Answer To Discussion Questions
[LO 1] Explain why the medical expense and casualty loss provisions are sometimes referred to as
wherewithal deductions and how this rationale is reflected in the limits on these deductions.
These deductions are
Chapter No 6
How is a business activity distinguished from an investment activity? Why is this distinction
important for the purpose of calculating federal income taxes?
Both business and investment activities are motivated primarily by profit intent,
1. What is a tax bracket? What is the relationship between filing status and the width of the tax
brackets in the tax rate schedule?
A tax bracket is a range of taxable income that is taxed at a specified tax rate. Because only the
income in the particula
Chapter No 1
4 Courtney recently received a speeding ticket on her way to the university. Her fine was $200.
Is this considered a tax? Why or why not?
The $200 speeding ticket is not considered a tax. Instead, it is considered a fine or
penalty. Taxes dif
Chapter No 5
Compare and contrast realization of income with recognition of income.
Realization is a judicial concept that determines the period in which income is generated,
whereas, recognition is a statutory concept that determines whether realized
Gross Income and Exclusions
Apply the concept of realization and explain when
taxpayers recognize gross income
Understand the distinctions between the various
sources of income, including income from services