Chap1%20HW%20Solutions

Chap1%20HW%20Solutions - Instructor's Manual 3 depletion'...

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Instructor's Manual 3 depletion'' for all natural resource properties except oil and gas properties. For oil and gas properties, the limit is 100% of taxable net income before depletion. ¶1187 Tax Policy and Reform Measures Reform of the tax statutes has been a trend through the years. The tax policy implications of the 1986 revision will be under examination for some time to come. In an effort to further the concept of neutrality in the tax law, the Revenue Reconciliation Act of 1990 made major changes in the way high- income individuals compute their taxable income. Also, for 1991 the tax rate schedules were changed to incorporate a third tax bracket: 31 percent. The Revenue Reconciliation Act of 1993 extended the tax rates to also include a 36 percent bracket and a 39.6 bracket. The Taxpayer Relief Act of 1997 made major modifications to capital gains. The holding period of capital assets to qualify as long term was extended from more than 12 months to more than 18 months. Also, the long-term capital gains tax rate for many items decreased from 28 percent to 20 percent. The IRS Restructuring and Reform Act of 1998 changed the holding period for long term classification from more than 18 months to more than 12 months. The year 2000 saw the passage of three important tax bills that contain many provisions impacting taxpayers. The Community Renewal Tax Relief Act of 2000 was contained in the Consolidated Appropriations Act, 2001. This Act renewed provisions designed to enhance investment in low- and moderate-income, rural and urban communities. The Act also extended for two years medical savings accounts (MSAs). Also included was a provision expanding innocent spouse relief. The Installment Tax Correction Act of 2000 reinstated the availability of the installment method of accounting for accrual basis taxpayers. The year 2001 brought another tax bill, the Economic Growth and Tax Relief Reconciliation Act of 2001. The major provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 are: reduction in the individual income tax rates; increased 401(k) and IRA contributions; tax relief for financing higher education, including graduate education; estate and gift tax relief; and a reduction in the marriage penalty. The highlights of the Jobs and Growth Tax Relief Reconciliation Act of 2003 are the rate reductions for individuals, the marriage penalty is reduced, the child tax credit is increased, the maximum tax rate for most long-term capital gains is reduced, the tax rate on dividend income is reduced, additional first-year depreciation is increased, the alternative minimum tax exemption is increased, the accumulated earnings tax rate is reduced, and the tax on undistributed personal holding company income is reduced. The Working Families Tax Relief Act of 2004 extended many of the provisions which were set to expire in 2004. Basic Tax Concepts
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Chap1%20HW%20Solutions - Instructor's Manual 3 depletion'...

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