ACC 233-INCOME TAX
posted by austin .
Tax Rates, latesha, a single taxpayer, had the following income and deductions for the year 2009.
Business Income $25,000
Tax-exempt bond interes $ 5,000
TOTAL INCOME $100,000
Business Expenses $ 9,500
Itemized deductions $20,000
Personal exemption $ 3,650
TOTAL DEDUCTIONS $33,150
1. Compute Latesha's taxable income and federal tax liability for 2009.
2. Compute Latesha's marginal, average, and effective tax rate.
3. for tax planning purpose which of the three rates in part 2 is the most important?
Clyde had worked for many years as a chief executive of Red Industries. Inc. and had also been a major shareholder. Clyde and the company had a falling out, and Clyde was terminated. Clyde and Red executed a document under which Clyde’s stock in Red would be redeemed and Clyde would agree not to complete against Red in its geographic service area. After extensive negotiations between the parties, Clyde agreed to surrender his Red stock in exchange for $600,000. Clyde’s basis in his shares was $143,000, and he had held the shares for 17 years. The agreement made no explicit allocation of any of the $600,000 to Clyde’s agreement not to complete against Red. How should Clyde treat the $600,000 payment on his 2010 tax return?