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:
1.

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.

2.

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.

3.

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.

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

Taxable Income

Tax Rate

Tax Paid

1. Ms. Amy Co

2. Bonnie & Blake Worm

3. Mr. Hus Lerr

________
Total:

$60,000

Name: ____________________________

ACCY 312 Spring 2015 Chorvat

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January 28, 2015

You have two deliverables for this assignment.

Please provide one hard copy (to me) of:
(1) The necessary details above to explain your calculations, especially in deriving taxable income and tax
paid.

Please be sure to include your name and section number at the end of your typewritten

calculations, in the following manner, together with a line for the score. I know that you will agree
that it is more respectful of the TAs not turn in handwritten calculations.
Name: __________________________

Section: _________________________________

Score: __________________________
And one hard copy (to me) and one electronic copy (via Turnitin.com) of:
(2) A three-page (max), double-spaced, 12-point-font, 1 margin memo analyzing your design choices and
explaining your motivation, reasoning, and expected outcomes. Be creative, but structured. Please
include a succinct (concise) introduction and conclusion. Explain what the key design elements are of
your tax system, why they are important, and what tradeoffs you noticed that you had to make. What
are your criteria for a successfully designed tax system? Think about the tax policy principles that
we discussed in class. How similar or different is your system from the tax system being used in the
U.S. today? Why did you choose your tax system to be different or similar than the U.S. 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, insightfulness, creativity, and logic of your tax system
design choices, worth 10 points. The Department of Accountancy Communication team will evaluate the
assignment based on your communication skills as they relate to coherence (organization and unity), clarity
(communicate clearly and persuasively), conciseness (simplicity and precision of language), and mechanics
(grammar), worth another 10 points.
Please use a memo format.
For complete information on the Communication teams grading and style criteria, including examples of
memos written according to the Communication teams specifications, please visit their web site at
https://business.illinois.edu/accountancy/programs/bs/resources/communication/.
continually updated, so please visit it.

This

website

is

Also, please see the following page, SP14 ACCY 312

Communication Grading Notes, for additional details on the Turnitin.com system that the
Communications team uses.
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.
ACCY 312 Spring 2015 Chorvat

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January 28, 2015

SP14 ACCY 312 Communication Grading Notes

Hello ACCY 312 students! You are only submitting one individual memo for communication grading. Your
memo should be 2-3 pages in length. I strongly urge you to use headers/subheaders if possible.
1.

Your paper submissions to Turnitin.com are due at the same time as your class submissions. You are
responsible for tracking the assignments you submit for communications grading. Therefore, you should log
into Turnitin.com at least a day before the assignment due date to ensure you can access your account
appropriately. We will not accept late assignments unless you have an emergency or a personal circumstance. If
so, you will need to contact your professor and me (klewis38@illinois.edu) via email as soon as possible.

2.

We are providing a revision opportunity for this memo. THIS REVISION IS OPTIONAL. We will average
your first grade and your revision grade for your final communications grade. You can make your revisions
based on the feedback we provide on your first paper. In order to receive full credit for the revisions, you need
to address/correct each mark on your paper. When grading the revision, we will only look to see if you made the
appropriate changes based on the marks on the first paper.
ACCESSING TURNITIN.COM
Based on class rosters, I will add you to the appropriate section of ACCY 312 in Turnitin.com. Most of you
should already have a Turnitin account from a previous ACCY course; if not, creating a new account is very
easy. PLEASE NOTE: you need to use your Illinois.edu email address in the Turnitin.com system.

1.

Once I upload the class rosters to Turnitin.com, you will receive an email to your Illinois.edu email address.
This email will tell you that you have been enrolled in an ACCY 312 course.

2.

Follow the directions in the email. Click on the link provided in the email or go to www.Turnitin.com and log in
if you already have an account. If you do not have an account yet, you should have received a temporary
password in the initial email to create an account. Simply log in with your U of I email address and the
temporary password.

3.

Once you have accessed your account, you may see previous classes that are expired if you used the system
last semester. DO NOT DROP THESE CLASSES. Just ignore them.

4.

Ensure that you are enrolled online for the correct section of ACCY 312. Please contact me directly
(klewis38@illinois.edu) with section changes, issues with online enrollment, and any
questions/concerns/feedback.
COMMUNICATIONS ASSISTANCE
I also urge you to review the ACCY communication web site featuring the communication grading rubric, and
the grading symbols and explanations. The web site also has helpful guides to memo writing, report writing,
letter writing, avoidance of casual/opinionated language, and appropriate use of numbers/symbols, punctuation,
and articles.
I am available for specific writing questions via email. If you would like assistance with a full paper, you can
schedule a 50-minute appointment with the universitys Writer's Workshop. The Writers Workshop is an
excellent resource and free to all students. For more information or to schedule an appointment, visit
http://www.cws.illinois.edu/workshop/. Please contact me with: *Course section changes *Issues with
Turnitin.com *Questions/concerns/feedback
Emails should include your registered name, professors name, and course number/section/meeting time.
Looking forward to a great spring semester!

-Kelly

Kelly Rudasill, Associate Director of Communications

Department of Accountancy l University of Illinois l 217.333.4567 l klewis38@illinois.edu

ACCY 312 Spring 2015 Chorvat

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