Solution Manual for McGraw-Hill's Taxation of
Individuals 2024 Edition, 15th Edition
By Brian Spilker, Benjamin Ayers, All Chapters 1 - 14
,TABLE OF CONTENTS
g g g
PartgI:gIntroductiongtogTaxation
Chapterg1:gAngIntroductiongtogTax
Chapterg2:gTaxgCompliance,gthegIRS,gandgTaxgAuthorities
Chapterg3:gTaxgPlanninggStrategiesgandgRelatedgLimitations
PartgII:gBasicgIndividualgTaxation
Chapterg4:gIndividualgIncomegTaxgOverview,gDependents,gandgFilinggStatus
Chapterg5:gGrossgIncomegandgExclusions
Chapterg6:gIndividualgDeductions
Chapterg7:gInvestments
Chapterg8:gIndividualgIncomegTaxgComputationgandgTaxgCredits
PartgIII:gBusiness-RelatedgTransactions
Chapterg9:gBusinessgIncome,gDeductions,gandgAccountinggMethods
Chapterg10:gPropertygAcquisitiongandgCostgRecovery
Chapterg11:gPropertygDispositions
PartgIV:gSpecializedgTopics
Chapterg12:gCompensation
Chapterg13:gRetirementgSavingsgandgDeferredgCompensation
Chapterg14:gTaxgConsequencesgofgHomegOwnership
,Chapterg1
AngIntroductiongtogTax
DiscussiongQuestions
(1) [LOg1]gJessica’sgfriendgZacharygoncegstatedgthatghegcouldn’tgunderstandgwhy
someonegwouldgtakegagtaxgcourse.gWhygisgthisgagrathergnaïvegview?
Taxesgaregagpartgofgeverydayglifegandghavegagfinancialgeffectgongmanygofgthegmajorg personalgdecisionsgtha
tgindividualsgfaceg(e.g.,ginvestmentgdecisions,gevaluatingg alternativegjobgoffers,gsavinggforgeducationgexp
enses,ggiftgorgestategplanning,getc.).
(2) [LOg1]gWhatgaregsomegaspectsgofgbusinessgthatgrequiregknowledgegofgtaxation?g Whatgare
gsomegaspectsgofgpersonalgfinancegthatgrequiregknowledgegofgtaxation?
Taxesgplaygangimportantgrolegingfundamentalgbusinessgdecisionsgsuchgasgtheg following:
Whatgorganizationalgformgshouldgagbusinessguse?
Wheregshouldgthegbusinessglocate?
Howgshouldgbusinessgacquisitionsgbegstructured?
Howgshouldgthegbusinessgcompensategemployees?
Whatgisgthegappropriategmixgofgdebtgandgequitygforgthegbusiness?
Shouldgthegbusinessgrentgorgowngitsgequipmentgandgproperty?
Howgshouldgthegbusinessgdistributegprofitsgtogitsgowners?
Onegmustgconsidergallgtransactiongcostsg(includinggtaxes)gtogevaluategthegmeritsgofg agtransaction.
Commongpersonalgfinancialgdecisionsgthatgtaxesginfluenceginclude:gchoosingg investments,gretirementgpla
nning,gchoosinggtogrentgorgbuygaghome,gevaluatingg alternativegjobgoffers,gsavinggforgeducationgexpenses,g
andgdoingggiftgorgestateg planning.
(3) [LOg1]gDescribegsomegwaysgingwhichgtaxesgaffectgthegpoliticalgprocessgingtheg UnitedgS
tates.
U.S.gpresidentialgcandidatesgoftengdistinguishgthemselvesgfromgtheirgopponents
, basedgupongtheirgtaxgrhetoric.gLikewise,gthegmajorgpoliticalgpartiesggenerallyghaveg verygdiversegviewsgofgt
hegappropriategwaygtogtaxgthegpublic.gDetermininggwhogisg taxed,gwhatgisgtaxed,gandghowgmuchgisgtaxedg
aregdifficultgquestions.gVotersgmustg havegagbasicgunderstandinggofgtaxesgtogevaluategthegmeritsgofgalternat
ivegtaxg proposalsgofferedgbygopposinggpoliticalgcandidatesgandgtheirgpoliticalgparties.
(4) [LOg2]gCourtneygrecentlygreceivedgagspeedinggticketgonghergwaygtogtheguniversity.g Hergfine
gwasg$200.gIsgthisgconsideredgagtax?gWhygorgwhygnot?
Theg$200gspeedinggticketgisgnotgconsideredgagtax.gInstead,gitgisgconsideredgagfineg orgpenalty.gTaxesgdif
fergfromgfinesgandgpenaltiesgbecausegtaxesgaregnotgintendedg togpunishgorgpreventgillegalgbehavior.
(5) [LOg2]gMarlongandgLatoyagrecentlygstartedgbuildinggaghouse.gTheyghadgtogpay
$300gtogthegcountyggovernmentgforgagbuildinggpermit.gIsgtheg$300gpaymentgagtax?g Whygorg
whygnot?
Thegbuildinggpermitgisgnotgconsideredgagtaxgbecauseg$300gpaymentgisgdirectlyg linkedgtogagbenefitgthatgth
eygreceivedg(i.e.,gthegabilitygtogbuildgaghouse).
(6) [LOg2]gToghelpgpaygforgthegcity’sgnewgstadium,gthegcitygofgBirminghamgrecentlyg enactedg
ag1gpercentgsurchargegonghotelgrooms.gIsgthisgagtax?gWhygorgwhygnot?
Theg1gpercentgsurchargegisgagtax.gTheg1gpercentgsurchargegisgangearmarkedgtaxg–
g i.e.,gcollectedgforgagspecificgpurpose.gThegsurchargegisgconsideredgagtaxgbecauseg thegtaxgpaymentsgmadegb
ygtaxpayersgdognotgdirectlygrelategtogthegspecificgbenefitg receivedgbygthegtaxpayers.
(7) [LOg2]gAsgnotedgingExampleg1-
2,gtolls,gparkinggmetergfees,gandgannualglicensingg feesgaregnotgconsideredgtaxes.gCangyougi
dentifygothergfeesgthatgaregsimilar?
Theregaregseveralgpossibleganswersgtogthisgquestion.gSomegcommongexamplesg includegentrancegfeesgtognat
ionalgparks,gtaggfeesgpaidgtoglocal/stateggovernmentg forgautomobiles,gboats,getc.
(8) [LOg2]gIfgtheggeneralgobjectivegofgourgtaxgsystemgisgtograisegrevenue,gwhygdoesgtheg incomegt
axgallowgdeductionsgforgcharitablegcontributionsgandgretirementgplang contributions?
Ingadditiongtogtheggeneralgobjectivegofgraisinggrevenue,gCongressgusesgthegfederalg taxgsystemgtogencourage
gcertaingbehaviorgandgdiscouragegothergbehavior.gTheg charitablegcontributiongdeductiongisgintendedgtogen
couragegtaxpayersgtogsupportg theginitiativesgofgcharitablegorganizations,gwhereasgdeductionsgforgretireme
ntg contributionsgaregintendedgtogencouragegretirementgsavings.gAnothergobjectivegofg thegtaxgsystemgisgtog
redistributegwealth.
