Fundamentals of Federal Taxation

by Freeland, James J.; Lathrope, Daniel J.; Lind, Stephen A.; Stephens, Richard B.; Freeland, James J.

• ISBN13: 9781587784125
• ISBN10: 1587784122
• Edition: 12th
• Format: Hardcover
• Copyright: 2002-05-01
• Publisher: Foundation Pr

Table of Contents

Preface	v
Table of Internal Revenue Code Sections	xxvii
Table of Treasury Regulations	lxix
Table of Internal Revenue Rulings	lxxv
Table of Miscellaneous Rulings	lxxvii
Table of Cases	lxxix
Table of Authorities	xci
PART ONE Introduction	1	(46)
Orientation	2	(45)
A Look Forward	2	(4)
A Glimpse Backward	6	(8)
The Income Tax and the United States Constitution	14	(7)
The Tax Practitioner's Tools	21	(11)
Tax Policy Considerations	32	(11)
The Road Ahead	43	(4)
PART TWO Identification of Income Subject to Taxation	47	(194)
Gross Income: The Scope of Section 61	48	(21)
Introduction to Income	48	(1)
Equivocal Receipt of Financial Benefit	49	(16)
Income Without Receipt of Cash or Property	65	(4)
The Exclusion of Gifts and Inheritances	69	(23)
Rules of Inclusion and Exclusion	69	(1)
Gifts	70	(13)
The Income Tax Meaning of Gift	70	(11)
Employee Gifts	81	(2)
Bequests, Devises, and Inheritances	83	(9)
Employee Benefits	92	(15)
Exclusions for Fringe Benefits	92	(10)
Exclusions for Meals and Lodging	102	(5)
Awards	107	(10)
Prizes	107	(6)
Scholarships and Fellowships	113	(4)
Gain From Dealings in Property	117	(38)
Factors in the Determination of Gain	117	(1)
Determination of Basis	118	(15)
Cost as Basis	118	(4)
Property Acquired by Gift	122	(7)
Property Acquired Between Spouses or Incident to Divorce	129	(2)
Property Acquired From a Decedent	131	(2)
The Amount Realized	133	(22)
Life Insurance Proceeds and Annuities	155	(10)
Life Insurance Proceeds	155	(4)
Annuity Payments	159	(6)
Discharge of Indebtedness	165	(17)
Damages and Related Receipts	182	(13)
Introduction	182	(1)
Damages In General	183	(3)
Damages and Other Recoveries for Personal Injuries	186	(9)
Separation and Divorce	195	(26)
Alimony and Separate Maintenance Payments	195	(13)
Direct Payments	195	(10)
Indirect Payments	205	(3)
Property Settlements	208	(4)
Other Tax Aspects of Divorce	212	(9)
Child Support	212	(2)
Alimony Payments Made by a Third Party	214	(3)
Divorce	217	(4)
Other Exclusions From Gross Income	221	(20)
Gain From The Sale of a Principal Residence	221	(6)
Income Earned Abroad	227	(1)
Exclusions and Other Tax Benefits Related to the Costs of Higher Education	228	(8)
Federal Taxes and State Activities	236	(5)
PART THREE Identification of the Proper Taxpayer	241	(72)
Assignment of Income	242	(34)
Introduction	242	(2)
Income From Services	244	(11)
Income From Property	255	(21)
Income Producing Entities	276	(37)
Introduction	276	(6)
Trusts and Estates	282	(13)
Partnerships	295	(8)
Corporations	303	(10)
PART FOUR Deductions in Computing Taxable Income	313	(272)
Business Deductions	314	(131)
Introduction	314	(2)
The Anatomy of the Business Deduction Workhorse: Section 162	316	(24)
``Ordinary and Necessary''	316	(3)
``Expenses''	319	(12)
``Carrying On'' Business	331	(9)
Specific Business Deduction	340	(53)
``Reasonable'' Salaries	340	(15)
Travel ``Away From Home''	355	(19)
Necessary Rental and Similar Payments	374	(11)
Expenses for Education	385	(8)
Miscellaneous Business Deductions	393	(11)
Introduction	393	(8)
Business Losses	401	(3)
Depreciation	404	(41)
Introduction	404	(26)
Special Depreciation Rules on Personal Property	430	(10)
Special Rules on Realty	440	(5)
Deductions for Profit--Making, Nonbusiness Activities	445	(31)
Section 212 Expenses	445	(21)
Charges Arising Out of Transactions Entered Into for Profit	466	(10)
Deductions Not Limited to Business or Profit--Seeking Activities	476	(35)
Introduction	476	(2)
Interest	478	(28)
Taxes	506	(4)
Bad Debts, Charitable Contributions and Casualty and Theft Losses	510	(1)
Restrictions on Deductions	511	(35)
Introduction	511	(3)
Deductions Limited to Amount at Risk	514	(4)
Activities Not Engaged in for Profit	518	(2)
Restrictions on Deductions of Homes	520	(5)
Passive Activity Limitations	525	(14)
Illegality or Impropriety	539	(7)
Deductions for Individuals Only	546	(39)
The Concept of Adjusted Gross Income	546	(3)
Moving Expenses	549	(5)
Extraordinary Medical Expenses	554	(12)
Qualified Tuition and Related Expenses	566	(2)
Personal and Dependency Exemptions	568	(5)
The Standard Deduction	573	(12)
PART FIVE The Year of Inclusion or Deduction	585	(94)
Fundamental Timing Principles	586	(62)
Introduction	586	(4)
The Cash Receipts and Disbursements Method	590	(26)
Receipts	590	(13)
Disbursements	603	(13)
The Accural Method	616	(28)
Income Items	616	(18)
Deduction Items	634	(10)
Forced Matching of Methods	644	(4)
How Ineluctable is the Integrity of the Taxable Year?	648	(31)
Taxpayer's Restoration of Previously Taxed Income	648	(9)
The Tax Benefit Doctrine	657	(3)
Income Averaging	660	(15)
Statutory Averaging	660	(1)
Do--It--Yourself Averaging	661	(7)
Statutory Deferred Compensation Arrangements	668	(7)
The Carryover and Carryback Devices	675	(4)
PART SIX The Characterization of Income and Deductions	679	(154)
Capital Gains and Losses	680	(77)
Introduction	680	(7)
The Mechanics of Capital Gains	687	(8)
The Mechanics of Capital Losses	695	(5)
The Meaning of ``Capital Asset''	700	(30)
The Statutory Definition	700	(9)
``Income'' Property	709	(9)
The Corn Products Doctrine	718	(12)
The Sale or Exchange Requirement	730	(20)
Introduction	730	(11)
Correlation With Prior Transactions	741	(9)
The Holding Period	750	(7)
Characterization on the Sale of Depreciable Property	757	(28)
Introduction	757	(1)
The Section 1231 Hotchpot	757	(12)
Characterization Under Section 1239	769	(6)
Recapture Under Section 1245	775	(6)
Recapture of Depreciation on the Sale of Depreciable Real Property	781	(4)
Deductions Affected by Characterization Principles	785	(48)
Bad Debts and Worthless Securities	785	(14)
The Charitable Deduction	799	(22)
Casualty and Theft Losses	821	(12)
Nature of Losses Allowed	821	(6)
Other Aspects of Casualty and Theft Losses	827	(6)
PART SEVEN Deferral and Nonrecognition of Income and Deductions	833	(94)
The Interrelationship of Timing and Characterization	834	(47)
Transactions Under Section 453	834	(18)
The General Rule	834	(2)
Contingent Sales Price	836	(3)
Situations in Which Section 453 is Inapplicable	839	(2)
Special Rules Related to Section 453	841	(11)
Transactions Outside of Section 453	852	(9)
Open Transactions	852	(6)
Closed Transactions	858	(3)
The Original Issue Discount Rules and Other Unstated, Hidden, and Imputed Interest	861	(8)
Property Transferred in Connection with Services	869	(7)
Income in Respect of Decedents	876	(5)
Disallowance of Losses	881	(10)
Losses Between Related Taxpayers	881	(7)
Wash Sales	888	(3)
Nonrecognition Provisions	891	(36)
Introduction	891	(2)
Like Kind Exchanges	893	(20)
The Like Kind Exchange Requirements	893	(11)
Three-Cornered Exchanges	904	(5)
Other Section 1031 Issues	909	(4)
Involuntary Conversions	913	(10)
Other Nonrecognition Provisions	923	(4)
PART EIGHT Converting Taxable Income Into Tax Liability	927	(40)
Computations	928	(39)
Classification of Taxpayers and Rates	928	(14)
Credits Against Tax	942	(12)
The Alternative Minimum Tax	954	(13)
PART NINE Federal Tax Procedure and Professional Responsibility	967	(36)
Procedure and Professional Responsibility	968	(35)
Overview of Federal Tax Procedure	968	(20)
Introduction	968	(1)
The Self-Assessment System	969	(1)
Administrative Procedures	970	(7)
Judicial Procedures	977	(8)
Collection of Taxes	985	(3)
Special Rules Applicable to Deficiency Procedures	988	(6)
Timing Rules, Interest and Penalties	988	(3)
The Innocent Spouse Rules	991	(3)
Special Rules Applicable to Refund Procedures	994	(5)
Professional Responsibility Issues	999	(4)
Index	1003