Solutions Manual—
km
Taxation of Individuals, by Spilker et al.
©kmMcGrawkmHillkmLLC.kmAllkmrightskmreserved.kmNokmreproductionkmorkmdistributionkmwithoutkmthekmpriorkmwrittenkmconsentkmofkmMcGrawkmH
illkmLLC.
1
, Solutions Manual— km
Taxation of Individuals, by Spilker et al.
SOLUTION MANUAL FOR km km
McGraw-
Hill's Taxation of Individuals 2025 Edition, 15th Edit
km km km km km km km
ion Spilker
km
Chapter 1-14 km
Chapter 1 km
An Introduction to Tax
km km km
Discussion Questions km
(1) [LO 1] Jessica’s friend Zachary once stated that he couldn’t understand why
km km km km km km km km km km km
someone would take a tax course. Why is this a rather naïve view?
km km km km km km km km km km km km
Taxes are a part of everyday life and have a financial effect on many of the
km km km km km km km km km km km km km km km km
major personal decisions that individuals face (e.g., investment decisions, eval
km km km km km km km km km
uating alternative job offers, saving for education expenses, gift or estate plan
km km km km km km km km km km km
ning, etc.). km
(2) [LO 1] What are some aspects of business that require knowledge of taxa
km km km km km km km km km km km km
tion? What are some aspects of personal finance that require knowledge of
km km km km km km km km km km km
taxation?
km
Taxes play an important role in fundamental business decisions such as the fol
km km km km km km km km km km km km
lowing:
What organizational form should a business use?
km km km km km km
Where should the business locate? km km km km
How should business acquisitions be structured?
km km km km km
How should the business compensate employees?
km km km km km
What is the appropriate mix of debt and equity for the business?
km km km km km km km km km km km
Should the business rent or own its equipment and property?
km km km km km km km km km
How should the business distribute profits to its owners?
km km km km km km km km
One must consider all transaction costs (including taxes) to evaluate the merit
km km km km km km km km km km km
s of a transaction.
km km km
Common personal financial decisions that taxes influence include: choosing in
km km km km km km km km km
vestments, retirement planning, choosing to rent or buy a home, evaluating alt
km km km km km km km km km km km
ernative job offers, saving for education expenses, and doing gift or estate pla
km km km km km km km km km km km km
nning.
(3) [LO 1] Describe some ways in which taxes affect the political process i
km km km km km km km km km km km km
n the United States.
km km km
©kmMcGrawkmHillkmLLC.kmAllkmrightskmreserved.kmNokmreproductionkmorkmdistributionkmwithoutkmthekmpriorkmwrittenkmconsentkmofkmMcGrawkmH
illkmLLC.
2
, Solutions Manual—
km
Taxation of Individuals, by Spilker et al.
U.S. presidential candidates often distinguish themselves from their opponents
km km km km km km km km
©kmMcGrawkmHillkmLLC.kmAllkmrightskmreserved.kmNokmreproductionkmorkmdistributionkmwithoutkmthekmpriorkmwrittenkmconsentkmofkmMcGrawkmH
illkmLLC.
3
, Solutions Manual— km
Taxation of Individuals, by Spilker et al.
based upon their tax rhetoric. Likewise, the major political parties generally h
km km km km km km km km km km km
ave very diverse views of the appropriate way to tax the public. Determining
km km km km km km km km km km km km km
who is taxed, what is taxed, and how much is taxed are difficult questions. V
km km km km km km km km km km km km km km
oters must have a basic understanding of taxes to evaluate the merits of alter
km km km km km km km km km km km km km
native tax proposals offered by opposing political candidates and their politic
km km km km km km km km km km
al parties.
km
(4) [LO 2] Courtney recently received a speeding ticket on her way to the unive
km km km km km km km km km km km km km
rsity. Her fine was $200. Is this considered a tax? Why or why not?
km km km km km km km km km km km km km
The $200 speeding ticket is not considered a tax. Instead, it is considered a
km km km km km km km km km km km km km k
mfine or penalty. Taxes differ from fines and penalties because taxes are not
km km km km km km km km km km km km km
intended to punish or prevent illegal behavior.
km km km km km km
(5) [LO 2] Marlon and Latoya recently started building a house. They had to pay
km km km km km km km km km km km km km
$300 to the county government for a building permit. Is the $300 payment a
km km km km km km km km km km km km km
tax? Why or why not?
km km km km km
The building permit is not considered a tax because $300 payment is directly l
km km km km km km km km km km km km km
inked to a benefit that they received (i.e., the ability to build a house).
km km km km km km km km km km km km km
(6) [LO 2] To help pay for the city’s new stadium, the city of Birmingham re
km km km km km km km km km km km km km km
cently enacted a 1 percent surcharge on hotel rooms. Is this a tax? Why o
km km km km km km km km km km km km km km
r why not?
km km
The 1 percent surcharge is a tax. The 1 percent surcharge is an earmarked ta
km km km km km km km km km km km km km km
x– km
i.e., collected for a specific purpose. The surcharge is considered a tax beca
km km km km km km km km km km km km km
use the tax payments made by taxpayers do not directly relate to the specific
km km km km km km km km km km km km km km
benefit received by the taxpayers.
km km km km
(7) [LO 2] As noted in Example 1-
km km km km km km
2, tolls, parking meter fees, and annual licensing fees are not considered ta
km km km km km km km km km km km km
xes. Can you identify other fees that are similar?
km km km km km km km km
There are several possible answers to this question. Some common examples
km km km km km km km km km km
include entrance fees to national parks, tag fees paid to local/state governm
km km km km km km km km km km km km
ent for automobiles, boats, etc.
km km km km
(8) [LO 2] If the general objective of our tax system is to raise revenue, why do
km km km km km km km km km km km km km km km
es the income tax allow deductions for charitable contributions and retiremen
km km km km km km km km km km
t plan contributions?
km km
In addition to the general objective of raising revenue, Congress uses the feder
km km km km km km km km km km km km
al tax system to encourage certain behavior and discourage other behavior. T
km km km km km km km km km km km
he charitable contribution deduction is intended to encourage taxpayers to su
km km km km km km km km km km
©kmMcGrawkmHillkmLLC.kmAllkmrightskmreserved.kmNokmreproductionkmorkmdistributionkmwithoutkmthekmpriorkmwrittenkmconsentkmofkmMcGrawkmH
illkmLLC.
4
km
Taxation of Individuals, by Spilker et al.
©kmMcGrawkmHillkmLLC.kmAllkmrightskmreserved.kmNokmreproductionkmorkmdistributionkmwithoutkmthekmpriorkmwrittenkmconsentkmofkmMcGrawkmH
illkmLLC.
1
, Solutions Manual— km
Taxation of Individuals, by Spilker et al.
SOLUTION MANUAL FOR km km
McGraw-
Hill's Taxation of Individuals 2025 Edition, 15th Edit
km km km km km km km
ion Spilker
km
Chapter 1-14 km
Chapter 1 km
An Introduction to Tax
km km km
Discussion Questions km
(1) [LO 1] Jessica’s friend Zachary once stated that he couldn’t understand why
km km km km km km km km km km km
someone would take a tax course. Why is this a rather naïve view?
km km km km km km km km km km km km
Taxes are a part of everyday life and have a financial effect on many of the
km km km km km km km km km km km km km km km km
major personal decisions that individuals face (e.g., investment decisions, eval
km km km km km km km km km
uating alternative job offers, saving for education expenses, gift or estate plan
km km km km km km km km km km km
ning, etc.). km
(2) [LO 1] What are some aspects of business that require knowledge of taxa
km km km km km km km km km km km km
tion? What are some aspects of personal finance that require knowledge of
km km km km km km km km km km km
taxation?
km
Taxes play an important role in fundamental business decisions such as the fol
km km km km km km km km km km km km
lowing:
What organizational form should a business use?
km km km km km km
Where should the business locate? km km km km
How should business acquisitions be structured?
km km km km km
How should the business compensate employees?
km km km km km
What is the appropriate mix of debt and equity for the business?
km km km km km km km km km km km
Should the business rent or own its equipment and property?
km km km km km km km km km
How should the business distribute profits to its owners?
km km km km km km km km
One must consider all transaction costs (including taxes) to evaluate the merit
km km km km km km km km km km km
s of a transaction.
km km km
Common personal financial decisions that taxes influence include: choosing in
km km km km km km km km km
vestments, retirement planning, choosing to rent or buy a home, evaluating alt
km km km km km km km km km km km
ernative job offers, saving for education expenses, and doing gift or estate pla
km km km km km km km km km km km km
nning.
(3) [LO 1] Describe some ways in which taxes affect the political process i
km km km km km km km km km km km km
n the United States.
km km km
©kmMcGrawkmHillkmLLC.kmAllkmrightskmreserved.kmNokmreproductionkmorkmdistributionkmwithoutkmthekmpriorkmwrittenkmconsentkmofkmMcGrawkmH
illkmLLC.
2
, Solutions Manual—
km
Taxation of Individuals, by Spilker et al.
U.S. presidential candidates often distinguish themselves from their opponents
km km km km km km km km
©kmMcGrawkmHillkmLLC.kmAllkmrightskmreserved.kmNokmreproductionkmorkmdistributionkmwithoutkmthekmpriorkmwrittenkmconsentkmofkmMcGrawkmH
illkmLLC.
3
, Solutions Manual— km
Taxation of Individuals, by Spilker et al.
based upon their tax rhetoric. Likewise, the major political parties generally h
km km km km km km km km km km km
ave very diverse views of the appropriate way to tax the public. Determining
km km km km km km km km km km km km km
who is taxed, what is taxed, and how much is taxed are difficult questions. V
km km km km km km km km km km km km km km
oters must have a basic understanding of taxes to evaluate the merits of alter
km km km km km km km km km km km km km
native tax proposals offered by opposing political candidates and their politic
km km km km km km km km km km
al parties.
km
(4) [LO 2] Courtney recently received a speeding ticket on her way to the unive
km km km km km km km km km km km km km
rsity. Her fine was $200. Is this considered a tax? Why or why not?
km km km km km km km km km km km km km
The $200 speeding ticket is not considered a tax. Instead, it is considered a
km km km km km km km km km km km km km k
mfine or penalty. Taxes differ from fines and penalties because taxes are not
km km km km km km km km km km km km km
intended to punish or prevent illegal behavior.
km km km km km km
(5) [LO 2] Marlon and Latoya recently started building a house. They had to pay
km km km km km km km km km km km km km
$300 to the county government for a building permit. Is the $300 payment a
km km km km km km km km km km km km km
tax? Why or why not?
km km km km km
The building permit is not considered a tax because $300 payment is directly l
km km km km km km km km km km km km km
inked to a benefit that they received (i.e., the ability to build a house).
km km km km km km km km km km km km km
(6) [LO 2] To help pay for the city’s new stadium, the city of Birmingham re
km km km km km km km km km km km km km km
cently enacted a 1 percent surcharge on hotel rooms. Is this a tax? Why o
km km km km km km km km km km km km km km
r why not?
km km
The 1 percent surcharge is a tax. The 1 percent surcharge is an earmarked ta
km km km km km km km km km km km km km km
x– km
i.e., collected for a specific purpose. The surcharge is considered a tax beca
km km km km km km km km km km km km km
use the tax payments made by taxpayers do not directly relate to the specific
km km km km km km km km km km km km km km
benefit received by the taxpayers.
km km km km
(7) [LO 2] As noted in Example 1-
km km km km km km
2, tolls, parking meter fees, and annual licensing fees are not considered ta
km km km km km km km km km km km km
xes. Can you identify other fees that are similar?
km km km km km km km km
There are several possible answers to this question. Some common examples
km km km km km km km km km km
include entrance fees to national parks, tag fees paid to local/state governm
km km km km km km km km km km km km
ent for automobiles, boats, etc.
km km km km
(8) [LO 2] If the general objective of our tax system is to raise revenue, why do
km km km km km km km km km km km km km km km
es the income tax allow deductions for charitable contributions and retiremen
km km km km km km km km km km
t plan contributions?
km km
In addition to the general objective of raising revenue, Congress uses the feder
km km km km km km km km km km km km
al tax system to encourage certain behavior and discourage other behavior. T
km km km km km km km km km km km
he charitable contribution deduction is intended to encourage taxpayers to su
km km km km km km km km km km
©kmMcGrawkmHillkmLLC.kmAllkmrightskmreserved.kmNokmreproductionkmorkmdistributionkmwithoutkmthekmpriorkmwrittenkmconsentkmofkmMcGrawkmH
illkmLLC.
4
