Solution Manual & Full Test Bank: Principles of Taxation for Business and Investment Planning (2023 Edition) by Sally Jones – 26th Edition Complete Chapters 1–18.

SOLUTION MANUAL FOR
V V




PrinciplesVofVTaxationVforVBusinessVandVInvestmentVPlanningV2023
V V EditionV26thVEditionVbyVSallyVM.VJones




FULL TEST BANK!!!
V V

,ChapterV1VTaxesVandVTaxingVJurisdictions

QuestionsVandVProblemsVforVDiscussion

1. TaxVpaymentsVdifferVfromVgovernmentVfinesVandVpenaltiesVbecauseVtheyVaren‘tVintendedVt
oVdeterVorVpunishVunacceptableVbehavior.VTaxVpaymentsVdifferVfromVfeesVorVuserVcharge
sVbecauseVtheyVdon‘tVentitleVtheVpayerVtoVaVspecificVgovernmentVgoodVorVservice,VsuchV
asVaVpostageVstampVorVaVdriver‘sVlicense.VTaxVpaymentsValsoVdifferVfromVfeesVorVuserVc
hargesVbecauseVtheyVareVcompulsory.

2. ThisVpaymentVhasVcharacteristicsVofVaVtax,VaVpenalty,VandVaVuserVfee.VTheVcompulsoryVp
aymentVisVnotVspecificallyVpunitiveVbutVdoesVapplyVselectivelyVtoVthoseVcompaniesVmostVlik
elyVresponsibleVforVtheVpollutedVconditionVofVGreenVRiver.VHowever,VtheseVsameVcompani
esVmayVbeVtheVentitiesVthatVbenefitVmostVfromVtheVenvironmentalVclean-up.

3. ThisVpaymentVmoreVcloselyVresemblesVaVfeeVforVaVgovernmentVserviceVthanVaVtransaction
-
basedVtaxVbecauseVtheVtransactionVoccursVbetweenVaVprivateVpartyVandVtheVjurisdictionVits
elf,VratherVthanVbetweenVprivateVpartiesVengagingVinVaVmarketVtransaction.VTheVpaymentVal
soVentitlesVtheVpayerVtoVaVspecificVbenefitV(theVrightVtoVmarryVunderVlaw).

4. ToVtheVextentVthatVtheVdeclineVinVexteriorVmaintenanceVreducesVtheVvalueVofVMr.VPowell‘s
VapartmentVcomplex,VheVbearsVtheVincidenceVofVtheVincreasedVpropertyVtax.VToVtheVextent
VthatVtheVdeclineVreducesVtheVvalueVofVadjoiningVpropertiesVorVmakesVtheVneighborhoodVl
essVattractive,VtheVownersVofVtheVadjoiningVpropertiesVandVtheVneighborhoodVresidentsVsha
reVtheVincidenceVofVtheVtaxVincrease.

5. PeopleVwhoVdon‘tVdirectlyVuseVpublicVschoolsV(suchVasVMr.VandVMrs.VAhernVorVpeopleVwh
oVdon‘tVhaveVchildren)VindirectlyVbenefitVfromVaVpublicVeducationVsystemVforVtheVgeneralVp
opulation.VArguably,VpublicVeducationVcontributesVtoVaVskilledVworkforceVandVimprovesVtheV
culturalVandVsocialVenvironmentVinVwhichVMr.VandVMrs.VAhernVlive.VBasedVonVthisVargume
nt,VMr.VandVMrs.VAhernVshouldVnotVbeVexemptVfromVtheVlocalVpropertyVtax.

6. TheVconsumersVwhoVpayVtheVsameVpriceVforVaVsmallerVbarVofVsoapVofVlesserVquality
VbearVtheVincidenceVofVtheVnewVgrossVreceiptsVtax.

7. RealVpropertyVcan‘tVbeVhiddenVorVmoved,VandVitsVownershipV(legalVtitle)VisVaVmatter
VofVpublicVrecord.VInVcontrast,VpersonalVpropertyVisVmobileVandVmayVbeVeasilyVconc
ealed.VMoreover,VjurisdictionsVmayVnotVhaveVanVeffectiveVmeansVtoVdiscoverVorVtrac
eVownershipVofVpersonalVproperty.

8. Arguably,VprivateVgolfVcoursesVbeautifyVtheVlocalityVandVareVenvironmentallyVmoreVdesirabl
eVthanVotherVcommercialVactivities.VTheyValsoVmayVrequireVmoreVacreageVthanVotherVbus
inessesVand,Vtherefore,VwouldVbeVatVaVcompetitiveVdisadvantageVwithoutVaVpreferentialVre
alVpropertyVtaxVrate.

9. ManyVjurisdictionsVthatVlevyVpropertyVtaxesVprovideVanVexemptionVforVpublicVinstitutions,V
suchVasVstateVuniversitiesVorVprivateVcolleges.VIfVUniversityVKVisVentitledVtoVsuchVanVexe
mption,VeveryVcommercialVbuildingVorVresidenceVacquiredVbyVtheVUniversityVreducesVthe
VlocalVjurisdiction‘sVpropertyVtaxVbase.

10. ExciseVtaxesVareVimposedVonVaVmuchVnarrowerVrangeVofVconsumerVgoodsVandVservi
cesVthanVsalesVtaxes.VConsequently,VpeopleVcanVmoreVreadilyVavoidVpurchasingVtheV
specificVgoodVorVserviceVsubjectVtoVexciseVtax.

,11. TheVtaxVincreaseVmayVhaveVreducedVtheVaggregateVdemandVforVconsumerVgoodsVand,Vco
nsequently,VmunicipalVresidentsVareVbuyingVfewerVgoods.VAVsecondVpossibilityVisVthatVmuni
cipalVresidentsVareVtravelingVtoVotherVjurisdictionsVwithVlowerVtaxVratesVorVmakingVmoreVp
urchasesVthroughVmailVorderVcatalogsVorVon-line.

12. FromVaVpoliticalVperspective,VliquorVandVcigarettesVsalesVmakeVanVexcellentVtaxVbaseVbec
auseVconsumptionVofVtheVtwoVproductsVisVpurelyVdiscretionary,VandVanyVdeclineVinVconsu
mptionVbecauseVofVtheVtaxVisVsociallyVdesirable.VFromVanVeconomicVperspective,VtheseVsal
esVareVaVgoodVtaxVbaseVbecauseVtheVdemandVforVliquorVandVcigarettesVisVrelativelyVprice
Vinelastic.VInVotherVwords,VpeopleVwhoVdrinkVandVsmokeVonVaVregularVbasisVbuyVtheseVpro
ductsVregardlessVofVaVheavyVexciseVtax.

13. TheVfederalVincomeV taxVhasVtheVbroaderVbase.VTheVfederalVpayrollVtaxVisVimposedVon
Vwages,Vsalaries,VandVotherVformsVofVcompensationVearnedVbyVemployees.VTheVfedera
lVincomeVtaxVisVimposedVonVallVtypesVofVcompensationVasVwellVasVnetVbusinessVprofit,
VinvestmentVincome,VandVanyVotherVincomeVitemVfromVwhateverVsourceVderived.

14. AVpropertyVtaxVisVaVperiodicV(usuallyVannual)VtaxVleviedVonVtheVownershipVofVpropertyVan
dVbasedVonVtheVvalueVofVtheVpropertyVonVaVparticularVassessmentVdate.VAVtransferVtaxVis
VaVtransaction-
VbasedVtaxVleviedVonVtheVtransferVofVpropertyVfromVoneVpartyVtoVanother.VAVtransferVtaxVi
sVbasedVonVtheVvalueVofVtheVpropertyVatVdateVofVtransfer.

15. IfVtheVfederalVgovernmentVcouldV―piggyVback‖VaVnationalVsalesVtaxVonVexistingVstateVsal
esVtaxVcollectionVsystems,VtheVfederalVgovernmentVcouldVavoidVcreatingVaVnewVfederalV
agencyVforVcollectingVtheVtax.VInVcontrast,VtheVfederalVgovernmentVwouldVhaveVtoVcreate
VaVnewVcollectionVsystemVforVaVnationalVVAT.VHowever,VaVnationalVVATVwouldVbeVlessVl
ikelyVtoVcauseVjurisdictionalVconflictVbetweenVtheVfederalVgovernmentVandVtheVstatesVbec
auseVstatesVdon‘tVdependVonVVATsVasVaVsourceVofVrevenue.

16. TheVInternalVRevenueVCodeVisVfederalVstatutoryVlaw,VenactedVbyVCongressVandVsignedVb
yVtheVPresident.VTechnically,VTreasuryVregulationsVonlyVinterpretVandVexplainVtheVstatuteV
andVaren‘tVlawsVinVtheirVownVright.VThus,VregulationsVareVlessVauthoritativeVthanVtheVCod
eVitself.VHowever,VbecauseVCongressVauthorizedVtheVTreasuryVtoVwriteVregulations,VtheyV
areVtheVgovernment‘sVofficialVinterpretationVofVstatutoryVlaw.VPractically,VtheVregulationsVcar
ryVconsiderableVauthoritativeVweight.


ApplicationVProblems

1. a.V TheVstatementVofVfactsVidentifiesVthreeVtaxpayers:VMr.VJoshVKenney,VJKVServices,
VandVJKVRealty.

b. TheVgovernmentVofVtheVlocalityVinVwhichVMr.VKenneyVresides,VtheVstateVgovernmentV
ofVVermont,VandVtheVU.S.VgovernmentVhaveVjurisdictionVtoVtaxVMr.VKenney.VTheVloca
lVgovernmentsVofVtheVfourVcountiesVinVwhichVJKVServicesVconductsVbusiness,VtheVsta
teVgovernmentVofVVermont,VandVtheVU.S.VgovernmentVhaveVjurisdictionVtoVtaxVJKVSer
vices.VTheVcityVofVBoston,VtheVstateVgovernmentVofVMassachusetts,VandVtheVU.S.Vgo
vernmentVhaveVjurisdictionVtoVtaxVJKVRealty.

2. a.V V TheVUnitedVStatesVhasVjurisdictionVtoVtaxVMrs.VMayVbecauseVsheVisVaVpermanentVresident.

b. TheVUnitedVStatesVhasVjurisdictionVtoVtaxVMrs.VMayVonlyVonVtheVU.S.VsourceVrenta
lVincomeVgeneratedVbyVtheVManhattanVrealVestate.

c. TheVUnitedVStatesVdoesVnotVhaveVjurisdictionVtoVtaxVMrs.VMay.

d. TheVUnitedVStatesVhasVjurisdictionVtoVtaxVMrs.VMayVbecauseVsheVisVaVU.S.Vcitizen.

, 3. a.V V TheVUnitedVStatesVhasVjurisdictionVtoVtaxVMr.VTompkinVbecauseVheVisVaVU.SVcitizen.

b. TheVUnitedVStatesVhasVjurisdictionVtoVtaxVMr.VTompkinVonlyVonVtheVU.S.VsourceVrenta
lVincomeVgeneratedVbyVtheVBuffaloVrealVestate.

c. TheVUnitedVStatesVhasVjurisdictionVtoVtaxVMr.VTompkinVbecauseVheVisVaVpermanentVresident.

d. TheVUnitedVStatesVhasVjurisdictionVtoVtaxVMr.VTompkinVonVhisVshareVofVtheVU.S
.VsourceVbusinessVincomeVgeneratedVbyVSophicVPartnership.

4. StateVA:
VolumeVofVsalesVbeforeVrateVincrease $800,000,000
OriginalVtaxVrate .05
RevenueVbeforeVrateVincrease $40,000,000

VolumeVofVsalesVafterVrateVincrease $710,000,000
NewVtaxVrate .06
RevenueVafterVrateVincrease $42,600,000

AdditionalVrevenueV($42,600,000V−V$40,000,000) $2,600,000

StateVZ:
VolumeVofVsalesVaddedVtoVtaxVbase $50,000,000
TaxVrate .05
AdditionalVrevenue $2,500,000


5. a.V V TheVpropertyVtaxVisV$8,300V($415,000VV2%).

b. TheVpropertyVtaxVisV$19,000V([$500,000VV2%]V+V[$225,000VV4%]).

6. a.V V TheVpropertyVtaxVisV$39,000V($1.3VmillionVV3%).

b. TheVpropertyVtaxVisV$85,000V([$2VmillionVV3%]V+V[$2.5VmillionVV1%]).

7. IncreaseVinVCountyVG‘sVaggregateVassessedVpropertyVtaxVvalue
$23,000,000
VAssessedVvalueVofVLexon‘sVnewVfacility (20,000,000)
NetVincreaseVinVCountyVG‘sVtaxVbase
$3,000,000
VTaxVrate V .04
NetVeffectVonVCountyVG‘sVcurrentVyearVrevenue $120,000

8. a.V ValueVofVpropertyVpurchasedVinVStateVK
$600,000
VUseVtaxVrateVinVStateVH V .06
PreVcreditVuseVtax $36,000
SalesVtaxVpaidVtoVStateVK (18,000)
UseVtaxVowedVtoVStateVH $18,000

b. ValueVofVpropertyVpurchasedVinVStateVL
$750,000
VUseVtaxVrateVinVStateVH V .06
PreVcreditVuseVtax $45,000
SalesVtaxVpaidVtoVStateVL (48,750)
UseVtaxVowedVtoVStateVH -0-