, Solution manual for South-Western Federal
Taxation 2023 Comprehensive 46th Edition James
C. Young
Notes
1- The file is chapter after chapter.
2- We have shown you few pages sample.
3- The file contains all Appendix and Excel
sheet if it exists.
4- We have all what you need, we make
update at every time. There are many new
editions waiting you.
5- If you think you purchased the wrong file
You can contact us at every time, we can
replace it with true one.
Our email:
, CHAPTER 1
AN INTRODUCTION TO TAXATION
AND UNDERSTANDING THE FEDERAL TAX LAW
SOLUTIONS TO PROBLEM MATERIALS
DISCUSSION QUESTIONS
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 Framework 1040), 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 1, 4)
a. John must now document rental receipts and separate his home expenses between personal and
rental use, and he may be subject to the transient occupancy tax.
b. Theresa has become self-employed. Now she will be subject to self-employment tax and may
have to make quarterly installment payments of estimated income and self-employment tax.
Theresa will be required to make payroll tax payments if she hires individuals to work in her
business.
c. Paul’s employer might have some moving expenses that it can deduct (in general, Paul cannot
deduct moving expenses). Paul’s personal taxes will change because Florida does not impose
an income tax but California does.
3. (LO 1, 4) The income tax consequences that result are Marvin’s principal concern. Any rent he receives
is taxed as income, but operating expenses and depreciation will generate deductions that offset some
or all of the income or even yield a loss. Marvin must also consider the effect of other taxes. Because
the property is being converted from residential to commercial use, he can expect an increase in the ad
valorem property taxes levied by the local (and perhaps even the state) taxing authorities. Besides the
real estate taxes, personal property taxes could be imposed on the furnishings.
4. (LO 2) To finance our participation in World War II, the scope of the income tax was expanded
considerably—from a limited coverage of 6% to over 74% of the population. Hence, the description of
the income tax as being a “mass tax” became appropriate.
5. (LO 2) For wage earners, the tax law requires employers to withhold a specified dollar amount from
wages paid to the employee to cover income taxes and payroll taxes. Persons with nonwage income
generally are required to make quarterly payments to the IRS for estimated taxes. Both procedures
ensure that taxpayers will be financially able to meet their annual tax liabilities. That is, the amounts
withheld are meant to prepay the employee’s income taxes and payroll taxes related to the wages
earned.
6. (LO 3) The tax law of this state appears to violate the certainty and simplicity principles.
1-1
© 2023 Cengage®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
, 1-2 2023 Comprehensive Volume/Solutions Manual
7. (LO 3) 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.
8. (LO 4)
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.
9. (LO 4) 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.
10. (LO 4)
a. In this case, the “tax holiday” probably concerns exemption from ad valorem taxes. “Generous”
could involve an extended period of time (e.g., 10 years) and include both realty and personalty.
b. The school district could be affected in two ways. First, due to the erosion of the tax base, less
revenue would be forthcoming. Second, new workers would mean new families and more
children to educate.
11. (LO 4) 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).
12. (LO 4) Presuming that the dockage facilities are comparable in Massachusetts, the Morgans may be
trying to avoid ad valorem taxes. Taxes on nonbusiness property vary from one state to another and are
frequently avoided.
13. (LO 4) In general, Federal excise taxes apply to fewer items than in the past. Lawmakers have focused
on and increased certain Federal excise taxes (e.g., those on tobacco products, gasoline, and air travel).
14. (LO 4) Jayla could have been overcharged, but it is likely that at least part of the excess is attributable
to a hotel occupancy tax and a car rental tax. In major cities, these types of excise taxes have become a
popular way of financing capital improvements such as sports arenas and stadiums. Consequently, the
amount of the taxes could be significant.
15. (LO 4) An excise tax is limited to a particular transaction (e.g., sale of gasoline), whereas a general
sales tax covers a multitude of transactions (e.g., sale of all nonfood goods).
a. The following states do not impose a general sales tax: Alaska, Delaware, Montana, New
Hampshire, and Oregon.
b. There is no Federal general sales tax.
© 2023 Cengage®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Taxation 2023 Comprehensive 46th Edition James
C. Young
Notes
1- The file is chapter after chapter.
2- We have shown you few pages sample.
3- The file contains all Appendix and Excel
sheet if it exists.
4- We have all what you need, we make
update at every time. There are many new
editions waiting you.
5- If you think you purchased the wrong file
You can contact us at every time, we can
replace it with true one.
Our email:
, CHAPTER 1
AN INTRODUCTION TO TAXATION
AND UNDERSTANDING THE FEDERAL TAX LAW
SOLUTIONS TO PROBLEM MATERIALS
DISCUSSION QUESTIONS
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 Framework 1040), 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 1, 4)
a. John must now document rental receipts and separate his home expenses between personal and
rental use, and he may be subject to the transient occupancy tax.
b. Theresa has become self-employed. Now she will be subject to self-employment tax and may
have to make quarterly installment payments of estimated income and self-employment tax.
Theresa will be required to make payroll tax payments if she hires individuals to work in her
business.
c. Paul’s employer might have some moving expenses that it can deduct (in general, Paul cannot
deduct moving expenses). Paul’s personal taxes will change because Florida does not impose
an income tax but California does.
3. (LO 1, 4) The income tax consequences that result are Marvin’s principal concern. Any rent he receives
is taxed as income, but operating expenses and depreciation will generate deductions that offset some
or all of the income or even yield a loss. Marvin must also consider the effect of other taxes. Because
the property is being converted from residential to commercial use, he can expect an increase in the ad
valorem property taxes levied by the local (and perhaps even the state) taxing authorities. Besides the
real estate taxes, personal property taxes could be imposed on the furnishings.
4. (LO 2) To finance our participation in World War II, the scope of the income tax was expanded
considerably—from a limited coverage of 6% to over 74% of the population. Hence, the description of
the income tax as being a “mass tax” became appropriate.
5. (LO 2) For wage earners, the tax law requires employers to withhold a specified dollar amount from
wages paid to the employee to cover income taxes and payroll taxes. Persons with nonwage income
generally are required to make quarterly payments to the IRS for estimated taxes. Both procedures
ensure that taxpayers will be financially able to meet their annual tax liabilities. That is, the amounts
withheld are meant to prepay the employee’s income taxes and payroll taxes related to the wages
earned.
6. (LO 3) The tax law of this state appears to violate the certainty and simplicity principles.
1-1
© 2023 Cengage®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
, 1-2 2023 Comprehensive Volume/Solutions Manual
7. (LO 3) 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.
8. (LO 4)
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.
9. (LO 4) 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.
10. (LO 4)
a. In this case, the “tax holiday” probably concerns exemption from ad valorem taxes. “Generous”
could involve an extended period of time (e.g., 10 years) and include both realty and personalty.
b. The school district could be affected in two ways. First, due to the erosion of the tax base, less
revenue would be forthcoming. Second, new workers would mean new families and more
children to educate.
11. (LO 4) 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).
12. (LO 4) Presuming that the dockage facilities are comparable in Massachusetts, the Morgans may be
trying to avoid ad valorem taxes. Taxes on nonbusiness property vary from one state to another and are
frequently avoided.
13. (LO 4) In general, Federal excise taxes apply to fewer items than in the past. Lawmakers have focused
on and increased certain Federal excise taxes (e.g., those on tobacco products, gasoline, and air travel).
14. (LO 4) Jayla could have been overcharged, but it is likely that at least part of the excess is attributable
to a hotel occupancy tax and a car rental tax. In major cities, these types of excise taxes have become a
popular way of financing capital improvements such as sports arenas and stadiums. Consequently, the
amount of the taxes could be significant.
15. (LO 4) An excise tax is limited to a particular transaction (e.g., sale of gasoline), whereas a general
sales tax covers a multitude of transactions (e.g., sale of all nonfood goods).
a. The following states do not impose a general sales tax: Alaska, Delaware, Montana, New
Hampshire, and Oregon.
b. There is no Federal general sales tax.
© 2023 Cengage®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
