Tower\b237 handout a-1 f99.doc

Business 237

Handout A-1

Summer 2005

Property Taxes

1. Recently the city of King, North Carolina (located in Stokes County) attempted to annex a large tract of land in northeast Forsyth County. Their efforts were generally unsuccessful. The residents incorporated the tract into a new city, Tobaccoville, N.C. Why was King interested in annexing the land? Why did the residents incorporate Tobaccoville?

2. Prepare a property tax listing for Garry and Jean Perdue for 2004. Assume the following information.

A. 1992 Ford tractor Ser # 012456787, fair market value $11,000.

B. The Perdues own 1 dog and three cats.

C. Home improvement for 1992: $22,000. Total value of the property is $120,000.

D. The taxpayers are under age 65.

Compute the county property tax. Assume a rate of $7.25 per $1,000 assessed valuation.

Assume that the Perdues live in the city of Winston-Salem. The rate is $8.25 per $1,000 assessed valuation. Compute their city/county property tax.

The listing must be completed by February 15, 2004. What are the consequences of a late listing?

3. Bobcat Corporation has the following assets at December 31, 2004.

Cost FMV

Inventory $106,000 $176,000

Fixed Assets

(all acquired in 1999) 94,000 74,000

Complete Bobcat's personal property tax liability. Assume a rate of $4.00 per 1,000 assessed valuation.

Sales Taxes

1. William Renshaw can purchase a new bicycle at the local bike shop for $230 + 6% sales tax. He can purchase the same model from Bikes Unlimited, a mail order house located in Hancock, Maryland for $190.00 + $40.00 shipping charges. Which choice costs less?

2. Bobcat Corporation can purchase a new X200 electric propulsion unit locally for $78,000 + 6% sales tax. The corporation can also purchase the same unit from a Danville, Virginia company for $78,000 with free local delivery. Which choice costs less?

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3. Which of the following organizations must collect and pay sales tax?

A. Congregation Beth El (a religious organization)

B. Providence Hospital (affiliated with the Sisters of Charity)

C. Atlantic Wholesale Distributors

D. Schwab & Dreyfus, a law firm

E. Alpha Graphic And Design, a small company specializing in advertising designs

F. Pinewood Lumber Company