Alternative Minimum Tax

1. Do you think that credits and other tax incentives actually cause companies to change economic behavior to utilize these tax provisions? Are they important to the economy? 2. Is the idea of an Alternative Minimum Tax (AMT) fair? Why or why not? Has the AMT worked in the manner in which it was originally intended?

True/false regarding business taxation questions

1. Unreasonable compensation can be reclassified as a nondeductible dividend payment to the shareholder. 2. The corporation cannot deduct as a business expense interest payments to creditors who are also shareholders. 3. The IRS determines that compensation is unreasonable by comparing how much is paid by similar corporations to officers who are not controlling shareholders. 4. Revenue agents who audit S corporations are on the alert for shareholder/employee salaries that are unreasonably low. 5. An investment's net present value is the sum of the present values of all cash inflows and outflows associated with it. 6. In current value terms, the ability to defer making a ... click for more

True/false business taxation questions

A majority interest taxable year is the taxable year of one or more partners that own more than 50 percent of partnership capital and profits. If a partnership does not have a majority interest taxable year, a principal partner taxable year, or a natural business year, it must use the taxable year resulting in the least aggregate deferral of income to its partners. A principal partner is any partner who owns more than 25 percent of partnership capital or profits. A taxable C corporation cannot be a shareholder in an S corporation. For Year 2003, the maximum expense allowed under Section 179 of the Internal Revenue Code, for those companies not doing business in any empowerment zo... click for more

Tom, an individual taxpayer, has just been audited by the IRS.

Tom, an individual taxpayer, has just been audited by the IRS and, as a result, has been assessed a substantial deficiency (which has not yet been paid) in additional income taxes. In preparing his defense, Tom advances the following possibilities: a. Although a resident of Kentucky, Tom plans to sue in a U.S. District Court in Oregon that appears to be more favorably inclined toward taxpayers. b. If (a) is not possible, Tom plans to take his case to a Kentucky state court where an uncle is the presiding judge. c. Since Tom has found a B.T.A. decision that seems to help his case, he plans to rely on it under alternative (a) or (b). d. If he loses at the trial court level, Tom plans to a... click for more

Taxes!!!

Bernie and Pam Britten are a young married couple beginning careers and establishing a household. They will each make about $50,000 next year and will have accumulated about $40,000 to invest. They now rent an apartment but are considering purchasing a condominium for $100,000. If they do, a down payment of $10,000 will be required. They have discussed their situation with Lew McCarthy, an investment advisor and personal friend, and he has recommended the following investments: * The condominium - expected annual increase in market value = 5%. * Municipal bonds - expected annual yield = 5%. * High-yield corporate stocks - expected dividend yield = 8%. * Savings accou... click for more