ACC547 ACC/547 DQs Week 2 - 19355

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Discussion Question 1: Section 61 of the Internal Revenue Code defines income as “income from whatever source derived unless otherwise excluded.” In determining income, several key concepts have evolved from this definition. Explain the following concepts and provide at least one example of each. Explain which concept you think is most beneficial from a taxpayer’s point of view and which concept is most beneficial from the Internal Review Service’s (IRS’s) point of view.

Discussion Question 2: Tax deductions often reflect social policy, and the belief that taxpayers having a wherewithal to pay should receive a less favorable tax treatment than those who do not. How is this policy reflected in the different categories of itemized deductions and in the treatment of itemized deduction in total? Do you agree with this policy? Why or why not?

Discussion Question 3: How does the alternative minimum tax system differ from the regular tax system? How is it similar? Why did Congress implement the alternative minimum tax system? The starting point for computing alternative minimum taxable income is regular taxable income. What are some of the adjustments and preferences to regular taxable income to compute alternative minimum taxable income?

Discussion Question 4: Sue owns a home in Arizona and in New York. She spends winters in Arizona and summers in New York. She also has a houseboat in Hawaii. All of these are her personal residences and none are rented. All of the properties have mortgages on which she pays interest. What are the limits, if any, on the deductibility of the mortgage interest? Is the deduction for AGI or from AGI? When a taxpayer has loans that exceed the limits for deductibility, how is the amount of deductible interest expense determined?

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DQ 1 Week2.

Section 61 of the Internal Revenue Code defines income as “income from whatever source derived unless otherwise excluded.” In determining income, several key concepts have evolved from this definition. Explain the following concepts and provide at least one example of each. Explain which concept you think is most beneficial from a taxpayer’s point of view and which concept is most beneficial from the Internal Review Service’s (IRS’s) point of view.

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