McGraw-Hill’s Taxation of Individuals and Business Entities (2025 Edition, 14th Edition) – Spilker | Complete Test Bank with Solutions

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Entities 2023 Edition 14th Edition Spilker
Instructor’s Manual – McGraw-Hill’s Taxation, by Spilker et al.


Chapter 1
An Introduction to Tax

INSTRUCTOR’S MANUAL


Learning Objectives
1-1. Demonstrate how taxes influence basic business, investment, personal, and political decisions.
1-2. Discuss what constitutes a tax and the general objectives of taxation.
1-3. Describe the different tax rate structures and calculate a tax.
1-4. Identify the various federal, state, and local taxes.
1-5. Apply appropriate criteria to evaluate alternate tax systems.



Teaching Suggestions
This chapter provides an overview of why taxes are important, what a tax is, how to calculate a tax,
various tax rates and tax rate structures, different types of federal, state, and local taxes, and how to
evaluate a tax system. One intent of the chapter is to get students thinking about the pervasive influence
of taxes and thus why it is important for a business or accounting student to understand taxes. Discussing
how taxes affect decisions that they will face (buying a house, investing for retirement, etc.) is an
effective way to pique students’ interest.

This chapter also provides an opportunity to motivate students by discussing the political importance of
taxes and the debate over alternative tax systems. Throughout most of the chapter, you can tie the material
discussed back to the debate over alternative tax systems. This is easily done in the section on evaluating
alternative tax systems and alternative tax rate structures but may also be done for other parts of the text.
For example, when discussing how to calculate a tax, you can point out that once the tax base is
computed, it is very easy to calculate virtually any tax. The difficulty is in determining the tax base. The
implication of this understanding is that the tax rate structure (e.g., progressive versus proportional) has
little effect on tax complexity.

In teaching this chapter, the time that you spend in class will vary based on how much discussion that you
want to incorporate regarding evaluating tax systems and implicit taxes. Most of the concepts in this
chapter are relatively straightforward, and thus, the chapter provides students with an introduction to tax
without overwhelming them on the first day or so of class. This is particularly important if your students
have some trepidation regarding their first tax course.

Implicit tax is typically a difficult concept for students to understand. The text provides a good overview
of implicit tax. If you plan to cover implicit tax in some detail, you might alert students that this is a
difficult concept and that they should be careful to get familiar with this discussion in the text prior to
class.




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Instructor’s Manual – McGraw-Hill’s Taxation, by Spilker et al.


Assignment Matrix
Learning Objectives Text Features




Research

Planning
Problem




Forms
Time
LO1

LO2

LO3

LO4

LO5
Difficulty
DQ1-1 5 min. Easy X
DQ1-2 5 min. Easy X
DQ1-3 5 min. Easy X
DQ1-4 5 min. Easy X
DQ1-5 5 min. Medium X
DQ1-6 5 min. Medium X
DQ1-7 5 min. Medium X
DQ1-8 10 min. Medium X
DQ1-9 5 min. Medium X
DQ1-10 10 min. Medium X
DQ1-11 15 min. Medium X
DQ1-12 5 min. Medium X
DQ1-13 15 min. Medium X
DQ1-14 10 min. Medium X
DQ1-15 5 min. Easy X
DQ1-16 15 min. Medium X
DQ1-17 5 min. Easy X
DQ1-18 5 min. Easy X
DQ1-19 10 min. Medium X
DQ1-20 10 min. Medium X
DQ1-21 10 min. Easy X
DQ1-22 10 min. Easy X
DQ1-23 15 min. Medium X
DQ1-24 15 min. Medium X
DQ1-25 15 min. Medium X
DQ1-26 15 min. Medium X
DQ1-27 15 min. Medium X
DQ1-28 15 min. Medium X
DQ1-29 15 min. Medium X X
DQ1-30 20 min. Medium X X
DQ1-31 15 min. Medium X X
DQ1-32 15 min. Medium X
DQ1-33 15 min. Medium X
P1-34 20 min. Medium X
P1-35 20 min. Medium X
P1-36 20 min. Medium X
P1-37 20 min. Medium X
P1-38 20 min. Medium X
P1-39 20 min. Medium X
P1-40 20 min. Medium X

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Instructor’s Manual – McGraw-Hill’s Taxation, by Spilker et al.

P1-41 20 min. Medium X
P1-42 20 min. Hard X X
P1-43 15 min. Medium X X X
P1-44 15 min. Medium X X X
P1-45 15 min. Medium X X X
P1-46 15 min. Medium X X X
P1-47 20 min. Hard X
P1-48 20 min. Hard X
P1-49 20 min. Hard X X
P1-50 20 min. Hard X X
P1-51 20 min. Hard X
P1-52 20 min. Hard X
P1-53 20 min. Hard X
P1-54 20 min. Hard X
P1-55 20 min. Hard X
P1-56 20 min. Hard X
P1-57 25 min. Hard X X X
P1-58 25 min. Hard X X X
P1-59 25 min. Medium X X
P1-60 25 min. Medium X X


Lecture Notes
1) Who Cares About Taxes and Why?
a) Businesses
b) Politicians
c) Individuals
2) What Qualifies as a Tax?
a) Definition of a tax
i) Key components of definition: payment is required, imposed by a government agency, and
not directly tied to any benefit received by the taxpayer from the government
b) Earmarked tax—definition and why this is considered a tax
c) Quiz students on tax definition using examples in the PowerPoint slides.
3) How to Calculate a Tax
a) Tax = Tax Base × Tax Rate
i) Tax Base—what is actually taxed, usually expressed in monetary terms
ii) Tax Rate—level of taxes imposed on the tax base, usually expressed as a percentage
iii) Flat taxes
iv) Graduated taxes
v) Brackets
b) Different ways to measure tax rates
i) Marginal tax rate
(1) Definition—tax rate that applies to the next additional increment of a taxpayer’s taxable
income (or deductions)




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