federal income tax

federal income tax

PART B Further, assume that Jackson is an accrual basis taxpayer and he also routinely pays a land clearing service before beginning major construction projects. Under the reoccurring item exception (which would allow him to immediately recognize expenses), he has the option of claiming the expenses either in the next or current year. Assuming that Jackson is projected to be far into the top marginal tax bracket of 37% in current and future years, which option would Jackson generally prefer? Why? PART A Jackson operates a construction company (as the sole owner). Since his company's current projects are all housing contracts, he has the choice of utilizing either the completed contract method (recognizing all income when the project is completed) or the percentage of completion method (recognizing the income in proportion to the percentage of the project completed) for recognizing income. The completed contract method would allow Jackson to defer income recognition. Assuming that Jackson is projected to be in the top marginal tax bracket of 37% (before considering income from the construction company) for current and future years, which income recognition method would Jackson generally prefer? Why? PART B Further, assume that Jackson is an accrual-basis taxpayer and he also routinely pays a land clearing service before beginning major construction projects. Under the reoccurring item exception (which would allow him to immediately recognize expenses), he has the option of claiming the expenses either in the next or current year. Assuming that Jackson is projected to be far into the top marginal tax bracket of 37% in current and future years, which option would Jackson generally prefer? Why