Exam 1: Taxation-Its Role in Decision Making

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The text book lists four fundamental tax variables which a manager needs to consider when making business decisions. These variables are: 1) primary types of income; 2) entities subject to taxation on income; 3) alternative forms of business and investing structures used by taxable entities structure; and 4) tax jurisdictions. List the relevant variables within these four categories.

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Question 1

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Income: Business, Property, Employment, Capital Gains, Other Entities: Individuals, Corporations, Trusts Forms of business: Proprietorship, Corporation, Partnership, Limited Partnership, Joint Venture, Income Trusts Tax Jurisdictions: Provincial, Federal, Foreign Accessibility: Keyboard Navigation

ABC Corporation is in a 25% income tax bracket. John Adams is an employee at ABC and is in a 40% tax bracket. The company has offered John a 10% pay raise. His current salary is $50,000. Required: A) Calculate the after-tax cost of the raise to the corporation. B) Calculate the after-tax value of the raise for John. Show all calculations.

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Question 2

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A) After-tax cost to ABC: ($50,000 * 10%) * (1 - .25) = $3,750
B) After-tax value for John: ($50,000 * 10%) * (1 - .4) = $3,000 Accessibility: Keyboard Navigation

Which of the following attitudes and actions will help decision-makers develop an efficient approach to taxation?

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Question 3

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Income tax is calculated for which of the following jurisdictional groups?

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Question 4

Explain what is meant by the statement that 'tax should be treated as a 'controllable cost''.

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Question 5

Which of the following statements is false?

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Question 6

When assessing the value of a corporation, the most relevant information that decision-makers normally consider is

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Question 7

Which of the following is not considered to be a separate entity for tax purposes in Canada?

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Question 8

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Which of the following attitudes and actions will help decision-makers develop an efficient approach to taxation?

Income tax is calculated for which of the following jurisdictional groups?

Explain what is meant by the statement that 'tax should be treated as a 'controllable cost''.

Which of the following statements is false?

When assessing the value of a corporation, the most relevant information that decision-makers normally consider is

Which of the following is not considered to be a separate entity for tax purposes in Canada?

Fundamentals of Tax Planning

Liability for Tax, Income Determination, and Administration of the Income Tax System

Income From Employment

Income From Business

The Acquisition, Use, and Disposal of Depreciable Property

Income From Property

Gains and Losses on the Disposition of Capital Property-Capital Gains

Other Income, Other Deductions, and Special Rules for Completing Net Income for Tax Purposes

Individuals: Determination of Taxable Income and Taxes Payable

Corporations-An Introduction

Organization, Capital Structures, and Income Distributions of Corporations

The Canadian-Controlled Private Corporation

Multiple Corporations and Their Reorganization

Partnerships

Limited Partnerships and Joint Ventures

Trusts

Business Acquisitions and Divestitures-Assets Versus Shares

Business Acquisitions and Divestitures-Tax-Deferred Sales

Domestic and International Business Expansion

Tax Aspects of Corporate Financing

Gsthst Overview

Business Valuations

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