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9780735537484

Federal Income Taxation

by ; ;
  • ISBN13:

    9780735537484

  • ISBN10:

    0735537488

  • Edition: 13th
  • Format: Hardcover
  • Copyright: 2003-03-01
  • Publisher: Aspen Pub

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Supplemental Materials

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Summary

The latest edition of this classic casebook continues to integrate theory policy, making the study of federal income taxation challenging but accessible. Students will appreciate how the authors cover a wealth of new material - and all the fundamentals for individual taxation - in a manageable length Federal Income Taxation, Thirteenth Edition, retains the strengths that have made is such a highly regarded casebook: problems interspersed with notes and questions, To reinforce the text and hold student interest built on the foundation established by original author Boris Bittker, with the current author team among the best scholars of the present day unique introduction provides insightful historical background and some brief economic analysis integration of theory and policy throughout the text makes the book intellectually stimulating while demonstrating real-world applications Scrupulously updated for its Thirteenth Edition, The book now includes: The 2001 Tax Act, major legislation that will have long-term effects on the code new developments in corporate tax shelters major new cases: Chamales v. Commissioner, Henderson v. Commissioner, and Wayne Baseball, Inc. v. Commissioner

Table of Contents

Preface xxi
Editorial Notice xxiii
Introduction
1(36)
The Importance of Income Taxes
1(2)
Some Data
1(1)
Effects on the Law
2(1)
Economic Consequences
3(1)
History
3(3)
Theory and Policy
6(7)
Why ``Income''?
6(1)
The Definition of Income
7(1)
The Tax Expenditure Budget
8(2)
Tax Incidence
10(1)
Inflation
11(1)
Income Versus Consumption
12(1)
The Rate Structure, Progression, and Marginal Rates
13(1)
Rate Schedules, the Taxable Unit, and the Marriage Penalty
14(2)
Compliance and Administration
16(6)
Some Tax Terminology and Concepts
22(8)
The Tax Base and Calculation of the Tax Payable
22(2)
Capital Gain
24(1)
Tax Accounting
25(2)
Realization and Recognition
27(1)
Recovery of Cost, Depreciation, and Basis
28(1)
Entities
28(2)
Deferral and Its Value
30(2)
The Sources of Federal Tax Law in a Nutshell
32(5)
Some Characteristics of Income
37(154)
Noncash Benefits
38(24)
Meals and Lodging Provided to Employees
39(1)
Example 1
40(1)
Notes and Questions
40(1)
Example 2
41(1)
Questions
41(1)
Example 3
41(1)
Notes and Questions
42(1)
Benaglia v. Commissioner
42(4)
Notes and Questions
46(1)
Statutory Aftermath to Benaglia
46(3)
Other Fringe Benefit Statutes
49(1)
Section 132 Fringe Benefits
50(1)
Questions
51(1)
Further Notes on Fringe Benefits
51(4)
Questions
55(1)
Economic Effects: An Example
56(2)
Another Approach to Valuation
58(1)
Turner v. Commissioner
59(1)
Notes and Questions
60(1)
The Kid Who Catches the Historic Home Run Ball
61(1)
Imputed Income
62(7)
Property Other than Cash
62(3)
Services
65(2)
Psychic Income and Leisure
67(1)
Questions
67(1)
Drawing the Line
67(1)
Revenue Ruling 79-24
68(1)
Questions
68(1)
Windfalls and Gifts
69(35)
Punitive Damages
69(1)
Commissioner v. Glenshaw Glass Co.
69(3)
Notes and Questions
72(1)
Gift: The Basic Concept
72(1)
Example
73(1)
Notes and Questions
73(1)
Commissioner v. Duberstein
74(6)
Notes and Questions
80(2)
United States v. Harris
82(7)
Notes
89(1)
Gift: Some Applications
90(4)
Questions
94(1)
Transfer of Unrealized Gain by Gift While the Donor Is Alive
94(1)
Taft v. Bowers
95(2)
Notes and Questions
97(1)
Transfers at Death
98(3)
Questions
101(1)
Gifts of Divided Interests
102(1)
Example
102(1)
Notes and Questions
103(1)
Recovery of Capital
104(21)
Sale of Easements
106(1)
Inaja Land Co. v. Commissioner
106(1)
Notes and Questions
107(1)
Life Insurance
108(6)
Annuities and Pensions
114(5)
Gains and Losses from Gambling
119(1)
Recovery of Loss
120(1)
Clark v. Commissioner
120(2)
Current Legal Status of Clark
122(1)
Notes and Questions
123(1)
Hypothetical
124(1)
Annual Accounting and Its Consequences
125(15)
The Use of Hindsight
125(1)
Burnet v. Sanford & Brooks Co.
125(2)
Notes and Questions
127(2)
Problems
129(1)
Claim of Right
130(1)
North American Oil Consolidated v. Burnet
130(2)
Notes and Questions
132(1)
United States v. Lewis
133(2)
Notes and Questions
135(2)
The Tax Benefit Rule
137(2)
Notes and Questions
139(1)
Recoveries for Personal and Business Injuries
140(4)
The Basic Rules
140(2)
Deferred Payments and Structured Settlements
142(1)
Medical Expenses and Other Recoveries and Benefits
142(2)
Transactions Involving Loans and ``Income from Discharge of Indebtedness''
144(35)
Loan Proceeds Are Not Income
144(1)
True Discharge of Indebtedness
145(1)
United States v. Kirby Lumber Co.
145(2)
Notes and Questions
147(1)
Relief Provision
148(1)
Misconceived Discharge Theory
149(1)
Zarin v. Commissioner
149(8)
Notes
157(1)
Diedrich v. Commissioner
158(2)
Notes and Questions
160(2)
Transfer of Property Subject to Debt
162(2)
Crane v. Commissioner
164(5)
Notes and Questions
169(3)
Commissioner v. Tufts
172(6)
Notes and Questions
178(1)
Illegal Income
179(5)
Gilbert v. Commissioner
179(4)
Notes and Questions
183(1)
Interest on State and Municipal Bonds
184(5)
Basic Concepts
184(2)
Limitations on Exempt Status
186(1)
Constitutional Barrier?
187(1)
Tax Arbitrage
187(2)
U.S. Treasury Bonds
189(1)
Gain on the Sale of a Home
189(2)
Notes and Questions
190(1)
Problems of Timing
191(144)
Gains and Losses from Investment in Property
191(44)
Origins
191(1)
Eisner v. Macomber
192(9)
Notes and Questions
201(3)
Development: Tenant Improvements
204(1)
Helvering v. Bruun
204(3)
Notes and Questions
207(2)
Nonrecourse Borrowing in Excess of Basis
209(1)
Woodsam Associates, Inc. v. Commissioner
209(2)
Notes and Questions
211(1)
Losses
211(1)
Introductory Note
211(2)
Cottage Savings Association v. Commissioner
213(7)
Note
220(1)
Questions
221(1)
Problems
221(1)
Express Nonrecognition Provisions
222(2)
Revenue Ruling 82-166
224(1)
Questions
225(1)
Jordan Marsh Co. v. Commissioner
225(3)
Questions
228(1)
Notes
229(1)
``Boot'' and Basis
229(2)
Three-Party Transactions and Substance Versus Form in Tax Matters
231(4)
Recognition of Losses
235(4)
Revenue Ruling 84-145
236(2)
Questions
238(1)
Constructive Sales
238(1)
Original Issue Discount and Related Rules
239(4)
Open Transactions, Installment Sales, and Deferred Sales
243(8)
Open Transactions
243(1)
Burnet v. Logan
244(1)
Notes and Questions
245(3)
The Installment Method
248(3)
Constructive Receipt and Related Doctrines
251(46)
Basic Principles
251(1)
Amend v. Commissioner
251(3)
Notes
254(2)
Pulsifer v. Commissioner
256(1)
Question
257(1)
Retirement Benefits: Early Case Law
257(1)
United States v. Drescher
257(5)
Notes and Questions
262(3)
Questions
265(1)
Deferred Compensation
266(1)
Minor v. United States
266(4)
Notes
270(1)
Problem
271(1)
Al-Hakim v. Commissioner
272(1)
Questions
273(1)
Commissioner v. Olmsted Incorporated Life Agency
274(4)
Notes and Questions
278(1)
Qualified Employee Plans
279(4)
Stock Options, Restricted Property, and Other Employee Compensation
283(1)
Example
284(1)
Questions
285(1)
Statutory Rules for Determining the Tax Treatment of Employee Stock Options
286(1)
Incentive Stock Options
286(1)
Questions
287(1)
Nonstatutory Stock Options
287(2)
Notes and Questions
289(1)
Cramer v. Commissioner
290(6)
Notes and Questions
296(1)
Transfers Incident to Marriage and Divorce
297(17)
Introduction
297(1)
Property Settlements
298(1)
Transfers Incident to a Divorce or Separation Agreement
298(1)
United States v. Davis
298(4)
Notes and Questions
302(1)
Problems
303(1)
Antenuptial Settlements
303(1)
Farid-Es-Sultaneh v. Commissioner
303(3)
Questions
306(1)
Alimony, Child Support, and Property Settlements
306(1)
The Basic Scheme
306(1)
The Rules
307(2)
Policy Questions
309(1)
The Tax Incentive
309(1)
A Final Question
310(1)
Problems
310(1)
Child Support Obligations in Default
311(1)
Diez-Arguelles v. Commissioner
311(1)
Notes and Questions
312(2)
Theoretical Issues
314(1)
Consumption Tax
315(3)
Cash Receipts and Payments of Accrual-Method Taxpayers
318(12)
Delay in the Receipt of Cash
319(1)
Georgia School-Book Depository v. Commissioner
319(2)
Notes and Questions
321(1)
Prepaid Income
322(1)
American Automobile Association v. United States
322(4)
Notes and Questions
326(2)
Deposits Versus Advance Payments
328(1)
Questions
329(1)
Current Deduction of Future Expenses
329(1)
Questions
330(1)
Corporate Transactions: Incorporations and Reorganizations
330(5)
Incorporation
330(2)
Reorganization
332(3)
Personal Deductions, Exemptions, and Credits
335(54)
Introduction
335(3)
The Mechanics of Personal Deductions
335(2)
The Role of the Personal Deduction
337(1)
Casualty Losses
338(13)
Dyer v. Commissioner
339(1)
Notes and Questions
340(1)
Chamales v. Commissioner
341(6)
Questions
347(1)
Problems
347(1)
Blackman v. Commissioner
348(3)
Questions
351(1)
Extraordinary Medical Expenses
351(9)
Overview
351(1)
What Is ``Medical Care?''
352(1)
Taylor v. Commissioner
353(1)
Henderson v. Commissioner
353(2)
Questions
355(1)
Ochs v. Commissioner
355(2)
Notes and Questions
357(2)
Policy
359(1)
Charitable Contributions
360(18)
Overview
360(1)
Contributions of Capital Gain Property
361(1)
Policy
362(1)
Gifts with Private Objectives or Benefits
363(1)
Ottawa Silica Co. v. United States
363(3)
Notes and Questions
366(1)
More on Private Benefits
367(1)
Overvaluation of Contributed Property
368(1)
The Special Case of Collegiate Athletics
369(1)
Religious Benefits and Services
369(1)
Voluntariness
370(1)
What Is Charitable?
371(1)
Bob Jones University v. United States
371(6)
Notes and Questions
377(1)
Interest
378(5)
The Rules
378(1)
Policy Issues
379(2)
Tracing
381(1)
Problems
381(1)
What Is ``Interest''?
381(1)
Interest and Inflation
382(1)
Interest on Student Loans
382(1)
Taxes
383(1)
Personal and Dependency Exemptions
384(1)
Credits Based on Personal Circumstances
385(4)
The Earned Income Tax Credit
385(1)
Credit for the Elderly and the Permanently and Totally Disabled
386(1)
Credit for Adoption Expenses
386(1)
Child Tax Credit
387(1)
Credits, Phaseouts, and Effective Tax Rates
387(2)
Allowances for Mixed Business and Personal Outlays
389(82)
Controlling the Abuse of Business Deductions
391(27)
Hobby Losses
391(1)
Nickerson v. Commissioner
391(5)
Notes and Questions
396(3)
Home Offices and Vacation Homes
399(1)
Problems
400(1)
Popov v. Commissioner
401(4)
Questions
405(1)
Income Unconnected to a Trade or Business
406(1)
Moller v. United States
406(6)
Questions
412(1)
Note
412(1)
Whitten v. Commissioner
413(3)
Questions
416(1)
Problem
416(1)
Office Decoration
416(1)
Henderson v. Commissioner
416(2)
Questions
418(1)
Automobiles, Computers, and Other Listed Property
418(1)
Travel and Entertainment Expenses
418(19)
Question Presented
418(2)
Rudolph v. United States
420(3)
Section 274
423(3)
Problems
426(1)
Business Lunches
427(1)
Moss v. Commissioner
427(2)
Note
429(1)
Questions
430(1)
More on Entertaining Customers
430(1)
Danville Plywood Corporation v. United States
430(5)
Notes and Questions
435(2)
Child-Care Expenses
437(3)
Smith v. Commissioner
437(1)
Notes and Questions
438(2)
Commuting Expenses
440(16)
Commissioner v. Flowers
440(5)
Notes and Questions
445(1)
Hantzis v. Commissioner
446(5)
Notes and Questions
451(3)
Problems: Testing the Rationale
454(2)
Clothing Expenses
456(3)
Pevsner v. Commissioner
456(2)
Note
458(1)
Questions
459(1)
Legal Expenses
459(6)
United States v. Gilmore
459(4)
Notes and Questions
463(2)
Expenses of Education
465(3)
Carroll v. Commissioner
465(1)
Notes and Questions
466(2)
Business Deductions and Taxpayer Behavior
468(3)
Deductions for the Costs of Earning Income
471(102)
Current Expenses Versus Capital Expenditures
471(12)
Encyclopaedia Britannica v. Commissioner
471(5)
Notes and Questions
476(2)
Revenue Ruling 85-82
478(1)
Question
479(1)
Note on Uniform Capitalization Rules (§263A)
480(1)
Note on the INDOPCO Decision
481(1)
Questions Concerning INDOPCO
482(1)
Repair and Maintenance Expenses
483(13)
Midland Empire Packing Co. v. Commissioner
483(2)
Notes and Questions
485(1)
Revenue Ruling 94--38
486(3)
Notes and Questions
489(1)
Norwest Corporation and Subsidiaries v. Commissioner
489(7)
Questions
496(1)
Inventory Accounting
496(3)
Problems
499(1)
Rent Payment Versus Installment Purchase
499(4)
Starr's Estate v. Commissioner
499(2)
Notes and Questions
501(1)
Problem
502(1)
Goodwill and Other Assets
503(5)
Welch v. Helvering
503(2)
Notes and Questions
505(3)
``Ordinary and Necessary''
508(14)
Extraordinary Behavior
508(1)
Gilliam v. Commissioner
508(5)
Notes and Questions
513(2)
Reasonable Compensation
515(1)
Costs of Illegal or Unethical Activities
516(2)
Stephens v. Commissioner
518(3)
Questions
521(1)
Depreciation and the Investment Credit
522(7)
General Principles
522(3)
History
525(1)
Basic Rules
526(2)
Goodwill and Other Intangibles
528(1)
Depletion and Intangible Drilling Costs
529(3)
``Legitimate'' Tax Reduction, Tax Avoidance, and Tax Shelters
532(41)
The Tax Shelter Problem
532(2)
The Judicial Response to Tax Shelters
534(1)
Knetsch v. United States
534(3)
Notes and Questions
537(2)
Subsequent Case
539(3)
Estate of Franklin v. Commissioner
542(4)
Notes and Questions
546(1)
The Role of the Tax Lawyer
546(2)
The Congressional Response to Tax Shelters
548(5)
Notes and Questions
553(1)
Sale and Leaseback Transactions
554(3)
Rules Aimed at the Tax Lawyer
557(2)
The Alternative Minimum Tax
559(2)
Notes and Questions
561(1)
Klaasen v. Commissioner
562(3)
Questions
565(1)
Prosman v. Commissioner
565(2)
Questions
567(1)
Problems
567(1)
The New Market in Corporate Tax Shelters
568(1)
Winn-Dixie Stores, Inc. v. Commissioner
569(2)
Notes
571(2)
The Splitting of Income
573(66)
Income from Services: Diversion by Private Agreement
575(2)
Lucas v. Earl
575(1)
Notes and Questions
576(1)
Income from Services: Diversion by Operation of Law
577(4)
Poe v. Seaborn
577(3)
Notes and Questions
580(1)
The Marriage Penalty (and Bonus)
581(2)
The Legislative Solution: Partial Income Splitting
581(1)
Proposals to Eliminate the Marriage Penalty
582(1)
Income from Services: More on Diversion by Private Agreement
583(8)
Armantrout v. Commissioner
583(5)
Notes and Questions
588(3)
Transfers of Property and Income from Property
591(8)
Blair v. Commissioner
592(1)
Helvering v. Horst
593(4)
Notes and Questions
597(2)
Services Transformed into Property
599(4)
Helvering v. Eubank
599(1)
Heim v. Fitzpatrick
600(2)
Notes and Questions
602(1)
Trusts
603(4)
Overview
603(1)
Tax Treatment of (Ordinary) Simple Trusts
604(1)
Tax Treatment of (Ordinary) Complex Trusts
605(2)
The Use of Multiple Trusts
607(1)
Grantor Trusts
607(5)
Revocable Trusts
607(1)
Totten Trusts and Similar Arrangements
608(1)
Trusts for the Benefit of the Grantor
608(1)
Reversions
608(1)
Powers of Control
609(1)
Administrative Powers
610(1)
The Obligation of Support
610(1)
Example
611(1)
Nongrantors with Power to Demand Trust Income or Corpus
612(1)
Gifts to Minors Under Uniform Acts
612(2)
Revenue Ruling 59-357
612(2)
Question
614(1)
Family Partnerships and S Corporations
614(1)
Gift and Leaseback
615(5)
Brooke v. United States
615(4)
Notes and Questions
619(1)
Shifting Income Through and to Corporations
620(9)
Shifting Income Through a Corporation
620(1)
Foglesong v. Commissioner
621(6)
Notes and Questions
627(2)
Pension Trust
629(10)
United States v. Basye
629(7)
Notes and Questions
636(3)
Capital Gains and Losses
639(86)
Background
639(1)
The Statutory Framework
640(2)
Policy
642(3)
Rationale for Favorable Treatment of Capital Gain
642(2)
Rationale for the Limitation on Deduction of Capital Losses
644(1)
Property Held ``Primarily for Sale to Customers''
645(13)
Sale to ``Customers''
645(1)
Bielfeldt v. Commissioner
645(2)
Notes and Questions
647(2)
``Primarily for Sale''
649(1)
Biedenharn Realty Co. v. United States
649(6)
Notes and Questions
655(3)
Transactions Related to the Taxpayer's Regular Business
658(11)
Corn Products Refining Co. v. Commissioner
659(4)
Arkansas Best Corporation v. Commissioner
663(5)
Notes and Questions
668(1)
Substitutes for Ordinary Income
669(24)
Payment for Cancellation of a Lease
669(1)
Hort v. Commissioner
669(2)
Notes and Questions
671(4)
Sale of Interest in a Trust
675(1)
McAllister v. Commissioner
675(2)
Notes and Questions
677(2)
Oil Payments
679(1)
Commissioner v. P. G. Lake, Inc.
679(2)
Notes and Questions
681(1)
Bootstrap Sale to Charity
682(1)
Commissioner v. Brown
682(9)
Notes and Questions
691(2)
Other Claims and Contract Rights
693(20)
Termination Payments
693(1)
Baker v. Commissioner
693(7)
Notes and Questions
700(1)
Theatrical Production Rights
701(1)
Commissioner v. Ferrer
701(7)
Notes and Questions
708(1)
Right of Privacy or of Exploitation
709(1)
Miller v. Commissioner
709(3)
Questions
712(1)
Patents and Copyrights
712(1)
Bail-Out of Corporate Earnings
713(3)
Gregory v. Helvering
713(2)
Note
715(1)
Fragmentation Versus Unification of Collective Assets
716(3)
Williams v. McGowan
716(2)
Notes and Questions
718(1)
Correlation with Prior Related Transactions
719(3)
Merchants National Bank v. Commissioner
719(1)
Arrowsmith v. Commissioner
719(3)
Note
722(1)
Requirement of a Sale or Exchange
722(3)
Table of Cases 725(6)
Table of Internal Revenue Code Provisions 731(8)
Table of Treasury Regulations 739(2)
Table of Revenue Rulings 741(2)
Table of Miscellaneous IRS Pronouncements 743(2)
Index 745

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