Tax Accounting Chapter 1 Homework. Exam Questions With Correct Answers
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Course
Tax
Institution
Tax
Tax Accounting Chapter 1 Homework. Exam
Questions With Correct Answers
Marvin is the executor and sole heir of his aunt's estate. The estate includes her furnished home, which
Marvin is considering converting to rental property to generate additional cash flow.
For each item below, select eithe...
Tax Accounting Chapter 1 Homework. Exam
Questions With Correct Answers
Marvin is the executor and sole heir of his aunt's estate. The estate includes her furnished home, which
Marvin is considering converting to rental property to generate additional cash flow.
For each item below, select either "Y" or "N" to identify those which could be a tax problem for Marvin.
a. Any rent Marvin receives from the property is taxed as income.
b. Besides the real estate taxes, personal property taxes could be imposed on the furnishings.
c. Marvin can expect an increase in the ad valorem property taxes levied by the local taxing authorities
due to the commercial use of the property.
d. Since the property was inherited, Marvin may not convert it to rental property. - answer✔Y, Y , Y , N
Answer the following questions regarding the pay-as-you-go procedure.
1. How does the pay-as-you-go procedure apply to wage earners?
a. The tax law requires employers to withhold a specified dollar amount from wages paid to the
employee to cover income taxes.
b. The tax law requires the taxpayer to make quarterly payments to the IRS for estimated taxes.
c. Wage earners are not required to pay-as-they-go.
2. How does the pay-as-you-go procedure apply to persons who have income from sources other than
wages?
a. People with other income sources are not required to pay-as-they-go.
b. The tax law requires employers to withhold a specified dollar amount from wages paid to the
employee to cover income taxes.
c. The tax law requires the taxpayer to make quarterly payments to the IRS for estimated taxes. -
answer✔a, c
Sophia lives several blocks from her parents in the same residential subdivision. Sophia is surprised to
learn that her ad valorem property taxes for the year were raised but those of her parents were
lowered.
Select either "Y" or "N" to identify possible explanation(s) for the difference.
a. Sophia made capital improvements to her property.
b. Her parents converted their property to income-producing property (e.g., a rental house).
c. Lower taxes may apply to a residence owned by older taxpayers (i.e. aged 65 or older). - answer✔Y, N,
Y
The Agarwal family lives in Massachusetts. They moor their sailboat in Rhode Island.
Complete the statement below which might be a plausible reason for this?
The Agarwals are trying to avoid:
a. ad valorem tax on personalty
b. ad valorem tax on realty
c. federal excise taxes
d. federal income taxes
e. None of these play into their decision to keep the sailboat in Rhode Island - answer✔a
After her first business trip to a major city, Jayla is alarmed when she reviews her credit card receipts.
Both the hotel bill and the car rental charge are in excess of the price she was quoted.
Complete the paragraph below to outline what Jayla needs to understand about these excess amounts.
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