chapter 4 - 50 On a particular Saturday Tom had planned to...

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50. On a particular Saturday, Tom had planned to paint a room in his house, but his employer gave him the opportunity to work that day. If Tom works, he must hire a painter for $120. For Tom to have a positive cash flow from working and hiring the painter: a. Tom must earn more than $160 if he is in the 25% marginal tax bracket. b. Tom must earn at least $160 if he is in the 33% marginal tax bracket. c. Tom must earn at least $150 if he is in the 25% marginal tax bracket. d. Tom must earn at least $135 if he is in the 15% marginal tax bracket. e. None of these. a 51. The tax concept and economic concept of income are in agreement on which of the following: 52. The Blue Utilities Company paid Sue $2,000 for the right to lay an underground electric cable across her property anytime in the future.
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53. For purposes of determining gross income, which of the following is true? 54. Detroit Corporation sued Chicago Corporation for intentional damage to Detroit's goodwill. Detroit had created its goodwill through providing high-quality services to its customers. Thus, no basis for the goodwill appeared on Detroit's balance sheet. The suit was settled and Detroit received $1,500,000 for the damages to its goodwill. a. The $1,500,000 is not taxable because it represents a recovery of capital. b. The $1,500,000 is taxable because Detroit has no basis in the goodwill.
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c. The $1,500,000 is not taxable because Detroit did nothing to earn the money. d. The $1,500,000 is not taxable because Detroit settled the case. e. None of these. b
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  • Spring '14
  • Taxation in the United States, income taxrates

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