For 2017, Tom Has Taxable Income of $48,005

question 85

Essay

For 2017, Tom has taxable income of $48,005. When he uses the Tax Tables, Tom finds that his tax liability is higher than under the Tax Rate Schedules.
a.Why is there a difference?
b.Can Tom use the Tax Rate Schedules?

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Definitions:

Initial Value Method

An accounting method for investment accounting where the investment is recorded at its cost at the time of purchase, without subsequent adjustments for market changes.

Intra-entity Gross Profit

The profit recognized within a consolidated entity from transactions among its varying parts, not yet realized outside the entity.