Versions of a tax bill multiple choicejobs and growth

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versions of a tax bill. Multiple Choice—Jobs and Growth Tax Relief Reconciliation Act of 2003 d. Capital gains are taxed at a maximum of 15 percent. Collectibles and Section 1202 gains are taxed at 28 26. percent. Multiple Choice—Tax Concepts d. Individuals have the option of deducting either state and local sales taxes or state and local income taxes. 27. d. Depreciable property is not a capital asset. 28. Multiple Choice—Tax Concepts d. Conduits must “ fi le” a tax return even though they need not pay taxes, and the income is “passed 29. through” to the owners. Taxpayer Relief Act of 1997 The fi ve major provisions of the Taxpayer Relief Act were: 30. (1) Capital gains tax rate reduction. The net capital gains tax rate is reduced to 20 percent for assets held more than 18 months. (2) Exclusion of a portion of the gain on the sale of a personal residence . Up to $250,000 of gain on a sale of a personal residence may be excluded from income ($500,000 for married taxpayers fi ling jointly). (3) Roth IRA . Individuals may contribute after-tax dollars into a Roth IRA. Interest accumulates tax free, and no taxes are paid when withdrawals are made from the IRA. (4) Child tax credit . Families with children under the age of 17 will receive a $400 credit per child in 1998 and $500 credit per child after 1998. (5) Education tax incentives . Several features were enacted to help fi nance quali fi ed higher education expenses. Two education credits were enacted for students enrolled in higher education institutions. Jobs and Growth Tax Relief Reconciliation Act of 2003 The Jobs and Growth Tax Relief Reconciliation Act of 2003 was signed into law on May 28, 2003. The 31. Act accelerates several tax cuts from the 2001 tax bill and added a few more. Among the highlights of the 2003 tax act are the rate reductions for individuals, the marriage penalty is reduced, the child tax credit is increased, the maximum tax rate for most long-term capital gains is reduced, the tax rate on dividend income is reduced, additional fi rst-year depreciation is increased, the alternative minimum tax exemption is increased, the accumulated earnings tax rate is reduced, and the tax on undistributed personal holding company income is reduced. Emergency Economic Stabilization Act of 2008 The Emergency Economic Stabilization Act of 2008 provided $700 billion to help stabilize the economy. 32. Also, it extended numerous provisions set to expire at the end of 2008. Research Problem—Tax Avoidance: Business Alternatives The case of the appeal of 33. Peterson & Pegau Baking Co. highlights the necessity of careful review of transactions. The sole issue in this case was whether royalties paid to Peterson and Pegau were indeed royalties or disguised dividends. The students should read the testimony of the accountant who prepared the corporate tax return. Of note is the accountant’s testimony on the selection of corporate form versus partnership status. The Board of Tax Appeals in this case ruled that the royalties were really disguised dividends.
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