UOP ACC 456 Week 1 Practice Problem 1 .pdf
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UOP ACC 456 Week 1 Practice Problem 1-39, 1-40, 1-41,1-42,143 NEW
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Complete the following problems in Chapter 1:
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Tax Rates. Latesha, a single taxpayer, had the following income
and deductions for the tax year 2015:
Compute Latesha’s taxable income and federal tax
liability for 2015 (round to dollars).
b.Compute Latesha’s marginal, average, and effective tax
c.For tax planning purposes, which of the three rates in
Part b is the most important?
Tax Rates. Based on the amounts of taxable income below,
compute the federal income tax payable in 2015 on each
amount assuming the taxpayers are married filing a joint
return. Also, for each amount of taxable income, compute the
average tax rate and the marginal tax rate.
a.Taxable income of $30,000.
b.Taxable income of $100,000.
c.Taxable income of $375,000.
d.Taxable income of $600,000.
Marginal Tax Rate. Jill and George are married and file a joint
return. They expect to have $425,000 of taxable income in the
next year and are considering whether to purchase a personal
residence that would provide additional tax deductions of
$80,000 for mortgage interest and real estate taxes.
a.What is their marginal tax rate for purposes of making
b.What is the tax savings if the residence is acquired?
Gift Tax. Betty, a married taxpayer, makes the following gifts
during the current year (2015): $20,000 to her church, $50,000
to her daughter, and $40,000 to her husband. What is the
amount of Betty’s taxable gifts for the current year (assuming
that she does not elect to split the gifts with her spouse)?
Estate Tax. Clay, who was single, died in 2015 and has a gross
estate valued at $8,500,000. Six months after his death, the
gross assets are valued at $9,000,000. The estate incurs funeral
and administration expenses of $125,000. Clay had debts
amounting to $150,000 and bequeathed all of his estate to his
children. During his life, Clay made no taxable gifts.
a.What is the amount of Clay’s taxable estate?
b.What is the tax base for computing Clay’s estate tax?
c.What is the amount of estate tax owed if the tentative
estate tax (before credits) is $3,235,800?
d.Alternatively, if, six months after his death, the gross
assets in Clay’s estate declined in value to $7,500,000, can the
administrator of Clay’s estate elect the alternate valuation
date? What are the important factors that the administrator
should consider as to whether the alternate valuation date
should be elected?