South-Western Federal Taxation 2024, Essentials
of Taxation, Individuals and Business Entities
27th Edition
by Annette Nellen
Complete Chapter Solutions Manual are included
(Ch 1 to 18)
** Immediate Download
** Swift Response
** All Chapters included
** Tax Forms
, Solution and Answer Guide: Nellen, Cuccia, Persellin, Young, SWFT Essentials of Taxation: Individuals and Business
Entities 2024, 9780357900796; Chapter 1: Introduction to Taxation
Solution and Answer Guide
NELLEN, CUCCIA , PERSELLIN, YOUNG, SWFT ESSENTIALS OF TAXATION: INDIVIDUALS AND
BUSINESS ENTITIES 2024, 9780357900796; CHAPTER 1: INTRODUCTION TO TAXATION
TABLE OF CONTENTS
Problems ..............................................................................................................................1
Bridge Discipline Problems ................................................................................................ 6
Research Problems ............................................................................................................. 7
PROBLEMS
1. (LO 1) Various answers are possible, including using the Key Terms at the end of each
chapter, referring to the Glossary (Appendix C), looking up the footnote resources to
the Internal Revenue Code in Appendix D, using chapter features (e.g., Global Tax
Issues, Ethics & Equity, Tax Planning, and Digging Deeper), examining the tax forms
used in the chapters, and completing additional end-of-chapter assignments. All of
these resources will help students engage more deeply with the materials and help
their understanding.
2. (LO 3, 5, 6) Some tax and nontax considerations James should investigate include the
following:
• State and local income taxes.
• State and local sales taxes.
• State and local property taxes.
• Employee implications of the move (Will James lose current employees? Is the
labor market better in the new location? Is cost of living lower or higher in new
location?).
• Logistics/transportation of products to customers (specifically document lower
costs).
• State infrastructure (better in new location?).
3. (LO 2) A tax is regressive if it represents a larger percentage of the income of a low-
income taxpayer relative to the income of a high-income taxpayer. Examples of
regressive taxes include sales and excise taxes. A tax is progressive if it represents a
larger percentage of the income of a high-income taxpayer relative to the income of a
low-income taxpayer. The Federal income tax is an example of a progressive tax.
1
, Solution and Answer Guide: Nellen, Cuccia, Persellin, Young, SWFT Essentials of Taxation: Individuals and Business
Entities 2024, 9780357900796; Chapter 1: Introduction to Taxation
4. (LO 3)
a. The parsonage probably was not listed on the property tax rolls because it was
owned by a tax-exempt church. Apparently the taxing authorities are not aware
that ownership has changed.
b. Ethan should notify the authorities of his purchase. This will force him to pay back
taxes but may eliminate future interest and penalties.
5. (LO 1, 2, 6) (See Digging Deeper 1.) As to Adam Smith’s canon on economy, the Federal
income tax yields a mixed result. From the standpoint of the IRS, economy exists as
collection costs are nominal (when compared with revenue generated). The
government’s cost of collecting Federal taxes amounts to less than one-half of 1
percent of the revenue collected. Economy is not present, however, if one looks to the
compliance effort and costs expended by taxpayers. According to recent estimates,
about 56% of individual taxpayers who file a return pay a preparer, and one-third
purchase tax software.
6. (LO 3) Jang probably will be required to pay the Washington use tax if, and when, he
applies for Washington license plates. In this case, the use tax probably is the same
amount as the Washington sales tax. See the discussion in connection with Example 4
in the textbook.
7. (LO 3) Although the Baker Motors bid is the lowest from a long-term financial
standpoint, it is the best. The proposed use of the property by the state and the
church probably will make it exempt from the school district’s ad valorem tax. This
would hardly be the case with a car dealership. In fact, commercial properties (e.g., car
dealerships) often are subject to higher tax rates.
8. (LO 3) A possible explanation is that Sophia made capital improvements (e.g., added a
swimming pool) to her residence and her parents became retirees (e.g., reached age 65).
9. (LO 5, 6) SWFT, LLP
5191 Natorp Boulevard
Mason, OH 45040
December 5, 2023
Cynthia Clay
1206 Seventh Avenue
Fort Worth, TX 76101
Dear Cynthia:
I am writing this letter to help you decide on what form of entity to choose for your
new food delivery business. In our phone conversation, you indicated that you expect
to have losses for the first two years in this business and then make substantial
profits in subsequent years. You and Marco also indicated that you are concerned
about potential personal liability.
While I can’t make a conclusive recommendation based on the information you have
given me, I can provide you with some general guidelines that should simplify your
decision. First, given your concern about personal liability, a partnership does not
appear to be a desirable option (you would both be personally liable for any injuries to
customers). Similarly, given your expectation of losses in the first two years, it does
2
of Taxation, Individuals and Business Entities
27th Edition
by Annette Nellen
Complete Chapter Solutions Manual are included
(Ch 1 to 18)
** Immediate Download
** Swift Response
** All Chapters included
** Tax Forms
, Solution and Answer Guide: Nellen, Cuccia, Persellin, Young, SWFT Essentials of Taxation: Individuals and Business
Entities 2024, 9780357900796; Chapter 1: Introduction to Taxation
Solution and Answer Guide
NELLEN, CUCCIA , PERSELLIN, YOUNG, SWFT ESSENTIALS OF TAXATION: INDIVIDUALS AND
BUSINESS ENTITIES 2024, 9780357900796; CHAPTER 1: INTRODUCTION TO TAXATION
TABLE OF CONTENTS
Problems ..............................................................................................................................1
Bridge Discipline Problems ................................................................................................ 6
Research Problems ............................................................................................................. 7
PROBLEMS
1. (LO 1) Various answers are possible, including using the Key Terms at the end of each
chapter, referring to the Glossary (Appendix C), looking up the footnote resources to
the Internal Revenue Code in Appendix D, using chapter features (e.g., Global Tax
Issues, Ethics & Equity, Tax Planning, and Digging Deeper), examining the tax forms
used in the chapters, and completing additional end-of-chapter assignments. All of
these resources will help students engage more deeply with the materials and help
their understanding.
2. (LO 3, 5, 6) Some tax and nontax considerations James should investigate include the
following:
• State and local income taxes.
• State and local sales taxes.
• State and local property taxes.
• Employee implications of the move (Will James lose current employees? Is the
labor market better in the new location? Is cost of living lower or higher in new
location?).
• Logistics/transportation of products to customers (specifically document lower
costs).
• State infrastructure (better in new location?).
3. (LO 2) A tax is regressive if it represents a larger percentage of the income of a low-
income taxpayer relative to the income of a high-income taxpayer. Examples of
regressive taxes include sales and excise taxes. A tax is progressive if it represents a
larger percentage of the income of a high-income taxpayer relative to the income of a
low-income taxpayer. The Federal income tax is an example of a progressive tax.
1
, Solution and Answer Guide: Nellen, Cuccia, Persellin, Young, SWFT Essentials of Taxation: Individuals and Business
Entities 2024, 9780357900796; Chapter 1: Introduction to Taxation
4. (LO 3)
a. The parsonage probably was not listed on the property tax rolls because it was
owned by a tax-exempt church. Apparently the taxing authorities are not aware
that ownership has changed.
b. Ethan should notify the authorities of his purchase. This will force him to pay back
taxes but may eliminate future interest and penalties.
5. (LO 1, 2, 6) (See Digging Deeper 1.) As to Adam Smith’s canon on economy, the Federal
income tax yields a mixed result. From the standpoint of the IRS, economy exists as
collection costs are nominal (when compared with revenue generated). The
government’s cost of collecting Federal taxes amounts to less than one-half of 1
percent of the revenue collected. Economy is not present, however, if one looks to the
compliance effort and costs expended by taxpayers. According to recent estimates,
about 56% of individual taxpayers who file a return pay a preparer, and one-third
purchase tax software.
6. (LO 3) Jang probably will be required to pay the Washington use tax if, and when, he
applies for Washington license plates. In this case, the use tax probably is the same
amount as the Washington sales tax. See the discussion in connection with Example 4
in the textbook.
7. (LO 3) Although the Baker Motors bid is the lowest from a long-term financial
standpoint, it is the best. The proposed use of the property by the state and the
church probably will make it exempt from the school district’s ad valorem tax. This
would hardly be the case with a car dealership. In fact, commercial properties (e.g., car
dealerships) often are subject to higher tax rates.
8. (LO 3) A possible explanation is that Sophia made capital improvements (e.g., added a
swimming pool) to her residence and her parents became retirees (e.g., reached age 65).
9. (LO 5, 6) SWFT, LLP
5191 Natorp Boulevard
Mason, OH 45040
December 5, 2023
Cynthia Clay
1206 Seventh Avenue
Fort Worth, TX 76101
Dear Cynthia:
I am writing this letter to help you decide on what form of entity to choose for your
new food delivery business. In our phone conversation, you indicated that you expect
to have losses for the first two years in this business and then make substantial
profits in subsequent years. You and Marco also indicated that you are concerned
about potential personal liability.
While I can’t make a conclusive recommendation based on the information you have
given me, I can provide you with some general guidelines that should simplify your
decision. First, given your concern about personal liability, a partnership does not
appear to be a desirable option (you would both be personally liable for any injuries to
customers). Similarly, given your expectation of losses in the first two years, it does
2
