Week 1 Testing

Question 1

If someone has a taxable income of 200,000. and their federal tax is 46,154 what is the effective tax rate in percentage?

Answer 1

46,154/ 200,000= 23.08%

Question 2

What is NOT a taxable entity?

Answer 2

Any partnerships

Question 3

Carla has an employment income of 126,100 and unincorporated business of 14,100. A rental property owned by carla has a net loss of 4,600. TCG of 32,400 and allowable capital loss of 45,000. RRSP deduction of 10,000. What is the loss carryforward? What is her net income for tax purposes?

Answer 3

Employment Income:			126,100
Add: Business Income		14,100
TCG- ACL:				(12,600) → become zero and auto carryover loss
Less: Deductions: 			10,000 
Less: Rental Loss			4,600
Net Income for tax purposes:		125,600
Carryover Loss:				12,600

Question 4

Calculate the amount of federal tax an individual would be assessed on taxable income of $150,000

Answer 4

45,916 (15%)= 6887
45,916 (20.5%)= 9413
50,522 (26%)= 13,136
7646 (29%)= 2217
Total federal tax: 31653

Question 5

What are some disadvantages of the tax system

Answer 5

discriminates against single income families, high brackets discourages employment/ investment growth, can encourage underground economies