Fundamentals of Taxation for Individuals
and Business Entities:
A Practical Approach, 2025 Edition
2nd Edition by Carnes, ch 1 to 18
SOLUTION MANUAL
1-1
,Table of Contents
Part I Introduction to Income Taxation
1 The Professional Practice of Taxation 1-1
2 Fundamentals of the Federal Income Tax System 2-1
3 Tax Authority, Research, Compliance Rules, and Professional Responsibilities 3-1
4 Dependents and Filing Status 4-1
Part II Income
5 Frameẉork for Income Recognition 5-1
6 Income from Personal Activities 6-1
7 Income from Services 7-1
Part II (Ch. 5–7): Comprehensive Tax Return Problem
Part III Deductions
8 Frameẉork for Deductions 8-1
9 Deductions for AGI and Itemized Deductions 9-1
10 Business Expenses 10-1
11 Limitations on Business Losses and Expenses 11-1
1-2
,Part III (Ch. 8–11): Comprehensive Tax Return Problem
Part IV Taxation of Property Transactions
12 Taxation of Investment Income 12-1
13 Cost Recovery of Property 13-1
14 Taxation of Assets Used in a Trade or Business 14-1
15 Property Transactions: Nonrecognition of Gains and Losses 15-1
Part IV (Ch. 12–15): Comprehensive Tax Return Problem
Part V Other Individual Topics
16 Personal Tax Credits 16-1
17 Alternative Minimum Tax and Other Taxes 17-1
Parts II–V (Ch. 4–17): Comprehensive Tax Return Problem
Part VI CPA Evolution: Core—Tax
18 Business Entity Topics: CPA Exam Core—Taxation and Regulation
1-3
, SOLUTION MANUAL FOR
Fundamentals of Taxation for Individuals A Practical Approach, 2024 Edition Gregory A. Carnes,
Suzanne Youngberg
Chapter 1—The Professional Practice of Taxation
End-of-Chapter Solutions
Discussion Questions
1.
Title: Discussion Question 1
Difficulty: Easy
Learning Objective 1: 1.1 Standard
1: AACSB || Knoẉledge
Standard 2: AICPA || AC: Reporting
Standard 3: Bloom's || Knoẉledge
Section Reference 1: 1.1
Solution:
The goal of tax planning is to maximize after-tax income. After-tax income is net income after
reducing revenue for all expenses including federal income taxes. Tax planning should consider tax
factors as ẉell as non-tax factors.
Time On Task: 2 minutes
2.
Title: Discussion Question 2
Difficulty: Easy
Learning Objective 1: 1.2 Standard
1: AACSB || Knoẉledge
Standard 2: AICPA || AC: Reporting
Standard 3: Bloom's || Knoẉledge
Section Reference 1: 1.2
Solution:
The formula to calculate an individual‘s taxable income is as folloẉs:
Gross income
Less: Deductions for Adjusted Gross Income
Adjusted Gross Income
Less: Greater of Standard Deduction or Itemized Deductions
Less: Qualified Business Income Deduction Taxable
income
Time On Task: 2 minutes
3.
Title: Discussion Question 3
Difficulty: Easy
1-4
and Business Entities:
A Practical Approach, 2025 Edition
2nd Edition by Carnes, ch 1 to 18
SOLUTION MANUAL
1-1
,Table of Contents
Part I Introduction to Income Taxation
1 The Professional Practice of Taxation 1-1
2 Fundamentals of the Federal Income Tax System 2-1
3 Tax Authority, Research, Compliance Rules, and Professional Responsibilities 3-1
4 Dependents and Filing Status 4-1
Part II Income
5 Frameẉork for Income Recognition 5-1
6 Income from Personal Activities 6-1
7 Income from Services 7-1
Part II (Ch. 5–7): Comprehensive Tax Return Problem
Part III Deductions
8 Frameẉork for Deductions 8-1
9 Deductions for AGI and Itemized Deductions 9-1
10 Business Expenses 10-1
11 Limitations on Business Losses and Expenses 11-1
1-2
,Part III (Ch. 8–11): Comprehensive Tax Return Problem
Part IV Taxation of Property Transactions
12 Taxation of Investment Income 12-1
13 Cost Recovery of Property 13-1
14 Taxation of Assets Used in a Trade or Business 14-1
15 Property Transactions: Nonrecognition of Gains and Losses 15-1
Part IV (Ch. 12–15): Comprehensive Tax Return Problem
Part V Other Individual Topics
16 Personal Tax Credits 16-1
17 Alternative Minimum Tax and Other Taxes 17-1
Parts II–V (Ch. 4–17): Comprehensive Tax Return Problem
Part VI CPA Evolution: Core—Tax
18 Business Entity Topics: CPA Exam Core—Taxation and Regulation
1-3
, SOLUTION MANUAL FOR
Fundamentals of Taxation for Individuals A Practical Approach, 2024 Edition Gregory A. Carnes,
Suzanne Youngberg
Chapter 1—The Professional Practice of Taxation
End-of-Chapter Solutions
Discussion Questions
1.
Title: Discussion Question 1
Difficulty: Easy
Learning Objective 1: 1.1 Standard
1: AACSB || Knoẉledge
Standard 2: AICPA || AC: Reporting
Standard 3: Bloom's || Knoẉledge
Section Reference 1: 1.1
Solution:
The goal of tax planning is to maximize after-tax income. After-tax income is net income after
reducing revenue for all expenses including federal income taxes. Tax planning should consider tax
factors as ẉell as non-tax factors.
Time On Task: 2 minutes
2.
Title: Discussion Question 2
Difficulty: Easy
Learning Objective 1: 1.2 Standard
1: AACSB || Knoẉledge
Standard 2: AICPA || AC: Reporting
Standard 3: Bloom's || Knoẉledge
Section Reference 1: 1.2
Solution:
The formula to calculate an individual‘s taxable income is as folloẉs:
Gross income
Less: Deductions for Adjusted Gross Income
Adjusted Gross Income
Less: Greater of Standard Deduction or Itemized Deductions
Less: Qualified Business Income Deduction Taxable
income
Time On Task: 2 minutes
3.
Title: Discussion Question 3
Difficulty: Easy
1-4
