A corporation has an excess input VAT due to its excessive local purchases of goods and services. This excess input VAT is accumulating every month and reached a significant value. The management is considering to deal with the excess input VAT. a. Determine the best option for the corporation in treating its excess input VAT to gain maximum tax benefit. Justify your answer. b. Assume that the excess input VAT is directly attributable to its Zero-rated VAT Sales, explain the options that could possibly be considered by the management.

A corporation has an excess input VAT due to its excessive local purchases of goods and services. This excess input VAT is accumulating every month and reached a significant value. The management is considering to deal with the excess input VAT. a. Determine the best option for the corporation in treating its excess input VAT to gain maximum tax benefit. Justify your answer. b. Assume that the excess input VAT is directly attributable to its Zero-rated VAT Sales, explain the options that could possibly be considered by the management.

SWFT Individual Income Taxes

43rd Edition

ISBN:9780357391365

Author:YOUNG

Publisher:YOUNG

Chapter18: Accounting Periods And Methods

Section: Chapter Questions

Problem 25DQ

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A corporation has an excess input VAT due to its excessive local purchases of goods and services. This excess input VAT is accumulating every month and reached a significant value. The management is considering to deal with the excess input VAT. Determine the best option for the corporation in treating its excess input VAT to gain maximum tax benefit.
. Why might revenues generated from the tax fall short of expectations? 2. Do you think that Philadelphia should or shouldn't have adopted the tax to fund pre-K education? Support your brief argument with economic concepts covered in the course. 3. Suppose a government wants to use tax policy to persuade people to not consume certain products or services. Suppose, the government has limited resources and can only enforce (or collect) a limited number of taxes. Should that government target goods or services that have an elastic or inelastic price elasticity of demand (ED)? Why? 4. Suppose the goal of a government is to raise as much money as possible to fund governmental services. Should the government target goods and services that have an inelastic or elastic ED? Why?
Assume the government introduces a lump-sum tax on each firm within a perfectly competitive industry. Which of the following will be true after the introduction of this tax? a. Consumer prices will increase b. There will be no change in any firm’s level of profits c. A deadweight efficiency loss will occur d. There will be no change in the market quantity of output
Which of the following has the greatest effect of reducing tax payable through the acceleration of deductions? a. Writing off any bad debts before the end of the income year. b. Value trading stock at market selling value where the market selling value is higher than the cost or replacement price. c. Ensuring investments are positively geared. d. Value trading stock at market selling value where the market selling value is higher than thecost or replacement price.
As a company, to minimize the present worth of taxes paid to the federal government, use longest MACRS recovery period. true or false?
Discuss carefully the following quotation: “It is reasonable to assume . . . that business can pass along the full value of the [value-added] tax to final consumers. But if [it is assumed that] businesses have the power to raise prices a dollar for each dollar they pay in value-added taxes, then it should also [be] assume[d] businesses can similarly raise prices against every dollar they now pay in payroll and corporate income taxes” [Cockburn and Pollin, 1992, p. A15].
A local politician claimed, “to reduce the government’sdeficit, it’s time we require companies to start payingtheir deferred income tax liabilities.” Explain to thepolitician what deferred income taxes represent and whythey should not be viewed as accounts payable to thegovernment.
If the government institutes a specific tax for a good that has a perfectly inelastic demand curve A)the producer passes the entire tax on to the consumer. B)the equilibrium price drops. C)the producer must absorb the entire tax. D)the producer can generally only pass part of the tax onto the consumer.
What statement is false? a. A tax on consumption will effectively result in virtually all residents of the State paying the tax. b. A tax on consumption would support savings initiative. c. The consumption tax for purchases of goods or services from foreign sources shall be payable by the buyer. d. Business taxes are usually included in the price of goods and services of the seller but are remitted by the seller to the government. e. All of the statements is correct.
Your employer asks you to consult on the better approach to a decision. What should the corporation pay for an asset that will return them $150,000 at the end of year 1, then zero in year 2, then $400,000 in years 3 & 4, then zero in year 5, then $200,000 in years 6-10, assuming their discount rate is 3% (ignoring taxes) ?
Which statement is NOT true about the structure of the Earned Income Tax Credit (EITC)? A. EITC payments decrease as earnings increase, but everyone qualifies for some amount. B. At a particular range of income, government reduces EITC payments based on a certain fixed percent of income earned. C. EITC pays a fixed amount at a range of income. D. Up to a threshold, EITC pays a certain fixed percent of wage earned.
Which statement is TRUE? If next years' tax rate will go down, companies with more existing deferred tax liabilities than deferred tax assets will have lower income tax expense in the current year If next years' tax rate will go down, companies with more existing deferred tax assets than deferred tax liabilities will have lower income tax expense in the current year If a company does not recognize a deferred tax asset for their current year tax loss, they can never recognize or use this in the future If a company does recognize a deferred tax asset for their current year tax loss, they would only derecognize this in the future if the tax loss is offset with taxable profits. O None of the other options