Solutions Manual for Fundamentals

Solutions Manual for Fundamentals of Taxation for Individuals and Business Entities A Practical Approach, 2025 Edition By Gregory

• Carnes (All Chapters 1-18, 100%

Original Verified, A+ Grade)

All Chapters Arranged Reverse: 18-1

Supplement Files Download link at the end of PDF file.This is Original and Complete Solutions Manual for 2025 Edition, All other SM in the market are wrong/old Edition files. 1 / 4

Chapter 18—Business Entity Topics End-of-Chapter Solutions Discussion Questions 1)

Title: Discussion Question 1

Difficulty: Easy

Learning Objective 1: 18.1

Standard 1: AACSB || Knowledge

Standard 2: AICPA || AC: Reporting

Standard 3: Bloom's || Knowledge

Section Reference 1: 18.1

Solution:

The general rules for income and deductions for individuals are the starting point for computing corporate taxable income. For example, the following rules for income are the same for

individuals and for corporations:

Income will be taxable if the taxpayer’s wealth has increased, the taxpayer has realized this increase in wealth, and the law does not provide a specific exclusion for this type of income.Prepaid revenue is generally included in income when received, even for accrual-basis taxpayers.Municipal interest income is exempt from taxation.Long-term capital gains are gains from the sale of capital assets held for more than one year.Similarly, the basic rules for income and deductions are the same for individuals and

corporations:

Business expenses are deductible if they are incurred in operating a business and are ordinary, necessary, and reasonable.Expenditures that are a violation of public polity are not deductible.Prepaid interest expense is deducted over the period the interest relates to, not when paid, even for cash-basis taxpayers.Net operating losses are generated only by business losses and casualty losses.

Time on Task: 6 minutes

2)

Title: Discussion Question 2

Difficulty: Easy

Learning Objective 1: 18.1

Standard 1: AACSB || Knowledge

Standard 2: AICPA || AC: Reporting

Standard 3: Bloom's || Knowledge

Section Reference 1: 18.1 2 / 4

Solution:

Cash-basis corporations deduct charitable contributions in the year that they pay the contribution.An accrual-basis corporation can elect to deduct accrued contributions if the corporation’s board has approved the contribution before year-end, and it has been paid within the first 3 ½ months following its year-end.

Time on Task: 2 minutes

3)

Title: Discussion Question 3

Difficulty: Medium

Learning Objective 1: 18.1

Standard 1: AACSB || Knowledge

Standard 2: AICPA || AC: Reporting

Standard 3: Bloom's || Knowledge

Section Reference 1: 18.1

Solution:

All charitable contributions are not deducted based on the fair market value of the asset. Cash contributions are deductible based on the amount of cash given. For contributions of property, there are different rules for long-term capital gain property (LTCG) and all other property. The full fair market value (FMV) of contributions of LTCG property is deductible. For all other

property, the deduction is:

(FMVoftheproperty)−(Theordinaryincome∨shorttermcapitalgainthatwouldberecognizedifthetaxpayersoldtheproperty) A corporation's contribution of inventory or depreciable property or real property used in its trade or business can result in a deduction that is greater than the property’s adjusted basis.

Time on Task: 4 minutes

4)

Title: Discussion Question 4

Difficulty: Medium

Learning Objective 1: 18.1

Standard 1: AACSB || Knowledge

Standard 2: AICPA || AC: Reporting

Standard 3: Bloom's || Knowledge

Section Reference 1: 18.1

Solution:

Congress allows the dividend received deduction to help mitigate triple taxation that could occur when dividends are paid to corporate shareholders.

Time on Task: 2 minutes

5)

Title: Discussion Question 5

Difficulty: Medium

Learning Objective 1: 18.1, 2

Standard 1: AACSB || Knowledge 3 / 4

Standard 2: AICPA || AC: Reporting

Standard 3: Bloom's || Knowledge

Section Reference 1: 18.1, 2

Solution:

There are several important differences in the computation of income and deductions for corporations.Charitable contributions to qualified organizations are allowed but only to the extent of 10% of taxable income before the charitable contribution and the dividend received deduction.The dividend received deduction is allowed for corporate taxpayers.Corporations cannot deduct up to $3,000 of net capital losses, as individuals can.Corporations can only use capital losses to offset capital gains. Capital losses cannot offset ordinary income. Any unused capital loss is carried back three years and carried forward five years.

Time on Task: 4 minutes

6)

Title: Discussion Question 6

Difficulty: Easy

Learning Objective 1: 18.2

Standard 1: AACSB || Knowledge

Standard 2: AICPA || AC: Reporting

Standard 3: Bloom's || Knowledge

Section Reference 1: 18.2

Solution:

Corporations do no not have a preferential tax rate for LTCGs. Rather, ordinary income, STCGs, and LTCGs are taxed at the same tax rate, 21%.

Time on Task: 2 minutes

7)

Title: Discussion Question 7

Difficulty: Easy

Learning Objective 1: 18.2

Standard 1: AACSB || Knowledge

Standard 2: AICPA || AC: Reporting

Standard 3: Bloom's || Knowledge

Section Reference 1: 18.2

Solution:

C corporations can designate any month for its year-end. While many corporations have a calendar year-end, this is not required. However, S corporations are generally required to use a calendar year

Time on Task: 2 minutes

8)

Title: Discussion Question 8

Difficulty: Easy

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