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188 - Income Tax Planning 6 Personal and dependency exemptions A Deduction for personal exemption (1) Each taxpayer is allowed a personal exemption for him- or herself and spouse, and may qualify for additional exemptions for each dependent (2) In 2003, the amount is $3,050 for each exemption claimed (3) An individual who is claimed as a dependent by another cannot claim a personal exemption for him- or herself (4) A child cannot claim a personal exemption even if the parent does not take the dependency exemption B Exemption for dependents An individual quali es as a dependent of the taxpayer if all of the following conditions are met: (1) The person is related to the taxpayer or is a member of the taxpayer s household for the entire year Certain relatives (child, grandchild, brother, sister, parent, etc) do not have to live with the taxpayer to qualify (2) The person s gross income does not equal or exceed the exemption amount This test does not apply to certain children: (a) A child under age 19 at the end of the year (b) A student under age 24 at the end of the year (3) The taxpayer generally provides more than half the support to the person (4) The person does not le a joint return under certain conditions Suppose, for example, you supported your daughter for the entire year while her husband was overseas on military duty The couple les a joint return You cannot take an exemption for your daughter (5) The person meets tests concerning citizenship or is a resident of the United States, Canada, or Mexico C Phaseout of personal exemption (1) The exemption amount will be reduced by 2 percent for each $2,500 ($1,250 for MFS), or fraction of that amount, by which the AGI of a taxpayer exceeds (2003): (a) $209,250 MFJ (b) $104,625 MFS (c) $139,500 Single (d) $174,400 HOH (e) $209,250 Surviving Spouse (2) Example: Taxpayers (MFJ) have an AGI of $255,000 The taxpayers have ve personal and dependency exemptions Calculate their actual personal and dependency exemption: Step 1 Exemption amount = 5 $3,050 = $15,250 Step 2 Difference = $255,000 (AGI) $209,250 (threshold) = $47,750 Step 3 Divide by $2,500 = 183 Step 4 Round up to 19 Step 5 Multiply by 2% = 38% Step 6 Loss due to threshold 38% $15,250 = $5,795 Step 7 Personal and dependency exemption after phaseout = $15,250 $5,795 = $9,455 7 Taxable income is AGI reduced by the greater of allowable itemized deductions or the standard deduction and personal exemptions.



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Although J2EE supposes a distributed application system, it's often necessary to maintain a common state among the system's components For example, resources, names, or addresses may be common among components (ie, location independent) Access and management of this state are provided by the Java Name and Directory Interface (JNDI) For those familiar with directory services, JNDI is the means with which to access such services as LDAP For most other J2EE developers, JNDI is simply an easy way to manage resources shared by tiers From a component standpoint, JNDI gives location-independent access to a common application state, or context The J2EE specification also views the JNDI context as a mechanism for making application components dynamic Instead of altering the source code for a component, it bases a conditional part of component execution on the values obtained by access to the context Then, at runtime, when the component accesses its context, such variable settings (ie, variable values or rules) are resolved This can be done on a deployment basis That is, the deployer can set the proper value in the deployment descriptor, and the component can obtain that value via the JNDI All of this occurs without recompilation For example, suppose we wanted to customize the multiple to use as the basis for salary raises If we assume that this value is deployment specific or otherwise dynamic, then our application component needs to read this value from the JNDI and act appropriately The following snippet of application code does just that for a mythical function called

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Topic 59: Income Tax Fundamentals and Calculations - 189 8 Tax liability A Determine tax by using either tax tables if taxable income is under $100,000 or tax rate schedules if taxable income is $100,000 or more B Tax credits such as child care, foreign tax credit, and credit for elderly must be taken into consideration in calculating total tax due Moreover, other taxes such as self-employment tax and AMT may result in increasing total tax due C Steps for calculating tax liability: Step 1 Determine total gross income Step 2 Subtract deductions from gross income to nd AGI Step 3 Determine itemized deductions to nd out whether they exceed the standard deduction amount Deduct the greater of total itemized deductions or the standard deduction Step 4 Subtract the total itemized deductions or the standard deduction amount Step 5 Determine how many personal exemptions can be claimed Step 6 To determine taxable income, subtract the personal exemptions from the total found in Step 4 Step 7 Find the tax amount from either the tax tables or the tax schedules Step 8 Subtract tax credits, if any, from taxes determined in Step 7 D Under current law (2003), the tax rates will be gradually reduced until the year 2006, as follows (the lowest marginal rates 10 and 15 percent will remain unchanged): Third Marginal Rate 27% 26% 25% Fourth Marginal Rate 30% 29% 28% Fifth Marginal Rate 35% 34% 33% Highest Marginal Rate 386% 376% 35%

calculateNewSalary() The method shown requires the prior salary value as a parameter and uses the value of raiseMultiple to determine the new salary public double calculateNewSalary(double a_origSalary) { /* Obtain handle to our naming context */ Context initCtx = new InitialContext(); Context localCtx = (Context)initCtxlookup("java:comp/env"); /* Look up the salary multiple */ double raiseMultiple = ((Double) localCtxlookup("raise_multiple"))doubleValue(); /* Raise salary per the multiple */ return raiseMultiple * a_origSalary; }

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