1. 1 An Introduction to Tax
2. Who Cares about Taxes and Why?
3. What Qualifies as a Tax?
4. How to Calculate a Tax
5. Different Ways to Measure Tax Rates
6. Tax Rate Structures
7. Proportional Tax Rate Structure
8. Progressive Tax Rate Structure
9. Regressive Tax Rate Structure
10. Types of Taxes
11. Federal Taxes
12. State and Local Taxes
13. Implicit Taxes
14. Evaluating Alternative Tax Systems
15. Sufficiency
16. Equity
17. Certainty
18. Convenience
19. Economy
20. Evaluating Tax Systems—The Trade-Offs
21. Conclusion
22. 2 Tax Compliance, the IRS, and Tax Authorities
23. Taxpayer Filing Requirements
24. Tax Return Due Date and Extensions
25. Statute of Limitations
26. IRS Audit Selection
27. Types of Audits
28. Tax Law Sources
29. Legislative Sources: Congress and the Constitution
30. Judicial Sources: The Courts
31. Administrative Sources: The U.S. Treasury
32. Tax Research
33. Step 1: Understand Facts
34. Step 2: Identify Issues
35. Step 3: Locate Relevant Authorities
36. Step 4: Analyze Tax Authorities
37. Step 5: Document and Communicate the Results
38. Tax Professional Responsibilities
39. Taxpayer and Tax Practitioner Penalties
40. Conclusion
41. 3 Tax Planning Strategies and Related Limitations
42. Basic Tax Planning Overview
43. Timing Strategies
44. Present Value of Money
45. The Timing Strategy When Tax Rates Are Constant
46. The Timing Strategy When Tax Rates Change
47. Income-Shifting Strategies
48. Transactions between Family Members and Limitations
49. Transactions between Owners and Their Businesses and Limitations
50. Income Shifting across Jurisdictions and Limitations
51. Conversion Strategies
52. Limitations of Conversion Strategies
53. Additional Limitations to Tax Planning Strategies: Judicially Based Doctrines
54. Tax Avoidance versus Tax Evasion
55. Conclusion
56. 4 Individual Income Tax Overview, Dependents, and Filing Status
57. The Individual Income Tax Formula
58. Gross Income
59. Character of Income
60. Deductions
61. Income Tax Calculation
62. Other Taxes
63. Tax Credits
64. Tax Prepayments
65. Dependents of the Taxpayer
66. Dependency Requirements
67. Filing Status
68. Married Filing Jointly and Married Filing Separately
69. Qualifying Widow or Widower (Surviving Spouse)
70. Single
71. Head of Household
72. Summary of Income Tax Formula
73. Conclusion
74. 5 Gross Income and Exclusions
75. Realization and Recognition of Income
76. What Is Included in Gross Income?
77. Other Income Concepts
78. When Do Taxpayers Recognize Income?
79. Who Recognizes the Income?
80. Types of Income
81. Income from Services
82. Income from Property
83. Other Sources of Gross Income
84. Exclusion Provisions
85. Common Exclusions
86. Education-Related Exclusions
87. Exclusions That Mitigate Double Taxation
88. Sickness and Injury-Related Exclusions
89. Deferral Provisions
90. Income Summary
91. Conclusion
92. 6 Individual Deductions
93. Deductions for AGI
94. Deductions Directly Related to Business Activities
95. Deductions Indirectly Related to Business Activities
96. Deductions Subsidizing Specific Activities
97. Summary: Deductions for AGI
98. Deductions from AGI: Itemized Deductions
99. Medical Expenses
100. Taxes
101. Interest
102. Charitable Contributions
103. Casualty and Theft Losses on Personal-Use Assets
104. Other Itemized Deductions
105. Summary of Itemized Deductions
106. The Standard Deduction
107. Standard Deduction
108. Deduction for Qualified Business Income
109. Deduction for Qualified Business Income
110. Limitations
111. Taxable Income Summary
112. Conclusion
113. 7 Investments
114. Investments Overview
115. Portfolio Income: Interest and Dividends
116. Interest
117. Dividends
118. Portfolio Income: Capital Gains and Losses
119. Types of Capital Gains and Losses
120. Limits for Capital Loss Deductions
121. Balancing Tax Planning Strategies for Capital Assets with Other Goals
122. Portfolio Income Summary
123. Investment Interest Expense
124. Net Investment Income Tax
125. Passive Activity Income and Losses
126. Passive Activity Definition
127. Income and Loss Categories
128. Rental Real Estate Exception to the Passive Activity Loss Rules
129. Net Investment Income Tax on Net Passive Income
130. Conclusion
131. 8 Individual Income Tax Computation and Tax Credits
132. Regular Federal Income Tax Computation
133. Tax Rate Schedules
134. Marriage Penalty or Benefit
135. Exceptions to the Basic Tax Computation
136. Alternative Minimum Tax
137. Alternative Minimum Tax Formula
138. Additional Taxes
139. Employment and Self-Employment Taxes
140. Tax Credits
141. Nonrefundable Personal Credits
142. Refundable Personal Credits
143. Business Tax Credits
144. Tax Credit Summary
145. Credit Application Sequence
146. Taxpayer Prepayments and Filing Requirements
147. Prepayments
148. Filing Requirements
149. Tax Summary
150. Conclusion
151. 9 Business Income, Deductions, and Accounting Methods
152. Business Gross Income
153. Gross Receipts Test for Determining Small Businesses
154. Business Deductions
155. Ordinary and Necessary
156. Reasonable in Amount
157. Limitations on Business Deductions
158. Expenditures against Public Policy
159. Political Contributions and Lobbying Costs
160. Capital Expenditures
161. Expenses Associated with the Production of Tax-Exempt Income
162. Personal Expenditures
163. Mixed-Motive Expenditures
164. Limitation on Business Interest Deductions
165. Losses on Dispositions of Business Property
166. Business Casualty Losses
167. Accounting Periods
168. Accounting Methods
169. Financial and Tax Accounting Methods
170. Overall Accounting Method
171. Accrual Income
172. Taxation of Advance Payments of Income (Unearned Income)
173. Inventories
174. Accrual Deductions
175. Comparison of Accrual and Cash Methods
176. Adopting an Accounting Method
177. Changing Accounting Methods
178. Conclusion
179. 10 Property Acquisition and Cost Recovery
180. Cost Recovery and Tax Basis for Cost Recovery
181. Basis for Cost Recovery
182. Depreciation
183. Personal Property Depreciation
184. Calculating Depreciation for Personal Property
185. Real Property
186. Special Rules Relating to Cost Recovery
187. Depreciation for the Alternative Minimum Tax
188. Depreciation Summary
189. Amortization
190. Section 197 Intangibles
191. Organizational Expenditures and Start-Up Costs
192. Research and Experimentation Expenditures
193. Patents and Copyrights
194. Amortizable Intangible Asset Summary
195. Depletion
196. Conclusion
197. 11 Property Dispositions
198. Dispositions
199. Amount Realized
200. Determination of Adjusted Basis
201. Realized Gain or Loss on Disposition
202. Recognized Gain or Loss on Disposition
203. Character of Gain or Loss
204. Ordinary Assets
205. Capital Assets
206. Section 1231 Assets
207. Depreciation Recapture
208. Section 1245 Property
209. Section 1250 Depreciation Recapture for Real Property
210. Other Provisions Affecting the Rate at Which Gains Are Taxed
211. Unrecaptured §1250 Gain for Individuals
212. Characterizing Gains on the Sale of Depreciable Property to Related Persons
213. Calculating Net §1231 Gains or Losses
214. Section 1231 Look-Back Rule
215. Gain or Loss Summary
216. Tax-Deferred Transactions
217. Like-Kind Exchanges
218. Involuntary Conversions
219. Installment Sales
220. Gains Ineligible for Installment Reporting
221. Other Tax-Deferred Provisions
222. Related-Person Loss Disallowance Rules
223. Conclusion
224. 12 Compensation
225. Salary and Wages
226. Employee Considerations for Salary and Wages
227. Employer Considerations for Salary and Wages
228. Equity-Based Compensation
229. Stock Options
230. Restricted Stock
231. Equity-Based Compensation Summary
232. Fringe Benefits
233. Taxable Fringe Benefits
234. Nontaxable Fringe Benefits
235. Tax Planning with Fringe Benefits
236. Fringe Benefits Summary
237. Conclusion
238. 13 Retirement Savings and Deferred Compensation
239. Employer-Provided Qualified Plans
240. Defined Benefit Plans
241. Vesting
242. Distributions
243. Nontax Considerations
244. Defined Contribution Plans
245. Employer Matching
246. Contribution Limits
247. Vesting
248. After-Tax Cost of Contributions to Traditional (non-Roth) Defined Contribution Plans
249. Distributions from Traditional Defined Contribution Plans
250. After-Tax Rates of Return for Traditional Defined Contribution Plans
251. Roth 401(k) Plans
252. Comparing Traditional Defined Contribution Plans and Roth 401(k) Plans
253. Nonqualified Deferred Compensation Plans
254. Nonqualified Plans versus Qualified Defined Contribution Plans
255. Employee Considerations
256. Employer Considerations
257. Individually Managed Qualified Retirement Plans
258. Individual Retirement Accounts
259. Traditional IRAs
260. Roth IRAs
261. Converting a Traditional IRA to a Roth IRA
262. Comparing Traditional and Roth IRAs
263. Self-Employed Retirement Accounts
264. Simplified Employee Pension (SEP) IRA
265. Individual 401(k) Plans
266. Saver’s Credit
267. Conclusion
268. 14 Tax Consequences of Home Ownership
269. Is a Dwelling Unit a Principal Residence, Residence, or Nonresidence?
270. Personal Use of the Home
271. Exclusion of Gain on Sale of Personal Residence
272. Home Mortgage Interest Deduction
273. Real Property Taxes
274. Rental Use of the Home
275. Residence with Minimal Rental Use
276. Residence with Significant Rental Use (Vacation Home)
277. Nonresidence (Rental Property)
278. Business Use of the Home
279. Direct versus Indirect Expenses
280. Limitations on Deductibility of Expenses
281. Conclusion
282. 15 Business Entities Overview
283. Business Entity Legal Classification and Nontax Characteristics
284. Legal Classification
285. Nontax Characteristics
286. Business Entity Tax Classification
287. Business Entity Tax Characteristics
288. Taxation of Business Entity Income
289. Converting to Other Business Entity Types
290. Conclusion
291. 16 Corporate Operations
292. Corporate Taxable Income Formula
293. Accounting Periods and Methods
294. Computing Corporate Taxable Income
295. Book–Tax Differences
296. Corporate-Specific Deductions and Associated Book–Tax Differences
297. Taxable Income Summary
298. Corporate Income Tax Liability
299. Compliance
300. Corporate Tax Return Due Dates and Estimated Taxes
301. Conclusion
302. 17 Accounting for Income Taxes
303. Accounting for Income Taxes and the Income Tax Provision Process
304. Why Is Accounting for Income Taxes So Complex?
305. Objectives of ASC 740
306. The Income Tax Provision Process
307. Calculating a Company’s Income Tax Provision
308. Step 1: Adjust Pretax Net Income for All Permanent Differences
309. Step 2: Identify All Temporary Differences andTax Carryover Amounts
310. Identifying Taxable and Deductible Temporary Differences
311. Step 3: Compute the Current Income Tax Expense or Benefit
312. Step 4: Determine the Ending Balances in the Balance Sheet Deferred Tax Asset and Liability Accounts
313. Determining Whether a Valuation Allowance Is Needed
314. Step 5: Evaluate the Need for a Valuation Allowance for Gross Deferred Tax Assets
315. Determining the Need for a Valuation Allowance
316. Step 6: Calculate the Deferred Income Tax Expense or Benefit
317. Accounting for Uncertainty in Income Tax Positions
318. Step 7: Evaluate the Need for an Uncertain Tax Benefit Reserve
319. Application of ASC Topic 740 to Uncertain Tax Positions
320. Subsequent Events
321. Interest and Penalties
322. Disclosures of Uncertain Tax Positions
323. Schedule UTP (Uncertain Tax Position) Statement
324. Financial Statement Disclosure and Computing a Corporation’s Effective Tax Rate
325. Balance Sheet Classification
326. Income Tax Footnote Disclosure
327. Interim Period Effective Tax Rates
328. FASB Projects Related to Accounting for Income Taxes
329. Conclusion
330. 18 Corporate Taxation: Nonliquidating Distributions
331. Taxation of Property Distributions
332. Determining the Dividend Amount from Earnings and Profits
333. Overview
334. Dividends Defined
335. Computing Earnings and Profits
336. Ordering of E&P Distributions
337. Distributions of Noncash Property to Shareholders
338. Stock Distributions
339. Tax Consequences to Shareholders Receiving a Stock Distribution
340. Stock Redemptions
341. The Form of a Stock Redemption
342. Redemptions That Reduce a Shareholder’s Ownership Interest
343. Tax Consequences to the Distributing Corporation
344. Partial Liquidations
345. Conclusion
346. 19 Corporate Formation, Reorganization, and Liquidation
347. Review of the Taxation of Property Dispositions
348. Tax-Deferred Transfers of Property to a Corporation
349. Transactions Subject to Tax Deferral
350. Meeting the Section 351 Tax Deferral Requirements
351. Tax Consequences to Shareholders
352. Tax Consequences When a Shareholder Receives Boot
353. Assumption of Shareholder Liabilities by the Corporation
354. Tax Consequences to the Transferee Corporation
355. Other Issues Related to Incorporating an Ongoing Business
356. Contributions to Capital
357. Section 1244 Stock
358. Taxable and Tax-Deferred Corporate Acquisitions
359. The Acquisition Tax Model
360. Tax Consequences to a Corporate Acquisition
361. Taxable Acquisitions
362. Tax-Deferred Acquisitions
363. Judicial Doctrines That Underlie All Tax-Deferred Reorganizations
364. Type A Asset Acquisitions
365. Type B Stock-for-Stock Reorganizations
366. Complete Liquidation of a Corporation
367. Tax Consequences to the Shareholders in a Complete Liquidation
368. Tax Consequences to the Liquidating Corporation in a Complete Liquidation
369. Conclusion
370. 20 Forming and Operating Partnerships
371. Flow-Through Entities Overview
372. Aggregate and Entity Concepts
373. Partnership Formations and Acquisitions of Partnership Interests
374. Acquiring Partnership Interests When Partnerships Are Formed
375. Acquisitions of Partnership Interests after Formation
376. Partnership Accounting: Tax Elections, Accounting Periods, and Accounting Methods
377. Tax Elections
378. Accounting Periods
379. Accounting Methods
380. Reporting the Results of Partnership Operations
381. Ordinary Business Income (Loss) and Separately Stated Items
382. Net Investment Income Tax
383. Allocating Partners’ Shares of Income and Loss
384. Partnership Compliance Issues
385. Adjusting a Partner’s Tax Basis in Partnership Interest
386. Cash Distributions in Operating Partnerships
387. Loss Limitations
388. Tax-Basis Limitation
389. At-Risk Amount Limitation
390. Passive Activity Loss Limitation
391. Excess Business Loss Limitation
392. Conclusion
393. 21 Dispositions of Partnership Interests and Partnership Distributions
394. Basics of Sales of Partnership Interests
395. Seller Issues
396. Buyer and Partnership Issues
397. Basics of Partnership Distributions
398. Operating Distributions
399. Liquidating Distributions
400. Disproportionate Distributions
401. Special Basis Adjustments
402. Special Basis Adjustments for Dispositions
403. Special Basis Adjustments for Distributions
404. Conclusion
405. 22 S Corporations
406. S Corporation Elections
407. Formations
408. S Corporation Qualification Requirements
409. S Corporation Election
410. S Corporation Terminations
411. Voluntary Terminations
412. Involuntary Terminations
413. Short Tax Years
414. S Corporation Reelections
415. Operating Issues
416. Accounting Methods and Periods
417. Income and Loss Allocations
418. Separately Stated Items
419. Shareholder’s Basis
420. Loss Limitations
421. Self-Employment Income
422. Net Investment Income Tax
423. Fringe Benefits
424. Distributions
425. Operating Distributions
426. Liquidating Distributions
427. S Corporation Taxes and Filing Requirements
428. Built-in Gains Tax
429. Excess Net Passive Income Tax
430. LIFO Recapture Tax
431. Estimated Taxes
432. Filing Requirements
433. Comparing C and S Corporations and Partnerships
434. Conclusion
435. 23 State and Local Taxes
436. State and Local Taxes
437. Sales and Use Taxes
438. Sales Tax Nexus
439. Sales Tax Liability
440. Income Taxes
441. Income Tax Nexus
442. Entities Included on Income Tax Return
443. State Taxable Income
444. Dividing State Tax Base among States
445. State Income Tax Liability
446. Nonincome-Based Taxes
447. Conclusion
448. 24 The U.S. Taxation of Multinational Transactions
449. The U.S. Framework for Taxing Multinational Transactions
450. U.S. Taxation of a Nonresident
451. Definition of a Resident for U.S. Tax Purposes
452. Overview of the U.S. Foreign Tax Credit System
453. U.S. Source Rules for Gross Income and Deductions
454. Source-of-Income Rules
455. Source-of-Deduction Rules
456. Operating Abroad through a Foreign Corporation
457. Treaties
458. Foreign Tax Credits
459. FTC Limitation Categories of Taxable Income
460. Creditable Foreign Taxes
461. Planning for International Operations
462. Check-the-Box Hybrid Entities
463. U.S. Anti-Deferral Rules
464. Definition of a Controlled Foreign Corporation
465. Definition of Subpart F Income
466. Planning to Avoid Subpart F Income
467. Global Intangible Low-Taxed Income
468. Base Erosion and Profit-Shifting Initiatives around the World
469. Conclusion
470. 25 Transfer Taxes and Wealth Planning
471. Introduction to Federal Transfer Taxes
472. Beginnings
473. Common Features of Integrated Transfer Taxes
474. The Federal Gift Tax
475. Transfers Subject to Gift Tax
476. Taxable Gifts
477. Computation of the Gift Tax
478. The Federal Estate Tax
479. The Gross Estate
480. The Taxable Estate
481. Computation of the Estate Tax
482. Wealth Planning Concepts
483. The Generation-Skipping Tax
484. Income Tax Considerations
485. Transfer Tax Planning Techniques
486. Integrated Wealth Plans
487. Conclusion
488. Appendix A Tax Forms
489. Appendix B Tax Terms Glossary
490. Appendix C Tax Rates
491. Code Index
492. Subject Index

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