"Analyzing Income Tax Implications" Cycle Iii And Iv

736 words - 3 pages

This paper will analysis the simulation about "Analyzing Income Tax Implications" Cycle III and IV. Although some parts of the simulation were very fundamental in essence it still provided many examples that enforced the decision-making process. These two cycles present scenarios regarding computing applicable deductions to arrive at net taxable income and applying the tax rate to taxable income to compute income tax. Within this paper, I will be describing the two cycle and the outcome results.For cycle III of the simulation, Betsy and Ronald Brown are planning for the future. They need advise on the new house they should select and on whether the vehicle Betsy wants should be leased or purchased. The IRS has specific tax guides for moving expenses and vehicle use for business. I used the textbook and the information tabs provided in the simulation to help me determine if the guidelines had been met.In order to deduct moving expenses, two basic tests must be met:1. Time: the move must be closely related to the start of work, meaning both in time and in place to the start of work at the new job. They have to move in within one year of the date he or she first reported to work at the new location.2. Distance: the new job must be at least 50 miles farther than the old residence was from the prior place of employment. Accepting a new job in the general location as the former job will eliminate any moving expense.If a vehicle is used for business purposes, generally there are two methods to use in determining the deductible business expenses:1. Standard mileage rate: If they choose the standard mileage rate he or she must use it in the first year he or she use the vehicle for business expenses, and they cannot deduct any vehicle expenses for that year.2. Actual vehicle expenses: If they choose to deduct actual vehicle expenses he or she generally can deduct depreciation by section 179 of the Internal Revenue Code. If he or she want to take the 179 deduction they must choose to in the first year he or she use the vehicle for business.After analyzing all the SUV details and Betsy's...

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