Tax assignment Essay

Hoffman, W., Maloney, D., Raabe, W., & Young, J. (2013). Federal Taxation Comprehensive Volume. (36 ed.). Ohio: South-W

The Internal Revenue Code authorizes deductions for trade or business activities if the expenditure is "ordinary and necessary".

Tax deductions are allowed to taxpayers only if specifically authorized by the Internal Revenue Code. Deductions allowable to individual taxpayers fall into four categories: trade or business expenses, expenses incurred for the production of income, losses, and personal expenses. In addition to discussing the general requirements for deductibility for each of the above types of expenses, this chapter also discusses the tax treatment of many commonly encountered expenses incurred by taxpayers, from trade or business expenses such as rent, insurance, interest, taxes, bad debts, etc. to employee business expenses (travel, transportation, etc.) to

Analysis: The prospective deductions include interest expense, real property tax, utilities, insurance, maintenance and depreciation, which may generate tax savings limited to the income from

Revenue generated through tax receipts ideally should exceed annual costs on various government operations. Moreover, the economic considerations involving amendment of Internal Revenue Codes for various depreciation deductions for purchase of business property and research/development deductions credits1. The second consideration, referred to, as social consideration give tax benefits to the employers encouraging health insurance and deduction for charitable contributions by employees as well as private companies. The equity considerations enable individuals or corporations to avoid the effect of double taxation on their taxable income. This could be necessarily ensured by deducting state and local taxes from Gross Income. The credit or deduction for certain foreign taxes and deductions for dividend received by corporations to avoid triple taxation. The

Under Section 179, the IRS allows you to deduct the full price of the equipment you purchased or leased during the year. By taking this deduction, you are essentially deducting the full cost of the equipment from your company's gross income.

In fact, the cost of these items is tax deductible in most cases as an advertising expense when you place your brand on the items.

The effective tax rate is the rate of tax paid on all income (taxable and nontaxable). The total tax paid is divided by the taxpayer's economic income (taxable income + nontaxable income). In this case, Susan has $10,000 of tax-exempt income that increases her economic income to $98,000 ($88,000 taxable + $10,000 nontaxable). This results in an effective tax rate of 18.73%:

The businesses among the process of production, collect the taxes from the products they sold and it is then given to the government. Therefore, it is a general consumption tax because the tax ultimately falls on the final consumer. VAT is also referred as an indirect tax because it is collected by the government from the seller (the businesses) and not the final consumer who pays the tax. This process of adding a tax in each stage of production differentiates itself from a sales tax (Anastakis, N.D.). Dimitry Anastakis, demonstrated this difference where he gives the following example, “if a sales tax of 10 percent is applied to a desk worth $1,000, then the end customer buying the desk from a desk retailer would pay $100 in sales tax and $1,000 to the desk retailer” (N.D.). Therefore, all others involved in each step of production of the desk would pay no tax only the consumer. Further, Anastakis states, “If a VAT of 10 percent is applied to the same desk, the end customer will pay $100 in VAT. If the desk builder has purchased wood and supplies for the desk totaling $400, he/she is thus assessing $600 of value that he/she has added in creating the desk. The desk builder would pay the 10 percent VAT of $40 on the supplies. When he/she remits payment of the VAT to the government, he/ she will remit the total VAT assessed on the end value of the desk ($100) minus what he/she has already paid ($40), to total $60 based on the added value” (N.D.).

Let us assume, a businessman in Rajasthan has purchased goods for Rs 10,000 and the tax of goods and services at 18%, which will include 9% CGST tax and 9% SGST tax. In such a case, if the dealer has to pay Rs 1800, then Rs 900 will be given to the Central Government and 900 rupees of Rajasthan government.

Tax credits can range from investments or investment accounts that provide favorable tax treatment, to activities or transactions that lower taxable income (Investopedia, n.d.). These investments in improving operations should yield the following results: reduced costs, enhanced revenue, improve customer satisfaction, reduce financial risks, protect the company’s R.O.I. and retain employees.

However Capital expenditure on plant, machinery and buildings for research and development (R&D), under the R&D allowance, can all be written off against taxable profits straightaway.

A company which produce a part or a component will be allowed an allowance in respect of depreciation of buildings, machinery, plant or furniture owned and used the assesee for the purpose of business and profession.

A fair and feasible tax regime is essential for the sustainable economic growth and fiscal consolidation of any economy in the world. In order to encourage this, we need a conducive environment as we push forward towards becoming a better developed nation. We also need a transparent, equitable and fair taxation system that is easy to administer.

Hong Kong tax base is phenomenally narrow and limited under the international standards. (Financial Services and the Treasury Bureau, 2006). As the Government tax revenue are mainly depends on Profit tax, Salary tax and Stamp Duties, which are nearly 90 percents of the total tax revenue, resulting that Government financial structure become unhealthy. (Hong Kong Inland Revenue Department, 2015). Moreover, the tax revenue is also fluctuated. Profit tax contribute around 45 percents of the total revenue collected (HKIRD,2015), is greatly influenced by the economic environment, and which shown after the financial crisis that Hong Kong tax revenue drop 4.6% in 2008-2009 and 6.5% in 2009-2010.(HKIRD,2010).