Accounting 371 Exam 1 2023 graded A+ 100% verified

"Realized Income" - income from a transaction with a second party where there is a measurable change in property rights between parties A tax imposed on a legal product or service that may be addictive in nature is known as a(n): - Sin Tax Annuity: - it is an investment that pays a stream of equal payments over time; it is a means of generating a fixed income stream during retirement Arlene is single and has taxable income of $18,000. Her tax liability is currently $2,236. She has the opportunity to earn an additional $5,000 is she accepts and completes a special project at work. There are no additional expenses to offset the $5000 income. Consequently, Arlene will have a tax liability of $2,986 if she accepts the special project. Arlene has a marginal tax rate of: - 15% (Change in Tax / Change in Taxable Income) Average Tax Rate - measures the average level of tax on only taxable income Basic components of a client letter - research question and limitations, facts, analysis, and closing Certainty - considers that taxpayers should be able to determine when, where, and how to calculate and pay the tax Claim of Right Doctrine - States that income has been realized if a taxpayer receives income and there are no restrictions on the taxpayer's use of the income. Community Property System - the income earned from services by one spouse is treated as though it was earned equally by both spouses Convenience - suggests that a tax system should be designed to facilitate the collection of tax revenues without undue hardship on the taxpayer or the government Criteria for filing as head of household status: - be unmarried at the end of the year; pay more than half of the costs of keeping up a home for the year; provide over half the cost of maintaining a household for a dependent parent not living with the taxpayer; have lived with a qualifying person in the taxpayer's home for more than half the year Deductions "for" AGI - cause a reduction in AGI, which increases the deductibility of "from" AGI deductions subject to AGI limitations Discriminant Function System - assigns a score to each tax return that represents the probability the tax liability on the return has been underreported Document Perfection - all tax returns are checked for mathematical and tax calculation errors Dynamic Forecasting - attempts to account for possible taxpayer responses to the tax law change Earmarked Tax - a tax that is assessed for a specific purpose Economy - considers that the system should minimize compliance and administration costs Effective Tax Rate - best measure of the tax burden because it is the average level of tax on all income from taxable and nontaxable sources Equity - considers how the tax burden should be distributed across taxpayers Examples of statutes, rules, and criteria that may govern tax practitioners? - IRS Circular 230; statues enacted by a CPA's specific state board of accountancy; AICPA Statements of Standards for Tax services; AICPA Code of Professional Conduct Filing due dates: - a 6-month extension allows a taxpayer to file a return up to 6-months after the original due date; individuals are required to file on the 15th day of the 4th month following their year-end; typically, "C" Corporations are required to file on the 15th day of the 4th mot