Solution Manual
McGraw-Hill's Taxation of Individuals 2024 Edition,
15th Edition by Spilker, Ayers, All Chapters 1 - 14
,TABLE OF CONTENTS
Y Y Y
PartYI:YIntroductionYtoYTaxation
ChapterY1:YAnYIntroductionYtoYTax
ChapterY2:YTaxYCompliance,YtheYIRS,YandYTaxYAuthorities
ChapterY3:YTaxYPlanningYStrategiesYandYRelatedYLimitations
PartYII:YBasicYIndividualYTaxation
ChapterY4:YIndividualYIncomeYTaxYOverview,YDependents,YandYFilingYStatus
ChapterY5:YGrossYIncomeYandYExclusions
ChapterY6:YIndividualYDeductions
ChapterY7:YInvestments
ChapterY8:YIndividualYIncomeYTaxYComputationYandYTaxYCredits
PartYIII:YBusiness-RelatedYTransactions
ChapterY9:YBusinessYIncome,YDeductions,YandYAccountingYMethods
ChapterY10:YPropertyYAcquisitionYandYCostYRecovery
ChapterY11:YPropertyYDispositions
PartYIV:YSpecializedYTopics
ChapterY12:YCompensation
ChapterY13:YRetirementYSavingsYandYDeferredYCompensation
ChapterY14:YTaxYConsequencesYofYHomeYOwnership
,ChapterY1
AnYIntroductionYtoYTax
DiscussionYQuestions
(1) [LOY1]YJessica’sYfriendYZacharyYonceYstatedYthatYheYcouldn’tYunderstandYwhy
someoneYwouldYtakeYaYtaxYcourse.YWhyYisYthisYaYratherYnaïveYview?
TaxesYareYaYpartYofYeverydayYlifeYandYhaveYaYfinancialYeffectYonYmanyYofYtheYmajor
Y personalYdecisionsYthatYindividualsYfaceY(e.g.,YinvestmentYdecisions,YevaluatingY alte
rnativeYjobYoffers,YsavingYforYeducationYexpenses,YgiftYorYestateYplanning,Yetc.).
(2) [LOY1]YWhatYareYsomeYaspectsYofYbusinessYthatYrequireYknowledgeYofYtaxation?
Y WhatYareYsomeYaspectsYofYpersonalYfinanceYthatYrequireYknowledgeYofYtaxation
?
TaxesYplayYanYimportantYroleYinYfundamentalYbusinessYdecisionsYsuchYasYtheY follow
ing:
WhatYorganizationalYformYshouldYaYbusinessYuse?
WhereYshouldYtheYbusinessYlocate?
HowYshouldYbusinessYacquisitionsYbeYstructured?
HowYshouldYtheYbusinessYcompensateYemployees?
WhatYisYtheYappropriateYmixYofYdebtYandYequityYforYtheYbusiness?
ShouldYtheYbusinessYrentYorYownYitsYequipmentYandYproperty?
HowYshouldYtheYbusinessYdistributeYprofitsYtoYitsYowners?
OneYmustYconsiderYallYtransactionYcostsY(includingYtaxes)YtoYevaluateYtheYmeritsYofY
aYtransaction.
CommonYpersonalYfinancialYdecisionsYthatYtaxesYinfluenceYinclude:YchoosingY invest
ments,YretirementYplanning,YchoosingYtoYrentYorYbuyYaYhome,YevaluatingY alternative
YjobYoffers,YsavingYforYeducationYexpenses,YandYdoingYgiftYorYestateY planning.
(3) [LOY1]YDescribeYsomeYwaysYinYwhichYtaxesYaffectYtheYpoliticalYprocessYinYthe
Y UnitedYStates.
U.S.YpresidentialYcandidatesYoftenYdistinguishYthemselvesYfromYtheirYopponents
, basedYuponYtheirYtaxYrhetoric.YLikewise,YtheYmajorYpoliticalYpartiesYgenerallyYhaveY v
eryYdiverseYviewsYofYtheYappropriateYwayYtoYtaxYtheYpublic.YDeterminingYwhoYisY tax
ed,YwhatYisYtaxed,YandYhowYmuchYisYtaxedYareYdifficultYquestions.YVotersYmustY hav
eYaYbasicYunderstandingYofYtaxesYtoYevaluateYtheYmeritsYofYalternativeYtaxY proposals
YofferedYbyYopposingYpoliticalYcandidatesYandYtheirYpoliticalYparties.
(4) [LOY2]YCourtneyYrecentlyYreceivedYaYspeedingYticketYonYherYwayYtoYtheYuniversity.
Y HerYfineYwasY$200.YIsYthisYconsideredYaYtax?YWhyYorYwhyYnot?
TheY$200YspeedingYticketYisYnotYconsideredYaYtax.YInstead,YitYisYconsideredYaYfine
Y orYpenalty.YTaxesYdifferYfromYfinesYandYpenaltiesYbecauseYtaxesYareYnotYintende
dY toYpunishYorYpreventYillegalYbehavior.
(5) [LOY2]YMarlonYandYLatoyaYrecentlyYstartedYbuildingYaYhouse.YTheyYhadYtoYpay
$300YtoYtheYcountyYgovernmentYforYaYbuildingYpermit.YIsYtheY$300YpaymentYaYtax?Y
WhyYorYwhyYnot?
TheYbuildingYpermitYisYnotYconsideredYaYtaxYbecauseY$300YpaymentYisYdirectlyY linke
dYtoYaYbenefitYthatYtheyYreceivedY(i.e.,YtheYabilityYtoYbuildYaYhouse).
(6) [LOY2]YToYhelpYpayYforYtheYcity’sYnewYstadium,YtheYcityYofYBirminghamYrecently
Y enactedYaY1YpercentYsurchargeYonYhotelYrooms.YIsYthisYaYtax?YWhyYorYwhyYnot?
TheY1YpercentYsurchargeYisYaYtax.YTheY1YpercentYsurchargeYisYanYearmarkedYtaxY–
Y i.e.,YcollectedYforYaYspecificYpurpose.YTheYsurchargeYisYconsideredYaYtaxYbecauseY th
eYtaxYpaymentsYmadeYbyYtaxpayersYdoYnotYdirectlyYrelateYtoYtheYspecificYbenefitY rec
eivedYbyYtheYtaxpayers.
(7) [LOY2]YAsYnotedYinYExampleY1-
2,Ytolls,YparkingYmeterYfees,YandYannualYlicensingY feesYareYnotYconsideredYtaxes.Y
CanYyouYidentifyYotherYfeesYthatYareYsimilar?
ThereYareYseveralYpossibleYanswersYtoYthisYquestion.YSomeYcommonYexamplesY incl
udeYentranceYfeesYtoYnationalYparks,YtagYfeesYpaidYtoYlocal/stateYgovernmentY forYa
utomobiles,Yboats,Yetc.
(8) [LOY2]YIfYtheYgeneralYobjectiveYofYourYtaxYsystemYisYtoYraiseYrevenue,YwhyYdoesYthe
Y incomeYtaxYallowYdeductionsYforYcharitableYcontributionsYandYretirementYplanY co
ntributions?
InYadditionYtoYtheYgeneralYobjectiveYofYraisingYrevenue,YCongressYusesYtheYfederalY t
axYsystemYtoYencourageYcertainYbehaviorYandYdiscourageYotherYbehavior.YTheY charit
ableYcontributionYdeductionYisYintendedYtoYencourageYtaxpayersYtoYsupportY theYinit
iativesYofYcharitableYorganizations,YwhereasYdeductionsYforYretirementY contributions
YareYintendedYtoYencourageYretirementYsavings.YAnotherYobjectiveYofY theYtaxYsyste
mYisYtoYredistributeYwealth.
