1. In the following independent situations, is the tax position of the taxpayer likely to change? Explain why or why not.
a. John used to make casual purchases and sales of real estate as an investor. Currently, he does so on a regular basis and has obtained a license as a dealer.
b. Theresa quit her job as a staff accountant and has established her own practice as a CPA.
c. After saving enough for a down payment, Paul has purchased a personal residence.
2. LO.1 Marvin is the executor and sole heir of his aunt’s estate. The estate includes her furnished home, which Marvin is considering converting to rental property to generate additional cash flow. What are some of the tax problems Marvin may confront?
3. LO.2 The Sixteenth Amendment to the U.S. Constitution was passed to overturn a Supreme Court decision that had invalidated the Federal income tax. Do you agree? Why or why not?
4. LO.2 World War II converted the Federal income tax into a mass tax. Explain.
5. LO.2 How does the pay-as-you-go procedure apply to wage earners? To persons who have income from sources other than wages?