Samantha is a single individual with no dependents. In 2018, she had total income of $162,000, of which $9,500 is from municipal bond interest. She has FOR AGI deductions of $12,000, itemized deductions of $9,800 and tax credits of $1,200. She also made estimated tax payments of $25,000. (Hint: Refer to the tax formula for individuals in Helpful Formulas from the Book PDF.)

1. Compute Samanthas taxable income for 2018.
2. Compute Samanthas tax due for 2018.
3. Assume that Samantha is a C Corporation instead of an individual and all of the deductions are business related. What would the corporations tax due be for 2018?

3) Goliath Supplies Inc. (a C Corp) reports total net income of $575,000 in 2018. This includes $25,000 of income from 5.00% Jackson County municipal bonds (muni bond interest is not taxable). Thus, the Corporations taxable income is equal to $550,000.

1. What is Goliaths tax liability for 2018?
2. What are Goliaths marginal, average and effective tax rates, respectively?
3. If equivalent taxablebonds pay 6.50% interest, what is the implicit tax rate for the Jackson County bonds? (see handout for Implicit Tax Rate)
4. Did Goliath make a good choice to invest in the municipal bonds instead of the taxable bonds?

4) Joe owns a 25% interest in an S Corporation that earned $250,000 in 2018. He also owns 20% of the stock in a C Corporation that earned $400,000 during the year. The S Corporation distributed $50,000 to Joe, and the C Corporation paid dividends of $15,000 to Joe. How much income must Joe report from these businesses on his individual income tax return? (Hint: A C Corporation is a separate taxable entity. An S Corporation is a flow-through entity.)

5) Complete the following table by selecting a response in each box:

Questions	General Partnership	S Corporation	C Corporation
Who pays tax on the entitys income?	Partners or the Partnership	Shareholders or the Corporation	Shareholders or the Corporation
Are operating losses passed through to owners?	Yes/No	Yes/No	Yes/No
Are capital gains/losses reported on owners tax returns as such?	Yes/No	Yes/No	Yes/No
Are distributions of profits taxable to owners?	Yes/No	Yes/No	Yes/No
Is the liability of owners limited?	Yes/No	Yes/No	Yes/No

6) Identify the probable justification (economic, social, equity, political, or simply administrative feasibility) for each of the following provisions of the tax law.

1. A tax credit allowed for electricity produced from renewable resources
2. A tax credit allowed for the purchase of a motor vehicle that operate on alternative energy sources (e.g., nonfossil fuels)
3. Favorable treatment accorded to research and development expenditures
4. The deduction allowed for contributions to qualified charitable organizations
5. An election that allows certain corporations to avoid the corporate income tax and pass losses through to their shareholders