346Sim02 - Links to Worksheets in File Introduction...

Info icon This preview shows pages 1–2. Sign up to view the full content.

Links to Worksheets in File Facts Issue Introduction Questions Analysis Regina is a single, cash basis taxpayer with a calendar year tax reporting period. At the beginning of the current year, she sold some property (not a capital asset) in which she had a basis of $60,000. She realized $200,000 on this sale which the buyer will pay in four equal payments. The first payment will be made at the end of the current year and subsequent payments will be made at the end of each of the three following years. She anticipates that her marginal tax rates on the income over those four years will be 35%, 30%, 25%, and 20%, respectively. How should Regina report the profit from this sale, assuming that she has a 10% discount rate? Authorities Internal Revenue Code (IRC) §1 imposes a tax on an individual's taxable income. IRC §63 defines taxable income to mean gross income, which generally includes all income from whatever source derived (per §61) minus allowable deductions. Section 453 mandates the use of the installment method (as defined in §453(c)) of reporting income from qualifying transactions. However, §453(d) allows the taxpayer to elect out of the installment method and report all of the income in the year of the sale (regardless of when cash is received). Objectives & Outcomes The objective of this computerized tax simulation is to help you learn how tax planning for income is affected by changes to a taxpayer's marginal tax rates over time. To accomplish this objective, you must -read the Facts, Issues, & Authorities sections below, -use the related Excel spreadsheet to analyze the taxpayer's facts, given the tax law -record your answer to the questions in this file, and -submit your Excel file in the manner prescribed in the course syllabus (e.g., upload via Canvas).
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern