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2. Explain the two "safe harbors" available to an Individual taxpayer to
avoid a penalty for underpayment of estimated tax.
Chapter 3 (5 pts)
3. Explain the distinction between an "above the line" deduction (i.e.
FOR AGI) and a below the line deduction (i.e. FROM AGI). Which one
is more valuable?
Chapter 13 (5 pts)
4. What is an Installment Sale? Is it a form of income "deferral" ? When
can't you elect this form of reporting?
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ACCT 553 Week 2 Homework
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Chapter 4
1. Your brother is short on cash and cannot pay his rent this month. You
pay his rent for him. Is this taxable income to your brother? Do you get a
deduction? (2 pts)
2. Which of the following items would be excluded from income? (a)
$100 bill found under the sugar caddy at the restaurant (b) Inheritance of
a car from your grandmother valued at $5,000. (c) Loan from your
father-in-law to start your business, (d) Child Support received totaling
$16,500. (4 pts)
Chapter 5
3. Shaun & Kayla earned the following in 2013: Interest on a Savings
account of $36, Interest on a U.S. Series EE Savings Bond of $25,