Reflection on Chapter 5

Reflection on Chapter 5

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Reflectionon Chapter 5

Chapter5 of the book “South-Western Federal Taxation 2016” discusesnumerous tax deductions and rules of deductions, some of which I wasnot aware of their existence. For example, it is common sense thatearnings obtained from an investment in the life insurance istaxable, but it was quite difficult to explain what happens whenannuities are collected by beneficiaries in installments. It is nowclear that the rules of annuity are applied to distinguish theelements of the principle amount and interest earned from theinvestment (Hoffman 6).

Inaddition, the chapter 5 cleared a general misconception that allfunds meant for scholarship are tax exempt. From chapter 5, theamount paid to aid a student pursue a degree is exempted to an extentof the tuition and other related expenses, such as books, fees, andsupplies (Hoffman 7). It is now clear that there are some scholarshipfunds, though meant to help a student pursue a degree, are taxable.Similarly, the savings bond is excluded from income under strictconditions, unlike the general misconception that al educationalsavings bonds are excluded. Chapter 5 emphasizes that the educationalsavings bonds must be within the recommended amount and be related toqualified higher educational expenses for them to be deducted(Hoffman 42).

Theongoing trend of globalization has increased the number of peopleworking abroad and students who aspire to work in foreign countries.However, very few people understand the tax implications of workingabroad. After reading chapter 5 of the book “South-Western FederalTaxation 2016” one is able to comprehend that the employee has tomeet certain conditions (such as being a bona fide resident of theforeign country) failure to which the employee may be double taxed(Hoffman 36).

Inconclusion, Chapter of the book “South-Western Federal Taxation2016” enlightens the readers on tax provisions that are rarelyaddressed in other scholarly publications.

Workscited

Hoffman,W., Maloney, D. Raabe, W. and Young, J. South-Westernfederal taxation 2016: Comprehensive professional edit.Boston, MA: Cengage Learning, 2015. Print.

Hoffman,W., Maloney, D. Raabe, W. and Young, J. South-Westernfederal taxation 2016: Comprehensive professional edit(PowerPoint Presentation).

Hoffman,W., Maloney, D. Raabe, W. and Young, J. South-Westernfederal taxation 2016: Comprehensive professional edit.(Audio Presentation).