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ime4030_ch11-12hmwk_templatef19r.xls

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	Homework Assignment #8: Chap. 11, 12								Name:
										Problem 1
Problem 1 Data										Federal Taxes
Family Status	Your Age	Year	Est. Gross Income	401k	IRA	State Taxes	Mortgage interest	Property Taxes	Donations			Year 1	Year 7	Year 10
single	25	1	75000	7500		3000			3750	Gross Inc
single	26	2	78000	7800		3120			3900	401k
single	27	3	81000	8100		3240			4050	IRA
single	28	4	84000	8400	2000	3360			4200	Other deferred
single	29	5	88000	8800	2000	3520			4400	Adj. Gross
single	30	6	91000	9100	2000	3640			4550
married	31	7	180000	18000	4000	7200			9000	Dependents	0	0	0	0
married	32	8	187000	18700	4000	7480	24000	5000	9350
married + child	33	9	195000	19500	4000	7800	24000	5100	9750	Standard Deduction	See text
married + 2 children	34	10	200000	20000	4000	8000	24000	5202	10000	Mortgage Interest
										Donations
										State Taxes
Problem 11-21	Depreciation Method									Prop. Taxes
A										Other
B										Total deductions
C
D										Taxable Inc
E										Federal Taxes owed	(from table)				Note impact of home ownership!!
										Problem 11-31a
										Year	BTCF Purchase & salvage	BTCF benefits-expenses	Straight Line	Book Value	Taxable Income	Tax	ATCF
										0	-20000
										1		5000
										2		5000
										3		5000
										4		5000
										5		5000
										6		5000
										7		5000
										8	3000	5000
																NPW =
																IRR =
										Problem 11-31b
										Year	BTCF Purchase & salvage	BTCF benefits-expenses	Double Declining Balance	Book Value	Taxable Income	Tax	ATCF
										0	-20000
										1		5000
										2		5000
										3		5000
										4		5000
										5		5000
										6		5000
										7		5000
										8	3000	5000
																NPW =
																IRR =
										Problem 11-31c
										Year	BTCF Purchase & salvage	BTCF benefits-expenses	100% Bonus	Book Value	Taxable Income	Tax	ATCF
										0	-20000
										1		5000
										2		5000
										3		5000
										4		5000
										5		5000
										6		5000
										7		5000
										8	3000	5000
																NPW =
																IRR =
										Problem 11-31d
										Year	BTCF Purchase & salvage	BTCF benefits-expenses	MACRS (5-year class)	Book Value	Taxable Income	Tax	ATCF
										0	-20000
										1		5000
										2		5000
										3		5000
										4		5000
										5		5000
										6		5000
										7		5000
										8	3000	5000
																NPW =
																IRR =

Program in the formula from either Table 12A-1a or 12A-1b on page 453

From column D.

401k and IRA investments up to specified limits are tax deferred. You can subtract them from your gross income to arrive at adjusted gross income.

Use the numbers from your text for the standard deduction for single and married even though they are slightly different now

Contributions to church, and other 501(c)(3) non-profit organizations.

Per text, there are no more deductions for dependents. However, since then there appears to be a small credit for dependents, but use the book to solve the problem.

You can itemize or take the standard deduction…one or the other. Typical itemized deductions are shown below. You can use the box to the right if you want to use the standard deduction instead.

PRR: Interest on home loans is tax deductable

For purposes of this exercise, 4% of Gross Income was used as an estimate for CA State tax rate. Actual CA Tax rates are shown at: http://www.ftb.ca.gov/forms/catxrate_exmpt.shtml

Mentioned in text on page 413. Use process of elimination to determine this.

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