Solution Manual
McGraw-Hill's Taxation of Individuals 2024 Edition,
15th Edition by Spilker, Ayers, All Chapters 1 - 14
,TABLE OF CONTENTS
z z z
PartzI:zIntroductionztozTaxation
Chapterz1:zAnzIntroductionztozTax
Chapterz2:zTaxzCompliance,zthezIRS,zandzTaxzAuthorities
Chapterz3:zTaxzPlanningzStrategieszandzRelatedzLimitations
PartzII:zBasiczIndividualzTaxation
Chapterz4:zIndividualzIncomezTaxzOverview,zDependents,zandzFilingzStatus
Chapterz5:zGrosszIncomezandzExclusions
Chapterz6:zIndividualzDeductions
Chapterz7:zInvestments
Chapterz8:zIndividualzIncomezTaxzComputationzandzTaxzCredits
PartzIII:zBusiness-RelatedzTransactions
Chapterz9:zBusinesszIncome,zDeductions,zandzAccountingzMethods
Chapterz10:zPropertyzAcquisitionzandzCostzRecovery
Chapterz11:zPropertyzDispositions
PartzIV:zSpecializedzTopics
Chapterz12:zCompensation
Chapterz13:zRetirementzSavingszandzDeferredzCompensation
Chapterz14:zTaxzConsequenceszofzHomezOwnership
,Chapterz1
AnzIntroductionztozTax
DiscussionzQuestions
(1) [LOz1]zJessica’szfriendzZacharyzoncezstatedzthatzhezcouldn’tzunderstandzwhy
someonezwouldztakezaztaxzcourse.zWhyziszthiszazratherznaïvezview?
Taxeszarezazpartzofzeverydayzlifezandzhavezazfinancialzeffectzonzmanyzofzthezmajorz pers
onalzdecisionszthatzindividualszfacez(e.g.,zinvestmentzdecisions,zevaluatingz alternativezj
obzoffers,zsavingzforzeducationzexpenses,zgiftzorzestatezplanning,zetc.).
(2) [LOz1]zWhatzarezsomezaspectszofzbusinesszthatzrequirezknowledgezofztaxation?z Wh
atzarezsomezaspectszofzpersonalzfinancezthatzrequirezknowledgezofztaxation?
Taxeszplayzanzimportantzrolezinzfundamentalzbusinesszdecisionszsuchzaszthez following:
Whatzorganizationalzformzshouldzazbusinesszuse?
Wherezshouldzthezbusinesszlocate?
Howzshouldzbusinesszacquisitionszbezstructured?
Howzshouldzthezbusinesszcompensatezemployees?
Whatziszthezappropriatezmixzofzdebtzandzequityzforzthezbusiness?
Shouldzthezbusinesszrentzorzownzitszequipmentzandzproperty?
Howzshouldzthezbusinesszdistributezprofitsztozitszowners?
Onezmustzconsiderzallztransactionzcostsz(includingztaxes)ztozevaluatezthezmeritszofz aztr
ansaction.
Commonzpersonalzfinancialzdecisionszthatztaxeszinfluencezinclude:zchoosingz investme
nts,zretirementzplanning,zchoosingztozrentzorzbuyzazhome,zevaluatingz alternativezjobzof
fers,zsavingzforzeducationzexpenses,zandzdoingzgiftzorzestatez planning.
(3) [LOz1]zDescribezsomezwayszinzwhichztaxeszaffectzthezpoliticalzprocesszinzthez Un
itedzStates.
U.S.zpresidentialzcandidateszoftenzdistinguishzthemselveszfromztheirzopponents
, basedzuponztheirztaxzrhetoric.zLikewise,zthezmajorzpoliticalzpartieszgenerallyzhavez veryz
diversezviewszofzthezappropriatezwayztoztaxzthezpublic.zDeterminingzwhozisz taxed,zwha
tzisztaxed,zandzhowzmuchzisztaxedzarezdifficultzquestions.zVoterszmustz havezazbasiczund
erstandingzofztaxesztozevaluatezthezmeritszofzalternativeztaxz proposalszofferedzbyzoppo
singzpoliticalzcandidateszandztheirzpoliticalzparties.
(4) [LOz2]zCourtneyzrecentlyzreceivedzazspeedingzticketzonzherzwayztozthezuniversity.z Her
zfinezwasz$200.zIszthiszconsideredzaztax?zWhy zorzwhyznot?
Thez$200zspeedingzticketzisznotzconsideredzaztax.zInstead,zitziszconsideredzazfinez orz
penalty.zTaxeszdifferzfromzfineszandzpenaltieszbecauseztaxeszareznotzintendedz tozpu
nishzorzpreventzillegalzbehavior.
(5) [LOz2]zMarlonzandzLatoyazrecentlyzstartedzbuildingzazhouse.zTheyzhadztozpay
$300ztozthezcountyzgovernmentzforzazbuildingzpermit.zIszthez$300zpaymentzaztax?z Why
zorzwhyznot?
Thezbuildingzpermitzisznotzconsideredzaztaxzbecausez$300zpaymentziszdirectlyz linkedzto
zazbenefitzthatztheyzreceivedz(i.e.,zthezabilityztozbuildzazhouse).
(6) [LOz2]zTozhelpzpayzforzthezcity’sznewzstadium,zthezcityzofzBirminghamzrecentlyz ena
ctedzaz1zpercentzsurchargezonzhotelzrooms.zIszthiszaztax?zWhyzorzwhyznot?
Thez1zpercentzsurchargeziszaztax.zThez1zpercentzsurchargeziszanzearmarkedztaxz–
z i.e.,zcollectedzforzazspecificzpurpose.zThezsurchargeziszconsideredzaztaxzbecausez thezta
xzpaymentszmadezbyztaxpayerszdoznotzdirectlyzrelateztozthezspecificzbenefitz receivedzby
ztheztaxpayers.
(7) [LOz2]zAsznotedzinzExamplez1-
2,ztolls,zparkingzmeterzfees,zandzannualzlicensingz feeszareznotzconsideredztaxes.zCanz
youzidentifyzotherzfeeszthatzarezsimilar?
Therezarezseveralzpossiblezanswersztozthiszquestion.zSomezcommonzexamplesz include
zentrancezfeesztoznationalzparks,ztagzfeeszpaidztozlocal/statezgovernmentz forzautomob
iles,zboats,zetc.
(8) [LOz2]zIfzthezgeneralzobjectivezofzourztaxzsystemzisztozraisezrevenue,zwhyzdoeszthez inc
omeztaxzallowzdeductionszforzcharitablezcontributionszandzretirementzplanz contributi
ons?
Inzadditionztozthezgeneralzobjectivezofzraisingzrevenue,zCongresszuseszthezfederalz taxzs
ystemztozencouragezcertainzbehaviorzandzdiscouragezotherzbehavior.zThez charitablezco
ntributionzdeductionziszintendedztozencourageztaxpayersztozsupportz thezinitiativeszofzc
haritablezorganizations,zwhereaszdeductionszforzretirementz contributionszarezintended
ztozencouragezretirementzsavings.zAnotherzobjectivezofz theztaxzsystemzisztozredistribut
ezwealth.
