Tax Acct Chapter 1 Notes

Tax Acct Chapter 1 Notes - Chapter 1 I. DEFINITION OF A TAX...

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Chapter 1 I. DEFINITION OF A TAX EXAMPLE: Are the following taxes? 1. A $50 fee for a marriage license 2. Increased sales tax to pay for construction on Lumpkin Street 3. Postage paid to mail a package 4. Property taxes on a home 5. Speeding ticket II. TAX BASE & TAX RATES A. Tax Base B. Tax Rates – 4 Types 1. 2. 3. 4. 1
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EXAMPLE: Assume the following tax brackets are legitimate and that a client has $40,000 of taxable income and $50,000 of economic income. Bracket Rate 0 - $10,000 10% $10,001 - $20,000 20% $20,001 - $50,000 30% > $50,000 40% What is the taxpayer’s tax liability? What is the taxpayer’s Average Tax Rate? What is the taxpayer’s Effective Tax Rate? What is the Statutory Marginal Tax Rate? EXAMPLE: Using the facts from the previous example, assume that your client earns an additional $20,000 of income, of which $15,000 is taxable. What is the Statutory Marginal Tax Rate? 2
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Tax Acct Chapter 1 Notes - Chapter 1 I. DEFINITION OF A TAX...

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