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January 28, 2015

ACCY 312: Principles of Taxation
Department of Accountancy / 3 credit hours / Spring 2015/ 20 points

Problem Set 1 Designing Your Own Tax System
Due: Wednesday, February 11, 2015, in class and electronically
You are the elected supreme ruler of your own country. You need to raise $60,000 in taxes for road
repairs, garbage removal, etc., from the following three households in your country:

Ms. Amy Co invested in an oil stock 20 years ago (at a cost of $100,000) that now has a fair market
value of $1,000,000. This year she received $100,000 in cash dividends from her stock. She spent all
$100,000 on living expenses. She also sold half of her stock for $500,000 that she bought for $50,000.
She reinvested the $500,000 in a different company. Ms. Amy Co is single.


Mrs. Bonnie Worm owns and operates a small bookstore with her husband, Blake. The bookstore had
a profit (sales less all expenses) of $200,000. Bonnie and Blake spent $20,000 on living expenses and
saved the rest of their income. They also donated $10,000 to a local food bank.


Mr. Hus Lerr works as a salesman. He earned a salary of $70,000. He paid $10,000 for training to
keep abreast of the latest negotiating techniques and sales pitches. These seminars took place in the
Bahamas. He is married and has 3 children, and spent $20,000 on living expenses.

You have the chance to design your own tax system. You need to raise $60,000 from these three
households. What will be each household’s taxable income? At what rate will you tax the income? Why?
How much should each taxpayer pay?

Taxable Income

Tax Rate

Tax Paid

1. Ms. Amy Co

2. Bonnie & Blake Worm

3. Mr. Hus Lerr



Name: ____________________________

ACCY  312  Spring  2015  Chorvat  

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edu/accountancy/programs/bs/resources/communication/. ACCY  312  Spring  2015  Chorvat   Page  2   . “SP14 ACCY 312 Communication Grading Notes. so please visit it. How similar or different is your system from the tax system being used in the U. conciseness (simplicity and precision of language). and logic of your tax system design choices. creativity. Name: __________________________ Section: _________________________________ Score: __________________________ And one hard copy (to me) and one electronic copy (via Turnitin. This website is Also.S. I know that you will agree that it is more respectful of the TA’s not turn in handwritten calculations. please see the following page. but structured.S. in the following manner. Be creative. especially in deriving taxable income and tax paid. insightfulness.illinois. The Department of Accountancy Communication team will evaluate the assignment based on your communication skills as they relate to coherence (organization and unity). 12-point-font. 1” margin memo analyzing your design choices and explaining your motivation. today? Why did you choose your tax system to be different or similar than the U. and expected outcomes. worth 10 points. worth another 10 points. including examples of memos written according to the Communication team’s specifications. Explain what the key design elements are of your tax system. double-spaced. system? What do you like or dislike about the current tax system that we have today? What did you learn most from this exercise? Please be sure to include your name and section number! I will evaluate the assignment based on the accuracy. What are your criteria for a “successfully” designed tax system? Think about the tax policy principles that we discussed in class. Please use a memo format.January 28. Note especially the “revision opportunity” outlined in the memo from Communications! This gives you an opportunity to maximize the communications portion of your grade for problem set 1. For complete information on the Communication team’s grading and style criteria. please visit their web site at https://business. and mechanics (grammar).” for additional details on the Turnitin. and what tradeoffs you noticed that you had to make. reasoning. together with a line for the score. Please provide one hard copy (to me) of: (1) The necessary details above to explain your calculations. 2015 You have two deliverables for this assignment. continually updated. Please include a succinct (concise) introduction and conclusion. Please be sure to include your name and section number at the end of your typewritten calculations. why they are of: (2) A three-page (max). clarity (communicate clearly and persuasively).com system that the Communications team uses.

Please contact me with: *Course section changes *Issues with Turnitin.4567 l klewis38@illinois. We are providing a revision opportunity for this memo. Please contact me directly (klewis38@illinois. When grading the revision. If you do not have an account yet. 3. We will not accept late assignments unless you have an emergency or a personal circumstance. You can make your revisions based on the feedback we provide on your first paper. Just ignore email address. Therefore. Your memo should be 2-3 pages in length. Associate Director of Communications Department of Accountancy l University of Illinois l are due at the same time as your class submissions. Ensure that you are enrolled online for the correct section of ACCY 312. you may see previous classes that are “expired” if you used the system last semester. The web site also has helpful guides to memo writing. Click on the link provided in the email or go to This email will tell you that you have been enrolled in an ACCY 312 course. COMMUNICATIONS ASSISTANCE I also urge you to review the ACCY communication web site featuring the communication grading rubric. ACCESSING TURNITIN. Once you have accessed your account. 1. THIS REVISION IS OPTIONAL. visit http://www. Once I upload the class rosters to Turnitin. DO NOT DROP THESE CLASSES.COM Based on class rosters. with section changes.cws. and appropriate use of numbers/symbols. 4. and articles. 2. and any questions/concerns/ at least a day before the assignment due date to ensure you can access your account appropriately. I strongly urge you to use headers/subheaders if ACCY  312  Spring  2015  Chorvat   Page  3   . we will only look to see if you made the appropriate changes based on the marks on the first paper. We will average your first grade and your revision grade for your final communications grade. The Writer’s Workshop is an excellent resource and free to all students. In order to receive full credit for the revisions. if not. professor’s name.Turnitin. You are responsible for tracking the assignments you submit for communications grading. you will receive an email to your Illinois. PLEASE NOTE: you need to use your and course number/section/meeting time. If so. you need to address/correct each mark on your For more information or to schedule an appointment. I am available for specific writing questions via email. If you would like assistance with a full paper. avoidance of casual/opinionated language. you should have received a temporary password in the initial email to create an account.illinois. report writing. you can schedule a 50-minute appointment with the university’s Writer's and log in if you already have an account. Looking forward to a great spring semester!   -Kelly Kelly *Questions/concerns/feedback Emails should include your registered name. issues with online enrollment. Most of you should already have a Turnitin account from a previous ACCY course. 2015 SP14 ACCY 312 Communication Grading Notes Hello ACCY 312 students! You are only submitting one individual memo for communication grading. Follow the directions in the email. letter writing. Simply log in with your U of I email address and the temporary password. you should log into Turnitin. and the grading symbols and explanations.January email address in the Turnitin. you will need to contact your professor and me (klewis38@illinois. creating a new account is very easy.333. I will add you to the appropriate section of ACCY 312 in Turnitin. Your paper submissions to Turnitin. punctuation. via email as soon as possible.