Lo6recognize the economic social equity and political

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Chapter 3 / Exercise 07
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23. LO.6Recognize the economic, social, equity, and political considerations that underlie the tax law. Some tax rules can be justified on multiple grounds (e.g., economic, social, etc.). In this connection, comment on the possible justification for the rules governing the following.1.Pension plans.2.Education.3.Home ownership.24. LO.6Recognize the economic, social, equity, and political considerations that underlie the tax law. Discuss the probable justification for each of the following provisions of the tax law.1.A tax credit allowed for electricity produced from renewable sources.2.A tax credit allowed for the purchase of a motor vehicle that operates on alternative energy sources (e.g., nonfossil fuels).3.The deduction for personal casualty losses that is subject to computational limitations.4.Favorable treatment accorded to research and development expenditures.5.A deduction allowed for income resulting from U.S. production (manufacturing) activities.6.The deduction allowed for contributions to qualified charitable organizations.7.An election that allows certain corporations to avoid the corporate income tax and pass losses through to their shareholders.25. LO.6Recognize the economic, social, equity, and political considerations that underlie the tax law. Discuss the probable justification for each of the following provisions of the tax law.1.A tax credit is allowed for amounts spent to furnish care for minor children while the parent works.2.Bribes to public officials are not deductible.3.Net operating losses of a current year can be carried back to profitable years.4.A taxpayer who sells property on an installment basis can recognize gain on the sale over the period the payments are received.5.Every year, the tax brackets and the amounts of the standard deduction and dependency exemptions are adjusted by the IRS.6.The exclusion from Federal tax of certain interest income from state and local bonds.7.Prepaid income is taxed to the recipient in the year it is received and not in the year it is earned. 26. LO.2Identify the various taxes affecting business enterprises. Contrast a value added tax(VAT) with a national sales tax in terms of anticipated taxpayer compliance.27.LO.2Identify the various taxes affecting business enterprises. Go to and determine Tax Freedom Day for your state for 1950, 1960, 1970, 1980, 1990, 2000, and 2010. Report your results as a line graph.28.
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Entrepreneurial Finance
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Chapter 3 / Exercise 07
Entrepreneurial Finance
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LO.7Describe the role played by the IRS and the courts in the evolution of the Federal tax system. Although the Federal income tax law is complex, most individual taxpayers are able to complete their tax returns without outside assistance. Gather data as to the accuracy of this statement. Summarize your comments in an e-mail to your instructor.29.LO.7Describe the role played by the IRS and the courts in the evolution of the Federal tax system. President Franklin D. Roosevelt once said, “I am wholly unable to figure out the amount of tax,” and wrote to the Federal Commissioner of Revenue, “may I ask that [the agency] let me know the amount of the balance due.”When a friend of FDR was ordered to pay $420,000 in tax penalties, the President called the Commissioner within earshot of reporters and told him to cut the penalties to $3,000. One listener, journalist David Brinkley, recalled years later: “Nobody seemed to think it was news or very interesting.” Evaluate the President's comments and actions.30.LO.7Describe the role played by the IRS and the courts in the evolution of the Federal tax system. In no more than five PowerPoint slides, discuss the means by which the IRS selects individual income tax returns for audit.31.LO.7Describe the role played by the IRS and the courts in the evolution of the Federal tax system. Define these terms as the IRS uses them: office auditand field audit.

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