Solution and Answer Guide YOUNG, NELLEN, PERSELLIN, LASSAR, CUCCIA, CRIPE, SWFT INDIVIDUAL INCOME TAXES 2026; CHAPTER 1: AN INTRODUCTION TO TAXATION AND UNDERSTANDING THE FEDERAL TAX LAW (Complete And Verified Study material) (552pages) LEARNEXAMS

TABLE OF CONTENTS

Discussion Questions...........................................................................................................1

Research Problems........................................................................................................... 10

Solution To Ethics & Equity Feature................................................................................. 11

Solutions To Becker CPA Review Questions....................................................................12

DISCUSSION QUESTIONS

1. (LO 1) Various answers are possible, including using the Key Terms at the end of each

chapter, referring to the Glossary (Appendix C), looking up the footnote resources to

the Internal Revenue Code in Appendix D, using chapter features (e.g., Global Tax

Issues, Ethics & Equity, Tax Planning, and Framework 1040), examining the tax forms

used in the chapters, and completing additional end-of-chapter assignments. All of

these resources will help students engage more deeply with the materials and help

their understanding.

2. (LO 1, 4)

a. John must now document rental receipts and separate his home expenses

between personal and rental use, and he may be subject to the transient

occupancy tax.

b. Theresa has become self-employed. Now she will be subject to self-employment

tax and may have to make quarterly installment payments of estimated income

and self-employment tax. Theresa will be required to make payroll tax payments if

she hires individuals to work in her business.

c. Paul’s employer might have some moving expenses that it can deduct (in general,

Paul cannot deduct moving expenses). Paul’s personal taxes will change because

Florida does not impose an income tax but California does.

3. (LO 1, 4) The income tax consequences that result are Marvin’s principal concern. Any

rent he receives is taxed as income, but operating expenses and depreciation will

generate deductions that offset some or all of the income or even yield a loss. Marvin

must also consider the effect of other taxes. Because the property is being converted

from residential to commercial use, he can expect an increase in the ad valorem

property taxes levied by the local (and perhaps even the state) taxing authorities.

Besides the real estate taxes, personal property taxes could be imposed on the

furnishings.