Chapter One
2. If Marvin was to convert his Aunt's estate into a rental property then this would increase the ad valorem taxes on the property, so a good deal of the income from the property would be needed to offset these property tax consequences.
5. The pay-as-you-go tax system requires employers to withhold a specified amount from wage earners income and provide them to the IRS. In the case of persons who have other sources of income they may need to make quarterly tax payments for estimated taxes on the year. If these quarterly payments are not made they will face the burden of a very high tax liability to pay out of pocket once they file their annual return.
6. According to the text, page 1-4, Adam Smith's canon on convenience states that "Administrative simplicity has long been valued in formulating tax policy. If a tax is easily assessed and collected and its administrative costs are low, it should be favored. An advantage of the withholding (pay-as-you-go) system is convenient for taxpayers." Going from this it seems that the Federal income tax system is set up to be as simple as possible for citizen to comply with then they will be more likely to accept it, which is the desired effect.
16. Eileen would avoid the Wyoming sales tax, but very briefly. When she returns to her home state and registers the car to her address they will make her pay the applicable sales tax to the state of Wyoming, but this will be considered a use tax instead of a sales tax. Though it seems like a good idea she will still be required to pay the same amount of taxes to Wyoming, possibly more.
27. I would not think that this question would be relevant to income taxes since it is not income related, but I believe that they are asking because it is tax related. With Ecommerce becoming more popular each year many sites require the purchaser to provide their state of residence for tax purposes. Also, there are some state that do not allow the purchase of some items to be shipped into their boarders (E.G. you cannot have alcohol shipped into PA). As the tax preparer I would inform the tax payer that I am required by law to file each tax return as completely and faithfully as possible, and if they wanted to omit this question they would have to take their business elsewhere.
42. I would tell Andy that if he omitted an excess of 25% of gross income in the year in question that he has six years from the mistake to amend it, if the amount did not exceed 25% then the three year grace period has already passed. My advice would not change if I was the one who prepared the taxes for the year in question, I would treat all of my clients in the same manner and give everyone who came to e with questions the same answers. I would not be willing to do Andy's taxes until he had this issue resolved, since every years AGI would be off since this mistake was made, and the current year's tax liability would be off that would reflect upon me and possibly case me to lose my license.
49. These tax provisions are justified to help deal with the energy crisis, and promote the use of alternative energy sources, so ecological consideration. Same answer as previous. Can be justified by social considerations. Research and development can be justified since these new developments can get affect the state of our country and its economy, so economic consideration. By U.S production will help create jobs here in the U.S.A. and help drive our economy, so economical considerations justify this event. This helps shift the tax burden from the public to the private sector for socially desirable programs, which is a social consideration. This helps corporations retain higher levels of equity, which is justified by equity considerations and if a company has higher levels of equity this will help the company succeed which will later help the investors. Plus, since stock holders are all partial owners of the company they should share the tax burden to help