Posted: October 20th, 2022

ACCT 401 – Spring B 2015 homework 1,2,3 and 4 all chapters from 1 to 14

Problem 1-35 (LO 1-3)Chuck, a single taxpayer, earns $77,750 in taxable income and $29,250 in interest from an investment in City of Heflin bonds. (Use the U.S. .mhhe.com/connect/0077631714/Tax_rate.JPG”>tax rate schedule.) (Do not round intermediate calculations. Round your answers to 2 decimal places.)a.If Chuck earns an additional $57,250 of taxable income, what is his marginal tax rate on this income?b.What is his marginal rate if, instead, he had $57,250 of additional deductions?Problem 1-39 (LO 1-3)Jorge and Anita, married taxpayers, earn $407,500 in taxable income and $72,500 in interest from an investment in City of Heflin bonds. Using the U.S. .mhhe.com/connect/0077631714/Tax_rate.JPG”>tax rate schedule for married filing jointly, how much federal tax will they owe? What is their average tax rate? What is their effective tax rate? What is their current marginal tax rate? (Do not round intermediate calculations. Round your answers to 2 decimal places.).award:0 out of4.00 pointsProblem 1-46 (LO 1-3, LO 1-4)Hugh has the choice between investing in a City of Heflin bond at 4.50 percent or a Surething, Inc. bond at 7.05 percent. Assume both bonds have the same nontax characteristics and that Hugh has a 40 percent marginal tax rate. What interest rate does Surething Inc., need to offer to make Hugh indifferent between investing in the two bonds? (Round your answer to 2 decimal places.)award:0 out of4.00 pointsProblem 1-51 (LO 1-3, LO 1-5)Song earns $192,500 taxable income as an interior designer and is taxed at an average rate of 20 percent (i.e., $38,500 of tax).a.If Congress increases the income tax rate such that Song’s average tax rate increases from 20 percent to 25 percent, how much more income tax will she pay assuming that the income effect is descriptive?(Round your intermediate calculations and final answer to 2 decimal places.)b.If the income effect describes Song’s response to the tax rate change, the tax base and the tax collected will increase._2014_QC_44450Problem 1-60 (LO 1-3, LO 1-5)Congress would like to increase tax revenues by 19 percent. Assume that the average taxpayer in the United States earns $54,000 and pays an average tax rate of 15 percent.a.If the income effect is in effect for all taxpayers, what average tax rate will result in a 19 percent increase in tax revenues? (Round your answer to 2 decimal places.)b.This is an example of what type of forecasting?Problem 3-32 (LO 3-2, LO 3-3)Isabel, a calendar-year taxpayer, uses the cash method of accounting for her sole proprietorship. In late December she received a $24,000 bill from her accountant for consulting services related to her small business. Isabel can pay the $24,000 bill anytime before January 30 of next year without penalty. Assume her marginal tax rate is 40 percent this year and next year, and that she can earn an after-tax rate of return of 8 percent on her investments.a.What is the after-tax cost if Isabel pays the $24,000 bill in December?b.What is the after-tax cost if Isabel pays the $24,000 bill in January? Use .mhhe.com/connect/0077631714/Exhibit_3_1.jpg”>Exhibit 3.1. (Round your intermediate calculations and final answer to the nearest whole dollar amount.)c.Based on requirement a and b, should Isabel pay the $24,000 bill in December or January?roblem 3-41 (LO 3-3)Assume Rafael can earn a 9 percent after-tax rate of return. Use .mhhe.com/connect/0077631714/Exhibit_3_1.jpg”>Exhibit 3.1.Would he prefer $900 today or $1,350 in five years?Problem 3-45 (LO 3-4)Tawana owns and operates a sole proprietorship and has a 40 percent marginal tax rate. She provides her son, Jonathon, $13,000 a year for college expenses. Jonathon works as a pizza delivery person every fall, and has a marginal tax rate of 15 percent.a.What could Tawana do to reduce her family tax burden?b.How much pretax income does it currently take Tawana to generate the $13,000 after taxes given to Jonathon? (Round your answer to the nearest whole dollar amount.)c.If Jonathon worked for his mother’s sole proprietorship, what salary would she have to pay him to generate $13,000 after taxes (ignoring any Social Security, Medicare, or self-employment tax issues)?(Round your answer to the nearest whole dollar amount.)d.How much money would this strategy save? (Round your intermediate calculations and final answers to the nearest whole dollar amount.)Problem 3-48 (LO 3-4)Hyundai is considering opening a plant in two neighboring states.Option 1:One state has a corporate tax rate of 10 percent. If operated in this state, the plant is expected to generate $1,435,000 pretax profit.Option 2:The other state has a corporate tax rate of 2 percent. If operated in this state, the plant is expected to generate $1,360,000 of pretax profit.a.What is the after state taxes profit in the state with the 2% tax rate?b.What is the after state taxes profit in the state with the 10% tax rate?c.Which state should Hyundai choose?Problem 3-51 (LO 3-5)Daniel is considering selling two stocks that have not fared well over recent years. A friend recently informed Daniel that one of his stocks has a special designation, which allows him to treat a loss up to $78,000 on this stock as an ordinary loss rather than the typical capital loss. Daniel figures that he has a loss of $93,600 on each stock. If Daniel’s marginal tax rate is 35 percent and he has $187,200 of other capital gains (taxed at 15 percent), what is the tax savings from the special tax treatment?Problem 4-26 (LO 4-1)Jeremy earned $280,000 in salary and $7,000 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 $21,500 in itemized deductions. Neither of his dependents qualifies for the child tax credit. (use the .mhhe.com/connect/0077631714/Tax_rate.JPG”>tax rate schedules.). (Do not round intermediate calculations. Round your final answer to the nearest whole dollar amount. Input all amounts as positive values.)a.Use the 2013 tax rate schedules to determine Jeremy’s taxes due.b.Assume that in addition to the original facts, Jeremy has a long-term capital gain of $13,500. What is Jeremy’s tax liability including the tax on the capital gain?c.Assume the original facts except that Jeremy had only $7,500 in itemized deductions. What is Jeremy’s total income tax liability?rev: 02_13_2014_QC_44900, 02_17_2014_QC_44900, 02_20_2014_QC_44900roblem 4-27 (LO 4-1)David and Lilly Fernandez have determined their tax liability on their joint tax return to be $2,170. They have made prepayments of $1,000 and also have a child tax credit of $2,000.What is the amount of their tax refund or taxes due? (Amounts in (1), (2) and (3) should be entered as positive numbers. )rev: 02_12_2014_QC_44967Problem 4-28 (LO 4-1)Rick, who is single, has been offered a position as a city landscape consultant. The position pays $87,500 in cash wages. Assume Rick files single and is entitled to one personal exemption. Rick deducts the standard deduction instead of itemized deductions. (use the .mhhe.com/connect/0077631714/Tax_rate.JPG”>tax rate schedules.) (Do not round intermediate calculations. Round your final answer to the nearest whole dollar amount. Input all amounts as positive values.)a.What is the amount of Rick’s after-tax compensation (ignore payroll taxes)?b-1.Suppose Rick receives a competing job offer of $82,500 in cash compensation and nontaxable (excluded) benefits worth $4,050. What is the amount of Rick’s after-tax compensation for the competing offer?b-2.Which job should he take if taxes were the only concern?Competing jobProblem 4-50 (LO 4-3)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 couple’s joint year 2 tax return and each spouse’s separate year 3 tax returns. The IRS determined that the year 2 joint return and Crewella’s separate year 3 tax return understated Crewella’s self-employment income causing the joint return year 2 tax liability to be understated by $6,800 and Crewella’s year 3 separate return tax liability to be understated by $6,250. 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 Dahvill’s year 2 joint return?b.What amount of tax can the IRS require Jasper to pay for Crewella’s year 3 separate tax return?Problem 5-55 (LO 5-2)For each of the following independent situations, indicate the amount the taxpayer must include in gross income:a.Phil won $790 in the scratch-off state lottery. There is no state income tax.b.Ted won a compact car worth $18,700 in a TV game show. Ted plans to sell the car next year.c.Al Bore won the Nobel Peace Prize of $585,000 this year. Rather than take the prize, Al designated that the entire award should go to Weatherhead Charity, a tax-exempt organization.d.Jerry was awarded $5,500 from his employer, Acme Toons, when he was selected most handsome employee for Valentine’s Day this year.e.Ellen won a $1,950 cash prize in a school essay contest. The school is a tax-exempt entity, and Ellen plans to use the funds to pay her college education.f.Gene won $760 in the office March Madness pool.roblem 5-72 (LO 5-3)Dontae’s employer has offered him the following employment package.Salary$ 450,000Health insurance15,500Dental insurance1,050Membership to Heflin Country Club17,000Season tickets to Atlanta Braves games5,100Tuition reimbursement for graduate courses4,150Housing allowance (for a McMansion in hisneighborhood of choice)37,000What is Dontae’s gross income from his employment?roblem 5-63 (LO 5-3)For each of the following situations, indicate how much the taxpayer is required to include in gross income:a.Steve was awarded a $9,200 scholarship to attend State Law School. The scholarship pays Steve’s tuition and fees.b.Hal was awarded a $19,400 scholarship to attend State Hotel School. All scholarship students must work 40 hours per week at the School residency during the term.c.Bill was the recipient of an athletic scholarship that pays his $20,200 tuition to State University and provides him with a $840 per month stipend to pay for food and housing. The scholarship requires Bill to participate in athletic competition each term.a.How much of scholarship is Steve required to include in his gross income?b.What is the amount of scholarship Hal should include in his gross income?c.How much of scholarship and stipend (for 12 months) are to be included in Bill’s gross income?Problem 6-36 (LO 6-1)Clem is married and is a skilled carpenter. Clem’s wife, Wanda, works part-time as a substitute grade school teacher. Determine the amount of Clem’s expenses that are deductible for AGI this year (if any) under the following circumstances:a.Clem is self-employed and this year he incurred $615 for tools and supplies related to his job. Since neither were covered by a qualified health plan, Wanda paid health insurance premiums of $5,790 to provide coverage for herself and Clem.b.Clem and Wanda own a garage downtown that they rent to a local business for storage. This year they incurred $1,840 in utilities and depreciation of $1,115.c.Clem paid self-employment tax of $18,600 (the employer portion is $9,300), and Wanda had $4,500 of Social Security taxes withheld from her pay.d.Clem paid $45 to rent a safe deposit box to store his coin collection. Clem has collected coins intermittently since he was a boy, and he expects to sell his collection when he retires.roblem 6-42 (LO 6-1)This year Jack intends to file a married-joint return with two dependents. Jack received $166,200 of salary and paid $7,500 of interest on loans used to pay qualified tuition costs for his dependent daughter, Deb. This year Jack has also paid qualified moving expenses of $4,750 and $32,100 of alimony. (Do not round intermediate calculations.)a.What is Jack’s adjusted gross income? Assume that Jack will opt to treat tax items in a manner to minimize his AGI.b.Suppose that Jack also reported income of $10,400 from a half share of profits from a partnership. Disregard any potential self-employment taxes on this income. What AGI would Jack report under these circumstances? Again, assume that Jack will opt to treat tax items in a manner to minimize his AGI.Problem 6-47 (LO 6-2)Simpson is a single individual who is employed full-time by Duff Corporation. This year Simpson reports AGI of $60,000 and has incurred the following medical expenses:Dentist charges$1,270Physician’s charges2,210Optical charges880Cost of eyeglasses305Hospital charges3,700Prescription drugs625Over-the-counter drugs515Medical insurance premiums1,260a.Calculate the amount of medical expenses that will be included with Simpson’s itemized deductions after any applicable limitations.b.Suppose that Simpson was reimbursed for $815 of the physician’s charges and $1,730 for the hospital costs. Calculate the amount of medical expenses that will be included with Simpson’s itemized deductions after any applicable limitations.Problem 6-58 (LO 6-2)Tim suffered greatly this year. In January a freak storm damaged his sailboat and in July Tim’s motorcycle was stolen from his vacation home. Tim originally paid $27,350 for the boat, but he was able to repair the damage for $6,800. Tim paid $17,850 for the motorcycle, but it was worth $19,950 before it was stolen. Insurance reimbursed $1,260 for the boat repairs and the cycle was uninsured.a.Calculate Tim’s deductible casualty loss if his AGI is $50,000.b.Calculate Tim’s deductible casualty loss if his AGI is $150,000.c.How would you answer a. if Tim received an additional $65,000 in interest from municipal bonds this year?Problem 7-50 (LO 7-1)In 2013, Lisa and Fred, a married couple, have taxable income of $355,000. If they were to file separate tax returns, Lisa would have reported taxable income of $137,500 and Fred would have reported taxable income of $217,500. .mhhe.com/connect/0077631714/Tax_rate.JPG” title=”Tax Rate Schedule”>Use Tax Rate Schedule for reference.What is the couple’s marriage penalty or benefit? (Do not round intermediate calculations. Round your answer to 2 decimal places. Input the amount as positive value.)Problem 7-52 (LO 7-1)Lacy is a single taxpayer. In 2013, her taxable income is $49,000. What is her tax liability in each of the following alternative situations? .mhhe.com/connect/0077631714/Tax_rate.JPG”>Use Tax rate schedule for reference. (Do not round intermediate calculations. Round your answer to 2 decimal places.)a.All of her income is salary from her employer.b.Her $49,000 of taxable income includes $2,900 of qualified dividends.c.Her $49,000 of taxable income includes $14,800 of qualified dividends.roblem 7-56 (LO 7-2)Brooklyn files as a head of household for 2013 and claims a total of three exemptions (3 × $3,900 = $11,700). She claimed the standard deduction of $8,950 for regular tax purposes. Her regular taxable income was $99,000.What is Brooklyn’s AMTI? (Input all amounts as positive values.)Problem 7-67 (LO 7-3)Rasheed works for Company A, earning $386,000 in salary during 2013.Assuming he has no other sources of income, what amount of FICA tax will Rasheed pay for the year?Problem 8-47 (LO 8-1, LO 8-2)Indicate the amount (if any) that Josh can deduct as ordinary and necessary business deductions in each of the following situations.a.Josh borrowed $83,000 from the First State Bank using his business assets as collateral. He used the money to buy City of Blanksville bonds. Over the course of a year, Josh paid interest of $12,000 on the borrowed funds, but he received $11,600 of interest on the bonds.b.Josh purchased a piece of land for $85,500 in order to get a location to expand his business. He also paid $7,000 to construct a new driveway for access to the property.c.This year Josh paid $18,200 to employ the mayor’s son in the business. Josh would typically pay an employee with these responsibilities about $15,400 but the mayor assured Josh that after his son was hired, some city business would be coming his way.d.Josh paid his brother, a mechanic, $5,300 to install a robotic machine for Josh’s business. The amount he paid to his brother is comparable to what he would have paid to an unrelated party to do the same work. Once the installation was completed by his brother, Josh began calibrating the machine for operation. However, by the end of the year, he had not started using the machine in his business.Problem 8-51 (LO 8-2)Ryan is self-employed. This year Ryan used his personal auto for several long business trips. Ryan paid $1,740 for gasoline on these trips. His depreciation on the car if he was using it fully for business purposes would be $4,800. During the year, he drove his car a total of 15,000 miles (a combination of business and personal travel). (Do not round intermediate calculations. Round your final answer to the nearest dollar amount.)a.Ryan can provide written documentation of the business purpose for trips totaling 6,000 miles. What business expense amount can Ryan deduct (if any) for these trips?b.Ryan estimates that he drove approximately 1,740 miles on business trips, but he can only provide written documentation of the business purpose for trips totaling 1,150 miles. What business expense amount can Ryan deduct (if any) for these trips?Problem 8-57 (LO 8-3)This year Amy purchased $2,100 of equipment for use in her business. However, the machine was damaged in a traffic accident while Amy was transporting the equipment to her business. Note that because Amy did not place the equipment into service during the year, she does not claim any depreciation expense for the equipment.a.After the accident, Amy had the choice of repairing the equipment for $2,540 or selling the equipment to a junk shop for $730. Amy sold the equipment. What amount can Amy deduct for the loss of the equipment?b.After the accident, Amy repaired the equipment for $860. What amount can Amy deduct for the loss of the equipment?c.After the accident, Amy could not replace the equipment so she had the equipment repaired for $4,800. What amount can Amy deduct for the loss of the equipment?Problem 9-38 (LO 9-1)Jose purchased a delivery van for his business through an online auction. His winning bid for the van was $34,750. In addition, Jose incurred the following expenses before using the van: shipping costs of $1,470; paint to match the other fleet vehicles at a cost of $1,590; registration costs of $4,836, which included $4,600 of sales tax and a registration fee of $236; wash and detailing for $141; and an engine tune-up for $318.What is Jose’s cost basis for the delivery van?Problem 9-44 (LO 9-1)Wanting to finalize a sale before year-end, on December 29, WR Outfitters sold to Bob a warehouse and the land for $189,000. The appraised fair market value of the warehouse was $126,000, and the appraised value of the land was $149,250. (Do not round intermediate calculations. Round your answers to the nearest dollar amount.)a.What is Bob’s basis in the warehouse and in the land?b.What would be Bob’s basis in the warehouse and in the land if the appraised value of the warehouse is $106,000, and the appraised value of the land is $169,250?c.Which appraisal would Bob likely prefer?Problem 9-62 (LO 9-3)Phil owns a ranch business and uses four-wheelers to do much of his work. Occasionally, though, he and his boys will go for a ride together as a family activity. During year 1, Phil put 999 miles on the four-wheeler that he bought on January 15 for $8,400. Of the miles driven, only 219 miles was for personal use. Assume four-wheelers qualify to be depreciated according to the five-year MACRS schedule and the four-wheeler was the only asset Phil purchased this year. (Use MACRS .mhhe.com/connect/0077631714/MACRS_Table_1.jpg”>Table 1, .mhhe.com/connect/0077631714/MACRS_Table_2.jpg”>Table 2, .mhhe.com/connect/0077631714/MACRS_Table_3.jpg”>Table 3, .mhhe.com/connect/0077631714/MACRS_Table_4.jpg”>Table 4 and .mhhe.com/connect/0077631714/MACRS_Table_5.jpg”>Table 5.) (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.)a.Calculate the allowable depreciation for year 1 (ignore the §179 expense and bonus depreciation).b.Calculate the allowable depreciation for year 2 if total miles were 1,495 and personal use miles were 665 (ignore the §179 expense and bonus depreciation).rev: 03_25_2014_QC_47356Problem 9-68 (LO 9-4)Nicole organized a new corporation. The corporation began business on April 1 of year 1. She made the following expenditures associated with getting the corporation started:ExpenseDateAmountAttorney fees for articles of incorporationFebruary 10$44,000March 1 – March 30 wagesMarch 307,600March 1 – March 30 rentMarch 303,200Stock issuance costsApril 117,000April 1 – May 30 wagesMay 3019,000a.What is the total amount of the start-up costs and organizational expenditures for Nicole’s corporation?b.What amount of the start-up costs and organizational expenditures may the corporation immediately expense in year 1?c.What amount can the corporation deduct as amortization expense for the organizational expenditures and for the start-up costs for year 1 (not including the amount it immediately expensed)? (Round intermediate calculations to 2 decimal places and final answer to the nearest whole dollar amount.)d.What would be the allowable organizational expenditures, including immediate expensing and amortization, if Nicole started a sole proprietorship instead?Problem 10-32 (LO 10-1)Rafael sold an asset to Jamal. What is Rafael’s amount realized on the sale in each of the following alternative scenarios?a.Rafael received $96,500 of cash and a vehicle worth $17,600. Rafael also pays $9,400 in selling expenses.b.Rafael received $116,000 of cash and was relieved of a $50,250 mortgage on the asset he sold to Jamal. Rafael also paid a commission of $8,950 on the transaction.c.Rafael received $25,750 of cash, a parcel of land worth $75,500, and marketable securities of $16,700. Rafael also paid a commission of $11,150 on the transaction.Problem 10-37 (LO 10-3, LO 10-4)In year 0, Longworth Partnership purchased a machine for $56,000 to use in its business. In year 3, Longworth sold the machine for $36,700. Between the date of the purchase and the date of the sale, Longworth depreciated the machine by $29,800. (Loss amounts should be indicated by a minus sign.)a.What is the amount and character of the gain Longworth will recognize on the sale?b.What is the amount and character of the gain Longworth will recognize on the sale if the sale proceeds were increased to $61,250?c.What is the amount and character of the gain Longworth will recognize on the sale if the sale proceeds were decreased to $18,300?Problem 10-52 (LO 10-6)Kase, an individual, purchased some property in Potomac, Maryland, for $213,000 approximately 10 years ago. Kase is approached by a real estate agent representing a client who would like to exchange a parcel of land in North Carolina for Kase’s Maryland property. Kase agrees to the exchange.What is Kase’s realized gain or loss, recognized gain or loss, and basis in the North Carolina property in each of the following alternative scenarios?(Loss amounts should be indicated by a minus sign.)a.The transaction qualifies as a like-kind exchange and the fair market value of each property is $687,500.b.The transaction qualifies as a like-kind exchange and the fair market value of each property is $150,000.Problem 10-61 (LO 10-6)Ken sold a rental property for $640,000. He received $152,000 in the current year and $122,000 each year for the next four years. $535,000 of the sales price was allocated to the building and the remaining $105,000 was allocated to the land. Ken purchased the property several years ago for $438,000. When he initially purchased the property, he allocated $340,000 of the purchase price to the building and $98,000 to the land. Ken has claimed $22,000 of depreciation deductions over the years against the building. (Round your answers to the nearest whole dollar amount.)Ken had no other sales of §1231 or capital assets in the current year.a.Determine the amount of Ken’s total recognized gain or loss, and the character of the gain or loss.b.Calculate Ken’s total tax due because of the sale (assuming his marginal ordinary tax rate is 35 percent).problem 11-48 (LO 11-1)Matt recently deposited $40,750 in a savings account paying a guaranteed interest rate of 4.5 percent for the next 10 years.(Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.)a.If Matt expects his marginal tax rate to be 15 percent for the next 10 years, how much interest will he earn after-tax for the first year of his investment?b.How much interest will he earn after-tax for the second year of his investment if he withdraws enough cash every year to pay the tax on the interest he earns?c.How much will he have in the account after four years?d.How much will he have in the account after seven years?Problem 11-52 (LO 11-1)At the beginning of her current tax year, Angela purchased a zero-coupon corporate bond at original issue for $46,000 with a yield to maturity of 5 percent.Given that she will not actually receive any interest payments until the bond matures in 10 years, how much interest income will she report this year assuming semiannual compounding of interest? (Do not round intermediate calculations. Round your answer to 2 decimal places.)Problem 11-53 (LO 11-1)At the beginning of his current tax year, Eric bought a corporate bond with a maturity value of $20,000 from the secondary market for $15,200. The bond has a stated annual interest rate of 8 percent payable on June 30 and December 31, and it matures in five years on December 31.Absent any special tax elections, how much interest income will Eric report from the bond this year and in the year the bond matures?Problem 11-71 (LO 11-2)Irene is saving for a new car she hopes to purchase either two or five years from now. Irene invests $21,500 in a growth stock that does not pay dividends and expects a 6 percent annual before-tax return (the investment is tax deferred). When she cashes in the investment after either two or five years, she expects the applicable marginal tax rate on long-term capital gains to be 25 percent. (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.)a.What will be the value of this investment two and five years from now?b.When Irene sells the investment, how much cash will she have after taxes to purchase the new car (two and five years from now)?roblem 12-29 (LO 12-1)Lynette is the CEO of publicly traded TTT Corporation and earns a salary of $380,000 in 2013. Assume TTT has a 35 percent marginal tax rate.a.What is TTT Corporation’s after-tax cost of paying Lynette’s salary?Problem 12-43 (LO 12-3)Nicole’s employer, Poe Corporation, provides her with an automobile allowance of $33,000 every other year. Her marginal tax rate is 30 percent. Poe Corporation has a marginal tax rate of 35 percent. Answer the following questions relating to this fringe benefit.a.What is Nicole’s after-tax benefit if she receives the allowance this year?b.What is Poe’s after-tax cost of providing the auto allowance?Problem 12-46 (LO 12-3)Seiko’s current salary is $98,500. Her marginal tax rate is 30 percent and she fancies European sports cars. She purchases a new auto each year. Seiko is currently a manager for an office equipment company. Her friend, knowing of her interest in sports cars, tells her about a manager position at the localBMW and Porsche dealer. The new position pays only $87,100 per year, but it allows employees to purchase one new car per year at a discount of $17,700. This discount qualifies as a nontaxable fringe benefit. In an effort to keep Seiko as an employee, her current employer offers her a $12,400 raise. Answer the following questions about this analysis.a.What is the annual after-tax cost to her current employer (office equipment company that has a 35 percent marginal tax rate) to provide Seiko with the $12,400 increase in salary?b-1.Financially, which offer is better for Seiko on an after-tax basis?Car dealer’s offerb-2.By how much is the offer better for Seiko on an after tax basis (Assume that Seiko is going to purchase the new car whether she switches jobs or not.)c.What salary would Seiko need to receive from her current employer to make her financially indifferent (after taxes) between receiving additional salary from her current employer and accepting a position at the auto dealership? (Round your intermediate and final answer to the nearest dollar amount.)Problem 12-52 (LO 12-3)LaMont works for a company in downtown Chicago. The firm encourages employees to use public transportation (to save the environment) by providing them with transit passes at a cost of $274 per month.a.If LaMont receives one pass (worth $274) each month, how much of this benefit must he include in his gross income each year?b.If the company provides each employee with $274 per month in parking benefits, how much of the parking benefit must LaMont include in his gross income each year?Problem 13-55 (LO 13-2)In 2013, Nina contributes 6 percent of her $143,000 annual salary to her 401(k) account. She expects to earn a 7 percent before-tax rate of return. Assuming she leaves this (and any employer contributions) in the account until she retires in 25 years, what is Nina’s after-tax accumulation from her 2013 contributions to her 401(k) account? (Do not round intermediate calculations. Round “Times future value factor” to 4 decimal places. Round your answers to the nearest dollar amount.)a.Assume Nina’s marginal tax rate at retirement is 30 percent.b.Assume Nina’s marginal tax rate at retirement is 20 percent.c.Assume Nina’s marginal tax rate at retirement is 40 percent.roblem 13-56 (LO 13-2)In 2013, Nitai contributes 10 percent of his $128,000 annual salary to a Roth 401(k) account sponsored by his employer, AY Inc. AY Inc. matches employee contributions dollar for dollar up to 10 percent of the employee’s salary to the employee’s traditional 401(k) account. Nitai expects to earn a 8 percent before-tax rate of return.Assuming he leaves his contributions in the Roth 401(k) and traditional 401(k) accounts until he retires in 25 years, what are Nitai’s after-tax proceeds from the Roth 401(k) and traditional 401(k) accounts after he receives the distributions assuming his marginal tax rate at retirement is 30 percent?(Do not round intermediate calculations. Round your answers to the nearest dollar amount.)ebook & resourcesroblem 13-57 (LO 13-3)Marissa participates in her employer’s nonqualified deferred compensation plan. For 2013, she is deferring 19 percent of her $325,000 annual salary.Assuming this is her only source of income and her marginal income tax rate is 30 percent, how much taxdoes Marissa save in 2013 by deferring this income (ignore payroll taxes)?Problem 13-61 (LO 13-4)John (age 54 and single) has earned income of $5,100. He has $30,100 of unearned (capital gain) income.a.If he does not participate in an employer-sponsored plan, what is the maximum deductible IRA contribution John can make in 2013?b.If he does participate in an employer-sponsored plan, what is the maximum deductible IRA contribution John can make in 2013?c.If he does not participate in an employer-sponsored plan, what is the maximum deductible IRA contribution John can make in 2013 if he has earned income of $16,400?Problem 13-66 (LO 13-4)Jackson and Ashley Turner (both 45 years old) are married and want to contribute to a Roth IRA for Ashley. In 2013, their AGI is $186,600. Jackson and Ashley each earned half of the income.a.How much can Ashley contribute to her Roth IRA if they file a joint return?b.How much can Ashley contribute if she files a separate return?c.Assume that Ashley earned all of the couple’s income. What amount can be contributed to Jackson’s Roth IRA?roblem 14-38 (LO 14-1)Several years ago, Junior acquired a home th

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