Which of the following sources of income would NOT result in any increase in Taxable Income (Division C) for the taxpayer who receives it?

A. Workers’ compensation payments.

B. A research grant received by a student in a university program.

C. Amounts that are withdrawn from an individual’s RRSP.

D. Spousal support payments.

1. Jeremy earned $95,000 in salary and $6,000 in interest income in the current year. Jeremy’s employer withheld $11,200 of federal income taxes from Jeremy’s paychecks during the year. Jeremy has one qualifying dependent child who lives with him. Jeremey qualifies to file as head of household and has $23,000 in itemized deductions. What is Jeremy’s tax refund or taxes due?

2. Jeremy earned $95,000 in salary, $6,000 in interest income and a long-term capital gain of $4,000 during the current year. Jeremy’s employer withheld $11,200 of federal income taxes from Jeremy’s paychecks during the year. Jeremy has one qualifying dependent child who lives with him. Jeremy qualifies to file as head of household and has $23,000 in itemized deductions. What is Jeremy’s tax refund or taxes due?

3. Jeremy earned $95,000 in salary and $6,000 in interest income during the year.  Jeremy’s employer withheld $11,200 of federal income taxes from Jeremy’s paychecks during the year. Jeremy has one qualifying dependent child who lives with him. Jeremey qualifies to file as head of household and has $7,000 in itemized deductions. What is Jeremy’s tax refund or taxes due?

1. (a) Explain the difference between a point estimate and an interval estimate.
   (b) The starting salaries of a random sample of three students who graduated from North Carolina State University last year with majors in the mathematical sciences are $45,000, $35,000, and $55,000.

   (i) Find a point estimate of the population mean of the starting salaries of all math science graduates at that university last year.
   (ii) The margin of error for a 95% confidence interval is known to be $24,800. Construct that interval.

   (iii) Use this example to explain why a point estimate alone is usually insufficient for statistical inference.

Misha Enterprises, a rapidly growing call center in Northeast Michigan, services clients across the United States. Businesses contract with Misha to provide external outbound calls in the following areas: customer satisfaction surveys, marketing research surveys, and fundraising for non-profit organizations. Misha was established in 1992 by Anela Ainsley, who founded the business in her basement. It expanded rapidly and moved to its current location in 1997. Fortunately, because of its niche market and responsiveness to its customer base, Misha has not been negatively impacted by the current trend of outsourcing call center activities to international companies.

Middle Management Turnover

Misha uses a part-time, multi-shift hourly workforce for outbound calling. Misha has had good success hiring its hourly workforce. Both name recognition and its status as one of a handful of employers in the area has created a candidate pool of hourly workers who have a tendency to remain in their positions for a long time.

But Misha has not been as successful hiring call center managers. The company requires its managers to be degreed professionals with call center experience, but the nearest university is 150 miles away. As a result, Misha usually recruits candidates from larger cities who desire a rural lifestyle, as well as Misha employees who left the area to complete a bachelors degree and have since returned to the area.

The call center is managed by Chauncey LaBrad, the general manager, who is skilled at selling contracts and gaining new business. He's also responsible for all profit and loss and cash flow for Misha, as well as overseeing operations. He reports directly to the owner, Anela, with whom he has worked for more than 10 years.

The two call center managers, Helen Kenjor and Linda Kamis, report directly to Chauncey. Turnover is high for this call center management position. Chauncey has told Anela that he thinks the requirements for a bachelors degree and call center experience are unnecessary for the position. In fact, he has told Anela, “If I knew Helen was working on her MBA, I never would have hired her.”

Anela has decided to enter into other business ventures and dedicate more of her time to racing horses, so she is frequently out of the office. She founded the organization on the principals of providing a high level of service to clients while remaining profitable, and when she was in the office daily, Misha retained a growth of 10% per year. Under Chauncey’s direction, however,

Misha is growing at just 2% per year. Worse yet, in addition to having trouble retaining call center managers, Chauncey also is unable to retain sales employees.

Skill Disparities

Over the years, Misha has had to hire additional employees as the organization has grown. In addition to hiring more help, the company has invested in technology with predictive dialers and a sales database that is both a customer service management tool for tracking contacts and preferences, and a statistical reporting tool. While Misha’s managers can operate the sales software, some of its tenured employees struggle with it. Admittedly, Misha brought the software when it was recruiting a new call center manager, so the training was not as thorough as originally planned. As a result, the tenured employees have exceptional customer service experience but are unable to log information in the database accurately. They remember client preferences and characteristics by making personal, handwritten notes.

This customer information is not shared with other employees, which has been problematic, but not disastrous. The tenured employees have a tendency to share their notes with each other, but do not share with employees who were hired within the past three years. This occurs because they simply have not formed strong relationships with the newer employees. Because they remain connected to a headset all day, talking to clients, they have little time to socialize with their colleagues like they did back in the day when they were manually dialing the phone.

The newly hired employees are more technically savvy and have taken ownership of learning the database software. They see the value in the software and keep all of their notes in the database. They are able to pull reports to help them manage their time and can calculate their bonus potential on a real-time basis, which keeps them motivated. These employees have established an instantaneous competency in system utilization despite the fact that they have had no training. But while these employees have exceptional software competencies, they lack customer service experience.

An example of their deficient customer service skills was recently brought to light when a newly- hired employee, who was soliciting donations, told a telemarketing prospect:

Unfortunately, I do not have the time to listen to the story about your child’s first day of school. I have to make more calls because my job is on the line if I do not make 50 calls by the end of the evening. I am sure you understand. Did you want to renew your contribution of $100 from last year?

While this employee received appropriate disciplinary action, the exchange is indicative of the type of customer service problems that exist among the employees who were hired during the past three years.

Write a letter in block format or a memo (select the correct format, per BCOM) and address it to Anela Ainsley. (This should not be a recap of your team meeting or a letter to me.) In the document, provide a brief description of the problems. Identify the facts and discuss the key problems. Consider the following before making recommendations:

· How should Anela Ainsley handle the managerial employee turnover problem? On what do you base this suggestion?

· How would you design training, and how would you test whether the training was successful, considering the disparity of skills in the workforce?

· What can be done to help the employees build rapport so the “tenured” vs. “newly hired” divisions are less obvious?

In the closing cite the benefits of your recommendations in a succinct, truthful and tactful manner. Also keep in mind that since you are consulting, you wish to land future business from Misha Enterprises. So be sure to establish your credibility for future projects through your skillful analysis and solutions.

Going back to the Savary case (TC Summary 2010-150) where Savary , a US citizen, was a flight attendant that lived and worked in Paris. The Tax Court reviewing Art 24 (Relief from Double Taxation) in the US-France DTC, concluded that France should give a credit for the US taxes on Savary's wages. Since France had already declined to provide a credit for the US tax, Savary was subject to double taxation by both contracting states on USD 23,321 (the Tax Court allowed Savary to exclude under sec 911 as foreign earned income USD 14,415).

Is this a correct reading of the Art 24? Art 24 has a 3-bite rule similar to the 3-bite rule in the US MC. The first bite is Art 24(2)(a)(iii). The second bite is Art 24(2)(a). The third bite is Art 24(1)(b)(i). The Treasury Department Technical Explanation to the US-France DTC provides a clear roadmap to the 3-bite rule so you may want to read it.

SCOR is a local nonprofit organization that provides advice and direction to new and/or small companies. The volunteers for the SCOR organization are all retired executives and/ or entrepreneurs. At their weekly meeting, Herb Graves and Ned Book were discussing a proposal that they had received from a local trucking company that had been founded about two years ago. The company, Bald Eagle Valley Trucking (BEV), had enjoyed some success and had been able to secure a loan enabling it to expand to 10 tractor and trailer units. Its success had been based largely upon a water bottling plant, owned by the Coca Cola Com- pany, that had been increasing the volume it shipped. BEV felt that there was an opportunity to expand its business with Coca Cola into the Philadelphia, New York, and Washington, DC, areas, but it needed additional capital to buy more equipment. BEV had requested help from SCOR to assist it with developing a strategic plan and supporting its request for a loan from a Pittsburgh-based bank. Herb and Ned were very experienced executives but they had no direct experience in the transportation and supply chain business. So they contacted a nearby state university with a large and well-known Supply Chain and Logistics department. The department had a program whereby its students could be assigned a business-related project for course credit, and it would be supervised by a faculty member. CASE QUESTIONS 1. You have been chosen to work on the BEV project, which will require you to answer the following questions: a. What are the major opportunities and issues trucking companies face presently? b. What insights can you provide to help BEV mitigate some or all of the issues?

Individual A ("A"), Individual B ("B"), both calendar year taxpayers, and Corporation C ("C") with a fiscal year end June 30, form Partnership P ("P") on January 1 of Year 1. P manufactured widgets and is not a passive activity.   A contributes $300,000 cash in exchange for a 30% ownership interest (profits and capital), B contributes property with a fair market value ("FMV") of $400,000 and adjusted basis of $110,000, but subject to a non-recourse mortgage of $100,000 (which is not qualified non-recourse financing) in exchange for a 30% ownership interest (profits and capital) and C contributed a property FMV $400,000 adjusted basis $500,000 in exchange for a 40% ownership interest.

From January 1, Year 1 through December 31, Year 1 (12 months) P lost $10,000 a month from operations. From January 1 Year 2 through December 31 Year 2 P earned $15,000 per month from operations at which point it shuttered operations and earned $0 thereafter.

a. What income, gain or loss, of any does B recognize upon formation of P?        

b. What income does B report on B's income tax return for

                        Year 1

                        Year 2

                        Year 3

c. What income does C report on C's income tax return for

                      Year 1

                      Year 2

                     Year 3

Suppose you are interested in understanding the causal impact of having an MBA (versus just an undergraduate degree in business) on earnings.  To this end, you estimate a regression of the following form:

EARNINGS = 55679 + 27809(MBA)

The estimated coefficient above suggests that individuals with an MBA earn $27,809 more than those with just a business undergraduate, on average.  Give an example of how omitted variable bias might impact this estimate