Solution Manual
McGraw-Hill's Taxation of Individuals 2024 Edition,
15th Edition by Spilker, Ayers, All Chapters 1 - 14
,TABLE OF CONTENTS
e e e
ParteI:eIntroductionetoeTaxation
Chaptere1:eAneIntroductionetoeTax
Chaptere2:eTaxeCompliance,etheeIRS,eandeTaxeAuthorities
Chaptere3:eTaxePlanningeStrategieseandeRelatedeLimitations
ParteII:eBasiceIndividualeTaxation
Chaptere4:eIndividualeIncomeeTaxeOverview,eDependents,eandeFilingeStatus
Chaptere5:eGrosseIncomeeandeExclusions
Chaptere6:eIndividualeDeductions
Chaptere7:eInvestments
Chaptere8:eIndividualeIncomeeTaxeComputationeandeTaxeCredits
ParteIII:eBusiness-RelatedeTransactions
Chaptere9:eBusinesseIncome,eDeductions,eandeAccountingeMethods
Chaptere10:ePropertyeAcquisitioneandeCosteRecovery
Chaptere11:ePropertyeDispositions
ParteIV:eSpecializedeTopics
Chaptere12:eCompensation
Chaptere13:eRetirementeSavingseandeDeferredeCompensation
Chaptere14:eTaxeConsequenceseofeHomeeOwnership
,Chapter 1
e
An Introduction to Tax
e e e
Discussion Questions
e
(1) [LOe1]eJessica’sefriendeZacharyeonceestatedethateheecouldn’teunderstandewhy
someoneewouldetakeeaetaxecourse.eWhyeisethiseaeratherenaïveeview?
Taxeseareeaeparteofeeverydayelifeeandehaveeaefinancialeeffecteonemanyeofetheemajore perso
naledecisionsethateindividualsefacee(e.g.,einvestmentedecisions,eevaluatinge alternativeejob
eoffers,esavingeforeeducationeexpenses,egifteoreestateeplanning,eetc.).
(2) [LOe1]eWhateareesomeeaspectseofebusinessethaterequireeknowledgeeofetaxation?e Wha
teareesomeeaspectseofepersonalefinanceethaterequireeknowledgeeofetaxation?
Taxeseplayeaneimportanteroleeinefundamentalebusinessedecisionsesucheasethee following:
Whateorganizationaleformeshouldeaebusinesseuse?
Whereeshouldetheebusinesselocate?
Howeshouldebusinesseacquisitionsebeestructured?
Howeshouldetheebusinessecompensateeemployees?
Whateisetheeappropriateemixeofedebteandeequityeforetheebusiness?
Shouldetheebusinesserenteoreowneitseequipmenteandeproperty?
Howeshouldetheebusinessedistributeeprofitsetoeitseowners?
Oneemusteconsiderealletransactionecostse(includingetaxes)etoeevaluateetheemeritseofe aetra
nsaction.
Commonepersonalefinancialedecisionsethatetaxeseinfluenceeinclude:echoosinge investme
nts,eretirementeplanning,echoosingetoerenteorebuyeaehome,eevaluatinge alternativeejobeoff
ers,esavingeforeeducationeexpenses,eandedoingegifteoreestatee planning.
(3) [LOe1]eDescribeesomeewayseinewhichetaxeseaffectetheepoliticaleprocesseinethee Unit
edeStates.
U.S.epresidentialecandidateseoftenedistinguishethemselvesefrometheireopponents
, basedeuponetheiretaxerhetoric.eLikewise,etheemajorepoliticalepartiesegenerallyehavee veryed
iverseeviewseofetheeappropriateewayetoetaxetheepublic.eDeterminingewhoeise taxed,ewhateis
etaxed,eandehowemucheisetaxedeareedifficultequestions.eVotersemuste haveeaebasiceunderst
andingeofetaxesetoeevaluateetheemeritseofealternativeetaxe proposalseofferedebyeopposinge
politicalecandidateseandetheirepoliticaleparties.
(4) [LOe2]eCourtneyerecentlyereceivedeaespeedingeticketeoneherewayetoetheeuniversity.e Heref
ineewase$200.eIsethiseconsideredeaetax?eWhyeorewhyenot?
Thee$200espeedingeticketeisenoteconsideredeaetax.eInstead,eiteiseconsideredeaefinee orepe
nalty.eTaxesedifferefromefineseandepenaltiesebecauseetaxeseareenoteintendede toepunishe
orepreventeillegalebehavior.
(5) [LOe2]eMarloneandeLatoyaerecentlyestartedebuildingeaehouse.eTheyehadetoepay
$300etoetheecountyegovernmenteforeaebuildingepermit.eIsethee$300epaymenteaetax?e Whye
orewhyenot?
Theebuildingepermiteisenoteconsideredeaetaxebecausee$300epaymenteisedirectlye linkedetoea
ebenefitethatetheyereceivede (i.e.,etheeabilityetoebuildeaehouse).
(6) [LOe2]eToehelpepayeforetheecity’senewestadium,etheecityeofeBirminghamerecentlye enact
edeae1epercentesurchargeeonehotelerooms.eIsethiseaetax?eWhyeorewhyenot?
Thee1epercentesurchargeeiseaetax.eThee1epercentesurchargeeiseaneearmarkedetaxe–
e i.e.,ecollectedeforeaespecificepurpose.eTheesurchargeeiseconsideredeaetaxebecausee theetaxe
paymentsemadeebyetaxpayersedoenotedirectlyerelateetoetheespecificebenefite receivedebyeth
eetaxpayers.
(7) [LOe2]eAsenotedeineExamplee1-
2,etolls,eparkingemeterefees,eandeannualelicensinge feeseareenoteconsideredetaxes.eCaney
oueidentifyeotherefeesethateareesimilar?
Thereeareeseveralepossibleeanswersetoethisequestion.eSomeecommoneexamplese includee
entranceefeesetoenationaleparks,etagefeesepaidetoelocal/stateegovernmente foreautomobil
es,eboats,eetc.
(8) [LOe2]eIfetheegeneraleobjectiveeofeouretaxesystemeisetoeraiseerevenue,ewhyedoesethee inco
meetaxeallowedeductionseforecharitableecontributionseanderetirementeplane contribution
s?
Ineadditionetoetheegeneraleobjectiveeoferaisingerevenue,eCongresseusesetheefederale taxesys
temetoeencourageecertainebehavioreandediscourageeotherebehavior.eThee charitableecontr
ibutionedeductioneiseintendedetoeencourageetaxpayersetoesupporte theeinitiativeseofechari
tableeorganizations,ewhereasedeductionseforeretiremente contributionseareeintendedetoee
ncourageeretirementesavings.eAnothereobjectiveeofe theetaxesystemeisetoeredistributeewea
lth.