1.What are the sources and causes of complexity in our tax system? which if any, of these causes are correctable?
2.why do the tax laws sometimes discriminate against related-party contracts? Is this always in society’s best interest?
3.Which of the following statements accurately described an efficient tax plan?
a. high-tax brackets investors should invest in municipal bonds
b. It is rarely a good strategy to pay explicit taxes
c.Renting durable business assets is more efficient than owning for low -tax rate investors
d.Employees prefer to defer receipt of their compensation (assuming this succeeds in postponing the recognition of taxable income) whenever they expect their tax rates to fall in the future
4.For a regular corporation, prepare a list of the following
a. Income items that are taxed (specifically, items included in realized income)
b. items excluded from realized income
c.deductions and exemptions
d.credit
5.A taxpayer is considering two manually exclusive alternatives. Alternatives A is to hire a tax accountant at a cost of $20000 to research the tax law on a tax avoidance plan. If successful the plan would save the taxpayer $21000 in taxes. The probability of success is estimated to be 75%. Alternative B is to hire marketing firm at a cost of $18000, whose task would be to develop a marketing plan for the taxpayer’s product. If successful, the plan would reduce other advertising costs by $25000 without affecting sales revenue. The probability of success is estimated at 80%. Which alternative should the taxpayer choose if he or she faces a tax rate of 15% of 35%. Comment on your results. Is tax planning a tax favored activity? Is so, for whom.
6.the taxpayer is the sole owner-employee of a small corporation that prepares tax returns. Before paying himself, any salary or dividends or taking fringe benefits the corporation has taxable income of $100000.Summarize the tax consequences to both parties (the corporation and the taxpayer) of
a. paying a salary of $50000
b. paying no salary but dividends of $50000
c.providing $10000 of fringe benefits and $40000 of salary
7.A taxpayer owns two separate companies. Company A is in the 35%marginal tax bracket and company Bis the 15% tax bracket. Company A sells all its output to B at cost and B sells to outsiders at a markup of 50%. Company A’s revenues total $2million, whereas company B’s revenues total $3million.What are the tax implications of this arrangement? How will the IRS react?

Requirement of how the questions need to be answered 1-7
#1 – choose the one that best describes an efficient tax plan and explain why.
#2 – Prepare list of tax items requested
#3 – Provide formula and calculations along with explanation to the questions posed.
#4 – Provide explanations and an example.
#5 – Provide explanations and an example.
#6 – Provide calculations and details to support your answer to each of a, b & c.
#7 – Provide calculations to support your answer.