Solution Manual
McGraw-Hill's Taxation of Individuals 2024 Edition,
15th Edition by Spilker, 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 pers
onalgdecisionsgthatgindividualsgfaceg(e.g.,ginvestmentgdecisions,gevaluatingg alternativegj
obgoffers,gsavinggforgeducationgexpenses,ggiftgorgestategplanning,getc.).
(2) [LOg1]gWhatgaregsomegaspectsgofgbusinessgthatgrequiregknowledgegofgtaxation?g W
hatgaregsomegaspectsgofgpersonalgfinancegthatgrequiregknowledgegofgtaxation?
Taxesgplaygangimportantgrolegingfundamentalgbusinessgdecisionsgsuchgasgtheg following
:
Whatgorganizationalgformgshouldgagbusinessguse?
Wheregshouldgthegbusinessglocate?
Howgshouldgbusinessgacquisitionsgbegstructured?
Howgshouldgthegbusinessgcompensategemployees?
Whatgisgthegappropriategmixgofgdebtgandgequitygforgthegbusiness?
Shouldgthegbusinessgrentgorgowngitsgequipmentgandgproperty?
Howgshouldgthegbusinessgdistributegprofitsgtogitsgowners?
Onegmustgconsidergallgtransactiongcostsg(includinggtaxes)gtogevaluategthegmeritsgofg agtr
ansaction.
Commongpersonalgfinancialgdecisionsgthatgtaxesginfluenceginclude:gchoosingg investm
ents,gretirementgplanning,gchoosinggtogrentgorgbuygaghome,gevaluatingg alternativegjobg
offers,gsavinggforgeducationgexpenses,gandgdoingggiftgorgestateg planning.
(3) [LOg1]gDescribegsomegwaysgingwhichgtaxesgaffectgthegpoliticalgprocessgingtheg Un
itedgStates.
U.S.gpresidentialgcandidatesgoftengdistinguishgthemselvesgfromgtheirgopponents
, basedgupongtheirgtaxgrhetoric.gLikewise,gthegmajorgpoliticalgpartiesggenerallyghaveg veryg
diversegviewsgofgthegappropriategwaygtogtaxgthegpublic.gDetermininggwhogisg taxed,gwh
atgisgtaxed,gandghowgmuchgisgtaxedgaregdifficultgquestions.gVotersgmustg havegagbasicgu
nderstandinggofgtaxesgtogevaluategthegmeritsgofgalternativegtaxg proposalsgofferedgbygop
posinggpoliticalgcandidatesgandgtheirgpoliticalgparties.
(4) [LOg2]gCourtneygrecentlygreceivedgagspeedinggticketgonghergwaygtogtheguniversity.g He
rgfinegwasg$200.gIsgthisgconsideredgagtax?gWhygorgwhygnot?
Theg$200gspeedinggticketgisgnotgconsideredgagtax.gInstead,gitgisgconsideredgagfineg org
penalty.gTaxesgdiffergfromgfinesgandgpenaltiesgbecausegtaxesgaregnotgintendedg togpu
nishgorgpreventgillegalgbehavior.
(5) [LOg2]gMarlongandgLatoyagrecentlygstartedgbuildinggaghouse.gTheyghadgtogpay
$300gtogthegcountyggovernmentgforgagbuildinggpermit.gIsgtheg$300gpaymentgagtax?g Wh
ygorgwhygnot?
Thegbuildinggpermitgisgnotgconsideredgagtaxgbecauseg$300gpaymentgisgdirectlyg linkedgto
gagbenefitgthatgtheygreceivedg(i.e.,gthegabilitygtogbuildgaghouse).
(6) [LOg2]gToghelpgpaygforgthegcity’sgnewgstadium,gthegcitygofgBirminghamgrecentlyg ena
ctedgag1gpercentgsurchargegonghotelgrooms.gIsgthisgagtax?gWhygorgwhygnot?
Theg1gpercentgsurchargegisgagtax.gTheg1gpercentgsurchargegisgangearmarkedgtaxg–
g i.e.,gcollectedgforgagspecificgpurpose.gThegsurchargegisgconsideredgagtaxgbecauseg thegta
xgpaymentsgmadegbygtaxpayersgdognotgdirectlygrelategtogthegspecificgbenefitg receivedgb
ygthegtaxpayers.
(7) [LOg2]gAsgnotedgingExampleg1-
2,gtolls,gparkinggmetergfees,gandgannualglicensingg feesgaregnotgconsideredgtaxes.gCang
yougidentifygothergfeesgthatgaregsimilar?
Theregaregseveralgpossibleganswersgtogthisgquestion.gSomegcommongexamplesg includ
egentrancegfeesgtognationalgparks,gtaggfeesgpaidgtoglocal/stateggovernmentg forgautomo
biles,gboats,getc.
(8) [LOg2]gIfgtheggeneralgobjectivegofgourgtaxgsystemgisgtograisegrevenue,gwhygdoesgtheg inc
omegtaxgallowgdeductionsgforgcharitablegcontributionsgandgretirementgplang contributi
ons?
Ingadditiongtogtheggeneralgobjectivegofgraisinggrevenue,gCongressgusesgthegfederalg taxgs
ystemgtogencouragegcertaingbehaviorgandgdiscouragegothergbehavior.gTheg charitablegc
ontributiongdeductiongisgintendedgtogencouragegtaxpayersgtogsupportg theginitiativesgof
gcharitablegorganizations,gwhereasgdeductionsgforgretirementg contributionsgaregintend
edgtogencouragegretirementgsavings.gAnothergobjectivegofg thegtaxgsystemgisgtogredistri
butegwealth.
