税收筹划原理课后答案Chapter04.docx

税收筹划原理课后答案Chapter04.docx

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税收筹划原理课后答案Chapter04

Chapter4

QuestionsandProblemsforDiscussion

1.a.Mr.Lisengagingintaxevasionbecauseheisdeliberatingunderstatingincome（andthushistaxliability）fortheyear.

b.Mr.Pisengagingintaxavoidance.Hehasnotearnedanyincomethathefailstoreport.Instead,heisgivinghissonanopportunitytoearnincomethatwillbetaxedatalowermarginalratethanifMr.Pearnedit.

c.Mrs.Qisengagingintaxevasionbecausesheisdeliberatelyviolatingtherulerequiringtaxpayerstoreportandpaytaxonincomeintheproperyear.Sheisfilingherprioryearreturnbasedonfalseinformation（theyearofsale）.

2.Becausethepreferentialtaxrateincreasestheafter-taxrateofreturnoninvestmentsinsingle-familyrentalhouses,thevalueofsuchhousesshouldincreasecomparedtothevalueofotherinvestmentsuntiltheafter-taxrateofreturndecreasestorestoremarketequilibrium.

3.Becauseofthetimevalueofmoney,thecostofataxdollarpaidinthefutureislessthanthecostofacurrenttaxdollar.Ifataxpaymentcanbepostponedformanyyears,itscostinpresentvaluetermsmaybenegligible.

4.Asageneralrule,themeasurementofbusinessincomeisnotaffectedbythechoiceofentityform.Mrs.K’sbusinessoperationshouldgeneratethesametaxableincomeregardlessofitsorganizationasasoleproprietorshiporasacorporation.

5.Businessesorganizedassoleproprietorships,partnerships,limitedliabilitycompanies（LLCs）,andScorporationsarenottaxableentities.Onlybusinessesorganizedascorporationsaretaxableentitiesseparateanddistinctfromtheirowners.

6.a.Thecorporation’smarginalrateis15percent.

b.Thecorporation’smarginalrateis39percent.

c.Theindividual’smarginalrateis25percent.

d.Theindividual’smarginalrateis35percent.

7.a.Ifthetaxrateistrulyproportionate（everydollarofbusinessincomeistaxedatthesamerate,regardlessoftheentityearningthedollar）,theentityvariablewouldbeirrelevantindevelopingtaxplanningstrategies.

b.Aproportionatetaxratewouldnotaffectthetimeperiodvariable.

c.Aproportionatefederalincometaxratewouldnotaffectthejurisdictionalvariablebecausestateandlocalgovernmentsandforeigntaxingjurisdictionswouldimposedifferentratesontaxableincome.

d.Ifthetaxrateisproportionate,nospecialcategoryofincomeissubjecttoapreferentialrate.However,otherspecialcharacteristics（suchastheU.S.sourceversusforeignsourcecharacteristic）mightcontinuetobeimportantindevelopingtaxplanningstrategies.

8.a.Inthiscase,theratesarerelativelylowandmildlyprogressive.Ashiftof$100incomefromanentitywiththehighest19percentmarginalratetoanentitywiththelowest5percentmarginalratesavesonly$14oftax.

b.Becausetheratesaremuchmoreprogressivethanintheprecedingsetoffacts,anincomeshiftismorebeneficial.Ashiftof$100incomefromanentitywiththehighest50percentmarginalratetoanentitywiththelowest10percentmarginalratesaves$40oftax.

c.Withaproportionateratestructure,anincomeshiftfromoneentitytoanotheryieldsnotaxbenefit.

9.Incomeanddeductionshiftsusuallyrequireacorrespondingshiftincashflow.Unlesstheeconomicconsequencesoftheshiftareneutral,thepartywiththereducedcashflowwouldnotagreetotheincome/deductionshift.Inarelatedpartytransaction,thepartythatreducesitscashflowbecauseoftheshiftcontinuestobenefitfromthecashindirectly.Forexample,aparentthatshiftsincometoachildmayhavelesscashflowbutbenefitstotheextentthechildbecomesfinanciallyindependent.

10.CorporationP’sincomeshifttoSubsidiarySsuggeststhatitsmarginaltaxrateislessthan25percent.ThedeductionshifttoSubsidiaryTsuggeststhatitsmarginaltaxrateismorethan25percent.

11.Delayofthereceiptof$25,000forfivemonths（AugusttoJanuary）hasahigheropportunitycostthandelayofthereceiptof$25,000foronemonth（DecembertoJanuary）.Evidently,FirmAconcludedthattheopportunitycostofthedeferraloftheAugustincomeitemexceededthetaxsavingsfromthecorrespondingtaxdeferral.

12.Everytaxplanningstrategyisbasedonasetofassumptionsaboutthefuture.Themoreuncertaintheassumptions,themorelikelythatthestrategywillnotproducethedesiredtaxoutcome.Ifthestrategycan’tbemodifiedorundoneatareasonablecostandtheassumptionsprovetobeinaccurate,thestrategymayhaveundesirabletaxconsequencesthatthefirmcan’tavoid.

13.a.Firmsmightaccelerateincomeandpostponedeductionstoincreasecurrentincomesubjecttothelowtaxrates（andreducefutureincomesubjecttothenew,highertaxrates）.

b.Firmsthatimplementthisstrategyareaccelerating,rathertha