TEST BANK McGraw-Hill's Essentials of Federal
Taxation 2024 Edition, 15th Edition By Brian
Spilker, Benjamin Ayers,
Verified Chapters 1 - 17, Complete
TABLE OF CONTENTS
Version 1 1
,Part I: Introduction to Taxation
Chapter 1: An Introduction to Tax
Chapter 2: Tax Compliance, the IRS, and Tax Authorities
Chapter 3: Tax Planning Strategies and Related Limitations
Part II: Individual Taxation
Chapter 4: ndividual Income Tax Overview, Dependents, and Filing Status
Chapter 5: Gross Income and Exclusions
Chapter 6: Individual For AGI Deductions
Chapter 7: Individual From AGI Deductions
Chapter 8: Individual Income Tax Computation and Tax Credits
Part III: Business-Related Transactions
Chapter 9: Business Income, Deductions, and Accounting Methods
Chapter 10: Property Acquisition and Cost Recovery
Chapter 11: Property Dispositions
Part IV: Entity Overview and Taxation of C Corporations
Chapter 12: Business Entities Overview
Chapter 13: Corporate Formations and Operations
Chapter 14: Corporate Nonliquidating and Liquidating Distributions
Part V: Taxation of Flow-Through Entities
Chapter 15: Forming and Operating Partnerships
Chapter 16: Dispositions of Partnership Interests and Partnership Distributions
Chapter 17: S Corporations
Version 1 2
,Chapter 1: An Introduction to Tax
answers at the end of every chapters
Student name:
1) The following are a series of tables that may be referred to in several questions
throughout your test. Please refer to these tables as needed or as directed. 2023 Tax
RateSchedules Individuals Schedule X-Single
If taxable income isover: But not The tax is:
over:
$0 $ 9,950 10% of taxable income
$ 9,950 $ 40,525 $995 plus 12% of the excess over
$9,950
$ 40,525 $ 86,375 $4,664 plus 22% of the excess over
$40,525
$ 86,375 $ 164,925 $14,751 plus 24% of the excess over
$86,375
$ 164,925 $ 209,425 $33,603 plus 32% of the excess over
$164,925
$ 209,425 $ 523,600 $47,843 plus 35% of the excess over
$209,425
$ 523,600 — $157,804.25 plus 37% of the excessover $523,600
Schedule Y-1-Married Filing Jointly or Qualifying Widow(er)
If taxable income isover: But not The tax is:
over:
$0 $ 19,900 10% of taxable income
$ 19,900 $ 81,050 $1,990 plus 12% of the excess over
$19,900
$ 81,050 $ 172,750 $9,328 plus 22% of the excess over
$81,050
$ 172,750 $ 329,850 $29,502 plus 24% of the excess over
$172,750
$ 329,850 $ 418,850 $67,206 plus 32% of the excess over
$329,850
$ 418,850 $ 628,300 $95,686 plus 35% of the excess over
$418,850
Version 1 3
, $ 628,300 — $168,993.50 plus 37% of the excessover $628,300
Schedule Z-Head of Household
Version 1 4
,If taxable income isover: But not The tax is:
over:
$0 $ 14,200 10% of taxable income
$ 14,200 $ 54,200 $1,420 plus 12% of the excess over
$14,200
$ 54,200 $ 86,350 $6,220 plus 22% of the excess over
$54,200
$ 86,350 $ 164,900 $13,293 plus 24% of the excess over
$86,350
$ 164,900 $ 209,400 $32,145 plus 32% of the excess over
$164,900
$ 209,400 $ 523,600 $46,385 plus 35% of the excess over
$209,400
$ 523,600 — $156,355 plus 37% of the excessover $523,600
Schedule Y-2-Married Filing Separately
If taxable income isover: But not The tax is:
over:
$0 $ 9,950 10% of taxable income
$ 9,950 $ 40,525 $995 plus 12% of the excess over
$9,950
$ 40,525 $ 86,375 $4,664 plus 22% of the excess over
$40,525
$ 86,375 $ 164,925 $14,751 plus 24% of the excess over
$86,375
$ 164,925 $ 209,425 $33,603 plus 32% of the excess over
$164,925
$ 209,425 $ 314,150 $47,843 plus 35% of the excess over
$209,425
$ 314,150 — $84,496.75 plus 37% of the excessover $314,150
Version 1 5
,2) Oswald is beginning his first tax course and does not really have a solid understanding
ofthe role that taxes play in various decisions. Please describe for Oswald the various types
of decisions that taxes may influence.
3) Determine if eachof the following is a tax and why or why not.
a. $2.50 toll paid on the Florida Turnpike
b. $300 ticket for reckless driving
c. 1 percent local surcharge on hotel rooms to fund public roadways
d. 2 percent city surcharge on wages earned in the city of Philadelphia
4) Although the primary purpose of a tax system is to raise revenue, Congress uses the
federal tax system for other purposes as well. Describe the other ways in which Congress
usesthe federal tax system. Be specific.
Version 1 6
,5) There are several different types of tax rates that taxpayers might use in
differentcontexts. Describe each tax rate and how a taxpayer might use it.
6) Ricky and Lucy are debating several types of taxes. Their debate has focused on
the different types of tax rate structures and whether they are "fair." Please define each
tax rate structure, provide examples of each structure, and discuss how each structure
may be viewedwith respect to vertical equity.
7) Bart is contemplating starting his own business. His new business would operate as a
soleproprietorship and would require hiring several employees. Describe the employment-
related taxes that Bart should be aware of as he starts his new business as a self-employed
business owner.
Version 1 7
,8) Raquel recently overheard two journalism students discussing the merits of the
federal tax system. One student offered as an example of unfairness a well-known
politician’s spouse, who paid little income tax, as most of the spouse's income was earned
in the form of municipalbond interest. What type of taxes is the journalism student
considering in his example? What type of taxes is he ignoring? Define each type of tax.
What role does each type of tax play in calculating relative tax burdens? What role does
each type of tax play in evaluating fairness?
9) Mandy, the mayor of Bogart and a strong advocate of a clean downtown, is proposing
an increase in the city sales tax from 7 percent to 50 percent on all packs of chewing gum
purchasedin Bogart. Based on the current gum sales, Mandy estimates that this tax will
actually reduce the tax revenue on gum sales. What type of forecasting is Mandy using to
derive her tax revenue estimates? What "effect" is her estimate based on? Does this
necessarily imply that Mandy will be happy given her desire to have a clean downtown?
10) Milton and Rocco are having a heated debate regarding a national sales tax.
Milton argues that a national sales tax is a proportional, vertically equitable tax. Rocco
argues that anational sales tax would be a regressive, vertically inequitable tax. Explain
both sides of the argument.
Version 1 8
,11) Evaluate the U.S. federal tax system on the certainty and economy criteria.
12) Jonah, a single taxpayer, earns $150,000 in taxable income and $10,000 in interest
from an investment in city of Denver bonds. Using the U.S. tax rate schedule for year 2023,
how muchfederal tax will he owe? What is his average tax rate? What is his effective tax rate?
What is his current marginal tax rate? If Jonah earned an additional $40,000 of taxable
income, what is his marginal tax rate on this income? (Round the tax rates to two decimal
places, e.g., .12345 as
12.35 percent.) (Use tax rate schedule.)
13) Jonah, a single taxpayer, earns $154,000 in taxable income and $14,000 in interest
from an investment in city of Denver bonds. Using the U.S. tax rate schedule for year 2023,
how muchfederal tax will he owe? What is his average tax rate? What is his effective tax rate?
What is his current marginal tax rate? If Jonah earned an additional $44,000 of taxable
income, what is his marginal tax rate on this income? (Round the tax rates to two decimal
places, e.g., .12345 as
12.35 percent.) (Use tax rate schedule.)
Version 1 9
, 14) Heather, a single taxpayer who files as a head of household, earns $60,000 in taxable
income and $5,000 in interest from an investment in city of Oxford bonds. Using the U.S. tax
rate schedule for year 2023, how much federal tax will she owe? What is her average tax
rate? What is her effective tax rate? What is her current marginal tax rate? If Heather has an
additional
$20,000 of tax deductions, what is her marginal tax rate on these deductions? (Round the
taxrates to two decimal places, e.g., .12345 as 12.35 percent.) (Use tax rate schedule.)
15) Heather, a single taxpayer who files as a head of household, earns $60,800 in taxable
income and $5,800 in interest from an investment in city of Oxford bonds. Using the U.S. tax
rate schedule for year 2023, how much federal tax will she owe? What is her average tax
rate? What is her effective tax rate? What is her current marginal tax rate? If Heather has an
additional
$20,800 of tax deductions, what is her marginal tax rate on these deductions? (Round the
taxrates to two decimal places, e.g., .12345 as 12.35 percent.) (Use tax rate schedule.)
16) Fred and Wilma, married taxpayers, earn $100,000 in taxable income and $20,000 in
interest from an investment in city of Bedrock bonds. Using the U.S. tax rate schedule for
married filing jointly for year 2023, how much federal tax will they owe? What is their
averagetax rate? What is their effective tax rate? What is their current marginal tax rate? If
Fred and Wilma earn an additional $40,000 of taxable income, what is their marginal tax
Version 1 10
Taxation 2024 Edition, 15th Edition By Brian
Spilker, Benjamin Ayers,
Verified Chapters 1 - 17, Complete
TABLE OF CONTENTS
Version 1 1
,Part I: Introduction to Taxation
Chapter 1: An Introduction to Tax
Chapter 2: Tax Compliance, the IRS, and Tax Authorities
Chapter 3: Tax Planning Strategies and Related Limitations
Part II: Individual Taxation
Chapter 4: ndividual Income Tax Overview, Dependents, and Filing Status
Chapter 5: Gross Income and Exclusions
Chapter 6: Individual For AGI Deductions
Chapter 7: Individual From AGI Deductions
Chapter 8: Individual Income Tax Computation and Tax Credits
Part III: Business-Related Transactions
Chapter 9: Business Income, Deductions, and Accounting Methods
Chapter 10: Property Acquisition and Cost Recovery
Chapter 11: Property Dispositions
Part IV: Entity Overview and Taxation of C Corporations
Chapter 12: Business Entities Overview
Chapter 13: Corporate Formations and Operations
Chapter 14: Corporate Nonliquidating and Liquidating Distributions
Part V: Taxation of Flow-Through Entities
Chapter 15: Forming and Operating Partnerships
Chapter 16: Dispositions of Partnership Interests and Partnership Distributions
Chapter 17: S Corporations
Version 1 2
,Chapter 1: An Introduction to Tax
answers at the end of every chapters
Student name:
1) The following are a series of tables that may be referred to in several questions
throughout your test. Please refer to these tables as needed or as directed. 2023 Tax
RateSchedules Individuals Schedule X-Single
If taxable income isover: But not The tax is:
over:
$0 $ 9,950 10% of taxable income
$ 9,950 $ 40,525 $995 plus 12% of the excess over
$9,950
$ 40,525 $ 86,375 $4,664 plus 22% of the excess over
$40,525
$ 86,375 $ 164,925 $14,751 plus 24% of the excess over
$86,375
$ 164,925 $ 209,425 $33,603 plus 32% of the excess over
$164,925
$ 209,425 $ 523,600 $47,843 plus 35% of the excess over
$209,425
$ 523,600 — $157,804.25 plus 37% of the excessover $523,600
Schedule Y-1-Married Filing Jointly or Qualifying Widow(er)
If taxable income isover: But not The tax is:
over:
$0 $ 19,900 10% of taxable income
$ 19,900 $ 81,050 $1,990 plus 12% of the excess over
$19,900
$ 81,050 $ 172,750 $9,328 plus 22% of the excess over
$81,050
$ 172,750 $ 329,850 $29,502 plus 24% of the excess over
$172,750
$ 329,850 $ 418,850 $67,206 plus 32% of the excess over
$329,850
$ 418,850 $ 628,300 $95,686 plus 35% of the excess over
$418,850
Version 1 3
, $ 628,300 — $168,993.50 plus 37% of the excessover $628,300
Schedule Z-Head of Household
Version 1 4
,If taxable income isover: But not The tax is:
over:
$0 $ 14,200 10% of taxable income
$ 14,200 $ 54,200 $1,420 plus 12% of the excess over
$14,200
$ 54,200 $ 86,350 $6,220 plus 22% of the excess over
$54,200
$ 86,350 $ 164,900 $13,293 plus 24% of the excess over
$86,350
$ 164,900 $ 209,400 $32,145 plus 32% of the excess over
$164,900
$ 209,400 $ 523,600 $46,385 plus 35% of the excess over
$209,400
$ 523,600 — $156,355 plus 37% of the excessover $523,600
Schedule Y-2-Married Filing Separately
If taxable income isover: But not The tax is:
over:
$0 $ 9,950 10% of taxable income
$ 9,950 $ 40,525 $995 plus 12% of the excess over
$9,950
$ 40,525 $ 86,375 $4,664 plus 22% of the excess over
$40,525
$ 86,375 $ 164,925 $14,751 plus 24% of the excess over
$86,375
$ 164,925 $ 209,425 $33,603 plus 32% of the excess over
$164,925
$ 209,425 $ 314,150 $47,843 plus 35% of the excess over
$209,425
$ 314,150 — $84,496.75 plus 37% of the excessover $314,150
Version 1 5
,2) Oswald is beginning his first tax course and does not really have a solid understanding
ofthe role that taxes play in various decisions. Please describe for Oswald the various types
of decisions that taxes may influence.
3) Determine if eachof the following is a tax and why or why not.
a. $2.50 toll paid on the Florida Turnpike
b. $300 ticket for reckless driving
c. 1 percent local surcharge on hotel rooms to fund public roadways
d. 2 percent city surcharge on wages earned in the city of Philadelphia
4) Although the primary purpose of a tax system is to raise revenue, Congress uses the
federal tax system for other purposes as well. Describe the other ways in which Congress
usesthe federal tax system. Be specific.
Version 1 6
,5) There are several different types of tax rates that taxpayers might use in
differentcontexts. Describe each tax rate and how a taxpayer might use it.
6) Ricky and Lucy are debating several types of taxes. Their debate has focused on
the different types of tax rate structures and whether they are "fair." Please define each
tax rate structure, provide examples of each structure, and discuss how each structure
may be viewedwith respect to vertical equity.
7) Bart is contemplating starting his own business. His new business would operate as a
soleproprietorship and would require hiring several employees. Describe the employment-
related taxes that Bart should be aware of as he starts his new business as a self-employed
business owner.
Version 1 7
,8) Raquel recently overheard two journalism students discussing the merits of the
federal tax system. One student offered as an example of unfairness a well-known
politician’s spouse, who paid little income tax, as most of the spouse's income was earned
in the form of municipalbond interest. What type of taxes is the journalism student
considering in his example? What type of taxes is he ignoring? Define each type of tax.
What role does each type of tax play in calculating relative tax burdens? What role does
each type of tax play in evaluating fairness?
9) Mandy, the mayor of Bogart and a strong advocate of a clean downtown, is proposing
an increase in the city sales tax from 7 percent to 50 percent on all packs of chewing gum
purchasedin Bogart. Based on the current gum sales, Mandy estimates that this tax will
actually reduce the tax revenue on gum sales. What type of forecasting is Mandy using to
derive her tax revenue estimates? What "effect" is her estimate based on? Does this
necessarily imply that Mandy will be happy given her desire to have a clean downtown?
10) Milton and Rocco are having a heated debate regarding a national sales tax.
Milton argues that a national sales tax is a proportional, vertically equitable tax. Rocco
argues that anational sales tax would be a regressive, vertically inequitable tax. Explain
both sides of the argument.
Version 1 8
,11) Evaluate the U.S. federal tax system on the certainty and economy criteria.
12) Jonah, a single taxpayer, earns $150,000 in taxable income and $10,000 in interest
from an investment in city of Denver bonds. Using the U.S. tax rate schedule for year 2023,
how muchfederal tax will he owe? What is his average tax rate? What is his effective tax rate?
What is his current marginal tax rate? If Jonah earned an additional $40,000 of taxable
income, what is his marginal tax rate on this income? (Round the tax rates to two decimal
places, e.g., .12345 as
12.35 percent.) (Use tax rate schedule.)
13) Jonah, a single taxpayer, earns $154,000 in taxable income and $14,000 in interest
from an investment in city of Denver bonds. Using the U.S. tax rate schedule for year 2023,
how muchfederal tax will he owe? What is his average tax rate? What is his effective tax rate?
What is his current marginal tax rate? If Jonah earned an additional $44,000 of taxable
income, what is his marginal tax rate on this income? (Round the tax rates to two decimal
places, e.g., .12345 as
12.35 percent.) (Use tax rate schedule.)
Version 1 9
, 14) Heather, a single taxpayer who files as a head of household, earns $60,000 in taxable
income and $5,000 in interest from an investment in city of Oxford bonds. Using the U.S. tax
rate schedule for year 2023, how much federal tax will she owe? What is her average tax
rate? What is her effective tax rate? What is her current marginal tax rate? If Heather has an
additional
$20,000 of tax deductions, what is her marginal tax rate on these deductions? (Round the
taxrates to two decimal places, e.g., .12345 as 12.35 percent.) (Use tax rate schedule.)
15) Heather, a single taxpayer who files as a head of household, earns $60,800 in taxable
income and $5,800 in interest from an investment in city of Oxford bonds. Using the U.S. tax
rate schedule for year 2023, how much federal tax will she owe? What is her average tax
rate? What is her effective tax rate? What is her current marginal tax rate? If Heather has an
additional
$20,800 of tax deductions, what is her marginal tax rate on these deductions? (Round the
taxrates to two decimal places, e.g., .12345 as 12.35 percent.) (Use tax rate schedule.)
16) Fred and Wilma, married taxpayers, earn $100,000 in taxable income and $20,000 in
interest from an investment in city of Bedrock bonds. Using the U.S. tax rate schedule for
married filing jointly for year 2023, how much federal tax will they owe? What is their
averagetax rate? What is their effective tax rate? What is their current marginal tax rate? If
Fred and Wilma earn an additional $40,000 of taxable income, what is their marginal tax
Version 1 10
