Evaluate average tax rate

Reference no: EM133824

Question:

Olga's proprietorship earned a total profit of $95,000 during the year and she withdrew $70,000 of this profit. Olga has to report $70,000 net income from the proprietorship on her individual income tax return.

2. Henry and Herman are equal members in Badger Enterprises, a calendar year limited liability company (LLC). In the year, Badger Enterprises had $305,000 gross income and $230,000 operating expenses. Badger made no distributions to the partners. Badger has to pay tax on $75,000 of income.

3. Quail Corporation is a C corporation with total income of $300,000 during 2010. If Quail paid dividends of $50,000 to its shareholders, the corporation has to pay tax on $300,000 of net income. Shareholders must also report the $50,000 of dividends as income.

4. In tax planning, the average tax rate is more significant than the marginal tax rate.

5. For a taxpayer in the 35% marginal tax bracket, a $100 tax CREDIT saves the taxpayer $100 of tax liability, whereas a $100 tax DEDUCTION saves the $35 of tax liability.

6. As a general rule, capital gains are preferable to ordinary income.

Bottom of Form

As a general rule, capital losses are preferable to ordinary losses.

The tax terms "deduction" and "exclusion" have the same meaning

A 6% corporate bond is always a better investment than a 4.5 percent municipal bond.

10.

Considering constant tax rates (and good tax planning), taxpayers could postpone income recognition and accelerate deduction recognition.

11. Custard Corporation reports a $500,000 taxable income from its operations. In addition, Custard has a $50,000 long-term capital profit from the sale of the investment. Custard can pay a maximum of $7,500 in taxes on the long-term capital profit.

Reference no: EM133824

Questions Cloud

Determine jasons basis in the land in the inventory : Determine Jason's basis in the land, in the inventory, and in the partnership interest instantly following the distribution.

The relationship between the sarbanes-oxley act and coso : Name and briefly explain the five components of COSO's internal control framework. Explain the relationship between the Sarbanes-Oxley Act and COSO.

Evaluate the number of pans : Evaluate the number of pans that must be sold for Prachi to break even. Conceptual Connection: Evaluate the unit variable cost? Determine the unit variable manufacturing cost?

Explain what is meant by tourism market : Identify the different types of hospitality customers, their needs, and how firms can meet those needs Explain what is meant by Tourism Market Identify contributing factors that influence the future of Travel

Evaluate average tax rate : average tax rate is more significant than the marginal tax rate.

Evaluate the net production costs : 1) Materials purchased through January 2) Cost of Goods Sold through January 3) Overhead applied through January 4) Underapplied and Overapplied overhead for January (you have to tell me both the amount and whether it is over or under for ..

Choose a pps sample of the above inventory population : Prepare a scenario that is consistent with setting the risk of incorrect acceptance at 37 %. Choose a PPS sample of the above inventory population using the sample size determined in above.

Evaluate the total overhead applied to production during may : Evaluate the total overhead applied to production during May. Determine the cost of the ending work in process inventory. Evaluate the cost of jobs completed during May. Calculate the cost of goods sold for the year ended May 31.

What factors are important to the success of cafe express : What factors are important to the success of Cafe Express? Which of these are controllable by Thomas? Does it matter?

User Account

All Pages