Solution Manual
Fundamentals Of Taxation For Individuals And Business Entities:
A Practical Approach
By Gregory A. Carnes
2025th Edition
1-1
,SOLUTION MANUAL FOR
Fundamentals Of Taxation For Individuals A Practical Approach, 2025 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 || Knowledge
Standard 2: AICPA || AC: Reporting
Standard 3: Bloom's || Knowledge
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 Well As Non-Tax Factors.
Time On Task: 2 Minutes
2.
Title: Discussion Question 2
Difficulty: Easy
Learning Objective 1: 1.2
Standard 1: AACSB || Knowledge
Standard 2: AICPA || AC: Reporting
Standard 3: Bloom's || Knowledge
Section Reference 1: 1.2
Solution:
The Formula To Calculate An Individual‘S Taxable Income Is As Follows:
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
1-2
,Learning Objective 1: 1.2
Standard 1: AACSB || Knowledge
Standard 2: AICPA || AC: Reporting
Standard 3: Bloom's || Knowledge
Section Reference 1: 1.2
Solution:
Form 1040 Is Used To File An Individual‘S Income Tax Return Information. Form 1040SR Can
Be Used By Those 65 And Older.
Time On Task: 1 Minute
4.
Title: Discussion Question 4
Difficulty: Medium
Learning Objective 1: 1.3
Standard 1: AACSB || Knowledge
Standard 2: AICPA || AC: Reporting
Standard 3: Bloom's || Knowledge
Section Reference 1: 1.3
Solution:
A Lower-Income Taxpayer Needs Every After-Tax Dollar Earned To Pay Bills And Does Not
Have Much Discretionary Income. If The Income Tax Rate Increases, The Lower-Income
Taxpayer May Have To Work More Hours At Their Current Job Or Take On Another Job To
Have The Same Amount Of After-Tax Income. A Wealthier Taxpayer May View The Increased
Tax Rate Adversely But Has More Flexibility With Their Discretionary Income. The Wealthier
Taxpayer May View Their Leisure Time As More Important Than Working Extra Hours To
Earn The Same After-Tax Pay.
Time On Task: 4 Minutes
5.
Title: Discussion Question 5
Difficulty: Easy
Learning Objective 1: 1.3
Standard 1: AACSB || Knowledge
Standard 2: AICPA || AC: Reporting
Standard 3: Bloom's || Knowledge
Section Reference 1: 1.3
Solution:
Tax Planning Is The Process Of Estimating An Individual‘S Tax Liability For Multiple
Scenarios And/Or Multiple Years And Considering Ways To Reduce It. The Appropriate Goal
For 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 Compliance Is
Determining The Tax Effects For Transactions That Have Already Occurred, Including The
Preparation Of Tax Returns.
Time On Task: 4 Minutes
6.
Title: Discussion Question 6
1-3
, Difficulty: Medium
Learning Objective 1: 1.3
Standard 1: AACSB || Knowledge
Standard 2: AICPA || AC: Reporting
Standard 3: Bloom's || Knowledge
Section Reference 1: 1.3
Solution:
An Open Transaction Means That The Proposed Transaction Is Not Yet Completed. A Closed
Transaction Means That The Relevant Events Have Already Happened, And The Facts Are
Set. This Distinction Is Important Because In An Open Transaction, The Facts And Results Can
Be Changed To Achieve A Better Outcome. A Closed Transaction Does Not Allow For This.
Time On Task: 3 Minutes
7.
Title: Discussion Question 7
Difficulty: Easy
Learning Objective 1: 1.3
Standard 1: AACSB || Knowledge
Standard 2: AICPA || AC: Reporting
Standard 3: Bloom's || Knowledge
Section Reference 1: 1.3
Solution:
The Marginal Tax Rate Is The Rate That Applies To The Next Additional Dollar Earned. The
Average Tax Rate Is Total Income Tax Divided By Taxable Income. The Effective Tax Rate
Is Total Income Tax Divided By Total Income.
Time On Task: 3 Minutes
8.
Title: Discussion Question 8
Difficulty: Medium
Learning Objective 1: 1.3
Standard 1: AACSB || Analytic
Standard 2: AICPA || AC: Measurement Analysis And Interpretation
Standard 3: Bloom's || Application
Section Reference 1: 1.3
Solution:
If A Taxpayer Is In A Higher Tax Bracket In The Current Year And Expects To Be In A Lower
Tax Bracket Next Year, He Would Have Tax Savings From Delaying The Receipt Of Income
To Next Year. If The Current Year‘S Tax Rate Is Higher, He Would Receive More Tax Benefit
From Accelerating Deductible Expenses Into The Current Year Rather Than Waiting Until The
Next Year When The Marginal Tax Rate Would Be Less.
Time On Task: 4 Minutes
9.
Title: Discussion Question 9
Difficulty: Easy
1-4
Fundamentals Of Taxation For Individuals And Business Entities:
A Practical Approach
By Gregory A. Carnes
2025th Edition
1-1
,SOLUTION MANUAL FOR
Fundamentals Of Taxation For Individuals A Practical Approach, 2025 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 || Knowledge
Standard 2: AICPA || AC: Reporting
Standard 3: Bloom's || Knowledge
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 Well As Non-Tax Factors.
Time On Task: 2 Minutes
2.
Title: Discussion Question 2
Difficulty: Easy
Learning Objective 1: 1.2
Standard 1: AACSB || Knowledge
Standard 2: AICPA || AC: Reporting
Standard 3: Bloom's || Knowledge
Section Reference 1: 1.2
Solution:
The Formula To Calculate An Individual‘S Taxable Income Is As Follows:
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
1-2
,Learning Objective 1: 1.2
Standard 1: AACSB || Knowledge
Standard 2: AICPA || AC: Reporting
Standard 3: Bloom's || Knowledge
Section Reference 1: 1.2
Solution:
Form 1040 Is Used To File An Individual‘S Income Tax Return Information. Form 1040SR Can
Be Used By Those 65 And Older.
Time On Task: 1 Minute
4.
Title: Discussion Question 4
Difficulty: Medium
Learning Objective 1: 1.3
Standard 1: AACSB || Knowledge
Standard 2: AICPA || AC: Reporting
Standard 3: Bloom's || Knowledge
Section Reference 1: 1.3
Solution:
A Lower-Income Taxpayer Needs Every After-Tax Dollar Earned To Pay Bills And Does Not
Have Much Discretionary Income. If The Income Tax Rate Increases, The Lower-Income
Taxpayer May Have To Work More Hours At Their Current Job Or Take On Another Job To
Have The Same Amount Of After-Tax Income. A Wealthier Taxpayer May View The Increased
Tax Rate Adversely But Has More Flexibility With Their Discretionary Income. The Wealthier
Taxpayer May View Their Leisure Time As More Important Than Working Extra Hours To
Earn The Same After-Tax Pay.
Time On Task: 4 Minutes
5.
Title: Discussion Question 5
Difficulty: Easy
Learning Objective 1: 1.3
Standard 1: AACSB || Knowledge
Standard 2: AICPA || AC: Reporting
Standard 3: Bloom's || Knowledge
Section Reference 1: 1.3
Solution:
Tax Planning Is The Process Of Estimating An Individual‘S Tax Liability For Multiple
Scenarios And/Or Multiple Years And Considering Ways To Reduce It. The Appropriate Goal
For 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 Compliance Is
Determining The Tax Effects For Transactions That Have Already Occurred, Including The
Preparation Of Tax Returns.
Time On Task: 4 Minutes
6.
Title: Discussion Question 6
1-3
, Difficulty: Medium
Learning Objective 1: 1.3
Standard 1: AACSB || Knowledge
Standard 2: AICPA || AC: Reporting
Standard 3: Bloom's || Knowledge
Section Reference 1: 1.3
Solution:
An Open Transaction Means That The Proposed Transaction Is Not Yet Completed. A Closed
Transaction Means That The Relevant Events Have Already Happened, And The Facts Are
Set. This Distinction Is Important Because In An Open Transaction, The Facts And Results Can
Be Changed To Achieve A Better Outcome. A Closed Transaction Does Not Allow For This.
Time On Task: 3 Minutes
7.
Title: Discussion Question 7
Difficulty: Easy
Learning Objective 1: 1.3
Standard 1: AACSB || Knowledge
Standard 2: AICPA || AC: Reporting
Standard 3: Bloom's || Knowledge
Section Reference 1: 1.3
Solution:
The Marginal Tax Rate Is The Rate That Applies To The Next Additional Dollar Earned. The
Average Tax Rate Is Total Income Tax Divided By Taxable Income. The Effective Tax Rate
Is Total Income Tax Divided By Total Income.
Time On Task: 3 Minutes
8.
Title: Discussion Question 8
Difficulty: Medium
Learning Objective 1: 1.3
Standard 1: AACSB || Analytic
Standard 2: AICPA || AC: Measurement Analysis And Interpretation
Standard 3: Bloom's || Application
Section Reference 1: 1.3
Solution:
If A Taxpayer Is In A Higher Tax Bracket In The Current Year And Expects To Be In A Lower
Tax Bracket Next Year, He Would Have Tax Savings From Delaying The Receipt Of Income
To Next Year. If The Current Year‘S Tax Rate Is Higher, He Would Receive More Tax Benefit
From Accelerating Deductible Expenses Into The Current Year Rather Than Waiting Until The
Next Year When The Marginal Tax Rate Would Be Less.
Time On Task: 4 Minutes
9.
Title: Discussion Question 9
Difficulty: Easy
1-4
