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Solution_AP_2-3.pdf-Solution to Assignment Problem Two –
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Solution_AP_2-3.pdf-Solution to Assignment Problem Two –
Page 1
Solution to Assignment Problem Two – 3
Case 1
Bronson's net tax owing in each of the three years is as follows:
2015
= Nil ($7,843 - $8,946) Note that a negative number is not used here.
2016
= $3,190 ($12,862 - $9,672)
2017
= $3,851 ($14,327 - $10,476 Estimated
As his net tax owing is expected to exceed $3,000 in 2017 and was more than $3,000 in 2016,
the payment of instalments is required.
Instalments under the three acceptable alternatives would be as follows:
Alternative 1
Using the estimated net tax owing for the current year would result in
quarterly instalments of $962.75 ($3,851
_
4), for a total amount of $3,851.
Alternative 2
Using the net tax owing for the previous year would result in quarterly
instalments of $797.50 ($3,190
_
4), for a total amount of $3,190.
Alternative 3
Using the net tax owing for the second previous year would result in
the first two instalments being nil. The remaining two instalments would be $1,595
[($3,190 - 0)
_
2], a total of $3,190.
The best alternative would be Alternative 3. While the total instalments under this alternative
are the same as under Alternative 2, this option offers some deferral as the first two instalments
are nil.
The required instalments would be due on September 15 and December 15, 2017.
Case 2
Bronson's net tax owing in each of the three years is as follows:
2015
= Nil ($8,116 - $8,946) Note that a negative number is not used here.
2016
= $4,174 ($13,846 - $9,672)
2017
= $3,066 ($13,542 - $10,476) Estimated
As his net tax owing is expected to exceed $3,000 in 2017 and was more than $3,000 in 2016,
the payment of instalments is required.
Instalments under the three acceptable alternatives would be as follows:
Alternative 1
Using the estimated net tax owing for the current year would result in
quarterly instalments of $766.50 ($3,066
_
4), for a total amount of $3,066.
Alternative 2
Using the net tax owing for the previous year would result in quarterly
instalments of $1,043.50 ($4,174
_
4), for a total amount of $4,174.
Alternative 3
Using the net tax owing for the second previous year would result in
the first two instalments being nil. The remaining two instalments would be $2,087
[($4,174 - 0)
_
2], a total of $4,174.
The best choice would be Alternative 1. While the first two instalments are lower under Alternative
3, the total for the year under Alternative 3 is $1,108 ($4,174 - $3,066) higher.
The required instalments would be due on March 15, June 15, September 15, and December
15, 2017.


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Concordia University-Sain...
Concordia_University-Saint_Paul
School:
Advanced_Taxation
Course:
Great resource for chem class. Had all the past labs and assignments
Leland P.
Santa Clara University
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