Study guides, Class notes & Summaries

Tax Formula Correct Answer-Income (broadly defined) - Exclusions _____________________ Gross Income - Deductions (for AGI) ______________________ Adjusted Gross Income - Deductions (from AGI) (greater of either Total Itemized or Standard Deduction !and! - Personal Exemptions - Dependency Exemptions ______________________ Taxable Income [Tax Calculation] __________________________ Tax on Taxable Income - Tax Credits ______________________ Tax Due / (Tax Refund)

What are the 2 components of taxes? Correct Answer-Tax rate and tax base What are the 3 types of tax rates? Correct Answer-Proportional, progressive and regressive Proportional Taxes Correct Answer-the rate of tax remains constant over the tax base (sales tax) Progressive taxes Correct Answer-Tax rates increase as the tax base grows larger (Federal income, gift and estate tax) Regressive taxes Correct Answer-Tax rates decrease as the tax base grows larger (Federal employment taxes su...

What are the two components of a Tax? Correct Answer-1) A tax rate (the percentage) 2) A tax base (the actual item being taxed) What are the three different tax rates and define each? Correct Answer-1) Progressive ( the overall tax rate increases as taxable income increases) 2) Regressive (the overall tax rate decreases as taxable income increases) 3) Proportional (the overall tax rate stays the same as taxable income increases Calculate Average Tax Correct Answer-Tax liability (T...

Proportional Tax Correct Answer--applies the same rate on all income, ex: Sales Tax -Also known as a flat tax rate = Tax Base X Tax Rate Regressive Tax Correct Answer--applies a decreasing rate as the tax base increases, ex: Social Security Taxes (Payroll Taxes) -as the tax base increases, the taxes paid increase, but the marginal tax rate decreases (not common) Progressive Tax Correct Answer--imposes an increasing marginal rate as the tax base increases, ex: Federal & State Income Taxe...

It has been suggested that tax policy favors deductions for AGI compared to itemized deductions. Describe two ways in which deductions for AGI are treated more favorably than itemized deductions. - Correct Answer Itemized deductions must exceed the standard deduction before taxpayers receive any tax benefit from the deductions (this is equivalent to an overall floor limit). In contrast, business deductions that are deductible for AGI (above the line) reduce taxable income without being subject t...

TAX 4001 Exam 1 Study Guide Tax - Answer-A payment to support the cost of the government. It's non-penal, but compulsory and is not directly related to any specific benefit provided by the government Jurisdiction - Answer-The right of a government to levy tax on a specific person or organization Tax Base - Answer-An item, occurrence, transaction, or activity with respect to which a tax is levied. Usually expressed in monetary terms. Incidence - Answer-The ultimate economic burden re...

TAX 4001 EXAM 1 Tax Formula - Answer-Income (broadly defined) - Exclusions _____________________ Gross Income - Deductions (for AGI) ______________________ Adjusted Gross Income - Deductions (from AGI) (greater of either Total Itemized or Standard Deduction !and! - Personal Exemptions - Dependency Exemptions ______________________ Taxable Income [Tax Calculation] __________________________ Tax on Taxable Income - Tax Credits ______________________ Tax Due / (Tax Refund...

TAX 4001 Final Exam Tax Shelter - Answer-Wealthy taxpayers in high income tax bracket invest in opportunities where they can collect a loss and bring down their taxable income - focused around non recourse financing - obligation where borrower isn't personally liable - Previous investment strategy before laws put in place - Used to avoid/defer taxes = offset income from other source How does tax shelter benefit the investor? - Answer-- Tax savings that pay for itself (pay partial amoun...

TAX 4001 Proportional Tax - Answer--applies the same rate on all income, ex: Sales Tax -Also known as a flat tax rate = Tax Base X Tax Rate Regressive Tax - Answer--applies a decreasing rate as the tax base increases, ex: Social Security Taxes (Payroll Taxes) -as the tax base increases, the taxes paid increase, but the marginal tax rate decreases (not common) Progressive Tax - Answer--imposes an increasing marginal rate as the tax base increases, ex: Federal & State Income Taxes -a...

TAX 4001 Final Questions With Complete Solutions