ACCT 553 Week 1 Homework Chapters 1, 2, 3 and 13

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ACCT 553 Week 1 Homework Chapters 1, 2, 3 and 13

1. Briefly discuss the purpose of the Sixteenth Amendment

2. Explain the two “safe harbors” available to an Individual taxpayer to avoid a penalty for underpayment of estimated tax.

3. Explain the distinction between an “above the line” deduction and a below the line deduction. Which one is more valuable?

3-31.Tom and Linda are married taxpayers who file a joint return. They have itemized deductions of $12,250 and four exemptions. Assuming an adjusted gross income of $40,000, what is their taxable income for 2012?

3-32: Compute Marie’s taxable income for 2012, assuming she is single and claims two dependent children. Her adjusted gross income is $70,000, and she has itemized deductions of $9,000.

3-36: Compute Stanley’s taxable income for 2012, assuming he has $1,000 in wages from working in a grocery store and $2,000 in interest income from some bonds he owns. Stanley, age 16, is claimed as a dependent on his parents’ return.

4. What is an Installment Sale? Is it a form of income “deferral” ? When can’t you elect this form of reporting?

13-55: Mr. Z, a non-dealer, sold assets on an installment plan. Determine Mr. Z’s gross income for 2012. Relevant data include:

13-69: Comprehensive Problem. Bill is a cash-basis, calendar-year taxpayer. Which of the following December items result in gross income or deductions for the current year?

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