excise Taxes c. Property Tax d. VATarrow_forward1. An entity shall offset a deferred tax asset and deferred tax liability A. When income taxes are levied by the same taxing authorityB. Expected future tax law regardless of whether enacted or notC. Under all circumstancesD. Choices A and B are correctarrow_forwardWhich of the following types of expenses is deductible? Group of answer choices A.Bribes & Illegal Kickbacks B.Expenses related to Tax-Exempt Income C.Political Contributions D.Contingency Attorney Feesarrow_forward
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