Question & Answer

Will underapplied and overapplied overhead arise under both actual and normal costing? Explain your answer.

{Planning}Through November, Tex has received gross income of $120,000.For December, Tex is considering whether to accept one more work engagement for the year.Engagement 1 will generate $7,000 of revenue at a cost of $4,000, which is deductible for AGI.In contrast, engagement 2 will generate $7,000 of revenue at a costof $3,000,which is deductible as an itemized deduction.Tex files as a single taxpayer.

Given the following tax structure, what tax would need to be assessed on Venita to make the tax horizontally equitable?

Assume that there are several chemical firms in an industry, each one producing different levels of an effluent, whose damage to the environment depends on the location of the firm. Compare the relative merits of using green taxes, tradable permits and controls as means of achieving the socially optimum levels of effluent from these firms.

] Manny hired his brother’s firm to provide accounting services to his business. During the current year, Manny paid his brother’s firm $82,000 for services even though other firms were willing to provide the same services for $40,000. How much of this expenditure, if any, is deductible as an ordinary and necessary business expenditure?

Consider the following tax rate structure.  Is it horizontally equitable?  Why or why not?  Is it vertically equitable?  Why or why not?

Orthogonal cutting is performed on a metal whose mass specific heat = 1.0 J/g-C, density = 2.9 g/cm3 , and thermal diffusivity = 0.8 cm2 /s. The cutting speed is 4.5 m/s, uncut chip thickness is 0.25 mm, and width of cut is 2.2 mm. The cutting force is measured at 1170 N. Using Cook's equation, determine the cutting temperature if the ambient temperature = 22°C.

Consider the following tax rate structure.  Is it horizontally equitable?  Why or why not?  Is it vertically equitable?  Why or why not?

Consider the following tax rate structure.  Is it horizontally equitable?  Why or why not?  Is it vertically equitable?  Why or why not?

Consider the following tax rate structure.  Is it horizontally equitable?  Why or why not?  Is it vertically equitable?  Why or why not?

Congress would like to increase tax revenues by 10 percent.  Assume that the average taxpayer in the United States earns $65,000 and pays an average tax rate of 15 percent.  If the income effect is in effect for all taxpayers, what average tax rate will result in a 10 percent increase in tax revenues?  This is an example of what type of forecasting?   Answer:

Using the Internet, find a comparison of income tax rates across states.  What state currently has the highest income tax rate?  In considering individual tax burdens across states, what other taxes should you consider?

Explain how state and local governments benefit from the provisions that allow taxpayers to exclude interest on state and local bonds from their gross income.

Stallman Company took a physical inventory on December 31 and determined that goods costing $200,000 were on hand. Not included in the physical count were $25,000 of goods purchased from Pelzer Corporation, f.o.b. shipping point, and $22,000 of goods sold to Alvarez Company for $30,000, f.o.b. destination. Both the Pelzer purchase and the Alvarez sale were in transit at year-end. What amount should Stallman report as its December 31 inventory?c

Benita is concerned that she will not be able to complete her tax return by April 15.  Can she request an extension to file her return?  By what date must she do so? Assuming she requests an extension, what is the latest date that she could file her return this year without penalty?

Approximately what percentage of tax returns does the IRS audit?  What are the implications of this number for the IRS’s strategy in selecting returns for audit?

Explain the difference between the DIF system and the National Research Program. How do they relate to each other?

Identify the following items as (1) operating, (2) investing, or (3) financing activities: purchase of land, payment of dividends, cash sales, and purchase of treasury stock.

Describe the differences between the three types of audits in terms of their scope and taxpayer type.

Simon just received a 30-day letter from the IRS indicating a proposed assessment. Does he have to pay the additional tax?  What are his options?

Compare and contrast the three trial-level courts.

Assessing rewards based on accounting profit Stevan is the divisional manager with the Liberty Property Development Group. His performance report shows a positive divisional margin but a loss for the year. Stevan has complained to the CEO about the common costs that have been charged to his division, and questions the method of charging. If they were not charged or were allocated in a different way, he would have a favourable profit figure and would be awarded his bonus.   Required Should Stevan’s bonus be awarded based on the profit or loss figure? Why? (LO2 and 4)

What are the basic differences between regulations, revenue rulings, and private letter rulings?

Compare and contrast the three types of tax law sources and give examples of each.

Identify the two basic methods of making electrical connections.