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Wrap-Up Questions for Chapter 9

29 July, 2015 - 16:31
  1. Why do you think that Congress has never enacted a counterpart to § 1341 and imposed a tax rate on recovery of tax benefit items equal to the rate applicable at the time of the deduction?
  2. Taxpayer has $5000 of before-tax income to save in an IRA. Taxpayer anticipates that his/her tax bracket will never change. Will taxpayer come out ahead with a Roth IRA or a traditional IRA? What if taxpayer anticipates that his/her tax bracket will be lower in retirement years than in working (and saving) years?
  3. How should Health Savings Accounts bring down the cost of medical care in a sustainable manner?
  4. Consider: Congress should permit taxpayers to save money tax-free for a variety of future needs, i.e., to implement a consumption tax model for various needs. In addition to saving for retirement and future health care, Congress permits saving for future educational expenses. Can you think of other objectives that Congress should pursue through this consumption model? What criteria should govern these decisions?
  5. How would you structure a retirement plan using Revenue Ruling 60-31 to defer income tax for taxpayers, yet make the payments as secure as possible?