McGraw-Hill's Taxation of Individuals and Business Entities 2019 Edition
1st Edition
ISBN: 9781259918391
Author: Professor, Brian C. Spilker
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Textbook Question
Chapter 3, Problem 36P
Billups, a physician and cash-method taxpayer, is new to the concept of tax planning and recently learned of the timing strategy. To implement the timing strategy, Billups plans to establish a new policy that allows all his clients to wait two years to pay their co-pays. Assume that Billups does not expect his marginal tax rates to change. What is wrong with his strategy?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
You and your friend Amy, while discussing your tax class, were surprised to learn that a substantial amount of income goes unreported each year by taxpayers. When taxpayers do not report all their income, the missing income must be replaced by imposing higher taxes on current taxpayers.
Consider a time when you were trying to decide whether something should be put on your income tax return or not.
Explain the differences between tax avoidance and tax evasion, and discuss the rewards of tax avoidance and the penalties of tax evasion.
Evaluate the ethical issues related to the payment of income taxes. in other words, if there is a legal tax-saving strategy available to a person who earns $50,000 per year, will it be ethical for the person to utilize this strategy in order to pay less tax? State how your answer to the previous question would change if the person were making $1,500,000.
Charlie's Green Lawn Care is a cash basis taxpayer. Charlie Adame, the sole proprietor, is considering delaying some of his December 2019 customer billings for lawn care into the next year. In addition, he is thinking about paying some of the bills in late December 2019, which he would ordinarily pay in January 2020. This way, Charlie claims, he will have "less income and more expenses, thereby, paying less tax!"
Is Charlie's way of thinking acceptable?
Chapter 3 Solutions
McGraw-Hill's Taxation of Individuals and Business Entities 2019 Edition
Ch. 3 - 1. The goal of tax planning is to minimize taxes....Ch. 3 - Prob. 2DQCh. 3 - In this chapter we discussed three basic tax...Ch. 3 - What are the two basic timing strategies? What is...Ch. 3 - Prob. 5DQCh. 3 - What are some common examples of the timing...Ch. 3 - What factors increase the benefits of accelerating...Ch. 3 - How do changing tax rates affect the timing...Ch. 3 - Prob. 9DQCh. 3 - Prob. 10DQ
Ch. 3 - Prob. 11DQCh. 3 - What two factors increase the difference between...Ch. 3 - What factors have to be present for income...Ch. 3 - Prob. 14DQCh. 3 - Prob. 15DQCh. 3 - Prob. 16DQCh. 3 - Prob. 17DQCh. 3 - Prob. 18DQCh. 3 - Prob. 19DQCh. 3 - Explain how implicit taxes may limit the benefits...Ch. 3 - Prob. 21DQCh. 3 - Do after-tax rates of return for investments in...Ch. 3 - Prob. 23DQCh. 3 - Prob. 24DQCh. 3 - Prob. 25DQCh. 3 - What is an implicit tax and how does it affect a...Ch. 3 - Several judicial doctrines limit basic tax...Ch. 3 - What is the constructive receipt doctrine? What...Ch. 3 - Prob. 29DQCh. 3 - Relative to arms length transactions, why do...Ch. 3 - Prob. 31DQCh. 3 - Prob. 32DQCh. 3 - Prob. 33DQCh. 3 - Prob. 34DQCh. 3 - Yong recently paid his accountant 10,000 for...Ch. 3 - Billups, a physician and cash-method taxpayer, is...Ch. 3 - Prob. 37PCh. 3 - Prob. 38PCh. 3 - Prob. 39PCh. 3 - Prob. 40PCh. 3 - Prob. 41PCh. 3 - Prob. 42PCh. 3 - Prob. 43PCh. 3 - Prob. 44PCh. 3 - Prob. 45PCh. 3 - Prob. 46PCh. 3 - Prob. 47PCh. 3 - Prob. 48PCh. 3 - Prob. 49PCh. 3 - Prob. 50PCh. 3 - Prob. 51PCh. 3 - Prob. 52PCh. 3 - Prob. 53PCh. 3 - Prob. 54PCh. 3 - Prob. 55PCh. 3 - Prob. 56PCh. 3 - Prob. 57PCh. 3 - Prob. 58PCh. 3 - Prob. 59PCh. 3 - Prob. 60PCh. 3 - Prob. 61PCh. 3 - Prob. 62PCh. 3 - Prob. 63PCh. 3 - Prob. 64PCh. 3 - Prob. 65P
Additional Business Textbook Solutions
Find more solutions based on key concepts
List five asset accounts, three liability accounts, and five expense accounts included in the acquisition and p...
Auditing and Assurance Services (16th Edition)
Calculating certain information using the direct method (Learning Objective 4) 20-25 min. Trudeaus Marine, Inc....
Financial Accounting, Student Value Edition (5th Edition)
Bank loan; accrued interest LO132 On October 1, Eder Fabrication borrowed 60 million and issued a nine-month, ...
Intermediate Accounting
BE1-7 Indicate which statement you would examine to find each of the following items: income statement (IS), ba...
Financial Accounting: Tools for Business Decision Making, 8th Edition
Fundamental and Enhancing Characteristics. Identify whether the following items are fundamental characteristics...
Intermediate Accounting
Dave Nelson recently retired at age 48, courtesy of the numerous stock options he had been granted while presid...
Managerial Accounting: Creating Value in a Dynamic Business Environment
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Charlie's Green Lawn Care is a cash basis taxpayer. Charlie the sole proprietor, is considering delaying some of his December 2019 customer billings for lawn care into the next year. In addition, he is thinking about paying some of the bills in late December 2019,l which he would ordinarily pay in January 2020. Charlie claims he will have less income and more expenses, thereby paying less tax!. Is Charlie's way of thinking acceptable?arrow_forwardAhmed does not have enough cash on hand to pay his taxes. He was excited to hear that he can request an extension to file his tax return. Does this solve his problem? What are the ramifications if he doesn’t pay his tax liability by April 15?arrow_forwardEvaluate the three strategies reducing income, increasing deductions, and taking advantage of tax credits that you listed based on their overall effect on a person's tax situation (the amount of income taxes that the person will have to pay). Evaluate the ethical issues related to the payment of income taxes. in other words, if there is a legal tax-saving strategy available to a person who earns $50,000 per year, will it be ethical for the person to utilize this strategy in order to pay less tax? State how your answer to the previous question would change if the person were making $1,500,000.arrow_forward
- A paid tax preparer must demonstrate due diligence. Review the following scenario, and then choose the appropriate response. Cherylynn Johnson (58) comes in to your office to have her tax return prepared. She states that she wants to use the head of household filing status and claim the Earned Income Tax Credit (EITC). She also tells you that her dependent child is her granddaughter, Alana (12), who currently lives with her. All of the following are appropriate questions to ask or actions to take EXCEPT: Ask Cherylynn how long Alana has lived with her and inquire into the whereabouts of Alana's parents. Ask Cherylynn who paid most of the expenses of maintaining her home. Inform Cherylynn that she must provide you with documentation proving Alana lived with her before you can prepare the return. Inquire whether the IRS has ever denied or reduced Cherylynn's EITC in a prior year.arrow_forwardCadla has a very complex tax return and it looks like she will not be able to file her tax return by its due date. When is her tax return due? What are Cadla's options for paying her tax due and filing her tax return this year? What are the consequences if Cadla does not file or pay her tax in a timely manner? Be specificarrow_forwardAdelaide is self-employed and must submit estimated quarterly tax payments. Her predicted total tax liability for the current year will be $36,000, and her current withholdings are $18,283. She is advised to determine her quarterly payments by subtracting her current withholdings from her predicted total tax liability and dividing by four. What is a good estimate for Adelaide to use for her quarterly payments?arrow_forward
- Ray Reyes owns a plumbing business. He went to his tax advisor to figure out what business deductions he can take to minimize his tax liability. Ray Reyes also wanted to know what else he can implement in his business to reduce his taxable income. Currently, Ray has 5 employees who work full time. He pays them a salary and often has referral bonuses for those who bring in new customers. Ray’s company does not provide retirement plans for his employees at this time. Ray recently bought 3 brand new vans for everyday use in his business. He also bought a new Range Rover vehicle that he claims he uses for business purposes. Ray is looking to hire two of his family members, one as an operations manager and one as a plumber. Ray is in the process of buying new equipment and a new building to conduct business and would like to use an accelerated depreciation method for these items. Ray donated $2,500 to a local charity organization in exchange for a printed advertisement of his plumbing…arrow_forwardBonnie is married and has one child. She owns Bonnies Rib Joint, which produces a taxable income of approximately 120,000 per year. a. Assume that Bonnies taxable income is 40,000 without considering the income from the rib joint. How much tax will she pay on the 120,000 of income from the rib joint? b. You work for the firm that prepares Bonnies tax return. Bonnie has asked the partner for whom you work to advise her on how she might lower her taxes. The partner has assigned you this task. Draft a memorandum to the partner that contains at least two options Bonnie could use to lower her taxes. For each option, explain the calculations that support the tax savings from your recommendation.arrow_forward
arrow_back_ios
arrow_forward_ios
Recommended textbooks for you
- Individual Income TaxesAccountingISBN:9780357109731Author:HoffmanPublisher:CENGAGE LEARNING - CONSIGNMENT
Individual Income Taxes
Accounting
ISBN:9780357109731
Author:Hoffman
Publisher:CENGAGE LEARNING - CONSIGNMENT
Accounting Basics Explained Through a Story; Author: Leila Gharani;https://www.youtube.com/watch?v=VYNTBWBqncU;License: Standard Youtube License