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11/11/15

UTD Acct. 3350

Daniyal Ranmal

Tax Issues Paper


An individuals ability to pay (concept) is what tax is based on. Tax is a
defense for education, health care, social security, and social service. It has
become absolutely essential; Not only did it help reshape the United States
economy arrangement, but also it helped the deprived and unfortunate to
improve their living conditions. The information on this document is relating to the
tax issues based on Pixars movie Toy Story 2. In Toy Story 2, property tax,
social security tax, sales tax, and income tax are the key tax components that are
involved in the movie. Each main character holds different tax responsibilities
based on their actions and their characters.
At the start of the movie, the first scene was taking place in Andys room.
Andys mother would most likely be the one who has to pay for property tax
assuming the property tax rule was involved. Property tax may be divided into
two different categories: Real property and personal property. Real property
contains lands, improvement of land, equipment that is used for improving lands,
things beneath the land, and items that are fixed to the land such as houses and
stores. Personal property is usually exempt from tax. In Toy Story 2, both the
chicken man and Andys mom have a car. Hence, the automobile tax varies
depending on the state governments regulations. Also, the property tax isnt
recognized on the true value, but the assessed value of the property. Moving
forward, property investment cycle has also taken place in this case. The four
critical elements are property acquisition, property disposition, initial basis, &
adjusted basis. The total tax results are based on these four items plus the

11/11/15

UTD Acct. 3350

Daniyal Ranmal

period of use. A good example could be Als toy barn. The tax amount could be
decreased due to the first investment the landlord has invested initially, according
to the capital recovery concept. Hence, its very important to estimate the
adjusted basis annually because the value of land will continue to depreciate
over time.
In the movie, the chicken mans job was shooting commercials. When the
chicken man receives pay from the owner of the store, the income tax has
directly taken place (concept). The U.S government uses pay-as-you-go (policy)
for every individual income taxpayer. This means that employers would reserve
a certain percentage of the total income for employees every period of time. By
law, every income taxpayer is required to file a tax return. Whether or not the
employees would obtain their tax return is dependent on their annual income. In
chicken mans situation, he is most likely to receive a tax refund due to his low
income by working at a toy store. Its unclear whether or not Andys mother has
secure yearly revenues and monthly earnings so it cannot be analyzed.
A yard sale, also called a garage sale has occurred right outside of Andys
house. If Andys mother didnt have a garage sale permit then she would be in
violation with the terms of the state law, but the movie did not mention that part.
In general, if a garage sale is conducted only once in a year then the sale income
is typically not taxable. However, if more than one garage sale per year is
conducted, then it makes the home a business and the transaction revenues will
be taxable.

11/11/15

UTD Acct. 3350

Daniyal Ranmal

Additionally, the social security tax is as significant as income tax. Social


security tax rule is made to protect retired citizens privileges and offer them a
suitable normal life once they have retired. Since the chicken man has a constant
monthly salary, he is required to pay for social security tax. Its not only beneficial
to elders who have retired, but its also a safety net for his prospective retirement
proposal.
The highpoint of Toy Story 2 is when the chicken man stole one of Andys
favorite toys, Woody. Later on, Woodys toy friends decided to rescue Woody
from chicken mans hand. The chicken man has illegally acquired Woody and the
federal law necessitates taxpayer to report the stolen property in the same year
when he or she stole the property. The chicken man was intended to send
Woody, Jessie, horse, and Stinky Pete to a museum located in Japan. He would
have gotten a huge profit out of the deal if Woodys friend did not rescue Woody.
Only if the chicken man were timely enough to unload the toys to Japan, then he
would have to report the income in the same year, unless he returns the figures
to Andy then he wouldnt be obligated to report it.
At the end of the movie Andy has acquired Jessie and the horse as his
new figures. Nonetheless, the toys escaped from the chicken mans suitcase, so
Andy has acquired these figures for free. Based on the situations in the textbook,
if a person receives a free hat or picks up a free sweater on the road and keeps
the item although has no objective to sell it, then the item will not be taxed. So
the same condition would relate to this situation as well. As long as Andy keeps

11/11/15

UTD Acct. 3350

Daniyal Ranmal

the toys to himself than the toys wont be taxed. Contrarily, if Andy chooses to
trade the toys to a toy store or a friend then the income will be taxable.
In conclusion, tax affects an individuals everyday life and the taxpayer
should be aware of the tax rules that relate to their daily life. The taxable element
scope is extremely extensive; there were six different types of tax involved and
two different tax issues that happened. Taxpayers should understand the
benefits of paying taxes. It is not only beneficial for the children, elders, poor
people, and government, but it is also beneficial for every American citizen.
Without tax, children would not have a good education system & a good learning
environment, drivers would not have well-maintained freeways and residential
roads to drive, and the safety of the public would be a big problem for everyone
in society. As a whole, the development of tax laws is magnificent, it improved
and reshaped American lives and more people should welcome the protected
living setting the government has provided.

















11/11/15

UTD Acct. 3350

Daniyal Ranmal

References
Murphy, Kevin E., and Mark Higgins. "Chapter 2." Concepts in Federal Taxation.
2015 ed. Print.