American Federal Taxation

Federal taxation in the United States is entirely administered by the Internal Revenue Service (IRS). One type of taxation that the IRS administers is income tax. This is calculated by taking the taxable income of an individual, multiplying it by the tax rate and subtracting the applicable credits that can reduce your taxes. Taxable income is your gross income minus all the deductions and exemptions that you are eligible for. The US income tax system is a progressive system where higher level s of income are subject to higher tax rates. For example, those in the lowest income bracket would only have to pay 10% whereas for those in the highest bracket they will have to pay 39.6% of taxable income in the highest bracket. Much like individuals, corporations are also subject to income tax.

Aside from income taxes, the federal government also assesses payroll taxes. There are generally three types of payroll taxes in the US: withholding taxes, social security and medicare taxes, and unemployment taxes. Withholding taxes are a tax whereby the employer withholds some of the wages paid and uses that to pay the government. These taxes serve to help ensure that taxes will be paid to the government. These may be refunded to the worker if it is later discovered it causes them to overpay their income taxes. Social Security and Medicare taxes are used to fund the healthcare and savings programs for employees. Unemployment tax is yet another tax to fund unemployment insurance. All these taxes are deducted from an employee's payroll.

Although the federal government does not administer any sales tax, it does administer excise taxes. Excise taxes are an indirect tax that is hidden within a product price unlike a sales tax. These include taxes on items such as gas, liquor, cigarettes, etc. Lastly, the federal government also administers estate and gift taxes. An estate tax is levied on the estate and is a type of excise tax. Gift taxes are exacted on the donor of property.

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Constructive Liquidation

Which of the following statements is false concerning the requirements of the atom bomb (Constructive liquidation) of Regulation Section 1.752-1? Limited partners, not general partners, are deemed to have their interests liquidated. Partners must restore negative capital accounts after the constructive liquidation. Partners

Home Office Deduction

Can an individual deduct the cost of a home office? Under which circumstances might a deduction be allowed? Find one court case that held in favor of the deduction and one court case that held against the deduction.

Tax / Nontax Advantages

Find out what types of limited liability entities Texas permits besides a corporation and general and limited partnerships. Select one of these entities and explain what tax and nontax advantages you think it may have over a C corporation.

Fringe benefit package

Find an article describing how a specific business put together its employee fringe benefit package in light of the limitations presented by the tax law and the business's form of operation.

Example C/S corporation

Alice owns 100% of Medical Data, a C corporation, and 100% of Your Realtors, and S corporation. She worked full time for Medical Data (i.e., she materially participated in the entity), but Alice did not materially participate in Your Realtors. During the tax years 2014 through 2016, Your Realtors leased real estate to Medical Da

Extension to Elect Consolidated Return Status.

The Cardinal Group had filed on a consolidated basis for several years with its wholly owned subsidiary, Swallow, Inc. The group used a calendar tax year. On January 25, 2016, Heron acquired all of the stock of Cardinal, including its ownership in Swallow, an important supplier for Heron's manufacturing process. All parties in

Mergers and Acquisitions Current Trends in Mergers

Find a current article (not more than two years old) discussing the financial accounting treatment of mergers and acquisitions. The article can discuss current trends in merger and acquisition financial accounting. 400 words (question not included) w/references

Stock Buy Back

Stock buy-back (redemption) programs are a frequent occurrence among publicly traded corporations. Using the Internet as your sole research source, find at least six publicly traded corporations that announced stock buy-back programs in 2015. What are some of the reasons noted by these corporations for the buy-back programs?

Tax on Dividends - Lower Capital Gains

The applicability of the lower capital gains rates to qualified dividends, enacted on a temporary basis in 2003, was made permanent in 2013. There was considerable debate surrounding the desirability of making the reduced rates permanent. Search the Internet for arguments for and against extending the reduced rates on dividends

Bluegrass Corporation Basis and Value of a Stock

Sarah is the sole owner of Bluegrass Corporation. The basis and value of her stock investment in Bluegrass are approximately $100,000. In addition, she manages Bluegrass's operations on a full-time basis and pays herself an annual salary of $40,000. Because of a recent downturn in business, she needs to put an additional $80,000

Industry Director and Implications for Corporations

How does the IRS suggest that corporate taxpayers apportion prior period compensation expenses that are not part of cost of goods sold? See Industry Director Directive (IMSB 04-0209-004), March 2009. 400 words w/ references

Do low-income people receive preferential tax treatment

Do low-income people receive preferential tax treatment? Explain. (include: earned income credit, head of household, child care credit, child credit, refundable credits vs. tax reductions, etc...) Does this help low-income families/society? 1000 words 5 references

Employee or Contractor

Aaron, a resident of Minnesota, has been a driver for Green Delivery Service for the past six years. For this purpose, he leases a truck from Green, and his compensation is based on a percentage of the income resulting from his pickup and delivery services. Green allows its drivers to choose their 10-hour shifts and does not exe

causality loss from taxable income

Esther owns a large home on the East Coast. Her home is surrounded by large, mature oak trees that significantly increase the value of her home. In August 2015, a hurricane damaged many of the trees surrounding her home. In September 2015, Esther engaged a local arborist to evaluate and treat the trees, but five of the largest t

Housing Exemption - Australia

Your client works for a defense contractor and was assigned to work on a military base in Australia. As a condition of his employment, he was required to live in housing that was provided to military personnel. The housing provided was a condominium located in a civilian neighborhood that was 20 miles from the military base wher

Value of the doughnut coupons should be included in income

Your client, John Butler, is an avid Houston Astros fan. Last March at the Astros' home opener, as a result of a random drawing of those in attendance at the game, John won 300 Shipley Do-Nut coupons. Each coupon entitled hip to a cup of coffee and a free doughnut or a dozen doughnut holes. John used some of the coupons (approxi

Murphy vs IRS

Murray reported to the Environmental Protection Agency that his employer was illegally dumping chemicals into a river. His charges were true, and Murray's employer was fined. In retaliation, Murray's employer fired him and made deliberate efforts to prevent Murray from obtaining other employment. Murray sued the employer, claimi

US Tax Court

WWW.USTAXCOURT.GOV 1. What different types of cases can be found on the site? 2. What is a Summary Opinion? Give an example of one. 3. What is a Memorandum Opinion? Give an example of one. 4. Find the Rules of Practice and Procedure. 100 words each (400 total) w/references if other than given website.

Tax Preparation Fees

If I am an executive for my company and my company reimburses me for my tax prep fees, is that income to me? Please support answer with Internal Revenue Code and citation.

Throwback Rules and Grantor Trusts

Normally under current law, does a domestic fiduciary need to worry about the Throwback rules? Identify three types of grantor trusts that will be respected as a separate entity under state law, but will not be treated as such under Federal tax law. Are investment advisory fees paid by a trust subject to the 2%-of-AGI floo

Filing State Returns for Married Couples

The taxpayers are a married couple. Both live in Maryland; however, one works in New Jersey. They are filing married filing jointly for the Federal. Can they file married filing separately in New Jersey and file married filing jointly in Maryland? Please advise.

Income in respect of decedent

Please provide how you obtain the answers. 2. For each of the following independent situations, indicate whether Income (Deduction) in Respect to a Decedent would result. Provide a brief (one sentence) explanation why or why not. a. Included in Decedent's taxable estate was an IRA (fully deductible, zero-basis traditional I

Distributions in Kind Relating to Trusts

Are there special rules for distributions in kind? Under what circumstances does the trust recognize gain or loss? Under what circumstances is such a distribution not traced to DNI?

Divorce law, tax audits and commercial property

Please cite all code sections, cases and regulations relevant: 1. Your client, Jane, is being audited for tax years 2009, 2010 and 2011. During these tax years Jane was married to Bart. Jane believed that Bart committed "suspicious" decisions regarding their tax returns. She says these were just one of those problems that led

Partnership distribution

PLEASE cite to source law (codes, regulations, relevant cases etc.) do not make jumps in logic, show all steps! Do not stop analysis because one element fails, if applicable test requires elements. Elias contributed $100,000 to become a 1/3 partner in CDE Partnership. The partnership agreement specifies that Elias's 1/3 shar

Partnership Agreements

Jack and Sawyer start a business in the US state "Random island that has the ability to disappear and move and probably isn't even in our dimension" wrote a partnership agreement that in part has the following clauses: 1) We will keep track of the capital account of our partnership interests in accordance with the regulations; 2