Paul and Hannah,who Are Married and File a Joint Return,are

question 39

Essay

Paul and Hannah,who are married and file a joint return,are in the process of adopting a child who is born in December 2015.The child,a son,comes to live with them a week after his birth on December 12.The adoption is not finalized until February of 2016.What tax issues are present in this situation?

---

Definitions:

Margin Of Safety

The excess of budgeted or actual dollar sales over the break-even dollar sales.

Margin Of Safety Percentage

A financial ratio that measures the difference between actual or projected sales and the break-even point, expressed as a percentage of sales.

Contribution Margin

The amount remaining from sales revenue after variable production costs are deducted, contributing to covering fixed costs and generating profit.

High-Low Method

A technique used in accounting to estimate variable and fixed costs based on the highest and lowest levels of activity.