Concepts in Federal Taxation 2005,9780324223446

Concepts in Federal Taxation 2005

by ;
Edition: 12th
ISBN13: 9780324223446
ISBN10: 0324223447
Format: Hardcover
Pub. Date: 2004-04-13
Publisher(s): South-Western College/West
List Price: $390.52

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Summary

Concepts in Federal Taxation is designed for a more conceptual, less detailed approach to federal taxation of individuals and corporations in an introductory taxation course. This conceptual approach presents taxation as a small number of unifying concepts, stressing the overriding principles that apply to all specific tax rules and regulations. Concepts in Federal Taxation offers an excellent balance between tax concepts and the Internal Revenue Code and regulations, preparing users for a future in the business environment.

Table of Contents

Preface xv
Introduction xxv
Why Study Federal Income Taxation? xxv
Significance of Tax Costs xxvi
Conservation of Wealth xxvii
Taxes Influence Routine Decisions xxviii
Self-Protection xxix
PART I Conceptual Foundations of the Tax Law
1(78)
Federal Income Taxation---An Overview
2(41)
Introduction
3(1)
Definition and Evaluation of a Tax
3(7)
Definition of a Tax
3(1)
Standards for Evaluating a Tax
4(2)
Tax Rates and Structures
6(4)
Major Types of U.S. Taxes
10(5)
Income Taxes
10(1)
Employment Taxes
11(1)
Sales Tax
12(1)
Property Taxes
13(1)
Other Taxes
13(2)
Sources of Federal Income Tax Law
15(1)
Federal Income Tax Terminology
16(5)
Income
16(1)
Deductions
17(1)
Income Tax Rates
18(1)
Tax Prepayments
18(2)
Tax Credits
20(1)
Filing Returns
20(1)
The Audit and Appeal Process within the IRS
21(2)
Tax Return Selection Processes
21(1)
Types of Examinations
22(1)
Settlement Procedures
22(1)
Administrative Appeals
22(1)
Individual Income Tax Calculation
23(3)
Deductions for Adjusted Gross Income
23(1)
Deductions from Adjusted Gross Income
24(1)
Personal and Dependency Exemptions
25(1)
Tax Planning
26(5)
Mechanics of Tax Planning
26(4)
Tax Evasion and Tax Avoidance
30(1)
Ethical Considerations in Tax Practice
31(2)
Summary
33(1)
Key Terms
33(1)
Primary Tax Law Sources
34(1)
Discussion Questions
35(1)
Problems
36(4)
Issue Identification Problems
40(1)
Technology Applications
41(1)
Discussion Cases
41(1)
Tax Planning Cases
42(1)
Ethics Discussion Case
42(1)
Income Tax Concepts
43(36)
Introduction
44(1)
General Concepts
45(3)
Ability-to-Pay Concept
45(1)
Administrative Convenience Concept
46(1)
Arm's-Length Transaction Concept
46(2)
Pay-as-You-Go Concept
48(1)
Accounting Concepts
48(6)
Entity Concept
48(3)
Annual Accounting Period Concept
51(3)
Income Concepts
54(6)
All-Inclusive Income Concept
54(1)
Legislative Grace Concept
55(1)
Capital Recovery Concept
56(1)
Realization Concept
56(2)
Wherewithal-to-Pay Concept
58(2)
Deduction Concepts
60(5)
Legislative Grace Concept
60(1)
Business Purpose Concept
60(2)
Capital Recovery Concept
62(3)
Summary
65(1)
Key Terms
65(1)
Primary Tax Law Sources
66(1)
Discussion Questions
67(1)
Problems
68(7)
Issue Identification Problems
75(1)
Technology Applications
76(1)
Discussion Cases
77(1)
Tax Planning Case
77(1)
Ethics Discussion Case
78(1)
PART II GROSS INCOME
79(88)
Income Sources
80(50)
Introduction
81(1)
What Constitutes Income
81(4)
Income Is Derived from Labor and Capital
82(1)
Income as an Increase in Wealth
83(1)
What Constitutes Income: Current View
84(1)
Common Income Sources
85(16)
Earned Income
85(2)
Unearned Income
87(4)
Transfers from Others
91(5)
Imputed Income
96(5)
Capital Gains and Losses--an Introduction
101(7)
Capital Gain-and-Loss Netting Procedure
102(2)
Tax Treatment of Capital Gains
104(2)
Tax Treatment of Dividends
106(1)
Tax Treatment of Capital Losses
107(1)
Capital Gains and Losses of Conduit Entities
108(1)
Effect of Accounting Method
108(5)
Cash Method
109(1)
Accrual Method
110(2)
Hybrid Method
112(1)
Exceptions Applicable to All Methods
112(1)
Summary
113(1)
Key Terms
113(1)
Primary Tax Law Sources
114(2)
Discussion Questions
116(1)
Problems
117(9)
Issue Identification Problems
126(1)
Technology Applications
127(1)
Discussion Cases
128(1)
Tax Planning Cases
128(1)
Ethics Discussion Case
129(1)
Income Exclusions
130(37)
Introduction
131(1)
Donative Items
132(4)
Gifts
132(1)
Inheritances
133(1)
Life Insurance Proceeds
134(1)
Scholarships
135(1)
Employment-Related Exclusions
136(8)
Foreign-Earned Income
136(1)
Payments Made on Behalf of an Employee
137(5)
Employer Benefit Plans
142(2)
Returns of Human Capital
144(3)
Workers' Compensation
144(1)
Damage Payments for Personal Physical Injury or Physical Sickness
145(1)
Payments from Health and Accident Policies
145(2)
Investment-Related Exclusions
147(4)
Municipal Bond Interest
147(1)
Stock Dividends
148(1)
Discharge of Indebtedness
149(1)
Improvements by a Lessee
150(1)
Summary
151(1)
Key Terms
151(1)
Primary Tax Law Sources
152(2)
Discussion Questions
154(1)
Problems
154(7)
Issue Identification Problems
161(1)
Technology Applications
162(1)
Integrative Problems
163(2)
Discussion Cases
165(1)
Tax Planning Cases
165(1)
Ethics Discussion Case
166(1)
PART III Deductions
167(204)
Introduction to Business Expenses
168(51)
Introduction
169(2)
Reporting Deductions
171(3)
Conduit Entity Reporting
173(1)
Classification of Deductions
174(7)
Profit-Motivated Expenditures
174(1)
Trade or Business or Production-of-Income Expenses?
175(3)
Rental Activity
178(1)
Personal Expenditures
179(1)
Mixed Business and Personal Expenditures
179(2)
Tests for Deductibility
181(7)
Ordinary, Necessary, and Reasonable in Amount
181(2)
Not a Personal Expense
183(1)
Not a Capital Expenditure
183(2)
Not Frustrate Public Policy
185(2)
Not Related to Tax-Exempt Income
187(1)
Expenditure Must Be for Taxpayer's Benefit
188(1)
Limited Mixed-Use Expenses
188(6)
Hobby Expenses
188(2)
Vocation Home Expenses
190(2)
Home Office Expenses
192(2)
Timing of Deductions---Effect of Accounting Method
194(7)
Cash Method
194(2)
Accrual Method
196(3)
Related Party Accrued Expenses
199(1)
Financial and Taxable Income Differences
200(1)
Summary
201(1)
Key Terms
202(1)
Primary Tax Law Sources
202(2)
Discussion Questions
204(1)
Problems
205(8)
Issue Identification Problems
213(1)
Technology Applications
214(2)
Comprehensive Problem
216(1)
Discussion Cases
217(1)
Tax Planning Cases
218(1)
Ethics Discussion Case
218(1)
Business Expenses
219(50)
Introduction
220(1)
Business Expenses
221(16)
Entertainment, Auto, Travel, Gift, and Education Expenses
221(9)
Compensation of Employees
230(1)
Bad Debts
231(2)
Other Business Expenses
233(4)
Individual Deductions for Adjusted Gross Income
237(12)
Reimbursed Employee Business Expenses
238(2)
Deductions for Self-Employed Taxpayers
240(1)
Retirement Plan Contribution Deductions
241(5)
Deduction for Higher Education Expenses
246(1)
Interest on Education Loans
246(2)
Moving Expenses
248(1)
Summary
249(1)
Key Terms
250(1)
Primary Tax Law Sources
250(2)
Discussion Questions
252(1)
Problems
253(9)
Issue Identification Problems
262(1)
Technology Applications
263(2)
Integrative Problem
265(2)
Discussion Cases
267(1)
Tax Planning Cases
267(1)
Ethics Discussion Case
268(1)
Losses---Deductions and Limitations
269(43)
Introduction
270(1)
Annual Losses
271(1)
Net Operating Losses
272(2)
Tax-Shelter Losses: An Overview
274(13)
The At-Risk Rules
275(3)
Passive Activity Losses
278(9)
Transaction Losses
287(10)
Trade or Business Losses
289(2)
Investment-Related Losses
291(6)
Summary
297(1)
Key Terms
298(1)
Primary Tax Law Sources
298(1)
Discussion Questions
299(1)
Problems
300(8)
Issue Identification Problems
308(1)
Technology Applications
309(1)
Comprehensive Problem
310(1)
Discussion Cases
310(1)
Tax Planning Cases
311(1)
Ethics Discussion Case
311(1)
Taxation of Individuals
312(59)
Introduction
313(1)
Personal and Dependency Exemptions
314(2)
Dependency Requirements
314(2)
Filing Status
316(3)
Married, Filing Jointly
317(1)
Married, Filing Separately
317(1)
Single
317(1)
Head of Household
318(1)
Deductions from Adjusted Gross Income
319(10)
Standard Deduction
319(1)
Itemized Deductions
320(9)
Itemized Deductions and Exemptions---Reductions by High-Income Taxpayers
329(2)
Exemption and Standard Deduction Restrictions on Dependents
331(1)
Calculating Tax Liability
332(8)
Tax on Unearned Income of a Minor Child
332(1)
Income Tax Credits
333(7)
Filing Requirements
340(1)
Summary
341(1)
Key Terms
341(1)
Primary Tax Law Sources
341(1)
Discussion Questions
342(1)
Problems
343(8)
Issue Identification Problems
351(1)
Technology Applications
352(2)
Integrative Problems
354(4)
Discussion Cases
358(1)
Tax Planning Cases
358(1)
Ethics Discussion Case
359(2)
Appendix to Chapter 8
360(1)
Schedule EIC (Earned Income Credit)
361(5)
2003 Earned Income Credit Table
366(5)
PART IV Property Transactions
371(176)
Acquisitions of Property
372(40)
Introduction
373(1)
Classes of Property
374(1)
The Property Investment Cycle
375(7)
Adjusted Basis
376(3)
Basis in Conduit Entities
379(1)
Property Dispositions
380(2)
Initial Basis
382(1)
Purchase of Assets
382(5)
Determining the Amount Invested
382(2)
Basis of a Bargain Purchase
384(1)
Purchase of Multiple Assets
384(1)
Purchase of a Business
385(2)
Constructed Assets
387(1)
Specially Valued Property Acquisitions
387(1)
Basis of Property Acquired by Gift
387(3)
General Rule for Gift Basis
388(1)
Split Basis Rule for Loss Property
389(1)
Holding Period
390(1)
Basis of Property Acquired by Inheritance
390(2)
Primary Valuation Date
390(1)
Alternate Valuation Date
390(1)
Distribution Date
391(1)
Other Considerations
391(1)
Personal Use Property Converted to Business Use
392(2)
General Rule for Basis
392(1)
Split Basis Rule
393(1)
Basis in Securities
394(3)
Stock Dividends
394(1)
Wash Sale Stock Basis
395(2)
Summary
397(2)
Key Terms
399(1)
Primary Tax Law Sources
399(1)
Discussion Questions
400(1)
Problems
400(7)
Issue Identification Problems
407(1)
Technology Applications
408(1)
Integrative Problem
409(1)
Discussion Cases
409(1)
Tax Planning Cases
410(1)
Ethics Discussion Case
411(1)
Cost Recovery on Property: Depreciation, Depletion, and Amortization
412(55)
Introduction
413(2)
Capital Recovery from Depreciation or Cost Recovery
415(2)
Section 179 Election to Expense Assets
417(3)
Qualified Taxpayers
417(1)
Qualified Property
417(1)
Limitations on Deduction
417(3)
Additional First-Year Depreciation
420(1)
Modified Accelerated Cost Recovery System (MACRS)
421(15)
Property Subject to MACRS
422(1)
Basis Subject to Cost Recovery
423(1)
MACRS Recovery Period
423(2)
MACRS Conventions
425(4)
Depreciation Method Alternatives
429(2)
Using MACRS Percentage Tables
431(2)
MACRS Straight-Line Election
433(1)
Alternative Depreciation System (ADS)
433(1)
Limitations on Listed Property
434(2)
Depletion
436(2)
Depletion Methods
436(1)
Cost Depletion
437(1)
Percentage Depletion
438(1)
Intangible Assets
438(2)
Summary
440(2)
Key Terms
442(1)
Primary Tax Law Sources
442(1)
Discussion Questions
443(1)
Problems
444(5)
Issue Identification Problems
449(1)
Technology Applications
449(1)
Integrative Problems
450(1)
Discussion Cases
451(1)
Tax Planning Cases
451(1)
Ethics Discussion Case
452(1)
Appendix to Chapter 10 MACRS Class Lives and MACRS Depreciation Schedules
453(1)
Rev. Proc. 87-56
453(14)
Section 1. Purpose
453(1)
Section 2. General Rules of Application
453(1)
Section 5. Tables of Class Lives and Recovery Periods
454(13)
Property Dispositions
467(42)
Introduction
468(2)
Realized Gain or Loss
470(3)
Amount Realized
470(2)
Effect of Debt Assumptions
472(1)
Character of Gain or Loss
473(1)
Capital Gains and Losses
473(11)
Capital Asset Definition
474(1)
Long-Term versus Short-Term Classification
474(1)
Capital Gain-and-Loss Netting Procedure
475(6)
Capital Gains and Losses---Planning Strategies
481(3)
Section 1231 Gains and Losses
484(3)
Definition of Section 1231 Property
484(1)
Section 1231 Netting Procedure
484(3)
Depreciation Recapture
487(6)
Section 1245 Recapture Rule
488(1)
Section 1250 Recapture Rule
489(1)
Section 1245 and Section 1250 Properties
490(1)
Unrecaptured Section 1250 Gain
491(2)
Summary
493(1)
Key Terms
494(1)
Primary Tax Law Sources
494(1)
Discussion Questions
495(1)
Problems
496(7)
Issue Identification Problems
503(1)
Technology Applications
504(2)
Comprehensive Problems
506(1)
Discussion Cases
506(1)
Tax Planning Cases
507(1)
Ethics Discussion Case
508(1)
Nonrecognition Transactions
509(38)
Introduction
510(1)
Rationale for Nonrecognition
510(1)
Commonalities of Nonrecognition Transactions
511(4)
Like-Kind Exchanges
515(10)
Exchange Requirement
515(1)
Like-Kind Property Requirements
516(3)
Effect of Boot
519(4)
Related Party Exchanges
523(1)
Carryover of Tax Attributes
524(1)
Involuntary Conversions
525(3)
Treatment of Involuntary Conversion Gains and Losses
525(2)
Qualified Replacement Property
527(1)
Sale of a Principal Residence
528(3)
Requirements for Exclusion
529(2)
Summary
531(1)
Key Terms
532(1)
Primary Tax Law Sources
533(1)
Discussion Questions
533(1)
Problems
534(5)
Issue Identification Problems
539(1)
Technology Applications
540(1)
Comprehensive Problem
541(1)
Discussion Cases
541(1)
Tax Planning Cases
542(1)
Ethics Discussion Case
542(5)
Appendix to Chapter 12 Selected SIC Product Classes
543(4)
PART V Income Tax Entities
547(144)
Choice of Business Entity---General Tax and Nontax Factors/Formation
548(43)
Introduction
549(1)
Nontax Factors
550(7)
Sole Proprietorship
551(1)
Partnership
551(1)
Corporation
552(1)
S Corporation
553(1)
Limited Liability Company
554(1)
Limited Liability Partnership
555(1)
Planning Commentary
556(1)
General Income Tax Factors
557(11)
Incidence of Income Taxation
557(3)
Double Taxation
560(1)
Employee versus Owner
561(2)
Fringe Benefits
563(2)
Social Security Taxes
565(2)
Planning Commentary
567(1)
Formation
568(12)
Transfers to an Entity
568(2)
Basis Considerations
570(4)
Organizational Costs
574(1)
Accounting Periods
575(2)
Accounting Methods
577(2)
Planning Commentary
579(1)
Summary
580(1)
Key Terms
581(1)
Primary Tax Law Sources
581(1)
Discussion Questions
582(2)
Problems
584(4)
Issue Identification Problems
588(1)
Technology Applications
589(1)
Discussion Cases
589(1)
Tax Planning Cases
590(1)
Ethics Discussion Case
590(1)
Choice of Business Entity---Operations and Distributions
591(44)
Introduction
592(1)
Operations
592(19)
Sole Proprietorship
592(2)
Partnership
594(6)
Corporation
600(6)
S Corporation
606(3)
Planning Commentary
609(2)
Entity Distributions
611(9)
Sole Proprietorship
611(1)
Partnership
612(2)
Corporation
614(2)
S Corporation
616(1)
Planning Commentary
617(3)
Tax Planning
620(4)
Income Splitting
620(1)
Children as Employees
621(1)
Family Entities
622(1)
Planning Commentary
623(1)
Summary
624(1)
Key Terms
625(1)
Primary Tax Law Sources
625(1)
Discussion Questions
626(1)
Problems
626(5)
Issue Identification Problems
631(1)
Technology Applications
632(1)
Discussion Cases
633(1)
Tax Planning Cases
633(1)
Ethics Discussion Case
634(1)
Choice of Business Entity---Other Considerations
635(56)
Introduction
636(1)
Compensation Plans
636(22)
Qualified and Nonqualified Pension Plans
637(3)
Other Pension Plans
640(5)
Distributions
645(2)
Penalties
647(2)
Planning Commentary
649(1)
Stock Options
649(7)
Reasonableness of Compensation
656(1)
Planning Commentary
657(1)
Other Tax Liability Considerations
658(13)
Income Tax Credits
658(4)
The Alternative Minimum Tax
662(1)
Basic Alternative Minimum Tax Computation
663(8)
Planning Commentary
671(1)
International Tax Aspects
671(6)
Taxpayers Subject to U.S. Taxation
671(1)
Tax Treaties
672(1)
Organizational Structure of Foreign Operations
672(4)
Taxation of Nonresident Aliens and Foreign Corporations
676(1)
Summary
677(2)
Key Terms
679(1)
Primary Tax Law Sources
679(2)
Discussion Questions
681(1)
Problems
682(6)
Issue Identification Problems
688(1)
Technology Applications
688(1)
Discussion Cases
689(1)
Tax Planning Cases
689(1)
Ethics Discussion Case
690(1)
PART VI Tax Research
691(1)
Tax Research
692(1)
Introduction
693(1)
Primary Sources of Federal Income Tax Law
693(11)
Legislative Sources
693(5)
Administrative Sources
698(2)
Judicial Sources
700(2)
Citations to Primary Authorities
702(2)
Secondary Sources of Federal Income Tax Law
704(3)
Tax Services
704(1)
Computer-Assisted Tax Research
705(1)
Citators
706(1)
Tax Periodicals
707(1)
Tax Research
707(3)
Tax Compliance versus Tax Planning
707(1)
Step 1: Establish the Facts and Determine the Issues
707(1)
Step 2: Locate the Relevant Authorities
708(1)
Step 3: Assess the Importance of the Authorities
708(1)
Step 4: Reach Conclusions, Make Recommendations, and Communicate the Results
709(1)
Comprehensive Research Example
710(2)
Step 1: Establish the Facts and Determine the Issues
710(1)
Step 2: Locate the Relevant Authorities
710(1)
Step 3: Assess the Importance of the Authorities
710(2)
Step 4: Reach Conclusions, Make Recommendations, and Communicate the Results
712(1)
Research Memorandum
712(1)
Facts:
713(1)
Issues:
713(1)
Conclusions:
713(1)
Reasoning:
713(1)
Summary
713(1)
Key Terms
714(1)
Primary Tax Law Sources
714(1)
Discussion Questions
715(1)
Problems
716(1)
Research Cases
717(1)
Income Cases
717(1)
Deduction Cases
718(2)
Loss Cases
720(2)
Entity Cases
722(1)
Property Cases
723(1)
Accounting Methods/Procedure Cases
724
Appendix A: Tax Return Problem 1(1)
Appendix B: Tax Rate Schedules and Tax Tables 1(1)
Appendix C: Tax Forms 1(1)
Appendix D: Statements on Standards for Tax Services 1(1)
Glossary 1(1)
Index 1

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