Homework Set 1 Solution - Tax 4001 2011/2012 Homework Set...

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Tax 4001 2011/2012 Homework Set #1 Solution PAGE 1 #1A Gross Income subject to tax $190,000 FOR AGI Deductions (6,000) AGI 184,000 Less: Itemized Deductions (23,000) Less: Personal Exemption (3,700) Taxable Income $157,300 #1B Tax Liability: 17025 + .28(157350-83600) = 37,675 Less: Credits (2,000) Total Tax Liability 35,675 Less: Estimated Payments (23,000) Total Tax Due $12,675 #1C Gross Income subject to tax 190,000 Less: Expenses (29,000) Taxable Income 161,000 Tax Liability: 50000 * .15 + 25000 * .25 + 25000 * .34 + 61000 * .39 = 46,040 Less: Credits (2,000) Less: Estimated Payments (23,000) Total Tax Due $21,040 #2A Taxable Income 120,000 Tax Liability: 50000 * .15 + 25000 * .25 + 25000 * .34 + 20000 * .39 = $30,050 #2B Marginal Rate 39% Tax on Next Dollar Earned Average Rate (30,050/120,000) 25.0% Tax//Taxable Income Effective Rate (30,050/130,000) 23.1% Tax/Accounting Income #2C Implicit Rate: =(7.5 - 5.5)/ 7.5 26.67% #2D Yes because the Implicit Rate is < Marginal Rate
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Tax 4001 2011/2012 Homework Set #1 Solution PAGE 2 #3 S Corp Income:
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This note was uploaded on 09/16/2011 for the course TAX 4001 taught by Professor Hampton,m during the Fall '08 term at University of Central Florida.

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Homework Set 1 Solution - Tax 4001 2011/2012 Homework Set...

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