FACC 220 Lecture Notes - Lecture 9: Limited Liability Partnership, Independent Contractor, General Partnership

76 views4 pages

amaranthjackal733

7 Feb 2018

School

Department

Course

Professor

For unlimited access to Class Notes, a Class+ subscription is required.

Document Summary

4 forms: employment, self employed, partner, corporation. Taxation depends on form of income: employment income, business income, investment, capital gains, dividends. 53. 3 % top rate marginal tax in quebec. 53. 53 % top rate marginal tax in ontario. In 2014 39% was top rate in alberta, in 2016 48% is now the current top rate. Employees are not liable for the business for which you work. Ex: employees are not responsible for company debt, just as employer is not responsible for employer if you go nutsy . Business speaking generically, as in business association forms: taxation. Employee is taxable on all employment income (income from employer) and have no deduction except what is specifically provided for in the income tax act (federal and quebec). 260 sections in tax act, deductions are all contained in one section (i. e. very few deductions, most of which don"t apply to architects and engineers) Employers take money directly from employee for tax deductions.

Related Questions

In Ontario, the HST rate is 13 percent, in Alberta there is only GST of 5 percent. For which of the following transactions will the rate charged be 5 percent? Question 6 options:

A. An Ontario registrant ships a product to a recipient in Alberta.

B. An Ontario registrant sells a product to a resident of Alberta who is visiting Ontario.

C. An Alberta registrant ships a product to a recipient in Ontario.

D. A writer located in Alberta produces a book for a publisher located in Ontario and receives payment from the Ontario office.

The term "supply" as used in the Excise Tax Act would include all of the following except: Question 7 options:

A. The sale of a car by a car dealership.

B. The provision of engineering services by an engineering firm.

C. A trade of hairdressing services provided in exchange for tax advice.

D. The provision of employment services by an employee to their employer.

question 3: Johnâs Rooms is a new business which started on January 1, 2016. Its sales during its first four quarters of operation were as follows: Quarter Sales 1 - $13,000 2 - 18,000 3 - 24,000 4 - 27,000 On what date will Johnâs Rooms have to begin collecting GST? Question 3 options A. The date in the second quarter on which cumulative sales total $30,000. B. July 1, 2016. C. August 1, 2016. D. September 1, 2016.

Question 4: How does the Canadian government compensate for the regressive nature of the GST? Question 4 options: A. By allowing an exemption from the tax for lower income individuals. B. By ensuring that items purchased more frequently by lower income individuals are not subject to the tax. C. By providing lower income individuals with GST refunds. D. By providing a refundable GST tax credit that is available to lower income individuals.

Question 5: Kevin Knight, a lawyer, is a sole practitioner in the province of Ontario. The HST rate in Ontario is 13 percent. Kevin has requested that you advise him on what his HST remittance should be for the October to December quarter. Details of transactions, excluding HST, between October and December are: Revenues $30,000 Expenses: Salaries $ 7,000 Proprietorâs drawings 11,000 Office supplies 500 Rent 3,000 The HST that is to be remitted for the October to December quarter is: Question 5 options: A. $1,105. B. $2,535. C. $3,445. D. $3,835. E. None of the above.

You have recently been hired as the business manager of a dentaloffice. Your employers, the two dentists that own the practice, areconsidering a number of changes to their practice. Using theinformation youâve learned in this course and generally in yourdegree and the facts provided on the next page, please draft ananswer to each of the questions provided on the next page. Youranswer should be a minimum of three pages in length (though it maybe considerably longer) and should address each of the providedquestions. Please explain your work and any calculations that youcomplete as part of that work. Finally, for all questions butquestion 1, please make the following assumptions:

1. The federal income tax rate is 39.6%.

2. The C-corporate income tax rate is 35%.

3. The Self-Employment tax rate is 15.3%.

4. The Social Security tax rate is 6.2% (employer) and 6.2%(employee).

5. The Medicare tax rate is 1.45% (employer) and (1.45(employee).

6. The Medicare Surtax does apply.

7. The maximum Section 179 amount is $100,000 per year. 50%bonus depreciation is available.

If you make any other assumptions in your case analysis, pleasenotate them and explain your reasoning.

Currently, the business is organized as a partnership. Each ofthe dentists takes a $20,000 monthly draw from the business as aguaranteed payment. They have a staff dentist who is an employee ofthe practice who is paid $140,000 per year. In the current year,the businessâs profits after payment of the guaranteed payments areexpected to be an additional $800,000, which is divided equallybetween the owners.

Currently the business reports its taxes on the cash basis. Thebusiness is located in a rural renewal community; however, thebusiness does not currently complete any paperwork relating to thework opportunity tax credit. The business owners are grateful thesmall community in which they have made their business andregularly donate 20% of the businessâs net profit to localreligious and charitable organizations. The businessowners would like to upgrade their X-Ray equipment to expand thebusinessâs offerings. They are proposing to spend $400,000 on thenew equipment and expect the equipment to generate incrementalearnings of $80,000 a year for each of the next 8 years.

The owners are considering alternate organizationalstructures.What structure that we learned about will yield thelowest total tax burden for both the business and the owners?Howmuch will that tax burden be and what taxes will it comprise?Whatare the ownersâ and the businessâs marginal tax rates under yourrecommended structure?

ochrescorpion556

1. Jeremy earned $260,000 in salary and $9,000 in interest income during the year. Jeremy has two qualifying dependent children who live with him. He qualifies to file as head of household and has $20,500 in itemized deductions. Neither of his dependents qualifies for the child tax credit. (use the tax rate schedules.). (Do not round intermediate calculations. Round "Income tax liability" to 2 decimal places.)

a. Use the 2017 tax rate schedules to determine Jeremyâs taxes due.

	Description	Amount
(1)	Gross income	?
(2)	For AGI deductions	?
(3)	Adjusted gross income	$0
(4)	Standard deduction	?
(5)	Itemized deductions	?
(6)	?	?
(7)	Personal and dependency exemptions	?
(8)	Taxable income	$0
	Income tax liability	?

2. b. Assume that in addition to the original facts, Jeremy has a long-term capital gain of $12,500. What is Jeremyâs tax liability including the tax on the capital gain?

	Description	Amount
(1)	Gross income	?
(2)	For AGI deductions	?
(3)	Adjusted gross income	$0
(4)	Standard deduction	?
(5)	Itemized deductions	?
(6)	?	?
(7)	Personal and dependency exemptions	?
(8)	Taxable income	$0
	Income tax liability	?

3. c. Assume the original facts except that Jeremy had only $3,000 in itemized deductions. What is Jeremyâs total income tax liability?

	Description	Amount
(1)	Gross income	?
(2)	For AGI deductions	?
(3)	Adjusted gross income	$0
(4)	Standard deduction	?
(5)	Itemized deductions	?
(6)	?	?
(7)	Personal and dependency exemptions	?
(8)	Taxable income	$0
	Income tax liability ?

4. Jasper and Crewella Dahvill were married in year 0. They filed joint tax returns in years 1 and 2. In year 3, their relationship was strained and Jasper insisted on filing a separate tax return. In year 4, the couple divorced. Both Jasper and Crewella filed single tax returns in year 4. In year 5, the IRS audited the coupleâs joint year 2 tax return and each spouseâs separate year 3 tax returns. The IRS determined that the year 2 joint return and Crewellaâs separate year 3 tax return understated Crewellaâs self-employment income, causing the joint return year 2 tax liability to be understated by $13,300 and Crewellaâs year 3 separate return tax liability to be understated by $6,700. The IRS also assessed penalties and interest on both of these tax returns. Try as it might, the IRS has not been able to locate Crewella, but they have been able to find Jasper. (Leave no cells blank - be certain to enter "0" wherever required.)

a. What amount of tax can the IRS require Jasper to pay for the Dahvillâs year 2 joint return?

Amount of tax: ?

5. Trudy and Ben file a joint return. Trudyâs reported income creates $200 of income tax and Benâs reported income creates $180 of income tax. In addition to the reported income, Trudy has unreported income on which she owes $50 of income tax. How much of the $430 potential tax liability is Ben liable for?

a. $50

b. $180

c. $380

d. $430

6. James received $25,000 of compensation from his employer and he received $1,900 of interest from a municipal bond. What is the amount of Jamesâs gross income?

a. $0

b. $1,900

c. $25,000

d. $26,900

7. Which of the following is a from AGI deduction?

a. moving expenses

b. rental and royalty expenses

c. business expenses for a self employed taxpayer

d. charitable contributions

8.Which of the following is not an itemized deduction?

a. personal casualty losses

b. medical expenses

c. personal property taxes for a personal use automobile

d. charitable contributions

e. none of the choices are correct

9. In May of year 1, David left his wife Juliette. While the couple was apart, they were not legally divorced. Juliette found herself having to financially provide for the coupleâs only child (6 years of age) and to pay all the costs of maintaining the household. When Juliette filed her tax return for year 1, she filed a return separate from David. What is Julietteâs most favorable filing status for year 1?

a. head of household

b. single

c. married filing separately

d. qualifying widow

10. Caroline and her husband Chris got divorced in May of this year. During the year, Caroline provided all the support for herself and her 23-year-old child Hans (not a full-time student) who lived in the same home as Caroline for the entire year. Hans earned $29,000 this year. What is the Carolineâs most favorable filing status for the year?

a. head of household

b. married filing separately

c. surviving spouse single

maroonleopard66

FACC 220 Lecture Notes - Lecture 9: Limited Liability Partnership, Independent Contractor, General Partnership

Document Summary

Get access

Related Documents

FACC 220- Midterm Exam Guide - Comprehensive Notes for the exam ( 47 pages long!)

FACC 220 Lecture 1: FACC 220 - Business Association & Taxation (2)

FACC 220- Final Exam Guide - Comprehensive Notes for the exam ( 47 pages long!)

Related Questions