Question & Answer

Jamareo has found a “favorable” authority directly on point for his tax question.  If the authority is an administrative authority, which specific type of authority would he prefer to answer his question?  Which administrative authority would he least prefer to answer his question?

For each of the following citations, identify the type of authority (statutory, administrative, or judicial) and explain the citation.

Justine would like to clarify her understanding of a code section recently enacted by Congress.  What tax law sources are available to assist Justine?

Aldina has identified conflicting authorities that address her research question.  How should she evaluate these authorities to make a conclusion?

Georgette has identified a 1983 court case that appears to answer her research question.  What must she do to determine if the case still represents “current” law?

Sandy has determined that her research question depends upon the interpretation of the phrase “not compensated by insurance.”  What type of research question is this?

1.       An organizational consultant said, “Some aspect of functional structure appears in every organization.” Do you agree? Explain.

Pierre recently received a tax penalty for failing to file a tax return.  He was upset to receive the penalty, but he was comforted by the thought that he will get a tax deduction for paying the penalty.  a.  Use an available tax research service to determine if Pierre is correct. b.  Write a memo communicating the results of your research.

Paris was happy to provide a contribution to her friend Nicole’s campaign for mayor, especially after she learned that charitable contributions are tax deductible.  a.  Use an available tax service to determine whether Paris can deduct this contribution. b.  Write a memo communicating the results of your research.

The use of RPE systems for the evaluation of individual managers has been abandoned by many organisations.  Microsoft is one example.  Given this can be conclude that RPE is no good?

Randy has found conflicting authorities that address a research question for one of his clients.  The majority of the authorities provide an unfavorable answer for his client.  Randy estimates that if the client takes the more favorable position on its tax return that there is approximately a 48 percent chance that the position will be sustained upon audit or judicial proceeding.  If the client takes this position on its tax return, will Randy be subject to penalty?  Will the client potentially be subject to penalty?

Compare and contrast the similarities and differences between organizational expenditures and start-up costs for tax purposes.

Felicia Rashad Corporation has pretax financial income (or loss) equal to taxable income (or loss) from 2006 through 2014 as follows. Income (Loss) Tax Rate 2006 $ 29,000 30% 2007 40,000 30% 2008 17,000 35% 2009 48,000 50% 2010 (150,000) 40% 2011 90,000 40% 2012 30,000 40% 2013 105,000 40% 2014 (60,000) 45% Pretax financial income (loss) and taxable income (loss) were the same for all years since Rashad has been in business. Assume the carryback provision is employed for net operating losses. In recording the benefits of a loss carryforward, assume that it is more likely than not that the related benefits will be realized. Instructions (a) What entry(ies) for income taxes should be recorded for 2010? (b) Indicate what the income tax expense portion of the income statement for 2010 should look like. Assume all income (loss) relates to continuing operations. (c) What entry for income taxes should be recorded in 2011? (d) How should the income tax expense section of the income statement for 2011 appear? (e) What entry for income taxes should be recorded in 2014? (f) How should the income tax expense section of the income statement for 2014 appear?

Using the same facts from the previous problem, how would your answer change if Randy estimates that there is only a 20 percent chance that the position will be sustained upon audit or judicial proceeding?

Maurice has a client that recently asked him about the odds of the IRS detecting cash transactions not reported on a tax return.  What are some of the issues that Maurice should discuss with his client?

To what extent is Article 102 consistent with both these points of view?

Suppose you asked your favorite AI query tool the following question: “I am single and earned $13,000 in 2024 in the United States. Should I file a U.S. federal income tax return?”  The AI tool provided the following response:   Is the AI response correct? Explain.

The goal of tax planning is to minimize taxes.”  Explain why this statement is not true.

Describe the three parties engaged in every business transaction and how understanding taxes may aid in structuring transactions.

In this chapter we discussed three basic tax planning strategies.  What different features of taxation does each of these strategies exploit?

What are the two basic timing strategies?  What is the intent of each?

Why is the timing strategy particularly effective for cash-method taxpayers?

What are some common examples of the timing strategy?

What factors increase the benefits of accelerating deductions or deferring income?

How do changing tax rates affect the timing strategy?  What information do you need to determine the appropriate timing strategy when tax rates change?