...the risk of detection to not be probable, eVade estimated the total amount of sales tax payables for the past five years to be $50 millions plus $6 million in interest and $ 4 million in penalties. On March 15, 2012, State X established a tax amnesty program. Any unregistered taxpayer who voluntarily registers to collect tax will be forgiven 50 percent of all unpaid sales tax and all interest and penalties. eVade decides to take advantage of this program. Issue 1 As of December 31, 2011 What amount, if any, of sales taxes due should recognized in eVade ‘s financial statements? Scope In order to analyze what part of the sections sections of the FASB Accounting Standards Codification applies to the case, ASC 450 section was examined since non-income taxes are often accounted for under the contingencies guidance. Next, ASC 740 section was also studied. ASC 740-10-20 defines “income taxes as domestic and foreign federal (national), state, and local (including franchise) taxes based on income.” Since sales taxes are under the umbrella of local and state, the following step will be defining if eVade should recognized a tax position. Definition of a Tax Position ASC 740 includes the following implementation guidance on recognizing tax positions. ASC 740-10-20 states some examples of tax positions as: “A decision not to file a tax return” (e.g., a decision not to file a specific state tax return because nexus was not established). What does nexus mean? Economic nexus...
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...Projected Percent 12 10 8 6 4 2 0 2000 Actual Projected 2012 2016 2020 2024 2004 2008 2012 2016 2020 2024 GDP and Potential GDP Unemployment Rate FEBRUARY 2013 Notes Numbers in the text and tables may not add up to totals because of rounding. Unless otherwise indicated, years referred to in describing the budget outlook are federal fiscal years (which run from October 1 to September 30) and years referred to in describing the economic outlook are calendar years. The figures in Chapter 2 have white vertical bars that indicate the duration of recessions. (A recession extends from the peak of a business cycle to its trough.) The economic forecast was completed in mid-January 2013, and the estimates of 2012 values shown in tables and figures in Chapter 2 and Appendix B are based on information available at that time. Supplemental data for this analysis and the historical budget data that are usually included in this report are available on CBO’s Web site (www.cbo.gov). CBO Pub. No. 4649 Contents Summary 1 1 2 A B The Budget Outlook Key Budgetary Decisions Facing Lawmakers in 2013 Budgetary Outcomes in 2012 and the Outlook for 2013 BOX: 7 10 11 12 18 29 30 THE AMERICAN TAXPAYER RELIEF ACT OF 2012 CBO’s Baseline Budget Projections for 2014 to 2023 Uncertainty in Budget Projections Alternative Assumptions About Fiscal Policy The Economic Outlook The Economy in 2012 The...
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...IoD Big Picture Summer 2013 Tax avoidance: remedies and collateral damage SNAPSHOT • The term ‘tax avoidance’ needs to be carefully defined and is not the same as ‘tax abuse’ or ‘tax evasion’. This article considers where avoidance becomes abuse and, in particular, the advantages and disadvantages of some measures to control it. Tax avoidance: remedies and collateral damage Richard Baron, former Head of Taxation at the IoD, and Stephen Herring, his successor, consider the proper use of the term ‘tax avoidance’, where avoidance becomes abuse, and the pros and cons of some measures to control it. • The basics of UK tax law are simple, but difficulties arise from complex transactions that require specific rules – which in turn create opportunities for aggressive tax avoidance and abuse. ax avoidance has rarely been out of the news over the past two years, although the term has also rarely been properly defined and has often been muddled both with tax abuse and, even more incorrectly, tax evasion. Commentary has focused on two separate assertions that tax avoidance is taking place. Firstly, claims that some multinational groups of companies, generally US-owned, have undertaken planning which might involve recognising profits in one country rather than another that has higher corporation tax rates. Secondly, introducing planning arrangements to secure better treatments of financing costs, intellectual property rights and undistributed profits by locating business...
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...ACC/545 Date: April 16, 2012 A corporation is the most common type of organization, which is a charter of the state of legal entity and separate from owners. A corporation is a limited liability to the owners, which means that the owner’s personal property is legally separate from the corporation ("Corporation," 2012). The deferred tax primary intention is to present estimated actual tax to payable in current and future periods and is seen as the income tax liability on the statement of financial position. The deferred tax liability is the amount of the income tax payable in future periods because of any taxable differences. Taxable temporary differences result from taxable amounts when determining taxable profit in future periods when carrying amount of an asset or a liability is recovered or settled. According to "Accountancy Students" (2012), ‘IAS 12 requires the tax effects of the tax-book basis differences of all assets and liabilities generally be presented as deferred tax assets and liabilities as at the date of acquisition’ (Accounting for Business Combinations : Deferred Tax Aspects). Temporary difference s could be a differed tax liability in the debit balances of financial statement compared with the tax written value. The deductible temporary differences are in the credit balance of the financial statements compared with the tax written values. The tax written value is also known as the asset or liability’s tax base where the amounts...
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...AND WORKING WITH THE FEDERAL TAX LAW SOLUTIONS TO PROBLEM MATERIALS Question/ Problem 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Learning Objective LO 1 LO 2 LO 2 LO 2 LO 2 LO 2 LO 2 LO 2 LO 2 LO 2 LO 2 LO 2 LO 2 LO 2 LO 2 LO 2 LO 2 LO 2 LO 2 LO 2 LO 2 LO 2 LO 2 LO 2 LO 2 LO 3 Topic Revenue neutrality Controlling the economy Encouraging industries Research and development expenditures Social considerations Earned income credit Charitable contributions Fines and penalties Home ownership Higher education incentives Tax credit versus deduction Alleviating the effect of multiple taxation Double taxation and effect of a credit versus a deduction Wherewithal to pay concept: transfer to controlled corporation Avoiding the corporate income tax Wherewithal to pay: example Recognized gain versus realized gain: amount Like-kind exchange versus involuntary conversion: losses Settlement time period Installment method Keogh Plan: grace period Bracket creep: indexation Community property states Community property states Deterrence provisions $13,000 annual gift tax exclusion: audit Status: Present Edition New New New New New Unchanged Unchanged Unchanged Unchanged Unchanged Unchanged Unchanged Unchanged Modified Modified New New New New New New New New New New New Q/P in Prior Edition 6 7 8 9 10 11 12 13 14 15 Instructor: For difficulty, timing, and assessment information about each item, see p. 1-3. 1-1 © 2012 Cengage Learning. All Rights Reserved...
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...foundation which is run by Buffet’s daughter and finally the NoVo Foundation which is run by Buffet’s other son Peter. These charities cover a variety of causes dealing with abortion rights, environmental issues, educational opportunities for low income children, anti-nuclear proliferation issues and human rights. (New York Times, 2006). In addition to Buffet’s donations to privately owned charities, his leadership capabilities are also demonstrated in his charity work. He has done this through the formation of the “Giving Pledge Initiative” which was made public by himself and Bill Gates in 2010 in effort to encourage other wealthy American business men to share there wealth with those in need. It is through Buffet’s desire to see positive change in the world that other billionaires have followed his example. Since the start of the initiative, many other...
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...The external environment in which businesses operate can have a significant effect on their success. To what extent do you think the external environment in the UK is favourable for businesses at the moment? Justify your answer with reference to external factors and/or businesses that you know. (40 marks) External environment in the UK can be favourable in any market to a business based on social and economic factors. This is important because this involves the way that people live, the lifestyle they have and finally their needs and wants as a customer, this is extremely important to businesses as they would need to keep on top of these wants and needs and adapt to suit them so that they can continue to sell their product or service. As a result of adapting their services to the customers’ needs they will see greater benefits for example increased profitability. In the UK, Rolex Watches have benefitted in big size because the weekly wage from 2010 has increased by £44 therefore providing more of an opportunity for consumers to spend on non-essential items as the economy has grew. This positive income elasticity of demand meant big ticket items benefitted such as Rolex as they saw 30% operating profit in 2014 as sales increased by 40% in the UK from 2013. This is due to consumers demanding higher quality products and bigger brand products with brand recognition such as Rolex therefore benefitted as higher quality lifestyle is demanded. Therefore this is favourable for Rolex...
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...has not offered a monetary settlement to the government in their tax dispute, sources told NDTV Profit today. While the telecom company has said it will prefer an amicable solution to the matter, it has never expressed willingness to settle the dispute at Rs. 8,000 crore or any other amount. The two parties have been embroiled in a tax dispute since 2012, after the Income Tax Department on October 22, 2010, passed an order determining a tax liability (including interest) of Rs. 11,218 crore on Vodafone on its acquisition of Hutchinson's stake in Hutch-Essar through a deal in Cayman Islands in 2007. The Supreme Court, however, quashed the order in January this year. After the apex court's ruling, the Income Tax Act was amended with retrospective effect to bring into tax net such deals. Section 119 of the Finance Act, 2012, seeks to validate the October 2010 order of the Income Tax Department,w which also passed an order imposing a penalty of Rs. 7,900 crore on Vodafone in April, 2011. Finance Minister P Chidambaram recently said the Income Tax Department will take a decision on the Vodafone taxation issue after the Parthasarathi Shome Committee has given its report on General Anti-Avoidance Rules (GAAR). Talking to reporters, he said the decision whether to send another notice to the British telecom major will be taken by the concerned assessing officer in the backdrop of amendment to the Income Tax Act, Supreme Court judgment in the Vodafone case, and the opinion...
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...questions are available at the end of this chapter. TRUe-FALSe—Conceptual Answer No. Description F 1. Taxable income. F 2. Use of pretax financial income. T 3. Taxable amounts. T 4. Deferred tax liability. F 5. Deductible amounts. T 6. Deferred tax asset. F 7. Need for valuation allowance account. T 8. Positive and negative evidence. F 9. Computation of income tax expense. T 10. Taxable temporary differences. F 11. Taxable temporary difference examples. T 12. Permanent differences. T 13. Applying tax rates to temporary differences. F 14. Change in tax rates. F 15. Accounting for a loss carryback. T 16. Tax effect of a loss carryforward. T 17. Possible source of taxable income. T 18. Classification of deferred tax assets and liabilities. F 19. Classification of deferred tax accounts. F 20. Method used for accounting for income taxes. Multiple Choice—Conceptual Answer No. Description b 21. Differences between taxable and accounting income. c 22. Differences between taxable and accounting income. b 23. Determination of deferred tax expense. a 24. Differences arising from depreciation methods. a P25. Temporary difference and a revenue item. b S26. Effect of future taxable amount. c P27. Causes of a deferred tax liability. d S28. Distinction between temporary and permanent differences. b S29. Identification of deductible temporary difference. c S30. Identification of taxable temporary difference. d S31. Identification...
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...government will face at the end of 2012, when the terms of the Budget Control Act of 2011 are scheduled to go into effect. The deficit which is the difference between what the government takes in and what it spends is expected to be reduced by roughly half beginning in the first days of 2013. This sharp decrease in the deficit in such a short period of time is known as the fiscal cliff. 2012 is the year the world is supposed to end, but it won’t happen on December 21st. For Americans it will be on December 31st. We don’t need a Mayan calendar to tell us that we’re heading towards doom; all we have to do is watch the TV or use the internet and read about the fiscal cliff. Almost all Americans will take a financial blow next year and low income families would be among the hardest hit, if the White House and Congress fail to solve the “fiscal cliff” of big tax increases and spending cuts set to start January 2nd. With the rise in payroll-tax increases, Expiration of the Bush tax cuts decreases in the Child Tax Credit, and the Dividend-Tax Increases, a middle-class family would be hit the hardest. According to Matthews, “For instance, if a couple together makes $82,000 and have four children and pay child care and even though money was tight were able to invest in $10,000 worth of blue-chip, dividend-paying stocks, in addition to socking away money in their 401(k)s; their taxes would go up $530 a month, or more than $6,000 a year. The Bush Tax Cuts have generated income, dividends...
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...Health Care System in Turmoil Alice Felton MHA 622 Healthcare Ethics & Law Dr. Teresita Gonzalez August 5, 2012 Health Care System in Turmoil The current health care system in the United States is in turmoil for many years because of two major problems which continues to be: patient access to care and the cost of care. There are well over 50 million Americans who continue to be uninsured today and a national health care tax called the Patient Protection and Affordable Care Act of 2010 has been passed and challenged and upheld by the United States Supreme Court, as a tax not a law, here recently which is suppose to be an answer to most of our health care insurance issues. Even though most Americans may agree that our health care system is in turmoil and needs to be reformed, not everyone agrees that a national health care tax is the solution. In the United States as the health care system continues to be in turmoil the patients are continuing to struggle to keep their medical care and that can be either if they are trying to maintain at least a standard of care or just simply hoping that the medical facility that they may prefer, such as a local hospital or community center will be able to stay in business, or that they will have continued accessed to emergency rooms even if they are the uninsured. In the midst of this health care system turmoil there are other segments in the health care sector that may be experiencing financial problems, such...
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...International Financial Reporting Standards Introduction As the business world evolves to a higher level of integration with the increased ability to conduct business globally, international accounting is a subject that is becoming more relevant and increasingly more important to understand. Doupnik and Perera (2012) define International accounting on three levels through the standards and guidelines of supranational organizations, at the company level, and third through the standards, rules, and guidelines that exist within each country. Brazil is one of the top five countries to be considered an emerging market (Top 30 Emerging Markets 2012-2017). It is estimated that Brazil’s GDP will grow by roughly 22.3% between the years 2013 to 2017 making the country attractive to investors (The Top 20 Emerging Markets, 2013) . Brazil ranks as one of the top 4 countries for growth in the manufacturing and industrial industries, telecommunications, technology and media, professional and business services, financial services, consumer products, pharmaceuticals and healthcare, energy and resources, automotive, chemicals, and transportation industries (Top 30 Emerging Markets 2012-2017). In addition Brazil will be a destination for world class events such as the 2014 World Cup and 2016 Olympic Games that will bring thousands of visitors to the country. As Brazil continues to grow in popularity as a location for trade, cultural activities, and investment the topics of international accounting...
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...subsections in Chapter 143 from 1973 through 2012. We plotted the number of effective subsections for each year in Figure 1. Clearly, things have changed over time, with the number of subsections increasing from 54 in 1973 to 154 in 2012. The next question is, why have the number of subsections in Chapter 143 of Title X increased? Several possible answers apply. For one thing, no law is ever written perfectly the first time. So, new subsections refine things, such as loopholes that were not evident when the law was initially written and to redefine what income is subject to taxation. Additionally, the state assembly sees opportunities to use tax laws that seek to stimulate economic development by changing the amount of income subject to the state income tax. By implementing such changes, the carrot-and-stick approach aims to modify people’s behavior so that the Missouri economy will grow faster. Third, if we started from scratch, would we implement the same set of subsections? The calls for tax reform are based on the notion that tax code becomes unnecessarily complicated over time. The view is that the number of laws that adjust taxable income changes over time complicate things by altering the set of deductions, exclusions, and credits that apply to taxpayers.4 Each filer must keep up in order to comply. Each new subsection adds a layer of new questions that taxpayers confront when filing their taxes. Do I qualify for the new tax credit? Does the new deduction apply to me...
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...Chanel Moore-Bass Law/531 Business Law March 19, 2012 Carmina Perez-Fowler, UOPX Faculty Online Week Two: Individual Paper: Legal Forms Of Business with Supporting Scenarios There are seven major forms of business: sole proprietorship (sole trader), partnership, limited liability partnership (LLP), and limited liability company (LLC), subsidiary or subchapter corporation (S), franchise, and corporate/company (C- traditional). The various forms of businesses are established and recognized by state laws. To determine the type of business form to use, it is important to know the differences, advantages, and disadvantages. Sole trader/proprietor is the clearest and simplest form of business to establish. It is just one owner, debt/tax liabilities fall on the owner, the income (profits/losses) reports on personal tax return. Examples of sole proprietorship are franchise, self employment, and independent contractor. Advantages are total autonomy of the business, no legal procedure to setup, no set hours/wages, and no shareholders. Disadvantages are if owner dies the business dissolves, full responsibility of tax/debt liabilities, difficulty obtaining long-term financing, and personal liability if sued. General partnership is more than one owner, involving verbal or oral agreement but not filing paperwork to create a specific entity, such as a corporation or LLC, either partner can bind the business to a contract, sharing of income (profits/losses), tax/debt liabilities, and...
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...Johnson Services company to pay for the Smith Company – would that raise debt to equity issues? 2. Conclusion: Mr. Jones, you should not purchase the stock of Smithon outright. If this is done, then you would inherit all assets and liabilities of Smithon. This would increase your personal tax liability. Issuing debt in Johnson Services Company to pay for the Smith Company would not be a good idea considering, Johnson services has incurred significant losses already. This would definitely raise debt to equity issues, since Johnson Company is operating with an existing loss and using debt equity to acquire additional assets. This would also produce a higher debt to equity ratio, meaning that most of Johnson Services’ assets are financed by debt. This may deter future investors. b. 1. Issue: Should Mr. Jones convert Smithon to an S corporation and change the fiscal year end to a calendar year end? 2. Applicable Law & Analysis: Would a convert of entity be beneficial to your tax situation? An S corporation is not subject to the corporate tax, except for a tax on built-in gains, a tax on excessive passive investment income, LIFO recapture tax, and a tax imposed on early disposition of property on which general business credit was claimed by the corporation when it was...
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