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Jocelyn and Roland file a joint return. Jocelyn works and receives income during the year but Roland does not. If the couple files a married filing joint tax return, Roland is not responsible for paying any taxes due if Jocelyn is unable to pay the taxes. 

Johnny Rose has a high tax rate and sells land to his daughter Alexis who has a low tax rate.  Alexis then leases the property back to her father Johnny for him to use in his business.  Which type of tax planning strategy is employed?    

Which of the following statements about tax rate structures is incorrect?

Roland reported lower wages on his tax return than were reported on his W-2. Which audit program will likely catch Roland’s “mistake”?  

The tax authority has changed the tax rate structure such that all income is taxed at 35%. Ted decides to work harder such that his after-tax income remains the same. Assuming prior to the law change his pre-tax income was 175,000 and his tax rate on all income was 25%, how much must he earn? 

Twyla is unmarried and has no children. Twyla’s mother, who lives in an apartment across town, earns $4,000 which she uses to buy groceries and get her hair done. Twyla pays for her mother’s rent ($3,000) and health insurance ($500). Which is the most advantageous filing status available to Twyla?

Ray Butani, a single taxpayer, earns $425,000 in taxable income and $60,000 interest from an investment in town of Elmdale bonds. Using the U.S. tax rate schedule for 2020 below, determine the following: A. How much federal tax will he owe? (3 points) B. What is his average tax rate? (2 points) C. What is his effective tax rate? (2 points) D. If Ray earns an additional $175,000 in taxable income, what is his marginal tax rate on this income? (3 points)   

Consider the following:  Taxpayer            Total Income            Tax Ronnie               70,000                  29,000  Bob                    50,000                  10,000  Roland               70,000                 16,000 Assess the equity of the tax rate structure.

Which of the following statements about tax rate structures is incorrect?

David Rose gives his mother Moira $10,000 to spend on clothing and wigs. David’s marginal tax rate is 32% and Moira’s marginal tax rate is 12%. David owns a store and needs assistance. How much would employing Moira at the store and paying her $10,000 instead of giving it to her save the family overall in tax (ignore payroll and employment tax)?