Solution Manual
McGraw-Hill's Taxation of Individuals 2024 Edition,
15th Edition by Spilker, Ayers, All Chapters 1 - 14
,TABLE OF CONTENTS
f f f
PartfI:fIntroductionftofTaxation
Chapterf1:fAnfIntroductionftofTax
Chapterf2:fTaxfCompliance,fthefIRS,fandfTaxfAuthorities
Chapterf3:fTaxfPlanningfStrategiesfandfRelatedfLimitations
PartfII:fBasicfIndividualfTaxation
Chapterf4:fIndividualfIncomefTaxfOverview,fDependents,fandfFilingfStatus
Chapterf5:fGrossfIncomefandfExclusions
Chapterf6:fIndividualfDeductions
Chapterf7:fInvestments
Chapterf8:fIndividualfIncomefTaxfComputationfandfTaxfCredits
PartfIII:fBusiness-RelatedfTransactions
Chapterf9:fBusinessfIncome,fDeductions,fandfAccountingfMethods
Chapterf10:fPropertyfAcquisitionfandfCostfRecovery
Chapterf11:fPropertyfDispositions
PartfIV:fSpecializedfTopics
Chapterf12:fCompensation
Chapterf13:fRetirementfSavingsfandfDeferredfCompensation
Chapterf14:fTaxfConsequencesfoffHomefOwnership
,Chapterf1
AnfIntroductionftofTax
DiscussionfQuestions
(1) [LOf1]fJessica’sffriendfZacharyfoncefstatedfthatfhefcouldn’tfunderstandfwhy
someonefwouldftakefaftaxfcourse.fWhyfisfthisfafratherfnaïvefview?
Taxesfarefafpartfoffeverydayflifefandfhavefaffinancialfeffectfonfmanyfoffthefmajorf person
alfdecisionsfthatfindividualsffacef(e.g.,finvestmentfdecisions,fevaluatingf alternativefjobfo
ffers,fsavingfforfeducationfexpenses,fgiftforfestatefplanning,fetc.).
(2) [LOf1]fWhatfarefsomefaspectsfoffbusinessfthatfrequirefknowledgefofftaxation?f What
farefsomefaspectsfoffpersonalffinancefthatfrequirefknowledgefofftaxation?
Taxesfplayfanfimportantfrolefinffundamentalfbusinessfdecisionsfsuchfasfthef following:
Whatforganizationalfformfshouldfafbusinessfuse?
Wherefshouldfthefbusinessflocate?
Howfshouldfbusinessfacquisitionsfbefstructured?
Howfshouldfthefbusinessfcompensatefemployees?
Whatfisfthefappropriatefmixfoffdebtfandfequityfforfthefbusiness?
Shouldfthefbusinessfrentforfownfitsfequipmentfandfproperty?
Howfshouldfthefbusinessfdistributefprofitsftofitsfowners?
Onefmustfconsiderfallftransactionfcostsf(includingftaxes)ftofevaluatefthefmeritsfoff aftran
saction.
Commonfpersonalffinancialfdecisionsfthatftaxesfinfluencefinclude:fchoosingf investmen
ts,fretirementfplanning,fchoosingftofrentforfbuyfafhome,fevaluatingf alternativefjobfoffer
s,fsavingfforfeducationfexpenses,fandfdoingfgiftforfestatef planning.
(3) [LOf1]fDescribefsomefwaysfinfwhichftaxesfaffectfthefpoliticalfprocessfinfthef Unit
edfStates.
U.S.fpresidentialfcandidatesfoftenfdistinguishfthemselvesffromftheirfopponents
, basedfuponftheirftaxfrhetoric.fLikewise,fthefmajorfpoliticalfpartiesfgenerallyfhavef veryfdi
versefviewsfoffthefappropriatefwayftoftaxfthefpublic.fDeterminingfwhofisf taxed,fwhatfisft
axed,fandfhowfmuchfisftaxedfarefdifficultfquestions.fVotersfmustf havefafbasicfunderstan
dingfofftaxesftofevaluatefthefmeritsfoffalternativeftaxf proposalsfofferedfbyfopposingfpol
iticalfcandidatesfandftheirfpoliticalfparties.
(4) [LOf2]fCourtneyfrecentlyfreceivedfafspeedingfticketfonfherfwayftofthefuniversity.f Herffi
nefwasf$200.fIsfthisfconsideredfaftax?fWhyforfwhyfnot?
Thef$200fspeedingfticketfisfnotfconsideredfaftax.fInstead,fitfisfconsideredfaffinef orfpe
nalty.fTaxesfdifferffromffinesfandfpenaltiesfbecauseftaxesfarefnotfintendedf tofpunishf
orfpreventfillegalfbehavior.
(5) [LOf2]fMarlonfandfLatoyafrecentlyfstartedfbuildingfafhouse.fTheyfhadftofpay
$300ftofthefcountyfgovernmentfforfafbuildingfpermit.fIsfthef$300fpaymentfaftax?f Whyfo
rfwhyfnot?
Thefbuildingfpermitfisfnotfconsideredfaftaxfbecausef$300fpaymentfisfdirectlyf linkedftofaf
benefitfthatftheyfreceivedf(i.e.,fthefabilityftofbuildfafhouse).
(6) [LOf2]fTofhelpfpayfforfthefcity’sfnewfstadium,fthefcityfoffBirminghamfrecentlyf enact
edfaf1fpercentfsurchargefonfhotelfrooms.fIsfthisfaftax?fWhyforfwhyfnot?
Thef1fpercentfsurchargefisfaftax.fThef1fpercentfsurchargefisfanfearmarkedftaxf–
f i.e.,fcollectedfforfafspecificfpurpose.fThefsurchargefisfconsideredfaftaxfbecausef theftaxf
paymentsfmadefbyftaxpayersfdofnotfdirectlyfrelateftofthefspecificfbenefitf receivedfbyfthe
ftaxpayers.
(7) [LOf2]fAsfnotedfinfExamplef1-
2,ftolls,fparkingfmeterffees,fandfannualflicensingf feesfarefnotfconsideredftaxes.fCanfyo
ufidentifyfotherffeesfthatfarefsimilar?
Therefarefseveralfpossiblefanswersftofthisfquestion.fSomefcommonfexamplesf includefe
ntranceffeesftofnationalfparks,ftagffeesfpaidftoflocal/statefgovernmentf forfautomobiles
,fboats,fetc.
(8) [LOf2]fIffthefgeneralfobjectivefoffourftaxfsystemfisftofraisefrevenue,fwhyfdoesfthef inco
meftaxfallowfdeductionsfforfcharitablefcontributionsfandfretirementfplanf contributions
?
Infadditionftofthefgeneralfobjectivefoffraisingfrevenue,fCongressfusesftheffederalf taxfsys
temftofencouragefcertainfbehaviorfandfdiscouragefotherfbehavior.fThef charitablefcontri
butionfdeductionfisfintendedftofencourageftaxpayersftofsupportf thefinitiativesfoffcharit
ableforganizations,fwhereasfdeductionsfforfretirementf contributionsfarefintendedftofen
couragefretirementfsavings.fAnotherfobjectivefoff theftaxfsystemfisftofredistributefwealt
h.
