1. To prepare the new staff for the upcoming tax season, you have decided to hold 1-week training.
Prepare a short PowerPoint presentation of 4-5 slides outlining the following:
- What type of tax rate structure does the U.S. tax system apply?
- What are the individual tax forms, and what factors are used to determine which one to use?
- What is taxable income, and how is it determined?
2. Another client, Ms. Dunham, has asked you to help her understand how her tax is computed. You need to provide Ms. Dunham with the following:
- An example of how to calculate the tax liability using the tax rate table and the tax rate formula for a taxpayer with taxable income of $55,000, filing status married filing jointly.
- An explanation of the marginal tax rate and average tax rates for this tax payer.
Be clear in our elaboration s that Ms. Dunham, a person with no business or tax background, can understand.
3. James Welling, a 37-year-old engineer has an appointment to meet you in about an hour. As you are reviewing his accounts, you notice that he is a fairly active trader. He seems to do pretty well with returns that outpace the averages, but you can’t help wonder how much he ends up paying each year in capital gains taxes.
As his appointment time approaches, you prepare a short explanation of the way that capital gains taxes may be hurting his net returns and the difference between short-term gains and long-term gains.
Prepare some detailed discussion points that cover the following:
- How capital gains taxes may be hurting James’ net returns.
- The difference between short-term gains and long-term gains.
4. Mr. and Mrs. Ybarra, a retired couple in their late 70s, come in to meet with you. They are very friendly and living a comfortable retirement due, in large part, to the overall size of their estate (nearly $4 million dollars spread over multiple accounts) and their conservative asset allocation.
As you bring up the issue of estate planning, they thank you for your concern, but explain that it is already taken care of. They go on to explain that their attorney has prepared wills for both of them and all of their accounts are titled Jointly with Rights of Survivorship.
There are surprised, and a little confused, when you mention that their heirs might end up receiving only a fraction of those assets after the two of them pass away.
Include the following in your explanation to Mr. and Mrs. Ybarra:
- The transfer-tax system
- What is considered part of the estate
- How much is excluded from taxation based on current legislation
- Gross estate versus adjusted gross estate
5. Find the annual report for some publicly listed high tech company that has losses. Refer to the tax footnote in the report to extract the NOL carryforward. Assume an after-tax discount rate of 10%
Calculate the firm’s marginal explicit tax rate using the Manzon (1994) market-value approach. Discuss and explain your result.
Under the Manzon (1994) approach, first calculate expected annual taxable income: TI-MVE*r, where MVE is the market value of equity of the firm and r is the after-tax discount rate.
Next calculate s-NOL/TI
Then calculate mtr =str(subtext s)/(l+r) to the s power
Use the collaboration forum for help with this formula.
Discuss and explain