West Federal Taxation 2006 Taxation of Business Entities, Professional Version,9780324305036

West Federal Taxation 2006 Taxation of Business Entities, Professional Version

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ISBN13: 9780324305036
ISBN10: 0324305036
Format: Hardcover
Pub. Date: 2005-04-29
Publisher(s): South-Western College/West
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Summary

The 2006 Edition of TAXATION OF BUSINESS ENTITIES provides thorough coverage of all relevant tax Code and regulations, emphasizing the high-interest and multidisciplinary aspects of taxation. Designed with the AICPA model tax curriculum in mind, this text presents the introductory federal taxation course from a business entity perspective. It is an ideal fit for the program that offers only one course in taxation where users need to be exposed to corporate taxation as well as individual taxation.

Table of Contents

Preface iii
PART ONE THE WORLD OF TAXATION
Introduction to Taxation
1(1)
The Structure of Taxes
3(1)
Tax Rates
3(1)
Tax Bases
4(1)
Types of Taxes
4(12)
Taxes on the Production and Sale of Goods
4(2)
Global Tax Issues: Why Is Gasoline Expensive? It Depends on Where You Live
6(1)
Employment Taxes
7(1)
Death Taxes
8(1)
Gift Taxes
9(1)
Property Taxes
10(1)
Tax in the News: College Expansion May Cause Property Tax Erosion
11(1)
Tax Fact: Property Taxes---It Matters Where You Live!
12(1)
Taxes on Privileges and Rights
12(1)
Tax Fact: What Is the U.S. Tax Burden?
13(1)
Income Taxes
14(2)
Income Taxation of Business Entities
16(3)
Proprietorships
16(1)
Corporations
17(1)
Partnerships
17(1)
S Corporations
18(1)
Limited Liability Companies and Limited Liability Partnerships
18(1)
Dealings between Individuals and Entities
18(1)
Tax Planning Fundamentals
19(8)
Overview of Tax Planning
19(1)
A General Framework for Income Tax Planning
19(1)
Tax Minimization Strategies Related to Income
20(1)
Tax Minimization Strategies Related to Deductions
21(1)
Tax Minimization Strategies Related to Tax Rates
22(3)
Tax Minimization Strategies Related to Credits
25(1)
Thinking Outside the Framework
25(2)
Understanding the Federal Tax Law
27(8)
Revenue Needs
27(1)
Economic Considerations
27(1)
Tax Fact: Who Pays the Federal Income Tax?
28(1)
Social Considerations
29(1)
Equity Considerations
30(2)
Political Considerations
32(1)
Influence of the Internal Revenue Service
33(1)
Tax Fact: The Costs of Complexity
34(1)
Influence of the Courts
34(1)
Summary
35(1)
Suggested Further Readings
35(1)
Problem Materials
36
Working with the Tax Law
1(1)
Tax Sources
2(17)
Statutory Sources of the Tax Law
2(1)
Tax Fact: Measuring Tax System Complexity
3(1)
Tax in the News: Those Disappearing Dependents
4(3)
Global Tax Issues: Tax Treaties
7(1)
Administrative Sources of the Tax Law
8(4)
Tax in the News: Changing the Face of Russia
12(1)
Judicial Sources of the Tax Law
12(7)
Working with the Tax Law---Tax Research
19(14)
Identifying the Problem
20(1)
Refining the Problem
20(1)
Locating the Appropriate Tax Law Sources
21(2)
Assessing Tax Law Sources
23(1)
Tax in the News: Internal Revenue Code: Interpretation Pitfalls
24(2)
Arriving at the Solution or at Alternative Solutions
26(1)
Communicating Tax Research
27(1)
Follow-up Procedures
27(1)
Computer-Assisted Tax Research
27(3)
Tax Fact: An Electronic IRS
30(3)
Suggested Further Readings
33(1)
Problem Materials
34
PART TWO Structure of the Federal Income Tax
Gross Income
1(1)
The Tax Formula
3(1)
Components of the Tax Formula
3(1)
Gross Income---What Is It?
4(3)
Economic and Accounting Concepts of Income
4(2)
Tax in the News: Your Silent Gambling Partner: If You Win!
6(1)
Comparison of the Accounting and Tax Concepts of Income
6(1)
Form of Receipt
7(1)
Year of Inclusion
7(6)
Taxable Year
7(1)
Accounting Methods
7(2)
Planning Strategies: Cash Receipts Method
9(1)
Special Rules for Cash Basis Taxpayers
10(1)
Tax in the News: Congress Rescues Lottery Winners from Constructive Receipt Problems
11(1)
Special Rules for Accrual Basis Taxpayers
12(1)
Planning Strategies: Prepaid Income
13(1)
Income Sources
13(5)
Personal Services
13(1)
Income from Property
14(1)
Tax Fact: How Much and What Type of Income?
15(2)
Tax Fact: Business Income and Loss
17(1)
Income Received by an Agent
17(1)
Planning Strategies: Techniques for Reducing Gross Income
17(1)
Specific Items of Gross Income
18(11)
Global Tax Issues: From ``All Sources'' Is a Broad Definition
19(1)
Imputed Interest on Below-Market Loans
19(2)
Tax Benefit Rule
21(1)
Tax in the News: Loans To Executives Prohibited
22(1)
Interest on Certain State and Local Government Obligations
22(1)
Planning Strategies: State and Municipal Bonds
23(1)
Improvements on Leased Property
23(1)
Life Insurance Proceeds
24(1)
Planning Strategies: Life Insurance
25(1)
Income from Discharge of Indebtedness
25(3)
Gains and Losses from Property Transactions
28(1)
Suggested Further Readings
29(1)
Problem Materials
30
Business Deductions
1(1)
Overview of Business Deductions
2(2)
Ordinary and Necessary Requirement
2(1)
Reasonableness Requirement
3(1)
Planning Strategies: Unreasonable Compensation
4(1)
Timing of Expense Recognition
4(3)
Cash Method Requirements
5(1)
Planning Strategies: Time Value of Tax Deductions
6(1)
Accrual Method Requirements
6(1)
Disallowance Possibilities
7(8)
Public Policy Limitations
7(1)
Political Contributions and Lobbying Activities
8(1)
Excessive Executive Compensation
9(1)
Disallowance of Deductions for Capital Expenditures
9(1)
Tax in the News: Executive Pay Abuse
10(1)
Investigation of a Business
11(1)
Transactions between Related Parties
12(1)
Lack of Adequate Substantiation
13(1)
Expenses and Interest Related to Tax-Exempt Income
14(1)
Charitable Contributions
15(2)
Property Contributions
15(1)
Limitations Imposed on Charitable Contribution Deductions
16(1)
Tax Fact: What Ten Percent Ceiling?
17(1)
Research and Experimental Expenditures
17(2)
Expense Method
18(1)
Deferral and Amortization Method
18(1)
Other Expense Rules
19(3)
Interest Expense
19(1)
Taxes
19(1)
Manufacturers' Deduction
20(2)
Cost Recovery Allowances
22(14)
Overview
22(1)
Concepts Relating to Depreciation
22(1)
Tax Fact: Cost Recovery by Any Other Name
23(2)
Modified Accelerated Cost Recovery System (MACRS)
25(1)
Cost Recovery for Personal Property
25(1)
Global Tax Issues: Changing the Life of a Truck
26(2)
Tax in the News: Capital Investment Write-Offs Reduce Corporate Taxes
28(1)
Cost Recovery for Real Estate
28(1)
Straight-Line Election
29(1)
Election to Expense Assets Under § 179
30(1)
Tax in the News: Changing Business Deductions
31(1)
Business and Personal Use of Automobiles and Other Listed Property
31(4)
Alternative Depreciation System (ADS)
35(1)
Amortization
36(1)
Planning Strategies: Structuring the Sale of a Business
36(1)
Depletion
37(3)
Intangible Drilling and Development Costs (IDC)
37(1)
Depletion Methods
38(1)
Planning Strategies: Switching Depletion Methods
39(1)
Cost Recovery Tables
40(4)
Suggested Further Readings
44(1)
Problem Materials
45
Losses and Loss Limitations
1(1)
Bad Debts
2(4)
Tax Fact: Just How Good Is Your Credit?
3(1)
Specific Charge-Off Method
3(1)
Tax in the News: A Deduction for Bad Debts
4(1)
Business versus Nonbusiness Bad Debts
4(1)
Loans between Related Parties
5(1)
Global Tax Issues: Macau---The New Las Vegas?
6(1)
Worthless Securities
6(1)
Small Business Stock
6(1)
Planning Strategies: Maximizing the Benefits of § 1244
7(1)
Casualty and Theft Losses
7(6)
Definition of Casualty
8(1)
Definition of Theft
8(1)
Planning Strategies: Documentation of Related-Taxpayer Loans, Casualty Losses, and Theft Losses
9(1)
When to Deduct Casualty Losses
9(1)
Measuring the Amount of Loss
10(1)
Casualty and Theft Losses of Individuals
11(2)
Net Operating Losses
13(2)
Introduction
13(1)
Tax Fact: The Utility of the NOL Deduction
14(1)
Carryback and Carryover Periods
14(1)
Tax in the News: Increased Net Operating Loss Cap
15(1)
The Tax Shelter Problem
15(3)
Tax in the News: With Tax Shelters in the Spotlight, Taxpayers Should Be Cautious!
16(2)
At-Risk Limitations
18(1)
Passive Loss Limits
19(17)
Classification and Impact of Passive Income and Loss
19(2)
Tax Fact: The Declining Interest in Limited Partnerships
21(2)
Taxpayers Subject to the Passive Loss Rules
23(1)
Activity Defined
24(1)
Material Participation
25(4)
Rental Activities
29(2)
Interaction of At-Risk and Passive Activity Limits
31(1)
Special Rules for Real Estate
31(1)
Tax in the News: Newly Developed Tax Shelter Strategies Now Protected by Patents
32(2)
Disposition of Passive Activities
34(1)
Planning Strategies: Utilizing Passive Losses
35(1)
Suggested Further Readings
36(1)
Problem Materials
37
PART THREE Property Transactions
Property Transactions: Basis, Gain and Loss, and Nontaxable Exchanges
1(1)
Determination of Gain or Loss
3(5)
Realized Gain or Loss
3(1)
Tax in the News: Reevaluating Your Investment Strategy
4(3)
Recognized Gain or Loss
7(1)
Nonrecognition of Gain or Loss
8(1)
Recovery of Capital Doctrine
8(1)
Basis Considerations
8(12)
Determination of Cost Basis
8(3)
Gift Basis
11(1)
Planning Strategies: Gift Planning
12(2)
Property Acquired from a Decedent
14(1)
Tax in the News: Effect of 2001 Tax Legislation on the Basis of Inherited Property: Bad News/Good News!
15(1)
Planning Strategies: Property from a Decedent
16(1)
Disallowed Losses
16(2)
Planning Strategies: Avoiding Wash Sales
18(1)
Conversion of Property from Personal Use to Business or Income-Producing Use
18(1)
Summary of Basis Adjustments
19(1)
General Concept of a Nontaxable Exchange
20(1)
Like-Kind Exchanges---§ 1031
21(6)
Planning Strategies: Like-Kind Exchanges
22(1)
Like-Kind Property
22(2)
Exchange Requirement
24(1)
Boot
24(1)
Basis and Holding Period of Property Received
25(2)
Involuntary Conversions---§ 1033
27(4)
Planning Strategies: Recognizing Involuntary Conversion Gains
28(1)
Involuntary Conversion Defined
28(1)
Tax in the News: A Court Limits the Government's Taking of Property
29(1)
Replacement Property
30(1)
Time Limitation on Replacement
30(1)
Other Nonrecognition Provisions
31(2)
Transfer of Assets to Business Entity---§§ 351 and 721
31(1)
Exchange of Stock for Property---§ 1032
32(1)
Certain Exchanges of Insurance Policies---§ 1035
32(1)
Exchange of Stock for Stock of the Same Corporation---§ 1036
32(1)
Rollovers Into Specialized Small Business Investment Companies---§ 1044
32(1)
Sale of a Principal Residence---§ 121
33(1)
Transfers of Property Between Spouses or Incident to Divorce---§ 1041
33(1)
Suggested Further Readings
33(1)
Problem Materials
34
Property Transactions: Capital Gains and Losses, Section 1231, and Recapture Provisions
1(1)
General Considerations
2(2)
Rationale for Separate Reporting of Capital Gains and Losses
2(1)
Tax in the News: Switching Funds Creates a Loss
3(1)
General Scheme of Taxation
4(1)
Capital Assets
4(3)
Definition of a Capital Asset
4(2)
Tax in the News: An Artist's Dilemma
6(1)
Statutory Expansions
6(1)
Sale or Exchange
7(6)
Worthless Securities and § 1244 Stock
8(1)
Retirement of Corporate Obligations
8(1)
Options
8(1)
Patents
9(2)
Franchises, Trademarks, and Trade Names
11(1)
Lease Cancellation Payments
12(1)
Tax in the News: Cancellation of a Lease Agreement
13(1)
Holding Period
13(3)
Special Holding Period Rules
14(1)
Global Tax Issues: Trading ADRs on U.S. Stock Exchanges
15(1)
Short Sales
15(1)
Tax Treatment of Capital Gains and Losses of Noncorporate Taxpayers
16(9)
Capital Gains
16(1)
Tax Fact: Individual Returns Reporting Capital Gains
17(1)
Planning Strategies: Timing Capital Gains
17(1)
Global Tax Issues: Capital Gain Treatment in the United States and Other Countries
18(1)
Planning Strategies: Gifts of Appreciated Securities
19(1)
Capital Losses
19(3)
Tax Fact: Detrimental Tax Treatment for Capital Losses
22(1)
Planning Strategies: Matching Gains with Losses
23(1)
Small Business Stock
23(1)
Global Tax Issues: Capital Gain Treatment and Non-U.S. Stock
24(1)
Tax Treatment of Capital Gains and Losses of Corporate Taxpayers
25(1)
Section 1231 Assets
25(5)
Relationship to Capital Assets
25(1)
Tax Fact: Capital Gains for the Wealthy?
26(1)
Property Included
27(1)
Property Excluded
27(1)
Casualty or Theft and Nonpersonal-Use Capital Assets
27(1)
Tax in the News: Sale of ``Campus'' Land Yields Potential Long-Term Capital Gain
28(1)
General Procedure for § 1231 Computation
28(2)
Section 1245 Recapture
30(4)
Tax in the News: More Depreciation and More Depreciation Recapture
33(1)
Section 1245 Property
33(1)
Observations on § 1245
33(1)
Planning Strategies: Depreciation Recapture and § 179
34(1)
Section 1250 Recapture
34(3)
Unrecaptured § 1250 Gain (Real Estate 25% Gain)
35(1)
Planning Strategies: Selling Depreciable Real Estate
36(1)
Additional Recapture for Corporations
37(1)
Exceptions to §§ 1245 and 1250
37(2)
Global Tax Issues: Exchange for Foreign Property Yields Recognized Recapture Gain
38(1)
Gifts
38(1)
Death
38(1)
Charitable Transfers
38(1)
Certain Nontaxable Transactions
39(1)
Like-Kind Exchanges and Involuntary Conversions
39(1)
Reporting Procedures
39(1)
Planning Strategies: Timing of Recapture
40(1)
Summary
40(1)
Suggested Further Readings
40(1)
Problem Materials
41
PART FOUR Business Entities
Corporations: Organization, Capital Structure, and Operating Rules
1(1)
An Introduction to Corporate Tax
2(7)
Global Tax Issues: Choice of Organizational Form When Operating Overseas
3(1)
Double Taxation of Corporate Income
3(1)
Tax Fact: Corporations' Reporting Responsibilities
4(1)
Tax in the News: Impact of the Dividend Tax Cut
5(1)
Tax in the News: Corporate Tax Breaks
6(1)
Comparison of Corporations and Other Forms of Doing Business
6(1)
Nontax Considerations
7(1)
Limited Liability Companies
8(1)
Entity Classification
8(1)
Planning Strategies: Consolidated Groups May Utilize Check-the-Box Regulations
8(1)
Organization of and Transfers to Controlled Corporations
9(13)
In General
9(1)
Transfer of Property
10(1)
Stock
11(1)
Control of the Corporation
11(2)
Planning Strategies: Utilizing § 351
13(2)
Global Tax Issues: Does § 351 Cover the Incorporation of a Foreign Business?
15(1)
Assumption of Liabilities---§ 357
15(3)
Planning Strategies: Avoiding § 351
18(1)
Basis Determination and Other Issues
19(2)
Recapture Considerations
21(1)
Planning Strategies: Other Considerations When Incorporating a Business
22(1)
Capital Structure of a Corporation
22(4)
Capital Contributions
22(1)
Debt in the Capital Structure
23(1)
Tax in the News: Conflict Arises between Corporations and Their Shareholders
24(2)
Corporate Operations
26(7)
Deductions Available Only to Corporations
26(3)
Planning Strategies: Organizational Expenditures
29(1)
Determining the Corporate Income Tax Liability
29(1)
Tax Liability of Related Corporations
30(1)
Controlled Groups
31(2)
Procedural Matters
33(4)
Filing Requirements for Corporations
33(1)
Tax Fact: Sources of Federal Government Revenues
34(1)
Estimated Tax Payments
34(1)
Reconciliation of Taxable Income and Financial Net Income
34(3)
Summary
37(1)
Suggested Further Readings
37(1)
Problem Materials
37
Corporations: Earnings & Profits and Dividend Distributions
1(1)
Corporate Distributions---In General
2(1)
Tax in the News: Companies Pay Record Dividends in 2004
3(1)
Earnings and Profits (E & P)
3(9)
Computation of E & P
4(3)
Summary of E & P Adjustments
7(1)
Allocating E & P to Distributions
7(4)
Planning Strategies: Corporate Distributions
11(1)
Property Dividends
12(3)
Property Dividends---Effect on the Shareholder
13(1)
Property Dividends---Effect on the Corporation
13(2)
Constructive Dividends
15(6)
Types of Constructive Dividends
15(2)
Tax in the News: The $6,000 Shower Curtain: Compensation or Constructive Dividend?
17(1)
Tax in the News: Hard Work Pays Off!
18(1)
Tax Fact: Executive Compensation: Amount and Composition
19(1)
Tax Treatment of Constructive Dividends
19(1)
Planning Strategies: Constructive Dividends
19(2)
Stock Dividends
21(1)
Global Tax Issues: Deemed Dividends from Controlled Foreign Corporations
22(1)
Stock Redemptions
22(2)
Tax in the News: Corporate Cash Reserves Affect the Frequency of Stock Redemptions
23(1)
Restrictions on Corporate Accumulations
24(1)
Suggested Further Readings
25(1)
Problem Materials
25
Partnerships and Limited Liability Entities
1(1)
Overview of Partnership Taxation
2(8)
Tax Fact: Partnership Power
3(1)
Forms of Doing Business---Federal Tax Consequences
3(2)
What Is a Partnership?
5(1)
Partnership Taxation and Reporting
5(1)
Tax Fact: Look at All the LLCs
6(2)
Partner's Ownership Interest in a Partnership
8(2)
Formation of a Partnership: Tax Effects
10(7)
Gain or Loss on Contributions to the Partnership
10(1)
Exceptions to Nonrecognition
11(1)
Tax Issues Related to Contributed Property
12(2)
Inside and Outside Bases
14(1)
Tax Accounting Elections
15(1)
Initial Costs of a Partnership
15(2)
Operations of the Partnership
17(12)
Reporting Operating Results
17(2)
Tax Fact: What Do Partnerships Do?
19(1)
Partnership Allocations
19(2)
Basis of a Partnership Interest
21(2)
Partner's Basis, Gain, and Loss
23(3)
Loss Limitations
26(1)
Planning Strategies: Make Your Own Tax Shelter
27(1)
Tax Fact: Whose Money Are We Losing?
28(1)
Planning Strategies: Formation and Operation of a Partnership
29(1)
Transactions between Partner and Partnership
29(4)
Guaranteed Payments
30(1)
Other Transactions between a Partner and a Partnership
31(1)
Partners as Employees
32(1)
Planning Strategies: Transactions between Partners and Partnerships
32(1)
Limited Liability Entities
33(2)
Limited Liability Companies
33(2)
Global Tax Issues: Partnerships Around the World---and Beyond
35(1)
Limited Liability Partnerships
35(1)
Summary
35(1)
Suggested Further Readings
36(1)
Problem Materials
36
S Corporations
1(1)
Tax Fact: The Business of S Corporations
3(1)
An Overview of S Corporations
3(2)
Planning Strategies: When to Elect S Corporation Status
5(1)
Qualifying for S Corporation Status
5(6)
Definition of a Small Business Corporation
5(2)
Planning Strategies: Beating the 100-Shareholder Limit
7(1)
Making the Election
7(1)
Shareholder Consent
8(1)
Planning Strategies: Making a Proper Election
8(1)
Loss of the Election
9(1)
Planning Strategies: Preserving the S Election
10(1)
Operational Rules
11(19)
Computation of Taxable Income
12(1)
Tax Fact: A ``Small'' Business Corporation
13(1)
Allocation of Income and Loss
13(1)
Planning Strategies: Salary Structure
14(1)
Tax in the News: An Abusive Tax Shelter?
15(1)
Tax Treatment of Distributions to Shareholders
15(4)
Planning Strategies: The Accumulated Adjustments Account
19(1)
Tax Treatment of Property Distributions by the Corporation
19(1)
Shareholder's Basis
20(2)
Planning Strategies: Working with Suspended Losses
22(1)
Treatment of Losses
23(1)
Planning Strategies: Loss Considerations
24(1)
Tax on Pre-Election Built-in Gain
25(2)
Planning Strategies: Managing the Built-in Gains Tax
27(1)
Tax Fact: No Double Taxation?
28(1)
Passive Investment Income Penalty Tax
28(1)
Planning Strategies: Avoid the PII Tax
29(1)
Other Operational Rules
29(1)
Summary
30(1)
Tax Fact: The S Corporation Economy
31(1)
Suggested Further Readings
31(1)
Problem Materials
32
PART FIVE Special Business Topics
Multijurisdictional Taxation
1(1)
The Multijurisdictional Taxpayer
2(1)
U.S. Taxation of Multinational Transactions
3(18)
Sources of Law
4(1)
Tax Fact: U.S. Income Tax Treaties in Force
5(1)
Planning Strategies: Treaty Shopping
6(1)
Tax Issues
7(1)
Tax in the News: Export Incentives Fade Away After 2004
8(1)
Tax in the News: Sourcing Income in Cyberspace
9(1)
Planning Strategies: Sourcing Income from Sales of Inventory
10(1)
Tax Fact: Income Subject to U.S. Tax, Foreign-Source Taxable Income, Current-Year Foreign Taxes, and Foreign Tax Credit: Tax Years 1994--1999
11(2)
Planning Strategies: Utilizing the Foreign Tax Credit
13(2)
Tax Fact: Taxing the Earnings of Controlled Foreign Corporations: A Tale of Two JFKs
15(2)
Tax in the News: A Boost to Domestic Investment or a Tax Amnesty for Outsourcers?
17(1)
Tax Fact: Who Are These CFCs?
18(1)
Planning Strategies: Avoiding Constructive Dividends
19(2)
Crossing State Lines: State and Local Income Taxation in the United States
21(8)
Sources of Law
21(2)
Tax in the News: Britney, You Need to Pay Your Tax
23(1)
Tax Issues
23(1)
Planning Strategies: Nexus: To Have or Have Not
24(3)
Tax in the News: State Deficits Change How Revenue Departments Work
27(2)
Planning Strategies: Where Should My Income Go?
29(1)
Common Challenges
29(5)
Authority to Tax
29(1)
Tax in the News: States in a Bind on Sales/Use Tax on Internet Sales
30(1)
Division of Income
30(1)
Tax Fact: The OECD's Tax Haven Blacklist
31(1)
Transfer Pricing
31(1)
Tax in the News: A Move to the Beach for U.S. Corporations Seeking a Vacation from U.S. Tax Rules
32(1)
Tax Havens
32(1)
Planning Strategies: Holding Companies Make Other States Angry
33(1)
Interjurisdictional Agreements
33(1)
Suggested Further Readings
34(1)
Problem Materials
34
Business Tax Credits and Corporate Alternative Minimum Tax
1(1)
Tax Policy and Tax Credits
2(1)
Tax Fact: Where Have All the Credits Gone?
3(1)
Specific Business-Related Tax Credit Provisions
3(11)
General Business Credit
3(1)
Tax in the News: A Credit That Went Up in Smoke
4(2)
Tax Credit for Rehabilitation Expenditures
6(2)
Work Opportunity Tax Credit
8(1)
Welfare-to-Work Credit
8(1)
Research Activities Credit
9(2)
Disabled Access Credit
11(1)
Credit for Small Employer Pension Plan Startup Costs
11(1)
Credit for Employer-Provided Child Care
12(1)
Global Tax Issues: Sourcing Income in Cyberspace---Getting It Right When Calculating the Foreign Tax Credit
13(1)
Foreign Tax Credit
13(1)
Corporate Alternative Minimum Tax
14(17)
The AMT Formula
14(3)
Tax Fact: The Reach of the AMT
17(1)
Tax in the News: The AMT: From 155 to 35.5 Million
18(1)
Tax Preferences
18(1)
Tax in the News: Distinguishing between Taxable and Exempt Bonds for AMT Purposes
19(1)
AMT Adjustments
20(5)
Planning Strategies: Avoiding Preferences and Adjustments
25(1)
Adjusted Current Earnings (ACE)
26(2)
Computing Alternative Minimum Taxable Income
28(1)
Planning Strategies: Optimum Use of the AMT and Regular Corporate Income Tax Rate Difference
29(1)
AMT Rate and Exemption
29(1)
Planning Strategies: Controlling the Timing of Preferences and Adjustments
29(1)
Minimum Tax Credit
30(1)
Other Aspects of the AMT
31(1)
Planning Strategies: The Subchapter S Option
31(1)
Individual Alternative Minimum Tax
31(1)
Suggested Further Readings
32(1)
Problem Materials
33
Comparative Forms of Doing Business
1(1)
Tax in the News: Should You Check That Box?
3(1)
Forms of Doing Business
3(3)
Principal Forms
3(1)
Tax in the News: Professional Service Firms and Organizational Form
4(1)
Limited Liability Companies
4(1)
Tax Fact: Revenue Relevance of Corporate versus Individual Taxpayers
5(1)
Nontax Factors
6(2)
Capital Formation
6(1)
Limited Liability
6(2)
Other Factors
8(1)
Single versus Double Taxation
8(3)
Overall Impact on Entity and Owners
8(1)
Tax in the News: Do Corporations Pay Taxes?
9(1)
Alternative Minimum Tax
10(1)
Planning Strategies: Planning for the AMT
10(1)
State Taxation
11(1)
Minimizing Double Taxation
11(4)
Making Deductible Distributions
11(1)
Tax in the News: Who Pays Corporate AMT?
12(1)
Not Making Distributions
13(1)
Return of Capital Distributions
13(1)
Electing S Corporation Status
14(1)
Tax Fact: Number of Income Tax Returns Filed by Different Types of Taxpayers (in Millions)
15(1)
Conduit versus Entity Treatment
15(6)
Effect on Recognition at Time of Contribution to the Entity
16(1)
Effect on Basis of Ownership Interest
17(1)
Effect on Results of Operations
17(1)
Effect on Recognition at Time of Distribution
18(1)
Effect on Passive Activity Losses
19(1)
Effect of At-Risk Rules
19(1)
Tax Fact: Partnership Income Tax Returns: Profits versus Losses
20(1)
Effect of Special Allocations
21(1)
Disposition of a Business or an Ownership Interest
21(3)
Sole Proprietorships
22(1)
Partnerships and Limited Liability Entities
23(1)
C Corporations
23(1)
Planning Strategies: Selling Stock or Assets
24(1)
S Corporations
24(1)
Overall Comparison of Forms of Doing Business
24(7)
Planning Strategies: Choosing a Business Form: Case Study
31(1)
Suggested Further Readings
31(1)
Problem Materials
32
PART SIX Taxation of Individuals
Introduction to the Taxation of Individuals
1(1)
Tax Fact: The Government's Interest in Our Work
3(1)
The Individual Tax Formula
3(7)
Components of the Tax Formula
4(2)
Global Tax Issues: Citizenship Is Not Tax-Free
6(2)
Application of the Tax Formula
8(1)
Special Limitations for Individuals Who Can Be Claimed as Dependents
9(1)
Personal and Dependency Exemptions
10(8)
Personal Exemptions
10(1)
Dependency Exemptions---Prior to 2005
10(2)
Planning Strategies: Multiple Support Agreements and the Medical Expense Deduction
12(2)
Planning Strategies: Problems with a Joint Return
14(1)
Dependency Exemptions---After 2004
14(3)
Tax in the News: How to Subtly Pluck the Chicken
17(1)
Phaseout of Exemptions
17(1)
Tax Determination
18(4)
Tax Table Method
18(1)
Tax Rate Schedule Method
18(1)
Planning Strategies: Shifting Income and Deductions across Time
19(1)
Tax Fact: The Tightening Tax Squeeze
20(1)
Computation of Net Taxes Payable or Refund Due
20(1)
Unearned Income of Children under Age 14 Taxed at Parents' Rate
21(1)
Planning Strategies: Income of Minor Children
22(1)
Filing Considerations
22(5)
Filing Requirements
23(1)
Tax Fact: What Form of Tax Compliance Is Right for You?
24(1)
Filing Status
24(1)
Global Tax Issues: Filing a Joint Return
25(2)
Overview of Income Provisions Applicable to Individuals
27(1)
Specific Inclusions Applicable to Individuals
28(2)
Alimony and Separate Maintenance Payments
28(1)
Prizes and Awards
29(1)
Unemployment Compensation
29(1)
Social Security Benefits
30(1)
Specific Exclusions Applicable to Individuals
30(5)
Gifts and Inheritances
30(1)
Scholarships
30(1)
Tax in the News: Begging as a Tax-Disfavored Occupation
31(1)
Damages
32(1)
Workers' Compensation
33(1)
Accident and Health Insurance Benefits
34(1)
Educational Savings Bonds
34(1)
Itemized Deductions
35(18)
Medical Expenses
35(3)
Tax in the News: The President and Vice President Itemize
38(2)
Taxes
40(1)
Global Tax Issues: Deductibility of Foreign Taxes
41(1)
Planning Strategies: Timing the Payment of Deductible Taxes
42(1)
Interest
42(4)
Charitable Contributions
46(1)
Global Tax Issues: Choose the Charity Wisely
47(1)
Tax in the News: Spring Cleaning and Charitable Contributions
48(3)
Miscellaneous Itemized Deductions Subject to Two Percent Floor
51(1)
Other Miscellaneous Deductions
51(1)
Overall Limitation on Certain Itemized Deductions
51(2)
Planning Strategies: Effective Utilization of Itemized Deductions
53(1)
Individual Tax Credits
53(6)
Adoption Expenses Credit
53(1)
Child Tax Credit
54(1)
Credit for Child and Dependent Care Expenses
55(1)
Education Tax Credits
56(2)
Earned Income Credit
58(1)
Suggested Further Readings
59(1)
Problem Materials
59
Individuals as Employees and Proprietors
1(1)
Employee versus Self-Employed
2(4)
Factors Considered in Classification
3(2)
Tax in the News: Self-Employed or Employed? Misclassification Can Be Costly!
5(1)
Planning Strategies: Self-Employed Individuals
5(1)
Exclusions Available to Employees
6(14)
Advantages of Qualified Fringe Benefits
6(1)
Employer-Sponsored Accident and Health Plans
6(1)
Medical Reimbursement Plans
7(1)
Long-Term Care Benefits
8(1)
Meals and Lodging Furnished for the Convenience of the Employer
8(2)
Group Term Life Insurance
10(1)
Qualified Tuition Reduction Plans
11(1)
Other Specific Employee Fringe Benefits
12(1)
Tax in the News: Employees Lose Some under ``Use or Lose Plans''
13(1)
Cafeteria Plans
13(1)
Flexible Spending Plans
14(1)
General Classes of Excluded Benefits
14(4)
Taxable Fringe Benefits
18(1)
Foreign Earned Income
19(1)
Employee Expenses
20(22)
Transportation Expenses
20(2)
Travel Expenses
22(1)
Tax in the News: Relief for Members of the Armed Forces Reserves
23(2)
Planning Strategies: Transportation and Travel Expenses
25(1)
Moving Expenses
25(2)
Global Tax Issues: Expatriates and the Moving Expense Deduction
27(1)
Planning Strategies: Moving Expenses
27(1)
Education Expenses
28(1)
Tax in the News: Is an MBA Degree Deductible?
29(1)
Planning Strategies: Education Expenses
29(1)
A Limited Deduction Approach
30(1)
Entertainment Expenses
31(1)
Planning Strategies: Entertainment Expenses
32(1)
Other Employee Expenses
33(2)
Tax in the News: One Side Effect of 9/11
35(1)
Classification of Employee Expenses
36(1)
Planning Strategies: Unreimbursed Employee Business Expenses
37(1)
Contributions to Individual Retirement Accounts
38(1)
Tax in the News: Rolling Over Your § 401(k) Plan?
39(1)
Tax Fact: The Vacillating Popularity of IRAs
40(2)
Individuals as Proprietors
42(7)
The Proprietorship as a Business Entity
42(1)
Income of a Proprietorship
42(1)
Deductions Related to a Proprietorship
42(2)
Retirement Plans for Self-Employed Individuals
44(1)
Tax Fact: Increasing Popularity of Keogh Plans
45(1)
Planning Strategies: Important Dates Related to IRAs and Keogh Plans
46(1)
Planning Strategies: Factors Affecting Retirement Plan Choices
47(1)
Accounting Periods and Methods
47(1)
Estimated Tax Payments
48(1)
Hobby Losses
49(3)
General Rules
49(1)
Presumptive Rule of § 183
50(1)
Determining the Amount of the Deduction
50(2)
Suggested Further Readings
52(1)
Problem Materials
52
Appendixes
Tax Rate Schedules and Tables 1(1)
Tax Forms 1(1)
Glossary of Key Terms 1(1)
Table of Code Sections Cited 1(7)
Table of Regulations Cited 8(2)
Table of Revenue Procedures and Revenue Rulings Cited 10
Table of Cases Cited 1(1)
Present Value and Future Value Tables 1(1)
Subject Index 1

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