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Solution Manual for Concepts in Federal Taxation 2019 26th Edition by Murphy

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Solution Manual for Concepts in Federal Taxation 2019 26th Edition by Murphy

CHAPTER 1
UNDERSTANDING AND WORKING WITH THE FEDERAL TAX LAW
SOLUTIONS TO PROBLEM MATERIALS
DISCUSSION QUESTIONS
1. (LO 1) When enacting tax legislation, Congress often is guided by the concept of revenue neutrality
so that any changes neither increase nor decrease the net revenues raised under the prior rules.
Revenue neutrality does not mean that any one taxpayer’s tax liability remains the same. Since this
liability depends on the circumstances involved, one taxpayer’s increased tax liability could be
another’s tax saving. Revenue-neutral tax reform does not reduce deficits, but at least it does not
aggravate the problem.
2. (LO 2) Economic, social, equity, and political factors play a significant role in the formulation of tax
laws. Furthermore, the IRS and the courts have had impacts on the evolution of tax laws. For
example, control of the economy has been an important economic consideration in passing a number
of laws (e.g., rapid depreciation, changes in tax rates).
3. (LO 2) The tax law encourages technological progress by allowing immediate (or accelerated)
deductions and tax credits for research and development expenditures.
4. (LO 2) Saving leads to capital formation and thus makes funds available to finance home construction
and industrial expansion. For example, the tax laws provide incentives to encourage savings by giving
private retirement plans preferential treatment.
5. (LO 2)
a. Section 1244 allows ordinary loss treatment on the worthlessness of small business
corporation stock. Since such stock normally would be a capital asset, the operation of § 1244
converts a less desirable capital loss into a more attractive ordinary loss. Such tax treatment
was designed to aid small businesses in raising needed capital through the issuance of stock.
b. The S corporation election allows the profits (or losses) of the corporation to flow through to
its individual shareholders (avoiding the corporate income tax). In addition, the qualified
business income deduction will apply to any flow-through profits (allowing a maximum 20%
deduction to the shareholders). However, with the corporate tax rate being 21% (and
individual marginal tax rates potentially being higher), individuals will need to compare the
benefits of avoiding the corporate tax rate with the taxes on any S corporation flow-through
profits.
6. (LO 2) Reasonable persons can, and often do, disagree about what is fair or unfair. In the tax area,
moreover, equity is generally tied to a particular taxpayer’s personal situation. For example, one
equity difference relates to how a business is organized (i.e., partnership versus corporation). Two
businesses may be equal in size, similarly situated, and competitors in the production of goods or
services, but they may not be comparably treated under the tax law if one is a partnership and the
other is a corporation. The corporation is subject to a separate Federal income tax of 21%; the
partnership is not. The tax law can and does make a distinction between these business forms. Equity,
then, is not what appears fair or unfair to any one taxpayer or group of taxpayers. Equity is, instead,
what the tax law recognizes.
1-2 2019 Corporations Volume/Solutions Manual
© 2019 Cengage®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
7. (LO 2) This deduction can be explained by social considerations. The deduction shifts some of the
financial and administrative burden of socially desirable programs from the public (the government)
sector to the private (the citizens) sector.
8. (LO 2) Preferential treatment of private retirement plans encourages saving. Not only are
contributions to Keogh (H.R. 10) plans and certain Individual Retirement Plans (IRA) deductible, but
income from these contributions accumulates on a tax-free basis.
9. (LO 2) The availability of percentage depletion on the extraction and sale of oil and gas and specified
mineral deposits and a write-off (rather than capitalization) of certain exploration costs encourage the
development of natural resources.
10. (LO 2) Favorable treatment of corporate reorganizations provides an economic benefit. By allowing
corporations to combine and split without adverse consequences, corporations are in a position to
reduce their taxes and possibly more effectively compete with other businesses (both nationally and
internationally).
11. (LO 2) Although the major objective of the Federal tax law is the raising of revenue, other
considerations explain many provisions. In particular, economic, social, equity, and political factors
play a significant role. Added to these factors is the impact the Treasury Department, the Internal
Revenue Service, and the courts have had and will continue to have on the evolution of Federal tax
law.
12. (LO 2) The deduction allowed for Federal income tax purposes for state and local income taxes is not
designed to neutralize the effect of multiple taxation on the same income. At most, this deduction
provides only partial relief. The $10,000 overall limitation on state and local taxes (effective in 2018)
also reduces the tax benefit of these taxes. Only allowing a full tax credit would achieve complete
neutrality.
a. With the standard deduction, a taxpayer is, indirectly, obtaining the benefit of a deduction for
any state or local income taxes he or she may have paid. The standard deduction is in lieu of
itemized deductions, which include any allowed deductions for state and local income taxes.
b. If the taxpayer is in the 10% tax bracket, $1 of a deduction for state or local taxes would save
$.10 of Federal income tax liability. In the 32% tax bracket, the saving becomes $.32. The
deduction approach (as opposed to the allowance of a credit) favors high-bracket taxpayers.
13. (LO 2) Under the general rule, a transfer of a partnership’s assets to a new corporation could result in
a taxable gain. However, if certain conditions are met, § 351 postpones the recognition of any gain (or
loss) on the transfer of property by Heather to a controlled corporation.
The wherewithal to pay concept recognizes the inequity of taxing a transaction when Heather lacks
the means with which to pay any tax. Besides, Heather’s economic position would not change
significantly should the transfer occur. Heather owned the assets before the transfer and still would
own the assets after a transfer to a controlled corporation.
14. (LO 2) Yes, once incorporated, the business may be subject to the Federal corporate income tax.
However, the 21% corporate tax rate might be lower than Heather’s individual tax rates, especially if
dividends are not paid to Heather.
The corporate income tax could be avoided altogether by electing to be an S corporation. An
S corporation is generally not taxed at the corporate level; instead, the income flows through the
corporate veil and is taxed at the shareholder level. An S election allows a business to operate as a
corporation but be taxed like a partnership. With a partnership, there is no double tax. Income and
expenses flow through to the partners and are taxed at the partner level.

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DescriptionEdition: 26th Edition Format: Downloadable ZIP Fille Resource Type: Solution manual Duration: Unlimited downloads Delivery: Instant DownloadBy: Spilker Edition: 11th Edition Format: Downloadable ZIP Fille Resource Type: Test bank Duration: Unlimited downloads Delivery: Instant DownloadEdition: 42nd Edition Format: Downloadable ZIP Fille Resource Type: Solution manual Duration: Unlimited downloads Delivery: Instant DownloadBy: Spilker Edition: 11th Edition Format: Downloadable ZIP Fille Resource Type: Solution Manual Duration: Unlimited downloads Delivery: Instant DownloadEdition: 12th Edition Format: Downloadable ZIP Fille Resource Type: Solution manual Duration: Unlimited downloads Delivery: Instant DownloadEdition: 37th Edition Format: Downloadable ZIP Fille Resource Type: Solution manual Duration: Unlimited downloads Delivery: Instant Download
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Solution Manual for Concepts in Federal Taxation 2019 26th Edition by Murphy

CHAPTER 1 UNDERSTANDING AND WORKING WITH THE FEDERAL TAX LAW SOLUTIONS TO PROBLEM MATERIALS DISCUSSION QUESTIONS 1. (LO 1) When enacting tax legislation, Congress often is guided by the concept of revenue neutrality so that any changes neither increase nor decrease the net revenues raised under the prior rules. Revenue neutrality does not mean that any one taxpayer’s tax liability remains the same. Since this liability depends on the circumstances involved, one taxpayer’s increased tax liability could be another’s tax saving. Revenue-neutral tax reform does not reduce deficits, but at least it does not aggravate the problem. 2. (LO 2) Economic, social, equity, and political factors play a significant role in the formulation of tax laws. Furthermore, the IRS and the courts have had impacts on the evolution of tax laws. For example, control of the economy has been an important economic consideration in passing a number of laws (e.g., rapid depreciation, changes in tax rates). 3. (LO 2) The tax law encourages technological progress by allowing immediate (or accelerated) deductions and tax credits for research and development expenditures. 4. (LO 2) Saving leads to capital formation and thus makes funds available to finance home construction and industrial expansion. For example, the tax laws provide incentives to encourage savings by giving private retirement plans preferential treatment. 5. (LO 2) a. Section 1244 allows ordinary loss treatment on the worthlessness of small business corporation stock. Since such stock normally would be a capital asset, the operation of § 1244 converts a less desirable capital loss into a more attractive ordinary loss. Such tax treatment was designed to aid small businesses in raising needed capital through the issuance of stock. b. The S corporation election allows the profits (or losses) of the corporation to flow through to its individual shareholders (avoiding the corporate income tax). In addition, the qualified business income deduction will apply to any flow-through profits (allowing a maximum 20% deduction to the shareholders). However, with the corporate tax rate being 21% (and individual marginal tax rates potentially being higher), individuals will need to compare the benefits of avoiding the corporate tax rate with the taxes on any S corporation flow-through profits. 6. (LO 2) Reasonable persons can, and often do, disagree about what is fair or unfair. In the tax area, moreover, equity is generally tied to a particular taxpayer’s personal situation. For example, one equity difference relates to how a business is organized (i.e., partnership versus corporation). Two businesses may be equal in size, similarly situated, and competitors in the production of goods or services, but they may not be comparably treated under the tax law if one is a partnership and the other is a corporation. The corporation is subject to a separate Federal income tax of 21%; the partnership is not. The tax law can and does make a distinction between these business forms. Equity, then, is not what appears fair or unfair to any one taxpayer or group of taxpayers. Equity is, instead, what the tax law recognizes. 1-2 2019 Corporations Volume/Solutions Manual © 2019 Cengage®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 7. (LO 2) This deduction can be explained by social considerations. The deduction shifts some of the financial and administrative burden of socially desirable programs from the public (the government) sector to the private (the citizens) sector. 8. (LO 2) Preferential treatment of private retirement plans encourages saving. Not only are contributions to Keogh (H.R. 10) plans and certain Individual Retirement Plans (IRA) deductible, but income from these contributions accumulates on a tax-free basis. 9. (LO 2) The availability of percentage depletion on the extraction and sale of oil and gas and specified mineral deposits and a write-off (rather than capitalization) of certain exploration costs encourage the development of natural resources. 10. (LO 2) Favorable treatment of corporate reorganizations provides an economic benefit. By allowing corporations to combine and split without adverse consequences, corporations are in a position to reduce their taxes and possibly more effectively compete with other businesses (both nationally and internationally). 11. (LO 2) Although the major objective of the Federal tax law is the raising of revenue, other considerations explain many provisions. In particular, economic, social, equity, and political factors play a significant role. Added to these factors is the impact the Treasury Department, the Internal Revenue Service, and the courts have had and will continue to have on the evolution of Federal tax law. 12. (LO 2) The deduction allowed for Federal income tax purposes for state and local income taxes is not designed to neutralize the effect of multiple taxation on the same income. At most, this deduction provides only partial relief. The $10,000 overall limitation on state and local taxes (effective in 2018) also reduces the tax benefit of these taxes. Only allowing a full tax credit would achieve complete neutrality. a. With the standard deduction, a taxpayer is, indirectly, obtaining the benefit of a deduction for any state or local income taxes he or she may have paid. The standard deduction is in lieu of itemized deductions, which include any allowed deductions for state and local income taxes. b. If the taxpayer is in the 10% tax bracket, $1 of a deduction for state or local taxes would save $.10 of Federal income tax liability. In the 32% tax bracket, the saving becomes $.32. The deduction approach (as opposed to the allowance of a credit) favors high-bracket taxpayers. 13. (LO 2) Under the general rule, a transfer of a partnership’s assets to a new corporation could result in a taxable gain. However, if certain conditions are met, § 351 postpones the recognition of any gain (or loss) on the transfer of property by Heather to a controlled corporation. The wherewithal to pay concept recognizes the inequity of taxing a transaction when Heather lacks the means with which to pay any tax. Besides, Heather’s economic position would not change significantly should the transfer occur. Heather owned the assets before the transfer and still would own the assets after a transfer to a controlled corporation. 14. (LO 2) Yes, once incorporated, the business may be subject to the Federal corporate income tax. However, the 21% corporate tax rate might be lower than Heather’s individual tax rates, especially if dividends are not paid to Heather. The corporate income tax could be avoided altogether by electing to be an S corporation. An S corporation is generally not taxed at the corporate level; instead, the income flows through the corporate veil and is taxed at the shareholder level. An S election allows a business to operate as a corporation but be taxed like a partnership. With a partnership, there is no double tax. Income and expenses flow through to the partners and are taxed at the partner level.

Test Bank for Taxation of Individuals 2020 Edition 11th Edition By Spilker

Taxation of Individuals, 11e (Spilker) Chapter 1   An Introduction to Tax  1) Taxes influence many types of business decisions but generally do not influence personal decisions. Answer:  FALSE Difficulty: 1 Easy Topic:  Who Cares About Taxes and Why? Learning Objective:  01-01 Demonstrate how taxes influence basic business, investment, personal, and political decisions. Bloom's:  Remember AACSB:  Reflective Thinking AICPA:  BB Critical Thinking 2) Taxes influence business decisions such as where a business should locate or how a business should be structured. Answer:  TRUE Difficulty: 1 Easy Topic:  Who Cares About Taxes and Why? Learning Objective:  01-01 Demonstrate how taxes influence basic business, investment, personal, and political decisions. Bloom's:  Remember AACSB:  Reflective Thinking AICPA:  BB Critical Thinking 3) Tax policy rarely plays an important part in presidential campaigns. Answer:  FALSE Difficulty: 1 Easy Topic:  Who Cares About Taxes and Why? Learning Objective:  01-01 Demonstrate how taxes influence basic business, investment, personal, and political decisions. Bloom's:  Remember AACSB:  Reflective Thinking AICPA:  BB Critical Thinking 4) Margaret recently received a parking ticket. This is a common example of a local tax. Answer:  FALSE Difficulty: 1 Easy Topic:  What Qualifies as a Tax? Learning Objective:  01-02 Discuss what constitutes a tax and the general objectives of taxes. Bloom's:  Remember AACSB:  Reflective Thinking AICPA:  BB Critical Thinking 5) George recently paid $50 to renew his driver's license. The $50 payment is considered a tax. Answer:  FALSE Explanation:  A tax is a payment required by a government that is unrelated to any specific benefit or service received by the government. Difficulty: 1 Easy Topic:  What Qualifies as a Tax? Learning Objective:  01-02 Discuss what constitutes a tax and the general objectives of taxes. Bloom's:  Remember AACSB:  Reflective Thinking AICPA:  BB Critical Thinking 6) A 1 percent charge imposed by a local government on football tickets sold is not considered a tax if all proceeds are earmarked to fund local schools. Answer:  FALSE Difficulty: 2 Medium Topic:  What Qualifies as a Tax? Learning Objective:  01-02 Discuss what constitutes a tax and the general objectives of taxes. Bloom's:  Understand AACSB:  Reflective Thinking AICPA:  BB Critical Thinking 7) One key characteristic of a tax is that it is a required payment to a governmental agency. Answer:  TRUE Difficulty: 2 Medium Topic:  What Qualifies as a Tax? Learning Objective:  01-02 Discuss what constitutes a tax and the general objectives of taxes. Bloom's:  Analyze AACSB:  Reflective Thinking AICPA:  BB Critical Thinking 8) Common examples of sin taxes include the taxes imposed on airline tickets and gasoline. Answer:  FALSE Difficulty: 2 Medium Topic:  What Qualifies as a Tax? Learning Objective:  01-02 Discuss what constitutes a tax and the general objectives of taxes. Bloom's:  Analyze AACSB:  Reflective Thinking AICPA:  BB Critical Thinking 9) One benefit of a sin tax (e.g., a tax on cigarettes) is that it should increase the demand for the products being taxed. Answer:  FALSE Difficulty: 2 Medium Topic:  What Qualifies as a Tax? Learning Objective:  01-02 Discuss what constitutes a tax and the general objectives of taxes. Bloom's:  Analyze AACSB:  Reflective Thinking AICPA:  BB Critical Thinking

Solution Manual for South Western Federal Taxation 2019 Corporations Partnerships Estates and Trusts 42nd Edition by Raabe

CHAPTER 1 UNDERSTANDING AND WORKING WITH THE FEDERAL TAX LAW Federal Taxation 2019 Corporations Partnerships Estates and Trusts SOLUTIONS TO PROBLEM MATERIALS DISCUSSION QUESTIONS 1. (LO 1) When enacting tax legislation, Congress often is guided by the concept of revenue neutrality so that any changes neither increase nor decrease the net revenues raised under the prior rules. Revenue neutrality does not mean that any one taxpayer’s tax liability remains the same. Since this liability depends on the circumstances involved, one taxpayer’s increased tax liability could be another’s tax saving. Revenue-neutral tax reform does not reduce deficits, but at least it does not aggravate the problem. 2. (LO 2) Economic, social, equity, and political factors play a significant role in the formulation of tax laws. Furthermore, the IRS and the courts have had impacts on the evolution of tax laws. For example, control of the economy has been an important economic consideration in passing a number of laws (e.g., rapid depreciation, changes in tax rates). 3. (LO 2) The tax law encourages technological progress by allowing immediate (or accelerated) deductions and tax credits for research and development expenditures. 4. (LO 2) Saving leads to capital formation and thus makes funds available to finance home construction and industrial expansion. For example, the tax laws provide incentives to encourage savings by giving private retirement plans preferential treatment. 5. (LO 2) a. Section 1244 allows ordinary loss treatment on the worthlessness of small business corporation stock. Since such stock normally would be a capital asset, the operation of § 1244 converts a less desirable capital loss into a more attractive ordinary loss. Such tax treatment was designed to aid small businesses in raising needed capital through the issuance of stock. b. The S corporation election allows the profits (or losses) of the corporation to flow through to its individual shareholders (avoiding the corporate income tax). In addition, the qualified business income deduction will apply to any flow-through profits (allowing a maximum 20% deduction to the shareholders). However, with the corporate tax rate being 21% (and individual marginal tax rates potentially being higher), individuals will need to compare the benefits of avoiding the corporate tax rate with the taxes on any S corporation flow-through profits. 6. (LO 2) Reasonable persons can, and often do, disagree about what is fair or unfair. In the tax area, moreover, equity is generally tied to a particular taxpayer’s personal situation. For example, one equity difference relates to how a business is organized (i.e., partnership versus corporation). Two businesses may be equal in size, similarly situated, and competitors in the production of goods or services, but they may not be comparably treated under the tax law if one is a partnership and the other is a corporation. The corporation is subject to a separate Federal income tax of 21%; the partnership is not. The tax law can and does make a distinction between these business forms. Equity, then, is not what appears fair or unfair to any one taxpayer or group of taxpayers. Equity is, instead, what the tax law recognizes. 1-2 2019 Corporations Volume/Solutions Manual © 2019 Cengage®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 7. (LO 2) This deduction can be explained by social considerations. The deduction shifts some of the financial and administrative burden of socially desirable programs from the public (the government) sector to the private (the citizens) sector. 8. (LO 2) Preferential treatment of private retirement plans encourages saving. Not only are contributions to Keogh (H.R. 10) plans and certain Individual Retirement Plans (IRA) deductible, but income from these contributions accumulates on a tax-free basis. 9. (LO 2) The availability of percentage depletion on the extraction and sale of oil and gas and specified mineral deposits and a write-off (rather than capitalization) of certain exploration costs encourage the development of natural resources. 10. (LO 2) Favorable treatment of corporate reorganizations provides an economic benefit. By allowing corporations to combine and split without adverse consequences, corporations are in a position to reduce their taxes and possibly more effectively compete with other businesses (both nationally and internationally). 11. (LO 2) Although the major objective of the Federal tax law is the raising of revenue, other considerations explain many provisions. In particular, economic, social, equity, and political factors play a significant role. Added to these factors is the impact the Treasury Department, the Internal Revenue Service, and the courts have had and will continue to have on the evolution of Federal tax law. 12. (LO 2) The deduction allowed for Federal income tax purposes for state and local income taxes is not designed to neutralize the effect of multiple taxation on the same income. At most, this deduction provides only partial relief. The $10,000 overall limitation on state and local taxes (effective in 2018) also reduces the tax benefit of these taxes. Only allowing a full tax credit would achieve complete neutrality. a. With the standard deduction, a taxpayer is, indirectly, obtaining the benefit of a deduction for any state or local income taxes he or she may have paid. The standard deduction is in lieu of itemized deductions, which include any allowed deductions for state and local income taxes. b. If the taxpayer is in the 10% tax bracket, $1 of a deduction for state or local taxes would save $.10 of Federal income tax liability. In the 32% tax bracket, the saving becomes $.32. The deduction approach (as opposed to the allowance of a credit) favors high-bracket taxpayers. 13. (LO 2) Under the general rule, a transfer of a partnership’s assets to a new corporation could result in a taxable gain. However, if certain conditions are met, § 351 postpones the recognition of any gain (or loss) on the transfer of property by Heather to a controlled corporation. The wherewithal to pay concept recognizes the inequity of taxing a transaction when Heather lacks the means with which to pay any tax. Besides, Heather’s economic position would not change significantly should the transfer occur. Heather owned the assets before the transfer and still would own the assets after a transfer to a controlled corporation. 14. (LO 2) Yes, once incorporated, the business may be subject to the Federal corporate income tax. However, the 21% corporate tax rate might be lower than Heather’s individual tax rates, especially if dividends are not paid to Heather. The corporate income tax could be avoided altogether by electing to be an S corporation. An S corporation is generally not taxed at the corporate level; instead, the income flows through the corporate veil and is taxed at the shareholder level. An S election allows a business to operate as a corporation but be taxed like a partnership. With a partnership, there is no double tax. Income and expenses flow through to the partners and are taxed at the partner level.

Solution Manual for Taxation of Individuals 2020 Edition 11th Edition By Spilker

U.S. Corporation Income Tax Return For calendar year 2018 or tax year beginning , 2018, ending , 20 ▶ Go to www.irs.gov/Form1120 for instructions and the latest information. OMB No. 1545-0123 2018 TYPE OR PRINT Name Number, street, and room or suite no. If a P.O. box, see instructions. City or town, state or province, country, and ZIP or foreign postal code A Check if: 1a Consolidated return (attach Form 851) . b Life/nonlife consolidated return . . . 2 Personal holding co. (attach Sch. PH) . . 3 Personal service corp. (see instructions) . . 4 Schedule M-3 attached B Employer identification number C Date incorporated D Total assets (see instructions) $ E Check if: (1) Initial return (2) Final return (3) Name change (4) Address change Income 1a Gross receipts or sales . . . . . . . . . . . . . . . . 1a b Returns and allowances . . . . . . . . . . . . . . . . 1b c Balance. Subtract line 1b from line 1a . . . . . . . . . . . . . . . . . . . . 1c 2 Cost of goods sold (attach Form 1125-A) . . . . . . . . . . . . . . . . . . . . 2 3 Gross profit. Subtract line 2 from line 1c . . . . . . . . . . . . . . . . . . . . 3 4 Dividends and inclusions (Schedule C, line 23, column (a)) . . . . . . . . . . . . . . . 4 5 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 6 Gross rents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 7 Gross royalties . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 8 Capital gain net income (attach Schedule D (Form 1120)) . . . . . . . . . . . . . . . 8 9 Net gain or (loss) from Form 4797, Part II, line 17 (attach Form 4797) . . . . . . . . . . . 9 10 Other income (see instructions—attach statement) . . . . . . . . . . . . . . . . . 10 11 Total income. Add lines 3 through 10 . . . . . . . . . . . . . . . . . . . ▶ 11 Deductions (See instructions for limitations on deductions.) 12 Compensation of officers (see instructions—attach Form 1125-E) . . . . . . . . . . . ▶ 12 13 Salaries and wages (less employment credits) . . . . . . . . . . . . . . . . . . 13 14 Repairs and maintenance . . . . . . . . . . . . . . . . . . . . . . . . 14 15 Bad debts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 16 Rents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 17 Taxes and licenses . . . . . . . . . . . . . . . . . . . . . . . . . . 17 18 Interest (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . 18 19 Charitable contributions . . . . . . . . . . . . . . . . . . . . . . . . . 19 20 Depreciation from Form 4562 not claimed on Form 1125-A or elsewhere on return (attach Form 4562) . . 20 21 Depletion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 22 Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 23 Pension, profit-sharing, etc., plans . . . . . . . . . . . . . . . . . . . . . 23 24 Employee benefit programs . . . . . . . . . . . . . . . . . . . . . . . 24 25 Reserved for future use . . . . . . . . . . . . . . . . . . . . . . . . . 25 26 Other deductions (attach statement) . . . . . . . . . . . . . . . . . . . . . 26 27 Total deductions. Add lines 12 through 26 . . . . . . . . . . . . . . . . . . ▶ 27 28 Taxable income before net operating loss deduction and special deductions. Subtract line 27 from line 11. 28 29a Net operating loss deduction (see instructions) . . . . . . . . . 29a b Special deductions (Schedule C, line 24, column (c)) . . . . . . . 29b c Add lines 29a and 29b . . . . . . . . . . . . . . . . . . . . . . . . . 29c Tax, Refundable Credits, and Payments 30 Taxable income. Subtract line 29c from line 28. See instructions . . . . . . . . . . . . 30 31 Total tax (Schedule J, Part I, line 11) . . . . . . . . . . . . . . . . . . . . . 31 32 2018 net 965 tax liability paid (Schedule J, Part II, line 12) . . . . . . . . . . . . . . . 32 33 Total payments, credits, and section 965 net tax liability (Schedule J, Part III, line 23) . . . . . . . 33 34 Estimated tax penalty. See instructions. Check if Form 2220 is attached . . . . . . . . ▶ 34 35 Amount owed. If line 33 is smaller than the total of lines 31, 32, and 34, enter amount owed . . . . 35 36 Overpayment. If line 33 is larger than the total of lines 31, 32, and 34, enter amount overpaid . . . . 36 37 Enter amount from line 36 you want: Credited to 2019 estimated tax ▶ Refunded ▶ 37 Sign Here Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and belief, it is true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge. ▲ Signature of officer Date ▲ Title May the IRS discuss this return with the preparer shown below? See instructions. Yes No Paid Preparer Use Only Print/Type preparer’s name Preparer’s signature Date Check if self-employed PTIN Firm’s name ▶ Firm’s address ▶ Firm’s EIN ▶ Phone no. For Paperwork Reduction Act Notice, see separate instructions. Cat. No. 11450Q Form 1120 (2018) Form 1120 (2018) Page 2 Schedule C Dividends, Inclusions, and Special Deductions (see instructions) (a) Dividends and inclusions (b) % (c) Special deductions (a) × (b) 1 Dividends from less-than-20%-owned domestic corporations (other than debt-financed stock) . . . . . . . . . . . . . . . . . . . . . . . . 2 Dividends from 20%-or-more-owned domestic corporations (other than debt-financed stock) . . . . . . . . . . . . . . . . . . . . . . . . 3 Dividends on certain debt-financed stock of domestic and foreign corporations . . 4 Dividends on certain preferred stock of less-than-20%-owned public utilities . . . 5 Dividends on certain preferred stock of 20%-or-more-owned public utilities . . . . 6 Dividends from less-than-20%-owned foreign corporations and certain FSCs . . . 7 Dividends from 20%-or-more-owned foreign corporations and certain FSCs . . . 8 Dividends from wholly owned foreign subsidiaries . . . . . . . . . . . 9 Subtotal. Add lines 1 through 8. See instructions for limitations . . . . . . . 10 Dividends from domestic corporations received by a small business investment company operating under the Small Business Investment Act of 1958 . . . . . 11 Dividends from affiliated group members . . . . . . . . . . . . . . 12 Dividends from certain FSCs . . . . . . . . . . . . . . . . . 13 Foreign-source portion of dividends received from a specified 10%-owned foreign corporation (excluding hybrid dividends) (see instructions) . . . . . . . . . 14 Dividends from foreign corporations not included on line 3, 6, 7, 8, 11, 12, or 13 (including any hybrid dividends) . . . . . . . . . . . . . . . . . 15 Section 965(a) inclusion . . . . . . . . . . . . . . . . . . . 16a Subpart F inclusions derived from the sale by a controlled foreign corporation (CFC) of the stock of a lower-tier foreign corporation treated as a dividend (attach Form(s) 5471) (see instructions) . . . . . . . . . . . . . . . . . . . . . b Subpart F inclusions derived from hybrid dividends of tiered corporations (attach Form(s) 5471) (see instructions) . . . . . . . . . . . . . . . . . . . c Other inclusions from CFCs under subpart F not included on line 15, 16a, 16b, or 17 (attach Form(s) 5471) (see instructions). . . . . . . . . . . . . . . 17 Global Intangible Low-Taxed Income (GILTI) (attach Form(s) 5471 and Form 8992) . . 18 Gross-up for foreign taxes deemed paid . . . . . . . . . . . . . . 19 IC-DISC and former DISC dividends not included on line 1, 2, or 3 . . . . . . 20 Other dividends . . . . . . . . . . . . . . . . . . . . . 21 Deduction for dividends paid on certain preferred stock of public utilities . . . . 22 Section 250 deduction (attach Form 8993) . . . . . . . . . . . . . 23 Total dividends and inclusions. Add lines 9 through 20. Enter here and on page 1, line 4 . . . . . . . . . . . . . . . . . . . . . . . . 24 Total special deductions. Add lines 9 through 22, column (c). Enter here and on page 1, line 29b . . . . . . . Form 1120 (2018) Form 1120 (2018) Page 3 Schedule J Tax Computation and Payment (see instructions) Part I–Tax Computation 1 Check if the corporation is a member of a controlled group (attach Schedule O (Form 1120)). See instructions ▶ 2 Income tax. See instructions . . . . . . . . . . . . . . . . . . . . . . . . 2 3 Base erosion minimum tax (attach Form 8991) . . . . . . . . . . . . . . . . . . . 3 4 Add lines 2 and 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 5 a Foreign tax credit (attach Form 1118) . . . . . . . . . . . . . 5a b Credit from Form 8834 (see instructions) . . . . . . . . . . . . 5b c General business credit (attach Form 3800) . . . . . . . . . . . 5c d Credit for prior year minimum tax (attach Form 8827) . . . . . . . . 5d e Bond credits from Form 8912 . . . . . . . . . . . . . . . 5e 6 Total credits. Add lines 5a through 5e . . . . . . . . . . . . . . . . . . . . . 6 7 Subtract line 6 from line 4 . . . . . . . . . . . . . . . . . . . . . . . . . 7 8 Personal holding company tax (attach Schedule PH (Form 1120)) . . . . . . . . . . . . . . 8 9 a Recapture of investment credit (attach Form 4255) . . . . . . . . . 9a b Recapture of low-income housing credit (attach Form 8611) . . . . . . 9b c Interest due under the look-back method—completed long-term contracts (attach Form 8697) . . . . . . . . . . . . . . . . . . . . . 9c d Interest due under the look-back method—income forecast method (attach Form 8866) . . . . . . . . . . . . . . . . . . . . . . 9d e Alternative tax on qualifying shipping activities (attach Form 8902) . . . . 9e f Other (see instructions—attach statement) . . . . . . . . . . . 9f 10 Total. Add lines 9a through 9f . . . . . . . . . . . . . . . . . . . . . . . . 10 11 Total tax. Add lines 7, 8, and 10. Enter here and on page 1, line 31 . . . . . . . . . . . . . 11 Part II–Section 965 Payments (see instructions) 12 2018 net 965 tax liability paid from Form 965-B, Part II, column (k), line 2. Enter here and on page 1, line 32 . 12 Part III–Payments, Refundable Credits, and Section 965 Net Tax Liability 13 2017 overpayment credited to 2018 . . . . . . . . . . . . . . . . . . . . . . 13 14 2018 estimated tax payments . . . . . . . . . . . . . . . . . . . . . . . . 14 15 2018 refund applied for on Form 4466 . . . . . . . . . . . . . . . . . . . . . . 15 ( ) 16 Combine lines 13, 14, and 15 . . . . . . . . . . . . . . . . . . . . . . . . 16 17 Tax deposited with Form 7004 . . . . . . . . . . . . . . . . . . . . . . . . 17 18 Withholding (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . 18 19 Total payments. Add lines 16, 17, and 18 . . . . . . . . . . . . . . . . . . . . 19 20 Refundable credits from: a Form 2439 . . . . . . . . . . . . . . . . . . . . . 20a b Form 4136 . . . . . . . . . . . . . . . . . . . . . 20b c Form 8827, line 8c . . . . . . . . . . . . . . . . . . 20c d Other (attach statement—see instructions) . . . . . . . . . . . 20d 21 Total credits. Add lines 20a through 20d . . . . . . . . . . . . . . . . . . . . . 21 22 2018 net 965 tax liability from Form 965-B, Part I, column (d), line 2. See instructions . . . . . . . . 22 23 Total payments, credits, and section 965 net tax liability. Add lines 19, 21, and 22. Enter here and on page 1, line 33 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Form 1120 (2018) Form 1120 (2018) Page 4 Schedule K Other Information (see instructions) 1 Check accounting method: a Cash b Accrual c Other (specify) ▶ Yes No 2 See the instructions and enter the: a Business activity code no. ▶ b Business activity ▶ c Product or service ▶ 3 Is the corporation a subsidiary in an affiliated group or a parent-subsidiary controlled group? . . . . . . . . . . If “Yes,” enter name and EIN of the parent corporation ▶ 4 At the end of the tax year: a Did any foreign or domestic corporation, partnership (including any entity treated as a partnership), trust, or tax-exempt organization own directly 20% or more, or own, directly or indirectly, 50% or more of the total voting power of all classes of the corporation’s stock entitled to vote? If “Yes,” complete Part I of Schedule G (Form 1120) (attach Schedule G) . . . . . . b Did any individual or estate own directly 20% or more, or own, directly or indirectly, 50% or more of the total voting power of all classes of the corporation’s stock entitled to vote? If “Yes,” complete Part II of Schedule G (Form 1120) (attach Schedule G) . 5 At the end of the tax year, did the corporation: a Own directly 20% or more, or own, directly or indirectly, 50% or more of the total voting power of all classes of stock entitled to vote of any foreign or domestic corporation not included on Form 851, Affiliations Schedule? For rules of constructive ownership, see instructions. If “Yes,” complete (i) through (iv) below. (i) Name of Corporation (ii) Employer Identification Number (if any) (iii) Country of Incorporation (iv) Percentage Owned in Voting Stock b Own directly an interest of 20% or more, or own, directly or indirectly, an interest of 50% or more in any foreign or domestic partnership (including an entity treated as a partnership) or in the beneficial interest of a trust? For rules of constructive ownership, see instructions. If “Yes,” complete (i) through (iv) below. (i) Name of Entity (ii) Employer Identification Number (if any) (iii) Country of Organization (iv) Maximum Percentage Owned in Profit, Loss, or Capital 6 During this tax year, did the corporation pay dividends (other than stock dividends and distributions in exchange for stock) in excess of the corporation’s current and accumulated earnings and profits? See sections 301 and 316 . . . . . . . . If “Yes,” file Form 5452, Corporate Report of Nondividend Distributions. See the instructions for Form 5452. If this is a consolidated return, answer here for the parent corporation and on Form 851 for each subsidiary. 7 At any time during the tax year, did one foreign person own, directly or indirectly, at least 25% of the total voting power of all classes of the corporation’s stock entitled to vote or at least 25% of the total value of all classes of the corporation’s stock? . For rules of attribution, see section 318. If “Yes,” enter: (a) Percentage owned ▶ and (b) Owner’s country ▶ (c) The corporation may have to file Form 5472, Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business. Enter the number of Forms 5472 attached ▶ 8 Check this box if the corporation issued publicly offered debt instruments with original issue discount . . . . . . ▶ If checked, the corporation may have to file Form 8281, Information Return for Publicly Offered Original Issue Discount Instruments. 9 Enter the amount of tax-exempt interest received or accrued during the tax year ▶ $ 10 Enter the number of shareholders at the end of the tax year (if 100 or fewer) ▶ 11 If the corporation has an NOL for the tax year and is electing to forego the carryback period, check here (see instructions) ▶ If the corporation is filing a consolidated return, the statement required by Regulations section 1.1502-21(b)(3) must be attached or the election will not be valid. 12 Enter the available NOL carryover from prior tax years (do not reduce it by any deduction reported on page 1, line 29a.) . . .

SOLUTIONS MANUAL FOR FUNDAMENTALS OF TAXATION 2019 12TH EDITION CRUZ

 
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Fundamentals of Taxation 2019 12/E Cruz 2019 SOLUTIONS MANUAL

Authors: Cruz, Deschamps, Niswander, Prendergast, Schisler ISBN: 1259917088 | 9781259917080

Solution Manual for Income Tax Fundamentals 2019 37th Edition Whittenburg

Solution Manual for Income Tax Fundamentals 2019, 37th Edition, Gerald E. Whittenburg, Steven Gill, ISBN-10: 1337703060, ISBN-13: 9781337703062
Table of Contents
1. The Individual Income Tax Return.
2. Gross Income and Exclusions.
3. Business Income and Expenses, Part I.
4. Business Income and Expenses, Part II.
5. Itemized Deductions and Other Incentives.
6. Credits and Special Taxes.
7. Accounting Periods and Methods and Depreciation.
8. Capital Gains and Losses.
9. Withholding, Estimated Payments, and Payroll Taxes.
10. Partnership Taxation.
11. The Corporate Income Tax.
12. Tax Administration and Tax Planning.
Appendix A: Tax Rate Schedules and Tax Tables.
Appendix B: Earned Income Credit Table.
Appendix C: Withholding Tables.
Appendix D: Additional Comprehensive Tax Return Problems.
Appendix E: Solutions to Self-Study Problems.
Glossary of Tax Terms.
Index.
List of Forms.
List of Schedules.
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