students2009-Ch05 part 2 methods

students2009-Ch05 part 2 methods - TIMING ISSUES Accounting...

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1 TIMING ISSUES Accounting Periods and Methods When is income reported? When are deductions claimed? TIMING ISSUES Accounting Periods and Methods When is income reported? When are deductions claimed? Who cares?
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2 Present Value of $1 Paid at End of Year $0.148644 20 $0.385543 10 $0.620921 5 $0.909091 1 PV at 10% Years
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3 Famous quote : A TAX DELAYED, IS A TAX NOT PAID Tax Accounting Principles
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4 Time Value of Money Income: Deferral Deductions: Accelerate Other reasons Why should you care about accounting methods? Tax Accounting Principles
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5
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6 Change the Rules? Reagan signs the Tax Reform Act of 1986
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7 Tax Rate Changes? New Opportunities? Potential Problems? 36 52 88 1952-53 36.45 50.75 87.2 1951 38 42 80 1950 39 38 77 1948-49 47.5 38 85.5 1946-47 50 40 90 1944-45 48 40 88 1942-43 50 31 81 1941 56.9 22.1 79 1940 60 19 79 1938-39 64 15 79 1936-37 49.25 13.75 63 1934–35 Difference Corporate Rate (%) Individual Rate (%) Year
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8 Individual & Corporate Tax Rates Historical Comparison (3.0) 34 31 1991-92 (6.0) 34 28 1988-90 5.6 34/35 39.6 1993-2001 0.0 35 35 2003-2009 (1.5) 40 38.5 1987 4 46 50 1982-86 24 46 70 1979-81 22 48 70 1965-78 27 50 77 1964 35 52 87 1954-63 Difference Corporate Rate (%) Individual Rate (%) Year
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9 When is the income reported?
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When report the income?
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Accounting Periods and Methods REPORTING PERIOD TAXABLE YEAR ASSIGNMENT OF INCOME AND DEDUCTIONS ACCOUNTING TO PERIODS METHODS 12/31/08 12/31/09
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12 Tax Accounting Principles PERIODS (Tax Years) Tax Accounting Principles PERIODS (Tax Years)
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13 2008 Tax Years What year CAN I use? What year should I use?
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14 ACCOUNTING PERIODS: GAAP VS. TAX ACCOUNTING PERIODS: GAAP VS. TAX Financial vs. Tax Is conformity required? Financial vs. Tax Is conformity required? Internal Revenue Code
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15 Accounting Periods Accounting Periods Conformity requirement Period: must be same as used for books (§446(c)) Meet by sufficient workpapers that reconcile differences between book and tax May be modified by statutory requirements Conformity requirement Period: must be same as used for books (§446(c)) Meet by sufficient workpapers that reconcile differences between book and tax May be modified by statutory requirements
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16 Tax Years Possibilities Calendar year Fiscal year 52-53 week year 2009 What year CAN I use? What year should I use?
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17 Tax Years Calendar Year What? Who uses? 2009
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18 Tax Years Fiscal Year What? Who can use a fiscal year? How about individuals, S corps, pshps, PSCs, trusts, estates, exempts? Limitations. Why? 2008 What year CAN I use? What year should I use?
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19 Tax Years: Reporting Income from Partnerships and S Corps Partners or S shareholders Report their shares of the entity’s income in their taxable year within which (or with which) the partnership or S corporation tax year ends Pshp Income
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20 Tax Years Reporting Income from Partnerships and S Corps Pshp Income 2/1 1/31/05 1/1/05 12/31/05
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1/1 12/31 9/30 $120,000 1 st qtr $30,000 $1,000 Problem 5-41
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This note was uploaded on 03/21/2010 for the course ACCOUNTING 533 taught by Professor Eric during the Spring '09 term at Universidade do Minho.

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students2009-Ch05 part 2 methods - TIMING ISSUES Accounting...

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