Solution Manual for Principles of Taxation for Business and Investment Planning 2020 Edition 23rd Edition by Sally M. Jones, Shelley C. Rhoades-Catanach & Sandra R. Callaghan , ISBN: 9781259969546 |All Chapters Verified| Guide A+

SOLUTION MANUAL FOR FE FE


Principles of Taxation for Business and Investment Planning 2020 23rd
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Edition by Sally Jones, Shelley Rhoades Catanach
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Chapter 1 Taxes and Taxing Jurisdictions
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Questions and Problems for Discussion
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1. Tax payments differ from government fines and penalties because they aren‘t
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intended to deter or punish unacceptable behavior. Tax payments differ from fees
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or user charges because they don‘t entitle the payer to a specific government
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good or service, such as a postage stamp or a driver‘s license. Tax payments
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also differ from fees or user charges because they are compulsory.
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2. This payment has characteristics of a tax, a penalty, and a user fee. The
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compulsory payment is not specifically punitive but does apply selectively to those
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companies most likely responsible for the polluted condition of Green River.
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However, these same companies may be the entities that benefit most from the
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environmental clean-up.
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3. This payment more closely resembles a fee for a government service than a
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transaction-based tax because the transaction occurs between a private party and
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the jurisdiction itself, rather than between private parties engaging in a market
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transaction. The payment also entitles the payer to a specific benefit (the right to
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marry under law).
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4. To the extent that the decline in exterior maintenance reduces the value of Mr.
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Powell‘s apartment complex, he bears the incidence of the increased property tax.
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To the extent that the decline reduces the value of adjoining properties or makes
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the neighborhood less attractive, the owners of the adjoining properties and the
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neighborhood residents share the incidence of the tax increase.
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5. People who don‘t directly use public schools (such as Mr. and Mrs. Ahern or
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people who don‘t have children) indirectly benefit from a public education system
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for the general population. Arguably, public education contributes to a skilled
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workforce and improves the cultural and social environment in which Mr. and Mrs.
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Ahern live. Based on this argument, Mr. and Mrs. Ahern should not be exempt
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from the local property tax.
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6. The consumers who pay the same price for a smaller bar of soap of lesser
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quality bear the incidence of the new gross receipts tax.
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7. Real property can‘t be hidden or moved, and its ownership (legal title) is a
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matter of public record. In contrast, personal property is mobile and may be
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easily concealed. Moreover, jurisdictions may not have an effective means to
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discover or trace ownership of personal property.
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8. Arguably, private golf courses beautify the locality and are environmentally more
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desirable than other commercial activities. They also may require more acreage
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than other businesses and, therefore, would be at a competitive disadvantage
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without a preferential real property tax rate.
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9. Many jurisdictions that levy property taxes provide an exemption for public
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, institutions, such as state universities or private colleges. If University K is
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entitled to such an exemption, every commercial building or residence acquired
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by the University reduces the local jurisdiction‘s property tax base.
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,10. Excise taxes are imposed on a much narrower range of consumer goods and
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services than sales taxes. Consequently, people can more readily avoid
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purchasing the specific good or service subject to excise tax.
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11. The tax increase may have reduced the aggregate demand for consumer goods
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and, consequently, municipal residents are buying fewer goods. A second possibility
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is that municipal residents are traveling to other jurisdictions with lower tax rates
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or making more purchases through mail order catalogs or on-line.
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12. From a political perspective, liquor and cigarettes sales make an excellent tax base
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because consumption of the two products is purely discretionary, and any decline
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in consumption
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perspective, these sales are a good tax base because the demand for liquor and
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cigarettes is relatively price inelastic. In other
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smoke on a regular basis buy these products regardless of a heavy excise tax.
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13. The federal income has the broader base. The federal payroll tax is imposed on
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wages, salaries, and other forms of compensation earned by employees. The
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federal income tax is imposed on
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business profit, investment income, and any other income item from whatever
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source derived.
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14. A property tax is a periodic (usually annual) tax levied on the ownership of
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property and based on the value of the property on a particular assessment date.
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A transfer tax is a transaction- based tax levied on the transfer of property from
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one party to another. A transfer tax is based on the value of the property at
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date of transfer.
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15. If the federal government could ―piggy back‖ a national sales tax on existing
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state sales tax collection systems, the federal government could avoid creating a
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new federal agency for collecting the tax. In contrast, the federal government
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would have to create a new collection system for a national VAT. However, a
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national VAT would be less likely to cause jurisdictional conflict between the
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federal government and the states because states don‘t depend on VATs as a
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source of revenue.
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16. The Internal Revenue Code is federal statutory law, enacted by Congress and
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signed by the President. Technically, Treasury regulations only interpret and explain
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the statute and aren‘t laws in their own right. Thus, regulations are less
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authoritative than the Code itself. However, because Congress authorized the
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Treasury to write regulations, they are the government‘s official interpretation of
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statutory law. Practically, the regulations carry considerable authoritative weight.
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Application Problems FE




1. a. F The statement of facts identifies three taxpayers: Mr. Josh Kenney, JK
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FE Services, and JK Realty. FE FE FE




b. The government of the locality in which Mr. Kenney resides, the state
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government of Vermont, and the U.S. government have jurisdiction to tax Mr.
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Kenney. The local governments of the four counties in which JK Services
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conducts business, the state government of Vermont, and the U.S. government
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have jurisdiction to tax JK Services. The city of Boston, the state government
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of Massachusetts, and the U.S. government have jurisdiction to tax JK Realty.
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2. a. The United States has jurisdiction to tax Mrs. May because she is a permanent
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resident.
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, b. The United States has jurisdiction to tax Mrs. May only on the U.S. source
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rental income generated by the Manhattan real estate.
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