Federal Income Taxation with Problems Supplement, 5th Edition 2004

by McDaniel, Paul R.; McMahon, Martin J.; Simmons, Daniel L.; Abreu, Alice G.

• ISBN13: 9781587784354
• ISBN10: 1587784351
• Edition: 5th
• Format: Hardcover
• Copyright: 2004-08-30
• Publisher: West Academic

Summary

Federal Income Taxation, Fourth Edition, focuses on both the technical and policy issues associated with income taxation. It thoroughly integrates all relevant amendments to the Code enacted in Taxpayer Relief Act of 1997 and presents indepth coverage of selected advanced issues. The casebook is adaptable for use in a single course covering basis income taxation or a sequence of courses dealing with income taxation at either the J.D. level or LL.M. level.

Table of Contents

Preface	iii
Acknowledgements	ix
Instructor's Note	xi
Table of Internal Revenue Code Sections	xlv
Table of Treasury Regulations	lxxiii
Table of Cases and Rulings	lxxxiii
PART I Introduction to Federal Income Taxation	1	(54)
Introduction	1	(54)
An Overview of Policy Issues and the Current Income Tax	1	(19)
Selection of a Tax---Goals and Criteria	1	(3)
Definitions of Income and Income vs. Consumption as the Tax Base	4	(1)
Goode, ``The Economic Definition of Income'' in Pechman (Ed.), Conprehensive Income Taxation	5	(3)
Cunningham, The Taxation of Capital Income and the Choice of Tax Base	8	(4)
The Structure of the Income Tax and Selected Policy Issues	12	(1)
Defining the Tax Base	13	(1)
General	13	(1)
Income From Property	14	(1)
Establishing the Rate Structure	15	(2)
Defining the Taxable Unit	17	(1)
Determining the Taxable Period and the Taxable Income for that Period	17	(1)
Other Key Concepts	18	(1)
Timing	18	(1)
Tax Expenditure Analysis	19	(1)
The Road to the Sixteenth Amendment	20	(5)
Introduction	20	(1)
The Early Years	21	(1)
The 1894 Income Tax---Legislative Victory and Judicial Defeat	22	(1)
The Sixteenth Amendment	23	(1)
Illustrative Material	24	(1)
The Federal Income Tax System	25	(30)
The Legislative Process	25	(2)
The Administrative Process	27	(1)
General Organization of the Internal Revenue Service	27	(1)
Administrative Interpretation of the Tax Laws	28	(5)
The Judicial Process	33	(1)
Original Jurisdiction	33	(1)
Appellate Jurisdiction	34	(1)
IRS Acquiescence and Nonacquiescence	35	(1)
A Brief Survey of Income Tax Procedure	35	(1)
Current Payment	35	(1)
Filing of Return and Final Payment	36	(1)
Investigation of Returns and Settlement Procedure	37	(2)
Tax Court Proceedings	39	(2)
Refund Procedure	41	(1)
Interest, Penalties, and Attorneys' Fees	41	(4)
Conclusion	45	(2)
The Tax Adviser	47	(1)
American Bar Association Formal Opinion 85--352	47	(3)
Report of the Special Task Force in Formal Opinion 85--352	50	(2)
Illustrative Material	52	(3)
PART II Gross Income	55	(304)
General Principles of Gross Income	55	(24)
Income	55	(9)
Increase in Net Worth	56	(1)
Commissioner v. Glenshaw Glass Co.	56	(3)
Illustrative Material	59	(1)
Indirect Receipts	60	(1)
Old Colony Trust Company v. Commissioner	60	(2)
Illustrative Material	62	(2)
The Realization Requirement	64	(11)
Eisner v. Macomber	64	(4)
Helvering v. Bruun	68	(2)
Illustrative Material	70	(5)
Imputed Income	75	(4)
Marsh, The Taxation of Imputed Income	75	(2)
Illustrative Material	77	(2)
Compensation for Services	79	(39)
Noncash Transactions	79	(7)
Revenue Ruling 79--24	79	(1)
Illustrative Material	80	(1)
Rooney v. Commissioner	80	(3)
Illustrative Material	83	(3)
Deferred Compensation Arrangements	86	(5)
United States v. Drescher	86	(4)
Illustrative Material	90	(1)
Employee Fringe Benefits	91	(27)
Exclusions Based on Tax Policy and Administrative Convenience	93	(1)
General Explanation of the Revenue Provisions of the Deficit Reduction Act of 1984	93	(8)
Illustrative Material	101	(10)
Employee Benefits Excluded from Gross Income to Further Social Policy Goals	111	(1)
Illustrative Material	111	(7)
Gifts, Inheritances, and Similar Items	118	(36)
Gifts and Inheritances	118	(16)
Exclusion for Gifts and Inheritances	118	(1)
Illustrative Material	119	(1)
The Meaning of ``Gift'' or ``Inheritance''	119	(1)
Commissioner v. Duberstein	119	(9)
Illustrative Material	128	(6)
Life Insurance Death Benefits	134	(3)
Illustrative Material	134	(3)
Prizes	137	(2)
Illustrative Material	138	(1)
Scholarships	139	(7)
General Explanation of the Tax Reform Act of 1986	139	(4)
Illustrative Material	143	(3)
Governmental Subsidies and Related Items	146	(8)
Business Subsidies	146	(1)
Illustrative Material	147	(1)
Social Welfare Payments	148	(1)
Notice 99--3	148	(2)
Illustrative Material	150	(4)
Loans and Other Receipts Balanced by Offsetting Obligations	154	(30)
Loans	154	(5)
Milenbach, et al. v. Commissioner	154	(4)
Illustrative Material	158	(1)
Claim of Right Doctrine	159	(4)
North American Oil Consolidated v. Burnet	159	(2)
Illustrative Material	161	(2)
Illegal Income	163	(9)
James v. United States	163	(6)
Illustrative Material	169	(3)
Deposits	172	(7)
Commissioner v. Indianapolis Power & Light Co.	172	(5)
Illustrative Material	177	(2)
Conduit Situations	179	(5)
Revenue Ruling 68--512	179	(1)
Illustrative Material	180	(4)
Income From the Disposition of Property	184	(35)
Introduction	184	(2)
Realization of Gain or Loss	186	(15)
Mortgaging Property as a Disposition	186	(1)
Woodsam Associates, Inc. v. Commissioner	186	(2)
Illustrative Material	188	(1)
Realization As Material Change	189	(1)
Cottage Savings Association v. Commissioner	189	(8)
Illustrative Material	197	(4)
Determining the Amount of Gain	201	(18)
Sales of Property and Transfers of Property in Satisfaction of a Claim	201	(1)
International Freighting Corporation, Inc. v. Commissioner	201	(3)
Illustrative Material	204	(4)
Basis of Property Received in an Exchange	208	(1)
Philadelphia Park Amusement Co. v. United States	208	(3)
Illustrative Material	211	(3)
The Role of Debt in Amount Realized and Basis	214	(1)
Illustrative Material	215	(4)
The Relationship of Basis to Income Recognition	219	(25)
Gifts of Property: Transferred Basis	219	(4)
Taft. v. Bowers	219	(2)
Illustrative Material	221	(2)
Transfers at Death: Fair Market Value Basis	223	(6)
Illustrative Material	224	(5)
Gifts and Inheritances of Split Interests	229	(3)
Irwin v. Gavit	229	(2)
Illustrative Material	231	(1)
Income in Respect of a Decedent	232	(6)
Edward D. Rollert Residuary Trust v. Commissioner	233	(3)
Illustrative Material	236	(2)
Tax Policy Aspects of Gratuitous Transfers of Appreciated Property	238	(2)
U.S. Treasury Department Tax Reform Studies and Proposals	239	(1)
Nonshareholder Contributions to Capital	240	(4)
Illustrative Material	240	(4)
Taxation of Periodic Income From Capital	244	(47)
Introduction	244	(8)
Illustrative Material	244	(8)
Tax Deferred and Tax-Exempt Investment Accounts	252	(8)
Illustrative Material	253	(4)
Eugene Steuerle, Back-loaded IRAs: Head Taxes Replace Income and Consumption Taxes	257	(3)
Special Treatment of Corporate Dividends	260	(2)
Jobs and Growth Tax Relief Reconciliation Act of 2003, Report of the Committee on Ways and Means, House of Representatives	260	(1)
Illustrative Material	261	(1)
Tax-Exempt Interest on State and Local Bonds	262	(8)
General Explanation of the Tax Reform Act of 1986	266	(2)
Illustrative Material	268	(2)
Treatment of the Owner of Annuity and Life Insurance Contracts	270	(13)
Annuities	271	(2)
Illustrative Material	273	(5)
Life Insurance	278	(2)
Illustrative Material	280	(3)
Exclusion of Gains From the Sale of a Principal Residence	283	(8)
Illustrative Material	284	(7)
Damage Awards and Settlements and Insurance Recoveries	291	(19)
Damages Received on Account of Property and Lost Profits	291	(7)
Clark v. Commissioner	291	(1)
Raytheon Production Corp. v. Commissioner	292	(4)
Illustrative Material	296	(2)
Damage Awards for Personal Injury	298	(9)
General Explanation of Tax Legislation Enacted in the 105th Congress	300	(2)
Illustrative Material	302	(5)
Insurance Recoveries	307	(3)
Compensation for Personal Injuries or Sickness	307	(1)
Worker's Compensation	307	(1)
Accident and Health Insurance	308	(1)
Insurance Payments for Living Expenses	309	(1)
Income From the Cancellation of Indebtedness	310	(23)
General Principles	310	(5)
United States v. Kirby Lumber Company	310	(1)
Illustrative Material	311	(4)
Statutory Codification of Cancellation of Indebtedness Rules	315	(5)
Illustrative Material	316	(4)
The Disputed Debt, or Contested Liability Doctrine	320	(10)
Preslar v. Commissioner	320	(7)
Illustrative Material	327	(3)
Cancellation of Indebtedness as a Medium of Payment	330	(3)
Illustrative Material	331	(2)
Tax Expenditures	333	(26)
The Concept of Tax Expenditures	333	(23)
Introduction	333	(1)
Identifying Tax Expenditures	334	(2)
The Tax Expenditure Budget	336	(1)
Estimates of Federal Tax Expenditures for Fiscal Years 2004--2008	336	(9)
Illustrative Material	345	(11)
Application of Tax Expenditure Analysis	356	(3)
Illustrative Material	356	(3)
PART III Business Deductions and Credits	359	(224)
Ordinary and Necessary Business and Profit--Seeking Expenses	359	(44)
The Relevance of ``Trade or Business'' Versus ``Profit--Seeking'' Expenses	360	(3)
Illustrative Material	362	(1)
The ``Ordinary and Necessary'' Limitation	363	(10)
The Supreme Court Decisions	363	(1)
Welch v. Helvering	363	(2)
Illustrative Material	365	(1)
The ``Ordinary and Necessary'' Limitation in the Lower Courts	366	(1)
Friedman v. Delaney	366	(3)
Illustrative Material	369	(4)
The Limitation of ``Unreasonable'' Compensation	373	(8)
Exacto Spring Corporation v. Commissioner	373	(4)
Illustrative Material	377	(4)
Expenses Related to Tax--Exempt Income	381	(5)
Revenue Ruling 83--3	381	(3)
Illustrative Material	384	(2)
``Public Policy'' Limitations: Tax Penalties	386	(17)
Bribes, Fines, and Penalties	387	(1)
Tank Truck Rentals, Inc. v. Commissioner	387	(2)
Illustrative Material	389	(6)
Lobbying Activities	395	(1)
Cammarano v. United States	395	(1)
Illustrative Material	396	(4)
Other Tax Penalties	400	(1)
Illustrative Material	400	(3)
Deductible Profit-Seeking Expenses Versus Nondeductible Capital Expenditures	403	(48)
Expenditures to Acquire Property	405	(12)
Encyclopaedia Britannica, Inc. v. Commissioner	405	(3)
Illustrative Material	408	(9)
Expenditures With Benefit Beyond the Taxable Year and Intangible Assets	417	(12)
INDOPCO, Inc. v. Commissioner	417	(4)
Illustrative Material	421	(8)
Business Investigation, Start-Up and Expansion Costs	429	(9)
Senate Finance Committee Report, Miscellaneous Revenue Act of 1980	431	(2)
Illustrative Material	433	(5)
Improvement Versus Repair or Replacement	438	(13)
Midland Empire Packing Company v. Commissioner	438	(3)
Mt. Morris Drive--In Theatre Co. v. Commissioner	441	(2)
Mt. Morris Drive--In Theatre Company v. Commissioner	443	(1)
Illustrative Material	444	(7)
Cost Recovery Mechanisms	451	(50)
Depreciation	453	(33)
Accelerated Cost Recovery System	453	(1)
Simon v. Commissioner	453	(7)
Illustrative Material	460	(14)
Election to Expense Certain Depreciable Business Assets	474	(1)
Illustrative Material	474	(1)
The Financial Impact of Accelerated Cost Recovery	475	(5)
Illustrative Material	480	(6)
Statutory Amortization of Intangible Assets	486	(6)
Revenue Reconciliation Act of 1993, Report of the Committee on Ways and Means, House of Representatives	486	(3)
Illustrative Material	489	(3)
Expensing and Amortization Provisions	492	(3)
Illustrative Material	492	(3)
Capital Recovery for Natural Resources	495	(6)
Illustrative Material	496	(5)
Transactional Losses	501	(32)
Business or Profit Seeking Losses	502	(14)
Miller v. Commissioner	504	(2)
Illustrative Material	506	(10)
Loss Disallowance Rules	516	(8)
Sales to Related Persons: Section 267	517	(1)
Illustrative Material	518	(2)
Wash Sales	520	(1)
Tax Straddles	521	(1)
Public Policy Limitation	522	(2)
Bad Debts	524	(9)
Illustrative Material	525	(8)
Interest as a Profit-Seeking Expense	533	(33)
What Is Interest?	533	(10)
Albertson's, Inc. v. Commissioner	533	(4)
Illustrative Material	537	(6)
Allocation of Interest	543	(5)
Illustrative Material	544	(4)
Limitations on the Interest Deduction	548	(18)
Investment Interest Limitation	548	(1)
General Explanation of the Tax Reform Act of 1986	549	(2)
Illustrative Material	551	(2)
Capitalization of Interest	553	(1)
Illustrative Material	554	(1)
Interest on Loans to Acquire or Carry Tax Exempt Bonds	555	(1)
Revenue Procedure 72--18	555	(4)
Illustrative Material	559	(2)
Interest Incurred in Connection with Insurance Contracts	561	(1)
Judicial Limitations on the Deductibility of Interest in Tax Motivated Transactions	562	(4)
Business Tax Credits	566	(17)
Introduction	566	(1)
General Business Credit	567	(13)
Illustrative Material	568	(12)
Other Business Credits	580	(3)
PART IV Dual Purpose Expenses	583	(100)
Determining When a Taxpayer is Engaging in a Business or Profit-Seeking Activity	583	(27)
Is There a Profit--Seeking Motive?	584	(14)
Peacock v. Commissioner	584	(7)
Illustrative Material	591	(7)
Business Use of Residence	598	(12)
Hamacher v. Commissioner	598	(4)
Illustrative Material	602	(8)
Expenses Involving Both Personal and Business Purposes	610	(49)
General Principles	610	(7)
Moss v. Commissioner	611	(3)
Illustrative Material	614	(3)
Travel and Related Expenses	617	(17)
Commissioner v. Flowers	617	(2)
Hantzis v. Commissioner	619	(6)
Illustrative Material	625	(9)
Business Meals and Entertainment	634	(13)
Churchill Downs, Inc. v. Commissioner	634	(4)
Illustrative Material	638	(9)
Statutory Limitations on Deductions for Certain Property	647	(4)
General Explanation of the Revenue Provisions of the Tax Reform Act of 1984	647	(1)
Illustrative Material	648	(3)
Clothing	651	(5)
Pevsner v. Commissioner	651	(4)
Illustrative Material	655	(1)
Child and Dependent Care	656	(3)
Smith v. Commissioner	656	(1)
Illustrative Material	657	(2)
Expenditures Involving Both Personal and Capital Aspects	659	(24)
Legal Expenses	659	(12)
United States v. Gilmore	659	(6)
Illustrative Material	665	(6)
Expenses for Education and Seeking Employment	671	(12)
Wassenaar v. Commissioner	671	(3)
Illustrative Material	674	(9)
PART V Deductions and Credits for Personal Living Expenses	683	(104)
Itemized Personal Deductions	683	(68)
Introduction---The Adjusted Gross Income Concept and Itemized Deductions	683	(2)
Illustrative Material	684	(1)
Medical Expenses	685	(13)
Revenue Ruling 99--28	686	(1)
Rev. Rul. 2002--19	687	(2)
Illustrative Material	689	(9)
Charitable Contributions	698	(27)
Hernandez v. Commissioner	699	(9)
Illustrative Material	708	(17)
State and Local Taxes	725	(3)
Illustrative Material	726	(2)
Qualified Home Mortgage Interest	728	(10)
General Explanation of the Tax Reform Act of 1986	728	(1)
Illustrative Material	729	(9)
Casualty Losses	738	(10)
Chamales v. Commissioner	738	(5)
Illustrative Material	743	(5)
Limitations on Itemized Deductions	748	(3)
Standard Deduction, Personal and Dependency Exemptions, and Personal Credits	751	(16)
Personal Exemptions and the Standard Deduction	751	(6)
The Standard Deduction	752	(1)
Illustrative Material	752	(1)
Personal Exemptions	753	(1)
Illustrative Material	754	(3)
Personal Credits	757	(10)
Credits for Basic Living Expenses	757	(1)
Earned Income Credit	757	(1)
Illustrative Material	758	(2)
The Child Credit	760	(1)
Tax Credits for Personal Costs	761	(1)
Illustrative Material	762	(5)
Tax Expenditures for Education	767	(20)
Overview of Present Law and Economic Analysis Relating to Tax and Savings Incentives for Education	767	(10)
Illustrative Material	777	(10)
PART VI Timing of Income and Deductions	787	(142)
Tax Accounting Methods	787	(79)
General Principles	787	(8)
Tax Accounting Methods in General---Cash and Accrual Methods	787	(3)
The Function of Tax Accounting	790	(1)
The Accounting Method Standard: Clear Reflection of Income	791	(2)
Differences Between Tax Accounting and Financial Accounting	793	(2)
The Cash Method	795	(18)
Income Items	795	(1)
Revenue Ruling 92--69	796	(2)
Pulsifer v. Commissioner	798	(1)
Illustrative Material	799	(5)
Deduction Items	804	(1)
Constructive Payment and the Equivalence of Cash---Has an Item Been ``Paid''	804	(1)
Illustrative Material	805	(2)
Advance Payments---When Must Deduction of an Item Be Deferred Even Though Actually Paid	807	(1)
Commissioner v. Boylston Market Association	808	(1)
Illustrative Material	809	(4)
The Accrual Method	813	(43)
Income Items	813	(1)
Inclusion Prior to Receipt---The Concept of Accrual	813	(1)
Charles Schwab Corporation v. Commissioner	814	(6)
Illustrative Material	820	(5)
Advance Receipts---May Inclusion of an Actual Receipt Be Deferred	825	(1)
Schlude v. Commissioner	825	(5)
Illustrative Material	830	(5)
Deduction Items	835	(1)
The Historic All Events Test	836	(1)
Mooney Aircraft, Inc. v. United States	836	(4)
Illustrative Material	840	(4)
The Economic Performance Requirement	844	(1)
General Explanation of the Tax Reform Act of 1984	845	(6)
Illustrative Material	851	(4)
Long-Term Contracts	855	(1)
Inventory Accounting	856	(6)
Illustrative Material	858	(4)
Changes in Method of Accounting or Method of Reporting Income	862	(4)
Illustrative Material	863	(3)
The Annual Accounting Concept	866	(28)
Transactional Problems	866	(21)
General Principles	866	(1)
Burnet v. Sanford & Brooks Co.	866	(2)
Illustrative Material	868	(1)
Initial Deduction Followed by Later Recovery: The Tax Benefit Doctrine	869	(1)
Hillsboro National Bank v. Commissioner	870	(4)
Illustrative Material	874	(3)
Initial Inclusion in Income Followed by Later Repayment	877	(1)
Illustrative Material	878	(3)
Related Procedural Doctrines	881	(1)
The Judicial Doctrines of Estoppel and Recoupment	881	(1)
Mitigation of the Statute of Litigations	882	(3)
Res Judicata and Collateral Estoppel	885	(1)
Policy Issues	886	(1)
Net Operating Loss Carryover and Carryback	887	(7)
Illustrative Material	889	(5)
Deferred Compensation Arrangements	894	(35)
Unfunded Deferred Compensation Contracts	894	(8)
Revenue Ruling 60--31	894	(5)
Illustrative Material	899	(3)
Transfers of Property for Services	902	(21)
The Situation Before Section 83	902	(1)
Commissioner v. Lo Bue	903	(3)
Illustrative Material	906	(1)
Section 83	907	(1)
General Explanation of the Tax Reform Act of 1969	907	(1)
Alves v. Commissioner	908	(4)
Illustrative Material	912	(8)
Incentive Stock Options	920	(1)
Summary of H.R. 4242, The Economic Recovery Tax Act of 1981	921	(1)
Illustrative Material	922	(1)
Qualified Pension Plans	923	(6)
Simplification of Present--Law Tax Rules Relating to Qualified Pension Plans (S. 1364, The Employee Benefits Simplification and Expansion Act of 1991, and S. 318)	923	(4)
Illustrative Material	927	(2)
PART VII The Taxable Unit	929	(104)
Shifting Income Among Taxable Units	929	(39)
Income From Personal Services	930	(8)
Lucas v. Earl	930	(1)
Illustrative Material	931	(7)
Income From Property	938	(18)
Blair v. Commissioner	938	(2)
Helvering v. Horst	940	(4)
Harrison v. Schaffner	944	(2)
Illustrative Material	946	(10)
Property that is the Product of Personal Efforts	956	(5)
Helvering v. Eubank	956	(2)
Revenue Ruling 54--599	958	(1)
Illustrative Material	958	(3)
Below--Market and Interest--Free Loans	961	(7)
General Explanation of the Revenue Provisions of the Deficit Reduction Act of 1984	961	(4)
Illustrative Material	965	(3)
Taxation of Families	968	(35)
The Married Couple as the Unit of Taxation	968	(14)
Druker v. Commissioner	968	(5)
Mueller v. Commissioner	973	(3)
Illustrative Material	976	(6)
Taxation of Children as Part of the Family Unit	982	(2)
General Explanation of the Tax Reform Act of 1986	982	(1)
Illustrative Material	983	(1)
Tax Aspects of Divorce and Separation	984	(17)
Property Settlements	986	(1)
Balding v. Commissioner	986	(2)
Illustrative Material	988	(6)
Alimony and Child Support	994	(1)
General Explanation of the Revenue Provisions of the Deficit Reduction Act of 1984	994	(2)
Illustrative Material	996	(5)
Unitary Treatment of Related Persons	1001	(2)
Taxation of the Income of Trusts	1003	(30)
Grantor Trusts	1003	(17)
Historical Background	1004	(1)
Helvering v. Clifford	1004	(3)
Illustrative Material	1007	(1)
Statutory Framework	1007	(3)
Illustrative Material	1010	(10)
The Taxation of Non--Grantor Trusts	1020	(13)
Tax Treatment of Simple Trusts	1021	(1)
Introduction	1022	(1)
The Statutory Pattern	1023	(3)
Illustrative Material	1026	(1)
Tax Treatment of Complex Trusts: Allocation Among Several Beneficiaries	1027	(3)
Illustrative Material	1030	(3)
PART VIII Deferred Recognition of Gain From Property	1033	(82)
Like--Kind Exchanges	1033	(27)
Like--Kind Exchanges In General	1034	(14)
Technical Rules	1034	(1)
Illustrative Material	1035	(13)
Multiparty and Deferred Exchanges	1048	(12)
Braker v. Commissioner	1048	(5)
Illustrative Material	1053	(7)
Involuntary Conversions and other Deferred Recognition Transactions	1060	(19)
Involuntary Conversions	1060	(15)
Willamette Industries, Inc. v. Commissioner	1061	(6)
Illustrative Material	1067	(8)
Miscellaneous Nonrecognition Provisions	1075	(4)
Illustrative Material	1076	(3)
Deferred Payment Sales	1079	(17)
Nonstatutory Deferred Reporting of Gains	1079	(3)
Burnet v. Logan	1079	(2)
Illustrative Material	1081	(1)
Installment Reporting Under Section 453	1082	(14)
Illustrative Material	1083	(13)
Interest on Discount Obligations	1096	(19)
Introduction	1096	(2)
Original Issue Discount	1098	(14)
Tax Reform Act of 1984 General Explanation of the Revenue Provisions	1098	(5)
Illustrative Material	1103	(9)
Bond Premium	1112	(3)
Illustrative Material	1112	(3)
PART IX Characterization of Gains and Losses	1115	(112)
Capital Gains and Losses	1115	(92)
Special Treatment of Capital Gains and Losses	1115	(19)
Illustrative Material	1120	(14)
Definition of ``Capital Asset''	1134	(47)
The Statutory Exclusions	1136	(1)
Investment Assets Versus Ordinary Business Assets	1136	(2)
Suburban Realty Co. v. United States	1138	(10)
Illustrative Material	1148	(8)
Section 1221(a)(2): Real Property and Depreciable Property Held for Use in the Taxpayers Trade or Business	1156	(1)
Section 1221(a)(3): Investment Profits Versus Rewards for Personal Services	1157	(1)
Illustrative Material	1158	(4)
Section 1221(a)(4): Accounts Receivable	1162	(1)
Section 1221(a)(5): Government Documents	1162	(1)
Section 1221(a)(6): Dealer--Held Commodities Derivative Financial Instruments	1162	(1)
Section 1221(a)(7): Hedging Transactions	1163	(1)
Illustrative Material	1163	(2)
Section 1221(a)(8): Non--Inventory Supplies	1165	(1)
Judicial Limitations on Capital Asset Classification	1166	(1)
Substitute for Ordinary Income	1166	(1)
Hort v. Commissioner	1167	(2)
Commissioner v. P.G. Lake, Inc.	1169	(2)
McAllister v. Commissioner	1171	(2)
Illustrative Material	1173	(4)
Other Contractual Arrangements	1177	(2)
Illustrative Material	1179	(2)
Sale or Exchange Requirement	1181	(8)
Termination of Taxpayer's Interest Without a ``Transfer''---The Creditor's Situation	1182	(1)
Taxpayer Relief Act of 1997, Report of the Committee on Ways and Means, House of Representatives	1182	(4)
Illustrative Material	1186	(2)
Satisfaction of a Claim---The Debtor's Situation	1188	(1)
Holding Period Requirement	1189	(3)
Illustrative Material	1190	(2)
Special Statutory Treatment of Particular Gains and Losses	1192	(5)
Illustrative Material	1193	(4)
Transactional Problems of Capital Gains and Losses	1197	(10)
Transaction Related to a Previous Capital Transaction	1198	(1)
Arrowsmith v. Commissioner	1198	(2)
Illustrative Material	1200	(7)
Sales of Assets Held for Use in a Trade or Business	1207	(20)
Section 1231 Property	1207	(10)
Illustrative Material	1211	(6)
Sale of an Entire Business	1217	(10)
Williams v. McGowan	1217	(1)
Illustrative Material	1218	(9)
PART X Tax Motivated Transactions	1227	(122)
Transactions Involving Leased Property: Has a Sale or Other Disposition Occurred?	1227	(28)
Estate of Starr v. Commissioner	1228	(2)
Alstores Realty Corp. v. Commissioner	1230	(3)
Frank Lyon Co. v. United States	1233	(13)
Illustrative Material	1246	(9)
Nonrecourse Debt and Leveraged Tax Shelters	1255	(30)
Acquisition and Disposition of Property Subject to Nonrecourse Debt	1255	(18)
Commissioner v. Tufts	1259	(8)
Illustrative Material	1267	(6)
Tax Shelters	1273	(5)
Illustrative Material	1274	(4)
The Valuation of Property Subject to Debt	1278	(7)
Estate of Franklin v. Commissioner	1278	(3)
Illustrative Material	1281	(4)
Statutory Limitations on Leveraged Tax Shelters	1285	(24)
The At-Risk Limitation	1285	(9)
Senate Finance Committee Report, Tax Reform Act of 1976	1285	(2)
Illustrative Material	1287	(7)
Passive Activity Loss Limitation	1294	(15)
Senate Finance Committee Report, Tax Reform Act of 1986	1295	(3)
Illustrative Material	1298	(11)
Economic Substance Doctrine	1309	(40)
Tax Avoidance versus Business Purpose	1309	(32)
In re CM Holdings, Inc.	1309	(8)
Compaq Computer Corp. v. Commissioner	1317	(9)
Illustrative Material	1326	(3)
Conference Report, Jobs and Growth Tax Relief Reconciliation Act of 2003	1329	(12)
Tax Shelter Disclosure and Reporting Requirements	1341	(8)
Illustrative Material	1342	(7)
PART XI Alternative Minimum Tax	1349	(16)
Alternative Minimum Tax for Individuals	1349	(16)
Structure of the AMT	1350	(6)
Study of the General State of the Federal Tax System and Recommendations for Simplification, Pursuant to Section 8022 of the Internal Revenue Code of 1986, Vol. II	1350	(2)
Illustrative Material	1352	(4)
Current Operation of the AMT	1356	(4)
Klaassen v. Commissioner	1356	(3)
Illustrative Material	1359	(1)
The Growth of the AMT---From Class Tax to Mass Tax	1360	(5)
Study of the General State of the Federal Tax System and Recommendations for Simplification, Pursuant to Section 8022 of the Internal Revenue Code of 1986, Vol. II	1360	(3)
Illustrative Material	1363	(2)
Index	1365