Discuss the numerous ways our government includes income in taxation and excludes income from taxation.

student 1 :

As a general rule of thumb, if you receive money, our government will tax you on the money you receive with a few exceptions. Some, but not all, ways the government taxes our income include wages, salaries, tips, bonuses, severance, commission, interest, dividends, unemployment compensation, jury pay, bank incentives, alimony, recognized capital gains, rental income, royalties, social security benefits, prizes, awards, gambling winnings, sholarships, grants, etc. Some forms of income that are not taxable include gifts (recipient), life insurance proceeds, child support, welfare payments, etc.

student 2:

The government loves to tax us. They will take a sizable portion of out gross income and take out any deductions we qualify for. The taxable income includes things like our salaries, tips, bonuses, commission, alimony, prizes, awards, and income from investments to name a few. There are a few items that are not taxes such as receiving gifts (under a certain amount) , some scholarships (excluding room and board), child support, and other items similar to these.

the question is …

Some analysts have suggested that the adoption of electronic medical records (EHR) by hospitals could eventually reduce annual healthcare expenditures by one third or more. Others have been far less sanguine about such projections, arguing that adopting such information technologies may in fact increase costs. State if you agree or disagree with reasons.??

reply to two of your classmates’ responses by displaying agreement or disagreement on her/his response, or by providing additional clarification or additional reference…

1-The first answer from my classmates is (A competitive healthcare market has created a veritable technological arms race to the tune of nearly 20 billion dollars. Rapidly emerging technological solutions designed to improve hospital operational efficiency are already having a positive effect on hospital bottom lines. In a fast-changing market, technology can provide the key edge for early adopters by automating some of the biggest medical cost-drivers.

So, how can technology reduce healthcare costs?

Automate administrative tasks for more efficient use of physicians’ time .Digitizing repetitive tasks can significantly cut down on the number of hours physicians need to treat patients. Administrative expenditures account for more than a quarter of total hospital spending in the U.S., higher than any other first-world country. Doctors spend less than a third (27%) of their time treating patients; the majority of their time is spent on various administrative tasks. In fact, some doctors spend up to one-third of their timejust entering patient notes into electronic health records (EHRs).

Obviously, this is not an effective use of a physician’s time. It also contributes to the already massive issue of physician burnout.

Artificial intelligence (AI) and basic digital software can limit—even automate—physician interactions with EHRs. For example, instead of manually entering test results or filling out intake forms, software can import test results and complete the corresponding paperwork. It can also provide prescription advice and reminders, and help physicians avoid excessive testing.)

2- the second answer from my classmater is (I agree because HIT includes a variety of integrated data sources, including patient Electronic Medical Records, Decision Support Systems, and Computerized Physician Order Entry for medications. HIT systems provide timely access to patient information and (if standardized and networked) can communicate health information to other providers, patients, and insurers. Creating and maintaining such systems is complex. However, the benefits can include dramatic efficiency savings, greatly increased safety, and health benefits.

EFFICIENCY SAVINGS THE POTENTIAL EFFICIENCY SAVINGS FOR BOTH INPATIENT AND OUTPATIENT CARE AND THE LARGEST SAVINGS COME FROM REDUCED HOSPITAL STAYS (A RESULT OF INCREASED SAFETY AND BETTER SCHEDULING AND COORDINATION), REDUCED NURSES’ ADMINISTRATIVE TIME, AND MORE EFFICIENT DRUG UTILIZATION.

INCREASED SAFETY MOST OF THE SAVINGS WOULD BE GENERATED BY HOSPITALS WITH MORE THAN 100 BEDS. PATIENTS AGE 65 OR OLDER WOULD ACCOUNT FOR THE MAJORITY OF AVOIDED ADVERSE DRUG EVENTS. ALSO, HIT HELPS WITH PREVENTION BY SCANNING PATIENT RECORDS FOR RISK FACTORS AND BY RECOMMENDING APPROPRIATE PREVENTIVE SERVICES, SUCH AS VACCINATIONS AND SCREENINGS. FINALLY, THE HIT SYSTEM CAN HELP IDENTIFY PATIENTS IN NEED OF TESTS OR OTHER SERVICES, AND IT CAN ENSURE THE CONSISTENT RECORDING OF RESULTS. PATIENTS USING REMOTE MONITORING SYSTEMS COULD TRANSMIT THEIR VITAL SIGNS DIRECTLY FROM THEIR HOMES TO THEIR PROVIDERS, ALLOWING A QUICK RESPONSE TO POTENTIAL PROBLEMS. EFFECTIVE DISEASE MANAGEMENT CAN REDUCE THE NEED FOR HOSPITALIZATION, THEREBY BOTH IMPROVING HEALTH AND REDUCING COSTS)

Note: This problem is for the 2019 tax year. Mike E. Jones and Joan A. Baxter, each age 43, married on September 7, 2015. Mike and Joan will file a joint return for 2019. Mike’s Social Security number is 111-11-1112. Joan’s Social Security number is 111-11-1113, and she adopted “Jones” as her married name. They live at 201 Riverview Dr, Augusta, GA 30901. Mike was divorced from Sally Jones in March 2014. Under the divorce agreement, Mike is to pay Sally $2,000 per month for the next 8 years or until Sally’s death, whichever occurs first. Mike pays Sally $24,000 in 2019. In addition, in January 2019, Mike pays Sally $50,000, which is designated as being for her share of the marital property. Also, Mike is responsible for all prior years’ income taxes. Sally’s Social Security number is 123-45-6788. Mike’s salary for 2019 is $145,000, and his employer, Facebook, Inc. (Federal I.D. No. 98- 7654321), provides him with group term life insurance equal to three times his annual salary. His employer withheld $23,000 for Federal income taxes and $5,000 for state income taxes. The proper amounts were withheld for FICA taxes. Joan recently graduated from law school and is employed by Legal Liability, Inc. (Federal I.D. No. 11-1111111), as a prosecutor. She receives a salary of $45,000 in 2019. Her employer withheld $8,000 for Federal income taxes and $2,000 for state income taxes. The proper amounts were withheld for FICA taxes. Joan has $1,000 in qualified dividends on Mesa Corporation stock she inherited. Mike and Joan receive a $1,800 refund on their 2018 state income taxes. They itemized deductions on their 2018 Federal income tax return (total of $17,000). Mike and Joan pay $3,500 interest and $1,500 property taxes on their personal residence in 2019. Their charitable contributions total $9,500 (all to their church). They paid sales taxes of $1,500, for which they maintain the receipts. Both spouses had health insurance for all months of 2019 and want to contribute to the Presidential Election Campaign. Required: THIS RETURN IS FOR 2019 – TAX LAWS IN EFFECT FOR 2019 WILL APPLY Compute the Jones’ net tax payable (or refund due) for 2019. Use and PRINT OUT Form 1040 and Schedule A, Schedule B and the Qualified Dividends and Capital Gain Tax Worksheet to complete this tax return. You are required to complete the 2019 Federal tax return using 2019 Intuit ProConnect Tax Software. You are required to submit the filing copy of the

ACC7008 – Case Study (for Financial Management part) Group work (50% of overall grade) Submission deadline: December 09, 2020. Please follow the submission guidelines (shown after the case study) carefully. Case Study – Group Altmann One early afternoon in March 2020, Alex Becker was at work all by himself at Group Altmann’s headquarters in Frankfurt, Germany. Normally, his office would be buzzing with activities at this time of the year; however, most of his staff members were self-isolating due to Covid-19 and the place looked deserted. This has not, however, dampened Becker’s enthusiasm in getting things done. If anything, this has only increased his appetite to pore over the financial documents that he had just received. The previous week, Becker had requested additional financial information about an investment proposal from Altmann-South Africa (Altmann-SA), a wholly owned subsidiary that operated a manufacturing facility and a regional sales office in Johannesburg, South Africa. Becker, who is a financial analyst at Altmann, is keenly interested in cross-border projects, particularly since Altmann started focusing on emerging markets several years earlier. The South African investment proposal seeks to buy and install new automated machinery to recycle and remanufacture toner cartridges used in printers. Cartridge recycling had become an important part of Altmann’s business in many markets and promised continued growth. Analysts predict that consumer demand for recycled cartridges would be increasing in the coming years. Altmann-SA’s Johannesburg plant began its cartridge recycling program in 2017. Existing recycling process consists of a series of labour-intensive manual operations aided by simple machine and hand tools. The investment proposal calls for replacing this process with new automated machinery from Germany with an estimated cost of 2.5 million South African rand (ZAR) (approximately €156,000) fully installed. As described in the project summary, Altmann-SA expects to realize substantial savings in labour and materials almost immediately. Though the proposed expenditure is not substantial by Altmann’s standard, a discounted cash flow analysis for all such investments is still required. Finally, a corporate review takes place in headquarters in Frankfurt before a decision is made on whether to invest or not. Becker is assigned to perform an analysis of the investment proposal and make a recommendation to his superior as to whether or not to accept the proposal. Global Operations: Group – Altmann Group Altmann is a global manufacturer of printers, copiers, fax machines, and other document production equipment. It also provides after-sales service contracts constituting about 18% of overall revenue. Company sales for 2020 were slightly lower than the previous year and the company registered a small net loss for the year. Table 1 presents selected consolidated financial data for Group Altmann. Altmann’s low profitability was typical of the industry in 2020. One bright spot in the company’s outlook, however, was its growth in several emerging markets, including the so- called BRIC economies of Brazil, Russia, India, and China. Altmann had been a global firm for years, but did not move aggressively into emerging markets until 2014-2015. This was later than some of its competitors. This meant that Altmann’s market share lagged in some regions but it helped the company to avoid some of its competitors’ earlier mistakes. Table 1: Group Altmann – Selected Consolidated Financial Data (millions of Euros, except as noted otherwise) Sales Operating income Net income 2016 4575.5 224.9 128.6 2017 4618.3 245.3 132.4 2018 5365.3 259.4 91.8 2019 5342.7 283.8 128.6 2020 5018.0 91.8 (1.0) Total assets Total debt Equity 3668.2 756.3 1297.7 4693.5 867.6 1411.5 4349.5 919.4 1244.5 4147.3 924.0 1229.2 4213.9 991.0 1173.9 Capital expenditures Depreciation R&D expenditures 351.1 232.5 70.2 361.4 229.3 72.3 142.6 321.1 28.5 150.0 314.1 30.0 131.4 292.5 26.3 Earnings/share (Euros) Dividend/share (Euros) Return on sales Return on equity 1.5 1.0 2.8% 9.9% 1.6 1.0 2.9% 9.4% 1.1 1.0 1.7% 7.4% 1.5 1.1 2.4% 10.5% 0.0 1.1 0.0% -0.1% The company’s international operations were conducted primarily through a network of subsidiaries, which operated mostly medium-sized regional factories in five countries around the world. In 2020, subsidiaries outside the European Union recorded about half of Altmann’s sales and generated slightly less than 40% of pre-tax income. Altmann competed in a relatively mature market, and its chief competitors were both established multinational companies – some of which had developed their consulting and other after-sales services businesses to a higher level than had Altmann – as well as smaller players serving niche markets. While Altmann marketed and sold its products across the full spectrum of industries, it had enjoyed particular success in financial services, health care, and government sectors. Operations in Johannesburg: Altmann-SA According to Altmann’s CEO Steffi Graf, “We were attracted to South Africa for the same reason we were attracted to other emerging markets like Russia and China. We wanted to diversify our operations and believed we needed to establish a strong presence in places besides Europe and the United States.” The manufacturing facility in Johannesburg was located near a small research and design facility, also owned by Altmann. While many product specifications for Altmann’s equipment were formulated at the corporate offices in Frankfurt, Germany, it was customary for regional subsidiaries to conduct fine-tuning research and design activity to tailor the product more closely to local consumers’ preferences. Roughly half of the products produced in the Johannesburg plant were sold in South Africa and were distributed through large office-product retailers, department stores, as well as small specialty shops; the remaining half were exported to other African and South American countries where Altmann had no manufacturing presence. Manufacturing inputs were sourced locally, and virtually all of the plant’s employees were South African citizens. In the summer of 2020 gross output at Altmann-SA was running at only about 80% of planned capacity. Nevertheless, plant records indicated that there was a sizable increase in demand for recycled printer and toner cartridges. Altmann-SA’s ‘Lovely Planet Programme’ was started in 2016 to provide low-cost recycling services to all its distributors and customers. Under the terms of users’ service contracts, when cartridges reached the end of their useful lives, they could be returned to the Altmann facility in exchange for a 28% discount on the purchase of a like number of new cartridges. Altmann pledged to recycle and remanufacture all returned toner and printer cartridges. As the number of cartridges returned for recycling increased, Altmann-SA management needed to hire and train more employees to carry out the labour-intensive task required to recycle cartridges. Johannesburg plant manager Wayne Parnell admitted that – though he was happy to see the cartridges coming back in – handling the recycling process was being more and more expensive due to higher labour costs. He was also concerned that, once other operations returned to full capacity, the extra volume of recycling would be a problem. Cost Savings from the Proposed New Equipment The new equipment could process the Johannesburg plant’s projected volume with considerable savings in both direct labour and material costs (due to lower wastage). It also would require only minimal maintenance expenditures compared to the equipment it replaced, and no significant change in working capital. Table 2 compares projected operating data for the existing recycling process and the proposed automated process, assuming future South African inflation of 7% per year. Table 2: Comparison of Projected Operating Data for Different Recycling Processes (thousands of rands, unless noted otherwise) 2021 2022 2023 2024 2025 496 847,224 1,672,776 2,520,000 5,040,000 546 997,183 1,968,857 2,696,400 5,662,440 600 1,173,684 2,317,345 2,885,148 6,376,177 660 1,381,426 2,727,515 3,087,108 7,196,050 660 1,478,126 2,918,441 3,303,206 7,699,773 1.71 3.37 1.83 3.61 1.96 3.86 2.09 4.13 2.24 4.42 Unit volume (000s) Materials Direct Labour Overhead 496 762,502 669,110 2,349,317 546 897,464 787,543 2,513,769 600 1,056,316 926,938 2,689,732 660 1,243,283 1,091,006 2,878,014 660 1,330,313 1,167,376 3,079,475 Total 3,780,929 4,198,776 4,672,986 5,212,303 5,577,164 1.54 1.35 1.64 1.44 1.76 1.54 1.88 1.65 2.02 1.77 Manual Unit volume (000s) Materials Direct Labour Overhead Total Materials/unit Direct labour/unit Automatic Materials/unit Direct labour/ unit The new equipment would have a useful life of 5 years and would be depreciated under the straight-line method for both tax and financial reporting purposes. The manual equipment being replaced had been properly maintained and would last for another 5 years; it had a book and tax written-down value of 875,000 rands and two years of straight-line depreciation remaining. However, its market value was thought to be lower, at about 675,000 rands. After considering Group Altmann’s consolidated tax position, Becker determined that his analysis would use South Africa’s corporate tax rate of 35%. Further additional information is available below: i) 70,000 rands has already been spent researching the feasibility of the new equipment and its potential impact on cash flows. ii) Real interest rates across all countries are assumed to be the same. iii) Annual inflation rates in Germany and South Africa are 2% and 7% respectively and they are not expected to change in the foreseeable future. iv) The spot exchange rate is ZAR 15.99 / EUR . Expected exchange rates (ZAR / EUR) for year-end 2021 through 2025 are 16.77; 17.60; 18.46; 19.36; and 20.31 respectively. v) Historically, Group Altmann’s variance of the market returns has been 55% and the covariance of the firm’s returns with that of the market has been 50%. vi) The debt to equity ratio, at market values, is 38% and is expected to remain at this level. vii) Group Altmann’s cost of debt is 5.5%. viii) Assume a risk free rate of 2.5%; market returns of 10.4%; and corporate tax rate of 35%. ix) For tax purposes, assume depreciation and capital allowance amount to be the same. REQUIRED: (1) Find the weighted average cost of capital for Group Altmann (7 marks) (2) Present the expected relevant cashflows from the project for Group Altmann if the new equipment was to be purchased. (20 marks) (3) Becker has asked you to analyse whether investing in the new equipment will enhance shareholders’ wealth. Make a recommendation to Becker, supported by clear calculations, as to whether the investment should be made in the new equipment. (7 marks) (4) Discuss the foreign exchange risks and mitigating techniques that are relevant to Group Altmann.(2 pages ) (10 Marks) (5) Assume that Group Altmann decided to increase its Debt to Equity ratio from 38% to 55% indefinitely. Also assume that this raises the current cost of debt to 6% (from 5.5%). What would the new WACC be under these circumstances? (6 marks) Total 50 Marks […important information in the following page] Marks will be awarded on: (i) a group basis, based upon how the Group address the tasks; and (ii) an individual basis, based on evidence of collaboration as shown in group log report (format attached for group log report *). Unexplained absences/non-participation will attract deductions. Submission guidelines You have been assigned to separate groups (FMGroup 1, 2 etc.) in Canvas. One digital copy (in .docx) format) per group should be uploaded to Canvas by the submission deadline. Ensure that the full name and student number of all group members are listed on the upper part of the front page; also include the group log report* at the end of the same file. Page limit: No more than 9 sides on A4 size paper including tables, figures, references etc. (to avoid confusion, 1 printed page has two sides); plus one side showing group log report * Plagiarism is treated very seriously; click here for more information on plagiarism. Any questions that may arise subsequently will be addressed in the FAQ page. * (format of group log report) FMGroup [your group number] meeting log report Date 10/10/2020 16/10/2020 22/10/2020 04/11/2020 05/11/2020 08/11/2020 09/11/2020 09/11/2020 10/11/2020 Action Meeting Discussion Meeting Report-writing Report-writing Report-writing Report-writing Discussion Revision Mode of Approximate participation Time (hours) Jin Yuan in person* 1.50 Y online 0.75 Y in person 1.00 Y online 2.00 Y online 2.00 Y online 2.00 N online 2.00 N in person 1.50 Y in person 2.00 Y Participation of group members (Y= yes; N=no) Boris Varadkar Y Y Y Y Y N N Y Y *in person = meeting face to face but with social distancing guidelines being followed properly. Jane Doe Y Y Y N N Y Y Y Y David Rooney Y Y Y N N Y Y Y Y Leo Johnson Y Y Y N N Y Y Y Y