FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 3: Tax Planning Strategies and Related Limitations

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 61

Multiple Choice

Review LaterAdd Note

Review Later

Jason's employer pays year-end bonuses each year on December 31.Jason,a cash-basis taxpayer,would prefer not to pay tax on his bonus this year (and actually would prefer his daughter to pay tax on the bonus) .So,he leaves town on December 31,2018,and has his daughter,Julie,pick up his check on January 2,2019.Who reports the income and when?

A) Julie in 2018.
B) Julie in 2019.
C) Jason in 2018.
D) Jason in 2019.
E) None of the choices are correct.

F) D) and E)
G) A) and B)

Correct Answer

verified

Show Answer

Question 62

Multiple Choice

Review LaterAdd Note

Review Later

If Jim invested $100,000 in an annual dividend-paying stock today with a 7 percent return,what investment time period will give Jim the greatest after-tax return?

A) 1 year.
B) 5 years.
C) 10 years.
D) 20 years.
E) All yield the same after-tax return.

F) A) and C)
G) B) and E)

Correct Answer

verified

Show Answer

Question 63

Multiple Choice

Review LaterAdd Note

Assume that Javier is indifferent between investing in a city of El Paso bond that pays 5 percent interest and a corporate bond that pays 6.25 percent interest.What is Javier's marginal tax rate?

Assume that Marsha is indifferent between investing in a city of Destin bond that pays 6 percent interest and a corporate bond that pays 8 percent interest.What is Marsha's marginal tax rate?

Nontax factors do not play an important role in tax planning.

Which of the following tax planning strategies is based on the present value of money?

An investment's time horizon does not affect after-tax rates of return on investments taxed annually.

If tax rates will be higher next year,taxpayers should accelerate their deductions regardless of their after-tax rate of return.

The timing strategy becomes more attractive if a taxpayer is able to accelerate deductions by two or more years (versus one year).

An astute tax student once summarized that many of the tax planning strategies merely make use of the variation of taxation across different dimensions.Explain why this is true.Be specific.

If Thomas has a 37 percent tax rate and a 6 percent after-tax rate of return,$50,000 of income in five years will cost him how much tax in today's dollars? Use Exhibit 3.1.(Round discount factor(s) to three decimal places.)

The constructive receipt doctrine:

Which of the following is an example of the timing strategy?

If Rudy has a 25 percent tax rate and a 6 percent after-tax rate of return,a $30,000 tax deduction in four years will save how much tax in today's dollars? Use Exhibit 3.1.(Round discount factor(s) to three decimal places.)

Which is not a basic tax planning strategy?