San Diego State University Equitable Tax Distributed Among Taxpayers Project

Part 1

In the late 1700s, Adam Smith identified four canons (or principles) of taxation: Equity, Certainty, Convenience of Payment, and Economy in Collection. “Equity” implies that each taxpayer enjoys fair or equitable treatment by paying taxes in proportion to income. Ability to pay is one of the measures of how equitable tax is distributed among taxpayers.

In late 2017, we had a significant change to our tax system as a result of the Taxpayer Jobs and Cuts Act (TCJA). So, how are we doing in terms of Equity? What “inequities” are there and what might we do to improve?

Part 2

• Anis purchased 6 acres of land with an old storage building on it for $1.5 million. He bought the land to start a commercial campground business. The first phase of the project was to demolish the old storage building in 2019. The demolition cost was $75,000. How does Anis treat the $75,000 for tax purposes?

a. List the keywords used in your search. (2 points)

b. List the code section(s) that deals with this situation. (2 points)

c. Summarize your conclusion. (6 points)

• On April 18, 2016, Aaron paid $23,000 for stock in Marvel, Inc., a publicly traded company. Since the stock wasn’t performing, Aaron sold it to Amelia on August 16, 2019 for $18,000. Amelia is Aaron’s sister. How much of the loss can Aaron deduct in 2019 assuming he has $80,000 in taxable income and no other capital asset transactions?

a. List the keywords used in your search. (2 points)

b. List the code section(s) that deals with this situation. (2 points)

c. Summarize your conclusion. (6 points)

Please don’t use any outside sources