ACC 456 STUDY Extraordinary Success/acc456study.com ACC 456 STUDY Extraordinary Success/acc456study. | Page 11

I:1-5
Carmen has computed that her average tax rate is 16% and her
marginal tax rate is 25% for the current year. She is considering
whether to make a charitable contribution to her church before the
end of the tax year. Which tax rate is of greater significance in
measuring the tax effect for her decision? Explain.
I:1-6
Why are the gift and estate taxes called wealth transfer taxes? What is
the tax base for computing each of these taxes?
I:1-7
Cathy, who is single, makes gifts of $50,000 to each of her two adult
children.
·
a.Who is primarily liable for the gift tax on the two gifts, Cathy
or the two children?
·
b.If Cathy has never made a taxable gift in prior years, is a gift
tax due on the two gifts?
2-1
·
a.
The tax law refers to gross income, yet the term gross income is not
found on Form 1040. Explain.