Test Chapter 1 to 5(2)

Test Chapter 1 to 5(2) - Advanced Taxation ACC416 April 18,...

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Advanced Taxation ACC416 April 18, 2011 Chapter 1 Discussion Questions 6. What purpose is served by the refundable earned income credit? Congress has deemed it socially desirable to reduce the number of people on the welfare rolls and to cut funding for welfare programs, this credit has come to replace some welfare programs. 14. Yvonne operates a profitable sole proprietorship. Because the business is expanding, she would like to transfer it to a newly created corporation. Yvonne is concerned, however over the possible tax consequences that would result from incorporating. Please comment: The tax rates applicable to corporations tend to favor small business in that size is relative to the amount of taxable income generated in any one year. Since a corporate tax rate of 34% applies only to taxable income in excess of $75,000, corporations that stay within this limit are subject to lower average tax rates. Problems 57. Rank these items according to their reliability: a. Letter ruling 5 b. Legislative Regulation 2 c. Code Section 1 d. Revenue Ruling 4 e. Proposed Regulation 6 f. Interpretative Regulation 3 g. Recent Temporary Regulation 7 Chapter 2 Discussion Questions 22. Briefly describe the calculation of the domestic production activities deduction for a corporate taxpayer. For 2010, the domestic production activities deduction (DPAD) is 9% of the lower of: Qualified production activities income, or Taxable income (computed without regard to the DPAD). The DPAD cannot exceed 50% of an employer’s W-2 wages related to qualified production activities income. 30.
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Test Chapter 1 to 5(2) - Advanced Taxation ACC416 April 18,...

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