ok continuing to with low light twenty one. problem one to one did twenty story. we've laid out two different the taxpayers take end of the will in them. and with comparing the year the concept of the after tax healed. on the descent eighteen he bond. birds the tax exempt municipal park. and the disabled on the Indiana bar and get special favorite treat as we discussed earlier. so that the. after tax income earned on those bonds are higher than the yet to tax yield on the eighteenth tee box. so ten thousand dollars of eighteen people. an annual basis. with over eight hundred dollars. however it would be taxed so that the after tax earnings. assuming everything else constant will lead the five hundred and twenty dollars whereas the Indiana bonds with the six hundred dollars this would get me first for the lower taxed individual. I was in the lower marginal bracket a lead them the lower tax people there. therefore they would have been. and less incentive to invest in the Indiana bond when they had expectations down in the future that the. there tax position will be would prefer. which into the other. higher bracket. the income tax the progress of this debate is going on in America for the last to. the last century. and of course local concept is. diminishing like the utility of money meaning that those who were very well afford it very fortunate to have. greater degree or a taxi sacrifice. and of. and of. at some point. have a preference for we distribution. in order to preserve the economy and halal with the less fortunate individuals to improve themselves to the tax system. the on the with the dog units that are in the progress of this film is said to resources. get taxes in opening on to the in a way that to. so what economic activity. and it publishes. hard working individuals who presumably have engaged in the capitalistic system and are being taxed and punished for of the successful. that is of the simplistic or I can it's much more complicated than it did book written on that one of particular the only the case for progressive taxation. written by twelve will perform. tax law. which highlights will of the conflict began. argument. another aspect of taxation is the telling message you. and from your financial accounting course learned about the call lasted in the case basis method. and you have studied the various aspects of that there's other accounting methods that are in between the two completed contract percentage of completion. the message of the financial accounting so I have been. virtually. light to the extent of guidance and the flavor of one is of course the cool basement accounting. for most businesses. no in the world. generally individuals are on the case based method of accounting. and of. most businesses are required to be on the cool based method of accounting when they reach certain criteria were met lawyer RBIs possible for switching to that method when they beat the heat certain result. example a five five million there's five million dollars that's ten million dollar test that requires a. construction contractors. beverage ten million over three year period to be placed to automatically of a percentage of completion method will be a cool bath. the event. one of the things that you will earlier on in the course is that in dealing with taxation of entities a reconciliation before between the financial accounting methods and the tax accounting methods. generally in the schedule called and one four inch rate depending on the side of the company. and a lot of these findings differences and permanent differences between the two accounting methods are reconciled. the basic income tax formula was described end. slight twenty five. and here again we introduce you to some key concepts in the tax law exclusion income that is excluded entirely deduction. deductions that are allowed. to reduce the amount of income subject to the tax to get to work on the cool taxable income. that taxable income becomes the amount on which baby tax rate is multiplied or that to come up with a quote tax. that's gross tax liability and there's credit. credits to dollar for dollar reduction of the actual tax o. any pre payment. our team and actually made into the system prior to. the computation of the tax on the tax return. and generally that he the to withholding the wages of the pain of estimated taxes. and the tax due. is the email recorded on the return or in some cases the refund if there's been an overpayment. of this is generally how the system works as credible reconciliation at the point of filing the return. but the responsibility for paying tax. States with the taxpayers who wealth the year though. many people don't understand this concept and ultimately tax practitioners have to be able to consistently explained it to. the working people or of business people who are venturing early on in Hickory is into the tax world. and explain how the to the how the payments system and accounting tax returns from work. the estate tax formula is. replicated on white forty eight. and there are where looking at a different aspect of taxation we are gathering. all the. at that at the time of death that to be a market value reducing. the areas of legislative deductions. to arrive that to. basically taxable estate. and ultimately end. after a unified credit. calculating and state tax liability. that gets tax formula on slight twenty no lying. further it simplifies the process of what happens when family members exchanged gifts. two other family members and guests staying busy. they will tax planning to buy specially for the wealthy who are able to just income. to future generations and take the that's the way the. from that income. from from the future generation and the income from that shoot for that from that future tax to that future generations. here below but then DNA narratives taxes. of. two flights individuals who are beneficiary. in this free class. word sales tax. like thirty one. it to the course of a product or service. based on and I didn't try to generally paid by the customer. the buyer. and the seller is the one responsible for collecting the tax. so sales tax since become one of those the Erie is where. payments are made from sellers to the government and that collected on the air for the government. from buyers. told Syrian Medicare taxes are levied on wages and self employment income. and this is one of the areas of the tax law in America that was setup in order to avoid war. theory is social programs especially dealing with. health and be healthy to take this. and. setting up a series of trust. at the government level to be utilized to deal with aging populations of time. the problem that are facing America and its national deficit now is some of this bill Clinton some of these questions about. out of one. the funds when the composition of the labor force change dramatically. why. so Security taxes are levied on the both employers and employees and the self employed. employer with old white go taxes. and self employed person. does the same to the computation of dispersal income tax liability. the federal insurance contribution act is to fight back. fifteen point three self of the Senate self employment income. then as you can see. of. another theory of the tax law. um definition one is what is meant by self employment income. the dividend from IDM stock self employment income. what about the sale of Intel's stock. would that be self employment income. the partners. here are of low income homeowners in young revenue. the accounting firm with a would that be. with that the self employment income. with a limited partner in a partnership the real estate partnership would he have. here of ink um that would be considered to be self employment income and therefore subject to this tax. these in various categories question is and generally the answer is. falling done in section fourteen oh two of the symbol different section fourteen oh to be self employed income isn't that earnings from self employment which the point in the cold section fourteen oh two with eighty has earned income. not that. so a limited quarter real estate partner who was can spawn a ship was considered to be a passive investor would not have income. that would be considered to be self employment income of proprietor of operating a business. wood was in fact the subject self employment income. so with the yearbook partnership income as indicated earlier to a gentle walk there. and the rest dividend when oil team. bills or considered passive income and not subject to self employment income. the critical issue when the tax law because as is shown on slide thirty six. there is a constant tension between. who was an employee and who is an independent contractor. an employee urge would prefer to hire everyone is an independent contractors and not be liable for will be employment taxes associated with hiring employees. so why does an employer what a treat the worker is an independent contractor. so we doesn't have to pay employment taxes. did the up money for Micah Medicare of Buddha. the workers' compensation benefits. no fringe benefits much less record keeping. of the comply with the tension was. much easier if you only have to worry about discriminatory issues associated with low or income employees for high earners. and of course increase the case. well Wolf will be close to minimize will be tax liabilities. the worker wants to be treated as an independent contractor because generally the scene there is less than six hundred hours. he doesn't receive a ten ninety nine now if you work for ten different employee or pull up to ten different companies in the arms of the six hundred from each one he won't receive a ten ninety nine but he will have self employment income subject to tax up on his tax return that he wouldn't have to report at least ten times assuming that all five hundred dollars each five thousand dollars of income. and he would be able take deduction. act. um there's no withholding of income and employment taxes and the worker can be deducted. for a concept called the GI which we haven't do yet but will it the moment. adjusted gross income which is your gross income less certain deduction. typically statutory deductions that are attracted to get to adjust to quilt it. with the IRS internal revenue service the federal government and state governments are very leery of individuals who are called themselves out as independent contractors that are really in disguise employees and will of the taxes are now being. oh boy did to it. definition of the label but it's so. the government has said. we will set up a classification criteria. well I don't like thirty seven. one major of criteria that there are issues that must be has forecast that must be satisfied is the control tax. if the employer controlled the work being performed by the worker it would call it though. all the other aspects associated with the contract relationship. many cases. the government will view this as an employee relationship not as an independent contractor with the employee or as little did little to no control over how the means manner by which to work for um. and is other evidence such as. ownership of cool. work on the premise is. services of a set schedule flexibility except the read was that in fact. it'll look more like an independent contract situation and for all of you. tax of twenty and requirements payment the climate been eliminated. here is of example. then the question is of two we have an independent contractor to we have an employee. some of these but difficult to. described. by the title you need to have some more. aspects of the relationship in the actual manner in which the work being four. there will employment taxes are imposed on employers to pay wages of fifteen hundred dollars to twenty ten during any calendar. wait least one person. on the some twenty days during the current County it. they'd unemployment taxes are also to the are also required. theories excise tax. a part of the overall tax structure in the man of American economy. and. to see. they range from occupational taxes. to taxes on the. everything from heavy try fishing equipment the airplane tickets gasoline. and the state excise taxes on cigarettes and liquor. the rates are shown in our. white forty two. and to forty three. Seoul the excise tax law in a. read album. but greater Los cigarettes treated and we found. her thousand. in nineteen fifty two on here it's eighteen dollars per barrel. fishing tackle box. fried said. to make act is associated with household. housekeepers babysitters cleaning ladies eccentric set to come in and take care of the period. household chores for babies except for children. child care. and of the Lord has set up the system so that to the individuals generally not treated as independent contractors. if the wages exceed the seventeen hundred olive threshold and twenty ten no social security. I think the whole Security or Medicare obligations duo. and so our lives. federal unemployment stayed unemployment taxes are required. um some cases W two will be we quieted of the into with the we want. indicating the Coolangatta wages earned by an individual over the year and it appeared in file by employers and filed with the federal government state government and the Cubbies in it to be employee so that he can pee and he can calculate. have a record of the tax the income earned as an employee to that employed her. here is some further example Florida criteria associated how the nanny tax work. it operates in lastly. of. we ordered just say at this moment since it's a little complex and PTO we haven't really gotten into the fire process of preparing and discussing the calculation of taxation. but rather than have a withholding system. for many the household workers that the federal government set up of different system which oh wells the taxpayer to basically file a schedule a. and make the payment due. of the filing of the annual income tax return and for the law to the record keeping that would normally take place. of that. now this will business and operating it and money can manage to get employee. with that note of it. what a lecture for two to chapter one has concluded. and we will move on to chapter two for the next. thank you.