which of the following does not limit the benefits of deferring income course hero
by Mr. Ben Jacobi
Published 1 year ago
Updated 1 year ago
8 min read
Which of the following increases the benefits of income deferral?
A taxpayer earning income in "cash" and not reporting it as taxable income is an example of: tax evasion. Which of the following increases the benefits of income deferral? Larger after-tax rate of return.
What factors increase the benefits of accelerating deductions or deferring income?
What factors increase the benefits of accelerating deductions or deferring income? 1. Higher tax rates, higher interest rates, larger transaction amounts, and the ability to accelerate deductions by two or more years increase the benefits of accelerating deductions.
Which of the following choices is an advantage of shifting income across jurisdictions?
Which of the following choices is an advantage of shifting income across jurisdictions? The differences in tax rates and tax laws across jurisdictions can often be used to maximize after-tax wealth.
What is the primary goal of tax planning?
A major goal of tax planning is minimizing federal income tax liability. This can be achieved by: Reducing taxable income through income deferral or shifting. Deduction planning.
Which of the following does not limit the income shifting strategy?
Which of the following does not limit the income shifting strategy? assignment of income doctrine.
How implicit taxes may limit the benefits of the conversion strategy?
Implicit taxes may reduce the benefits of the conversion strategy. Investors must consider complicit taxes as well as explicit taxes in order to make correct investment choices. The business purpose, step-transaction, and substance-over-form doctrines may limit the conversion strategy.
Which of the following would not be included in gross income?
-excluded from gross income are health and casualty insurance reimbursements, child support payments received, reimbursements of moving expenses and other expenses by an employer, veteran's benefits, and welfare benefits.
Which one of the following is a correct statement about the constructive receipt doctrine?
A funded tax-deferred arrangement must be nontransferable and subject to a substantial risk of forfeiture. Which one of the following is a correct statement about the constructive receipt doctrine? It may tax income not yet received by a taxpayer.
Which of the following requirements are necessary to qualify for head of household status?
You must have provided more than half the cost of keeping up a home that was the person's main home for more than half the year. However, the requirement that the home must have been the person's main home for more than half the year does not apply if the person was not alive for more than half the year.
What are limitations of tax planning?
The main disadvantages are that it is more complex than the cash basis, and that income taxes may be owed on revenue before payment is actually received. However, the accrual basis may yield favorable tax results for companies that have few receivables and large current liabilities.
What are the benefits of tax planning?
Advantages of tax planning:
To minimise litigation: To litigate is to resolve tax disputes with local, federal, state, or foreign tax authorities. ...
To reduce tax liabilities: Every taxpayer wishes to reduce their tax burden and save money for their future.
Tax planning is the analysis of one's financial situation from a tax efficiency point of view so as to plan one's finances in the most optimized manner. Tax planning allows a taxpayer to make the best use of the various tax exemptions, deductions and benefits to minimize their tax liability over a financial year.
When do businesses use the deferral method?
Businesses using the deferral method recognize advance payments for goods by the earlier of (1) when the business would recognize the income for tax purposes if it had not received the advance payment or (2) when it recognizes the income for financial reporting purposes.
What are the conditions for recognizing income for tax purposes under the accrual method?
A taxpayer must recognize income if (1) all the events have occurred that are necessary to fix the right to receive a payment and (2) the amount of the payment can be determined with reasonable accuracy.
Why are there tensions between financial reporting and tax reporting?
The natural tension between financial reporting incentives and tax reporting incentives may be the reason the tax laws indicate that as a general rule businesses must use the same accounting methods for tax purposes that they use for financial accounting purposes. That is, businesses want to accelerate book income (or delay taxable income) ...
Do businesses need to accelerate book income?
That is, businesses want to accelerate book income (or delay taxable income) are also required to accelerate taxable income (or delay financial income ). Thus, using the same method for both tends to neutralize incentives to stretch numbers in one direction or the other.
What is the difference between tax policy and financial accounting?
Tax policy objectives often differ from the objectives motivating financial accounting rules. Tax accounting attempts to maximize revenue for the government while financial accounting attempts to minimize overstatements that might mislead investors and creditors.
When does a business have to account for inventories?
Under Reg §1.471-1 a business must account for inventories when sales of "merchandise" are a material "income-producing factor.".
Can a cash method business deduct prepayment?
A cash-method business that prepays businesses expenses may immediately deduct the prepayment if the contract period (1) does not last more than a year and (2) does not extend beyond the end of the taxable year following the tax year in which the taxpayer makes the payment .
What is a before loss non-insurance transfer of risk?
A before-loss non-insurance transfer of risk is not a sure thing. It is an attempt to transfer the risk to the sub-contractor but depends on the sub-contractor's ability to meet its duties. Black's Bulldozer Company promises to excavate a lot for a general contractor according to the building plans. The general contractor must have the excavation ...
Why is a risk manager not solicited for input?
A risk manager who frequently advocates avoidance may not be solicited for input because they may get a reputation for wanting to avoid risks too frequently. A hold-harmless agreement: This hold-harmless agreement shifts the premises liability risk from the property owner (the landlord) to the lessee (the restaurant).
What is a hold harmless?
Hold-harmless, indemnification, and additional insured provisions are all parts of the standard property insurance contract. While the indemnification clause and the additional insured provision may be part of a property policy, a hold-harmless agreement is generally a non-insurance transfer.
Does Black's Bulldozer excavate a lot?
It is an attempt to transfer the risk to the sub-contractor but depends on the sub-contractor's ability to meet its duties. Black's Bulldozer Company promises to excavate a lot for a general contractor according to the building plans. The general contractor must have the excavation work completed by June 1 in order to get ...
What are the three major classifications of captives?
There are three major classifications of captives: owned, rented, and group. False. A group captive has multiple parents but one of these owners could also be the insured. Thus a group can either be an owned or rented captive - the two major classifications of captives.
What are the different types of finite risk contracts?
True. There are three main types of finite risk contracts: 1) loss portfolio transfers, 2) prospective aggregate contracts, and 3) retrospective aggregate contracts. whats an advantage of purchasing insurance from an admitted, local insurer relative to a non-admitted insurer?
What is Fortuitous Risk?
A variation from the expected outcome. Fortuitous risk is also known as insurable risk. Both terms denote only the risk of loss - an adverse outcome. Risk can also be speculative, where a gain is possible.