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Homework_Set_1 - TAX 4001 Judd 2011/2012 Homework Set#1 1...

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TAX 4001 Judd 2011/2012 Homework Set #1 1) Jill is a single individual with no dependents. In 2011 she has total income of $200,000, of which $10,000 is from municipal bond interest. She has FOR AGI deductions of $6,000, itemized deductions of $23,000 (assume no AGI limitations are applicable) and tax credits of $2,000. She also made estimated tax payments of $23,000. a) Compute Jill’s taxable income for 2011. b) Compute Jill’s tax liability for 201. c) Assume that Jill is a C Corporation instead of an individual and all of the deductions are business related. What would the corporation’s tax due be? 2) Williams Supplies Inc reports total net income of $130,000 during 2011. This includes $10,000 of income from 5.5% Orange County municipal bonds. Thus the Corporation’s taxable income is equal to $120,000. a) What is William’s tax liability for 2011? b) What are William’s marginal, average and effective tax rates, respectively? c) If equivalent taxable bonds pay 7.5% interest, what is the implicit rate for the Orange County bonds?
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