West Federal Taxation 2007 Individual Income Taxes, Volume 1, Professional Edition

by Hoffman, William H.; Smith, James E.; Willis, Eugene

• ISBN13: 9780324399608
• ISBN10: 032439960X
• Format: Hardcover
• Copyright: 2006-04-12
• Publisher: South-Western College/West

Summary

WEST FEDERAL TAXATION: INDIVIDUAL INCOME TAXES, 2007 EDITION is accessible, comprehensive, and authoritative in its coverage of the Tax Code and regulations pertaining to the individual taxpayer. Covering all major developments in federal taxation, there is no other text as effective at helping users master the ever-changing Individual Tax Code.

Table of Contents

PART 1: INTRODUCTION AND BASIC TAX MODEL
An Introduction To Taxation And Understanding The Federal Tax Law	1	(1)
History Of U.S. Taxation	2	(2)
Early Periods	2	(1)
Revenue Acts	3	(1)
Historical Trends	3	(1)
Criteria Used in the Selection of a Tax Structure	4	(1)
Tax in the News: Adam Smith Stopped Too Soon	5	(1)
The Tax Structure	5	(1)
Tax Base	5	(1)
Tax Rates	5	(1)
Incidence of Taxation	6	(1)
Major Types of Taxes	6	(12)
Property Taxes	6	(1)
Tax in the News: A Few Pigs and Chickens May Not Be Enough	7	(1)
Transaction Taxes	8	(2)
Ethical Considerations: Making Good Use of Out-of-State Relatives	10	(1)
Death Taxes	10	(2)
Gift Taxes	12	(1)
Income Taxes	13	(2)
Tax in the News: Using the Income Tax Return As a ``Use Tax'' Reminder	15	(1)
Employment Taxes	15	(1)
Other U.S. Taxes	16	(1)
Proposed U.S. Taxes	17	(1)
Tax Administration	18	(5)
Internal Revenue Service	18	(1)
The Audit Process	18	(2)
Statute of Limitations	20	(1)
Tax in the News: The IRS Gets Tough with Taxpayers Who Refuse to Pay	21	(1)
Interest and Penalties	21	(1)
Tax Practice	22	(1)
Ethical Considerations: When the IRS Does Not Know	23	(1)
Understanding the Federal Tax Law	23	(10)
Revenue Needs	23	(1)
Global Tax Issues: Outsourcing of Tax Return Preparation	24	(1)
Economic Considerations	24	(2)
Social Considerations	26	(1)
Equity Considerations	26	(1)
Tax in the News: Treating Everyone the Same	27	(2)
Political Considerations	29	(1)
Influence of the Internal Revenue Service	30	(1)
Ethical Considerations: Deducting Uncollected Charges for Services Rendered	31	(1)
Influence of the Courts	32	(1)
Summary	32	(1)
Problem Materials	33
Working With The Tax Law	1	(1)
Tax Sources	2	(20)
Statutory Sources of the Tax Law	2	(1)
Tax in the News: Tax Freedom Day	3	(1)
Tax in the News: Prison Inmates' Tax Fraud	4	(3)
Administrative Sources of the Tax Law	7	(1)
Ethical Considerations: The President and the IRS	7	(5)
Judicial Sources of the Tax Law	12	(1)
Tax in the News: The Tax Gap Increases	13	(7)
Other Sources of the Tax Law	20	(1)
Global Tax Issues: Tax Treaties	20	(2)
Working With The Tax Law---Tax Research Tools	22	(6)
Electronic versus Paper Tax Research Tools	22	(1)
Tax Services	23	(1)
Electronic Services	24	(4)
Global Tax Issues: Data Warehousing Reduces Global Taxes	28	(1)
Working With The Tax Law---Tax Research	28	(7)
Identifying the Problem	29	(1)
Refining the Problem	29	(1)
Locating the Appropriate Tax Law Sources	30	(1)
Assessing the Validity of the Tax Law Sources	30	(1)
Tax in the News: Internal Revenue Code: Interpretation Pitfalls	31	(3)
Arriving at the Solution or at Alternative Solutions	34	(1)
Communicating Tax Research	34	(1)
Working With The Tax Law---Tax Planning	35	(4)
Nontax Considerations	35	(1)
Tax Avoidance and Tax Evasion	36	(1)
Ethical Considerations: A Toilet Paper Tax?	37	(1)
Tax in the News: The Disappearing Taxpayers	38	(1)
Follow-up Procedures	38	(1)
Tax Planning---A Practical Application	38	(1)
Taxation on The Cpa Examination	39	(1)
Problem Materials	40
Tax Determination; Personal and Dependency Exemptions; an Overview of Property Transactions	1	(1)
Tax Formula	3	(7)
Components of the Tax Formula	3	(2)
Global Tax Issues: Citizenship is Not Tax-free	5	(3)
Application of the Tax Formula	8	(1)
Individuals Not Eligible for the Standard Deduction	9	(1)
Special Limitations for Individuals Who Can Be Claimed as Dependents	9	(1)
Personal Exemptions	10	(1)
Dependency Exemptions	11	(8)
Qualifying Child	11	(2)
Qualifying Relative	13	(2)
Ethical Considerations: Discovering Lest Dependency Exemptions	15	(1)
Other Rules for Dependency Exemptions	16	(1)
Ethical Considerations: A Change of Residence Can Be Rewarding	17	(1)
Comparison of Categories for Dependency Exemptions	17	(1)
Phaseout of Exemptions	17	(2)
Tax in the News: How to Subtly Pluck the Chicken	19	(1)
Child Tax Credit	19	(1)
Tax Determination	19	(5)
Tax Table Method	19	(1)
Tax Rate Schedule Method	20	(1)
Computation of Net Taxes Payable or Refund Due	21	(1)
Tax in the News: Tax Rate Trauma	22	(1)
Unearned Income of Children under Age 14 Taxed at Parents' Rate	22	(2)
Filing Considerations	24	(7)
Filing Requirements	25	(2)
Tax in the News: Special Rules for Certain Military Personnel	27	(1)
Tax in the News: ``Charge It''---Convenient But Not Cheap!	28	(1)
Filing Status	28	(1)
Global Tax Issues: Filing a Joint Return	29	(2)
Ethical Considerations: The Hidden Benefits of Taking Care of a Relative	31	(1)
Gains and Losses From Property Transactions---in General	31	(1)
Gains and Losses from Property Transactions---Capital Gains and Losses	32	(2)
Definition of a Capital Asset	32	(1)
Taxation of Net Capital Gain	33	(1)
Determination of Net Capital Gain	33	(1)
Treatment of Net Capital Loss	34	(1)
Tax Planning Considerations	34	(4)
Maximizing the Use of the Standard Daduction	34	(1)
Dependency Exemptions	35	(1)
Ethical Considerations: Nondependence Can Provide Tax Benefits	36	(1)
Taking Advantage of Tax Rate Differentials	37	(1)
Income of Minor Children	37	(1)
Problem Materials	38
PART 2: GROSS INCOME
Gross Income: Concepts And Inclusions	1	(1)
Gross Income---What is it?	2	(4)
Definition	2	(1)
Global Tax Issues: From ``All Sources'' is a Broad Definition	3	(1)
Economic and Accounting Concepts	3	(2)
Tax in the News: if Free is Taxed. It's Not Free	5	(1)
Comparison of the Accounting and Tax Concepts of Income	5	(1)
Form of Receipt	5	(1)
Recovery of Capital Doctrine	6	(1)
Year of Inclusion	6	(7)
Taxable Year	6	(1)
Accounting Methods	7	(2)
Exceptions Applicable to Cash Basis Taxpayers	9	(1)
Ethical Considerations: Choosing When to File Insurance Claims	10	(2)
Global Tax Issues: Tax Credit Neutralizes Foreign Income Taxes	12	(1)
Exceptions Applicable to Accrual Basis Taxpayers	12	(1)
Income Sources	13	(7)
Personal Services	13	(1)
Income from Property	14	(2)
Ethical Considerations: Enhancing Lottery Winnings	16	(1)
Income Received by an Agent	16	(1)
Income from Partnerships, S Corporations, Trusts, and Estates	16	(1)
Tax in the News: The Attorney's Fee Was the Plaintiff's Income	17	(1)
Income in Community Property States	17	(1)
Tax In the News: Trust Splits Income from Lottery	18	(2)
Items Specifically Included in Gross Income	20	(14)
Alimony and Separate Maintenance Payments	20	(2)
Ethical Considerations: Avoiding Front-Loading with Equal Payments	22	(1)
Imputed Interest on Below-Market Loans	23	(3)
Tax In the News: loans to Executives Prohibited	26	(1)
Income from Annuities	27	(3)
Prizes and Awards	30	(1)
Tax in the News: Survivor Winner Did Not Survive IRS Audit	31	(1)
Group Term Life Insurance	31	(2)
Tax in the News: A Taxpayer Learns about the ``Quirky'' Social Security Benefits Taxation Formula	33	(1)
Unemployment Compensation	33	(1)
Social Security Benefits	33	(1)
Tax Planning Considerations	34	(4)
Nontaxable Economic Benefits	34	(1)
Tax Deferral	35	(1)
Shifting Income to Relatives	36	(1)
Accounting for Community Property	37	(1)
Alimony	37	(1)
Problem Materials	38
Gross Income: Exclusions	1	(1)
Items Specifically Excluded from Gross Income	2	(2)
Tax in the News: Avoiding a Natural Disaster Can Create a Tax Burden	4	(1)
Statutory Authority	4	(1)
Gifts and Inheritances	4	(2)
General	4	(1)
Tax in the News: Begging as a Tax-Disfavored Occupation	5	(1)
Gifts to Employees	5	(1)
Tax in the News: Frequent-Flyer Miles Will Not Be Taxed	6	(1)
Employee Death Benefits	6	(1)
Life Insurance Proceeds	6	(3)
General Rule	6	(1)
Tax in the News: Corporate-Owned Life Insurance May Not Yield Corporate Benefits	7	(1)
Accelerated Death Benefits	7	(1)
Ethical Considerations: Should the Terminally III Pay Social Security Taxes?	8	(1)
Transfer for Valuable Consideration	8	(1)
Scholarships	9	(2)
General Information	9	(1)
Timing Issues	10	(1)
Disguised Compensation	10	(1)
Qualified Tuition Reduction Plans	10	(1)
Compensation for Injuries and Sickness	11	(2)
Damages	11	(1)
Workers' Compensation	12	(1)
Accident and Health Insurance Benefits	12	(1)
Tax in the News: Abandoning Parent Gets an ``Undeserved'' Benefit Tax-Free	13	(1)
Employer-Sponsored Accident and Health Plans	13	(2)
Global Tax Issues: When Jobs Leave the Country, So Do the Health Insurance Benefits	14	(1)
Medical Reimbursement Plans	14	(1)
Tax in the News: The Staggering Cost of Employee Health Insurance	15	(1)
Long-Term Care Insurance Benefits	15	(1)
Meals and Lodging	15	(3)
Furnished for the Convenience of the Employer	15	(2)
Other Housing Exclusions	17	(1)
Other Employee Fringe Benefits	18	(8)
Specific Benefits	18	(1)
Cafeteria Plans	19	(1)
Flexible Spending Plans	19	(1)
Tax in the News: Taxpayers Have Longer to Use Before They Lose Plan Benefits	20	(1)
General Classes of Excluded Benefits	20	(4)
Taxable Fringe Benefits	24	(2)
Foreign Earned Income	26	(1)
Ethical Considerations: Who Should Benefit from the Foreign Earned Income Exclusion?	27	(1)
Interest on Certain State and Local Government Obligations	27	(1)
Global Tax Issues: U.S. Taxpayers Abroad Are Gone but Not Forgotten	28	(1)
Dividends	28	(1)
General information	28	(1)
Ethical Considerations: Beneficiaries and Victims of Changes in Dividend Taxation	29	(1)
Stock Dividends	29	(1)
Educational Savings Bonds	29	(1)
Qualified Tuition Programs	30	(1)
Tax Benefit Rule	31	(1)
Income from Discharge of Indebtedness	31	(2)
Tax Planning Considerations	33	(2)
Life Insurance	33	(1)
Employee Benefits	33	(1)
Investment Income	34	(1)
Problem Materials	35
PART 3: DEDUCTIONS
Deductions and Losses: in General	1	(1)
Classification of deductible Expenses	2	(7)
Tax in the News: Proper Treatment of Your Voice	3	(1)
Deductions for Adjusted Gross Income	3	(1)
Itemized Deductions	4	(1)
Trade or Business Expenses and Production of Income Expenses	5	(1)
Tax in the News: Penalty or Restitution: The Tax Consequences	6	(1)
Business and Nonbusiness Losses	7	(1)
Reporting Procedures	8	(1)
Deductions And Losses---Timing Of Expense Recognition	9	(2)
Importance of Taxpayer's Method of Accounting	9	(1)
Cash Method Requirements	9	(1)
Accrual Method Requirements	10	(1)
Disallowance Possibilities	11	(17)
Public Policy Limitation	11	(2)
Political Contributions and Lobbying Activities	13	(1)
Excessive Executive Compensation	14	(1)
investigation of a Business	14	(1)
Hobby Losses	15	(1)
Ethical Considerations: When Is a Dairy Farm a Trade or Business?	16	(2)
Rental of Vacation Homes	18	(1)
Tax in the News: Making Money at the Masters, but not As a Golfer	19	(4)
Expenditures Incurred for Taxpayer's Benefit or Taxpayer's Obligation	23	(1)
Ethical Considerations: How the Payment is Made	23	(1)
Disallowance of Personal Expenditures	23	(1)
Disallowance of Deductions for Capital Expenditures	24	(1)
Transactions between Related Parties	25	(1)
Substantiation Requirements	26	(1)
Expenses and Interest Relating to Tax-Exempt Income	27	(1)
Tax Planning Considerations	28	(3)
Time Value of Tax Deductions	28	(1)
Unreasonable Compensation	28	(2)
Excessive Executive Compensation	30	(1)
Shifting Deductions	30	(1)
Hobby Losses	30	(1)
Capital Expenditures	31	(1)
Problem Materials	31
Deductions And Losses: Certain Business Expenses And Losses	1	(1)
Bad Debts	3	(2)
Specific Charge-Off Method	3	(1)
Business versus Nonbusiness Bad Debts	4	(1)
Global Tax Issues: Writing Off Bad Debts in Australia	5	(1)
Loans between Related Parties	5	(1)
Worthless Securities	5	(2)
Small Business Stock	6	(1)
Losses Of Individuals	7	(8)
Tax in the News: A Casualty Loss Deduction?	8	(1)
Ethical Considerations: What Is a Casualty Loss?	8	(1)
Events That Are Not Casualties	8	(1)
Theft Losses	9	(1)
When to Deduct Casualty Losses	9	(1)
Measuring the Amount of Loss	10	(3)
Statutory Framework for Deducting Losses of Individuals	13	(1)
Personal Casualty Gains and Losses	13	(2)
Ethical Considerations: The Amount of a Casualty Loss	15	(1)
Research And Experimental Expenditures	15	(2)
Expense Method	15	(1)
Tax in the News: Using Public Dollars to Advance Research	16	(1)
Deferral and Amortization Method	16	(1)
Domestic Production Activities Deduction	17	(2)
Operational Rules	17	(2)
Eligible Taxpayers	19	(1)
Net Operating Losses	19	(6)
Tax in the News: Windfall From a Net Operating Loss	20	(1)
Carryback and Carryover Periods	20	(1)
Global Tax Issues: Tax Perks	21	(1)
Computation of the Net Operating Loss	21	(2)
Recomputation of Tax Liability for Year to Which Net Operating Loss Is Carried	23	(1)
Calculation of the Remaining Net Operating Loss	24	(1)
Tax Planning Considerations	25	(2)
Tax Consequences of the Groetzinger Case	25	(1)
Documentation of Related-Taxpayer Loans, Casualty Losses, and Theft Losses	25	(1)
Small Business Stock	26	(1)
Casualty Losses	26	(1)
Net Operating Losses	26	(1)
Problem Materials	27
Depreciation, Cost Recovery, Amortization, And Depletion	1	(1)
Overview	2	(2)
General	2	(1)
Concepts Relating to Depreciation	3	(1)
Modified Accelerated Cost Recovery System (macrs)	4	(14)
Global Tax Issues: Tax Incentives for the Textile Industry in India	5	(1)
Personalty: Recovery Periods and Methods	5	(2)
Tax In the News: Tax Headaches for Owners of Small Businesses	7	(1)
Realty: Recovery Periods and Methods	8	(1)
Ethical Considerations: Proper Classification of Real Property	9	(1)
Straight-Line Election	9	(1)
Election to Expense Assets	10	(1)
Business and Personal Use of Automobiles and Other Listed Property	11	(1)
Tax in the News: Tax Incentives for Wind Energy	12	(4)
Tax in the News: Leasing versus Buying an Automobile	16	(1)
Alternative Depreciation System (ADS)	17	(1)
Accelerated Cost Recovery System (acrs)	18	(1)
Amortization	19	(1)
Ethical Considerations: Computing § 197 Amortization	19	(1)
Depletion	20	(4)
Intangible Drilling and Development Costs (IDC)	21	(1)
Depletion Methods	21	(3)
Reporting Procedures	24	(1)
Tax Planning Considerations	24	(5)
Cost Recovery	24	(4)
Tax in the News: Cost Segregation	28	(1)
Amortization	28	(1)
Depletion	28	(1)
Cost Recovery Tables	29	(4)
Problem Materials	33
Deductions: Employee And Self-employed-Related Expenses	1	(1)
Employee Versus Self-employed	2	(2)
Tax in the News: Nannygate Revisited	3	(1)
Employee Expenses---in General	4	(1)
Transportation Expenses	4	(3)
Qualified Expenditures	4	(1)
Computation of Automobile Expenses	5	(2)
Travel Expenses	7	(4)
Definition of Travel Expenses	7	(1)
Away-from-Home Requirement	7	(1)
Restrictions on Travel Expenses	8	(1)
Combined Business and Pleasure Travel	9	(1)
Global Tax Issues: Conventions in Faraway Lands	10	(1)
Moving Expenses	11	(2)
Distance Test	11	(1)
Time Test	11	(1)
Treatment of Moving Expenses	12	(1)
Global Tax Issues: Expatriates and the Moving Expense Deduction	13	(1)
Ethical Considerations: Manipulating the Real Estate Market	13	(1)
Education Expenses	13	(4)
General Requirements	13	(1)
Requirements Imposed by Law or by the Employer for Retention of Employment	14	(1)
Maintaining or Improving Existing Skills	14	(1)
Classification of Specific Items	14	(1)
Tax in the News: Is an MBA Degree Deductible?	15	(1)
A Limited Deduction Approach	15	(1)
Other Provisions Dealing with Education	16	(1)
Entertainment Expenses	17	(3)
Cutback Adjustment	17	(1)
Classification of Expenses	18	(1)
Restrictions upon Deductibility	19	(1)
Other Employee Expenses	20	(3)
Office in the Home	20	(2)
Tax in the News: ``Home Sourcing'' Can Generate Substantial Cost Savings	22	(1)
Miscellaneous Employee Expenses	22	(1)
Contributions To Retirement Accounts	23	(1)
Employee IRAs	23	(1)
Self-Employed Keogh (H.R. 10) Plans	24	(1)
Classification Of Employee Expenses	24	(3)
Accountable Plans	24	(2)
Nonaccountable Plans	26	(1)
Reporting Procedures	26	(1)
Ethical Considerations: A Customized Reimbursement Agreement	27	(1)
Limitations On Itemized Deductions	27	(1)
Miscellaneous Itemized Deductions Subject to the 2 Percent Floor	27	(1)
Ethical Considerations: Will Separate Returns by Married Persons Save Taxes?	28	(1)
Miscellaneous Itemized Deductions Not Subject to the 2 Percent Floor	28	(1)
Tax Planning Considerations	28	(3)
Self-Employed Individuals	28	(1)
Tax in the News: Relief for Members of the Armed Forces Reserves	29	(1)
Shifting Deductions between Employer and Employee	29	(1)
Transportation and Travel Expenses	29	(1)
Moving Expenses	30	(1)
Education Expenses	30	(1)
Entertainment Expenses	30	(1)
Unreimbursed Employee Business Expenses	31	(1)
Problem Materials	31
Deductions And Losses: Certain Itemized Deductions	1	(1)
General Classification Of Expenses	2	(1)
Medical Expenses	2	(8)
General Requirements	2	(1)
Tax in the News: The President and Vice President Itemize	3	(1)
Medical Expenses Defined	3	(1)
Capital Expenditures for Medical Purposes	4	(1)
Medical Expenses Incurred for Spouse and Dependents	5	(1)
Transportation, Meal, and Lodging Expenses for Medical Treatment	6	(1)
Ethical Considerations: Travel Expenses: Medical or Personal?	7	(1)
Amounts Paid for Medical Insurance Premiums	7	(1)
Year of Deduction	7	(1)
Reimbursements	8	(1)
Health Savings Accounts	8	(2)
Taxes	10	(3)
Deductibility as a Tax	10	(1)
Property Taxes	11	(1)
Global Tax Issues: Deductibility of Foreign Taxes	12	(1)
State and Local Income Taxes and Sales Taxes	13	(1)
Interest	13	(7)
Tax in the News: States Respond to the Federal State Sales Tax Deduction	14	(1)
Allowed and Disallowed Items	14	(3)
Tax in the News: A Recommendation to Limit the Mortgage Interest Deduction	17	(1)
Restrictions on Deductibility and Timing Considerations	18	(1)
Classification of Interest Expense	19	(1)
Charitable Contributions	20	(7)
Criteria for a Gift	20	(1)
Qualified Organizations	21	(1)
Global Tax Issues: Choose the Charity Wisely	22	(1)
Time of Deduction	22	(1)
Record-Keeping and Valuation Requirements	22	(1)
Limitations on Charitable Contribution Deduction	23	(4)
Miscellaneous Itemized Deductions	27	(1)
Ethical Considerations: Job Hunting in Ski Country: A Deductible Expense?	27	(1)
Other Miscellaneous Deductions	28	(1)
Comprehensive Example Of Schedule A	28	(2)
Overall Limitation On Certain Itemized Deductions	30	(2)
Tax in the News: The First Family and Itemized Deduction Phaseouts	31	(1)
Ethical Considerations: Between a Rock and a Hard Place	32	(1)
Tax Planning Considerations	32	(4)
Effective Utilization of Itemized Deductions	32	(1)
Utilization of Medical Deductions	32	(1)
Timing the Payment of Deductible Taxes	33	(1)
Protecting the Interest Deduction	33	(1)
Assuring the Charitable Contribution Deduction	34	(2)
Problem Materials	36
Passive Activity Losses	1	(1)
The Tax Shelter Problem	2	(1)
At-risk Limits	3	(2)
Tax in the News: With Tax Shelters in the Spotlight, Taxpayers Should Be Cautious!	4	(1)
Passive Loss Limits	5	(18)
Classification and Impact of Passive Income and Losses	5	(4)
Taxpayers Subject to the Passive Loss Rules	9	(1)
Passive Activities Defined	10	(6)
Ethical Considerations: A Lovers' Triangle and the Passive Loss Rules	16	(2)
Interaction of the At-Risk and Passive Activity Limits	18	(1)
Tax in the News: Newly Developed Tax Shelter Strategies Now Protected by Patents	19	(1)
Special Passive Activity Rules for Real Estate Activities	19	(1)
Tax in the News: Do the Passive Loss Rules Affect the Filing Status Decision for Married Taxpayers?	20	(2)
Ethical Considerations: How Active Is Active?	22	(1)
Dispositions of Passive Interests	22	(1)
Tax Planning Considerations	23	(3)
Utilizing Passive Losses	23	(3)
Problem Materials	26
PART 4: SPECIAL TAX COMPUTATION METHODS, PAYMENT PROCEDURES, AND TAX CREDITS
Alternative Minimum Tax	1	(1)
Individual Alternative Minimum Tax	2	(24)
Amt Formula for Alternative Minimum Taxble Income (amti)	2	(1)
Tax in the News: The Amt: From 155 to 33 Million	3	(3)
Amt Formula: Other Components	6	(2)
Amt Adjustments	8	(11)
Amt Preferences	19	(1)
Tax in the News: Being Treated Like the Rich	20	(1)
Ethical Considerations: Tax-Exempt Bonds and the Amt	21	(1)
Tax in the News: Distinguishing between Taxable and Exempt Bonds for Amt Purpose	22	(1)
Illustration of the Amt Computation	22	(1)
Amt Credit	23	(3)
Corporate Alternative Minimum Tax	26	(4)
Repeal of Amt for Small Corporations	26	(1)
Ethical Considerations: Amt and Small Corporations	27	(1)
Amt Adjustments	27	(2)
Tax Preferences	29	(1)
Exemption Amount	30	(1)
Other Aspects of the Amt	30	(1)
Tax Planning Considerations	30	(2)
Responding to Bob and Carol	30	(1)
Avoiding Preferences and Adjustments	30	(1)
Controlling the Timing of Preferences and Adjustments	31	(1)
Taking Advantage of the Amt/Regular Tax Rate Differential	31	(1)
Problem Materials	32
Tax Credits And Payment Procedures	1	(1)
Tax Policy Considerations	3	(1)
Tax in the News: Federal Tax Law Is a Key Component of U.S. Energy Policy	4	(1)
Overview And Priority Of Credits	4	(3)
Refundable versus Nonrefundable Credits	4	(2)
General Business Credit	6	(1)
Treatment of Unused General Business Credits	6	(1)
Specific Business-Related Tax Credit Provisions	7	(8)
Tax Credit for Rehabilitation Expenditures	7	(2)
Work Opportunity Tax Credit	9	(1)
Welfare-to-Work Credit	10	(1)
Research Activities Credit	10	(2)
Low-Income Housing Credit	12	(1)
Ethical Considerations: A Win-Win Situation or an Incalculable Loss?	13	(1)
Disabled Access Credit	13	(1)
Credit for Small Employer Pension Plan Startup Costs	14	(1)
Credit for Employer-Provided Child Care	14	(1)
Other Tax Credits	15	(10)
Earned Income Credit	15	(2)
Tax in the News: The Earned Income Credit: A Boost to the Working Poor and Merchants, Too!	17	(1)
Tax Credit for Elderly or Disabled Taxpayers	17	(1)
Foreign Tax Credit	18	(1)
Global Tax Issues: Sourcing Income in Cyberspace---Getting It Right When Calculating the Foreign Tax Credit	19	(1)
Adoption Expenses Credit	20	(1)
Child Tax Credit	20	(1)
Credit for Child and Dependent Care Expenses	21	(2)
Ethical Considerations: Using the Credit for Child and Dependent Care Expenses	23	(1)
Education Tax Credits	23	(2)
Credit for Certain Retirement Plan Contributions	25	(1)
Payment Procedures	25	(16)
Procedures Applicable to Employers	28	(3)
Tax in the News: Will Social Security Be There for You When You Need It?	31	(5)
Global Tax Issues: Foreign ``Withholding Tax'' Performs an Important Role	36	(1)
Procedures Applicable to Self-Employed Persons	37	(4)
Tax Planning Considerations	41	(2)
Foreign Tax Credit	41	(1)
Credit for Child and Dependent Care Expenses	41	(1)
Adjustments to Increase Withholding	42	(1)
Adjustments to Avoid Overwithholding	43	(1)
Problem Materials	43
PART 5: PROPERTY TRANSACTIONS
Property Transactions: Determination Of Gain Or Loss And Basis Considerations	1	(1)
Determination Of Gain Or Loss	3	(5)
Realized Gain or Loss	3	(1)
Tax in the News: Putting the House at Risk	4	(2)
Recognized Gain or Loss	6	(1)
Nonrecognition of Gain or Loss	7	(1)
Ethical Considerations: Avoiding the Disallowance of Losses on Personal Use Assets	7	(1)
Recovery of Capital Doctrine	7	(1)
Basis Considerations	8	(14)
Determination of Cost Basis	8	(1)
Tax in the News: What's Your Stock Basis?	9	(2)
Gift Basis	11	(1)
Tax in the News: Frequent-Flyer Miles and Basis	12	(2)
Property Acquired from a Decedent	14	(2)
Tax in the News: Effect of 2001 Tax Legislation on the Basis of Inherited Property: Bad News/Good News!	16	(1)
Disallowed Losses	17	(1)
Ethical Considerations: Transactions between Spouses	18	(1)
Conversion of Property from Personal Use to Business or Income-Producing Use	19	(1)
Additional Complexities in Determining Realized Gain or Loss	20	(2)
Summary of Basis Adjustments	22	(1)
Tax in the News: Where to Invest: Growth Stock versus Income Stock	22	(1)
Tax Planning Considerations	22	(5)
Tax Consequences of Alice's Proposed Transaction	22	(2)
Cost Identification and Documentation Considerations	24	(1)
Selection of Property for Making Gifts	25	(1)
Selection of Property for Making Bequests	25	(1)
Disallowed Losses	26	(1)
Problem Materials	27
Property Transactions: Nontaxable Exchanges	1	(1)
General Concept Of A Nontaxable Exchange	2	(1)
Like-kind Exchanges---§ 1031	3	(7)
Like-Kind Property	3	(1)
Ethical Considerations: An Assumption for a Related-Party Exchange	4	(1)
Exchange Requirement	5	(1)
Tax in the News: Avoiding Taxes on the Disposition of a Vacation Home	6	(1)
Boot	6	(1)
Basis and Holding Period of Property Received	7	(3)
Involuntary Conversions---§ 1033	10	(5)
Involuntary Conversion Defined	10	(1)
Computing the Amount Realized	10	(1)
Tax in the News: A Court Upholds the Government's Taking of Property	11	(1)
Replacement Property	11	(1)
Time Limitation on Replacement	12	(1)
Nonrecognition of Gain	13	(1)
Involuntary Conversion of a Personal Residence	14	(1)
Reporting Considerations	15	(1)
Sale Of A Residence---§ 121	15	(6)
Requirements for Exclusion Treatment	15	(1)
Tax in the News: A Tax Break for Those Who Serve	16	(1)
Exceptions to the Two-Year Ownership Rule	16	(2)
Calculation of the Amount of the Exclusion	18	(2)
Principal Residence	20	(1)
Involuntary Conversion and Using §§ 121 and 1033	20	(1)
Other Nonrecognition Provisions	21	(2)
Exchange of Stock for Property---§ 1032	21	(1)
Certain Exchanges of Insurance Policies---§ 1035	21	(1)
Exchange of Stock for Stock of the Same Corporation---§ 1036	21	(1)
Certain Reacquisitions of Real Property---§ 1038	22	(1)
Transfers of Property between Spouses or Incident to Divorce---§ 1041	22	(1)
Ethical Considerations: Incident to Divorce or Not?	22	(1)
Rollovers into Specialized Small Business Investment Companies---§ 1044	22	(1)
Rollover of Gain from Qualified Small Business Stock into Another Qualified Small Business Stock---§ 1045	23	(1)
Tax Planning Considerations	23	(3)
Like-Kind Exchange	23	(1)
Involuntary Conversions	24	(1)
Sale of a Principal Residence	24	(1)
Tax in the News: Sale of a Residence and the Home Office Deduction	25	(1)
Problem Materials	26
Property Transactions: Capital Gains And Losses	1	(1)
General Considerations	2	(1)
Rationale for Separate Reporting of Capital Gains and Losses	2	(1)
Tax in the News: Avoiding A Recognized Gain	3	(1)
General Scheme of Taxation	3	(1)
Capital Assets	3	(5)
Definition of a Capital Asset	3	(2)
Ethical Considerations: Inventory or Capital Asset?	5	(1)
Effect of Judicial Action	6	(1)
Statutory Expansions	6	(2)
Tax in the News: Know Your Losses	8	(1)
Sale Or Exchange	8	(6)
Worthless Securities and § 1244 Stock	8	(1)
Special Rule---Retirement of Corporate Obligations	8	(1)
Options	9	(2)
Patents	11	(1)
Franchises, Trademarks, and Trade Names	12	(1)
Lease Cancellation Payments	13	(1)
Holding Period	14	(5)
Tax in the News: How Long Was the Holding Period for That Property?	15	(1)
Review of Special Holding Period Rules	15	(1)
Special Rules for Short Sales	16	(1)
Global Tax Issues: Trading Adrs on U.S. Stock Exchanges	17	(2)
Tax Treatment Of Capital Gains And Losses Of Noncorporate Taxpayers	19	(12)
Capital Gain and Loss Netting Process	20	(3)
Ethical Considerations: Is That Capital Gain Taxable?	23	(1)
Qualified Dividend Income	23	(1)
Alternative Tax on Net Capital Gain	23	(1)
Treatment of Capital Losses	24	(2)
Tax in the News: Not All Corporate Dividends Are ``Qualified Dividends''	26	(1)
Reporting Procedures	27	(4)
Tax Treatment Of Capital Gains And Losses Of Corporate Taxpayers	31	(1)
Tax Planning Considerations	31	(3)
Importance of Capital Asset Status	31	(1)
Planning for Capital Asset Status	31	(1)
Global Tax Issues: Capital Gain Treatment in the United States and Other Countries	32	(1)
Effect of Capital Asset Status in Transactions Other Than Sales	32	(1)
Stock Sales	33	(1)
Maximizing Benefits	33	(1)
Year-End Planning	34	(1)
Problem Materials	34
Property Transactions: § 1231 And Recapture Provisions	1	(1)
Tax in the News: Capital Gain Confusion	3	(1)
Section 1231 Assets	3	(8)
Relationship to Capital Assets	3	(1)
Justification for Favorable Tax Treatment	4	(1)
Property Included	4	(1)
Property Excluded	5	(1)
Special Rules for Certain § 1231 Assets	5	(1)
Tax in the News: An Environmental Fight over Timber Cutting	6	(1)
General Procedure for § 1231 Computation	7	(1)
Global Tax Issues: Canadian Slow Depreciation	8	(3)
Section 1245 Recapture	11	(3)
Ethical Considerations: Preparing Tax Returns without Proper Information	11	(1)
Tax in the News: Ask The Cpa About Recapture	12	(1)
Section 1245 Property	13	(1)
Observations on § 1245	14	(1)
Section 1250 Recaptur	14	(5)
Computing Recapture on Nonresidential Real Property	15	(1)
Computing Recapture on Residential Rental Housing	16	(1)
Section 1250 Recapture Situations	16	(1)
Unrecaptured § 1250 Gain (Real Estate 25% Gain)	17	(2)
Global Tax Issues: Exchange for Foreign Property Yields Recognized Recapture Gain	19	(1)
Considerations Common To §§ 1245 And 1250	19	(2)
Exceptions	19	(1)
Other Applications	20	(1)
Special Recapture Provisions	21	(1)
Special Recapture for Corporations	21	(1)
Gain from Sale of Depreciable Property between Certain Related Parties	21	(1)
Intangible Drilling Costs	21	(1)
Reporting Procedures	22	(3)
Global Tax Issues: Depreciation Recapture in Other Countries	23	(2)
Ethical Considerations: Form 4797, Depreciation Recapture, and Corporations	25	(1)
Tax Planning Considerations	25	(5)
Timing of § 1231 Gain	25	(4)
Timing of Recapture	29	(1)
Postponing and Shifting Recapture	29	(1)
Avoiding Recapture	30	(1)
Problem Materials	30
PART 6: ACCOUNTING PERIODS, ACCOUNTING METHODS, AND DEFERRED COMPENSATION
Accounting Periods And Methods	1	(1)
Tax in the News: Production Activities Deduction Creates Tax Planning Opportunities	2	(1)
Accounting Periods	3	(6)
In General	3	(1)
Specific Provisions for Partnerships, S Corporations, and Personal Service Corporations	3	(2)
Ethical Considerations: Who Benefits from the Change in Tax Year?	5	(1)
Making the Election	6	(1)
Changes in the Accounting Period	6	(1)
Taxable Periods of Less Than One Year	7	(2)
Mitigation of the Annual Accounting Period Concept	9	(1)
Accounting Methods	9	(9)
Permissible Methods	9	(1)
Cash Receipts and Disbursements Method---Cash Basis	10	(1)
Tax in the News: Who Wants to Be a Producer?	11	(1)
Accrual Method	12	(1)
Global Tax Issues: Tax Accounting Methods as an Incentive to Go Foreign	13	(2)
Tax in the News: Economic Performance and Breach of Contract: Which Contract?	15	(1)
Hybrid Method	15	(1)
Change of Method	16	(2)
Special Accounting Methods	18	(10)
Installment Method	18	(5)
Disposition of Installment Obligations	23	(1)
Interest on Deferred Taxes	23	(1)
Ethical Considerations: Electing Out of Electing Out of the Installment Sale Method	24	(1)
Electing Out of the Installment Method	24	(1)
Long-Term Contracts	25	(3)
Inventories	28	(7)
Determining Inventory Cost	29	(2)
Global Tax Issues: Inventory Acquired from a Foreign Subsidiary	31	(1)
Tax in the News: Environmental Mess Spills onto Inventory Valuation	32	(2)
Ethical Considerations: Preserving the Lifo Reserve	34	(1)
The Lifo Election	34	(1)
Tax Planning Considerations	35	(2)
Taxable Year	35	(1)
Cash Method of Accounting	35	(1)
Installment Method	35	(1)
Completed Contract Method	36	(1)
Inventories	36	(1)
Problem Materials	37
Deferred Compensation	1	(1)
Qualified Pension, Profit Sharing, And Stock Bonus Plans	3	(15)
Types of Plans	3	(1)
Tax in the News: Compensation and Performance	4	(2)
Ethical Considerations: Do Cash Balance Plans Discriminate Against Older Employees?	6	(1)
Qualification Requirements	7	(3)
Tax in the News: Underfunded Pension Plans Multiply	10	(1)
Global Tax Issues: Covering Expatriate Employees	11	(1)
Tax Consequences to the Employee and Employer	11	(3)
Limitations on Contributions to and Benefits from Qualified Plans	14	(2)
Global Tax Issues: Global Remuneration Approach	16	(1)
§ 401 (k) Plans	16	(2)
Retirement Plans For Self-Employed Individuals	18	(1)
Coverage Requirements	18	(1)
Contribution Limitations	19	(1)
Individual Retirement Accounts (Iras)	19	(9)
General Rules	19	(6)
Penalty Taxes for Excess Contributions	25	(1)
Taxation of Benefits	25	(3)
Nonqualified Deferred Compensation Plans	28	(4)
Underlying Rationale for Tax Treatment	28	(1)
Tax Treatment to the Employer and Employee	28	(3)
Ethical Considerations: The Jock Tax Spreads	31	(1)
Restricted Property Plans	32	(2)
General Provisions	32	(1)
Substantial Risk of Forfeiture	32	(1)
Tax in the News: Dividend Benefits of Restricted Stock	33	(1)
Special Election Available	33	(1)
Employer Deductions	34	(1)
Stock Options	34	(3)
In General	34	(1)
Incentive Stock Options	34	(2)
Nonqualified Stock Options	36	(1)
Tax Planning Considerations	37	(4)
Deferred Compensation	37	(1)
Qualified Plans	38	(1)
Self-Employed Retirement Plans	38	(1)
Individual Retirement Accounts	38	(1)
Comparison of § 401(k) Plan with Ira	38	(1)
Nonqualified Deferred Compensation (Nqdc) Plans	39	(1)
Stock Options	40	(1)
Flexible Benefit Plans	41	(1)
Problem Materials	41
PART 7:CORPORATIONS AND PARTNERSHIPS
Corporations And Partnerships	1	(1)
What Is A Corporation?	2	(2)
Compliance with State Law	2	(1)
Entity Classification prior to 1997	3	(1)
Entity Classification after 1996	4	(1)
Income Tax Considerations	4	(12)
General Tax Consequences of Different Forms of Business Entities	4	(1)
Individuals and Corporations Compared---An Overview	4	(1)
Ethical Considerations: Who Gets the Deduction?	5	(1)
Specific Provisions Compared	6	(5)
Tax in the News: Variations in Mitigating the Effect of Multiple Taxation	11	(1)
Deductions Available Only to Corporations	11	(2)
Determination of Corporate Tax Liability	13	(1)
Corporate Filing Requirements	14	(1)
Reconciliation of Corporate Taxable Income and Accounting Income	15	(1)
Forming The Corporation	16	(4)
Capital Contributions	16	(2)
Transfers to Controlled Corporations	18	(2)
Ethical Considerations: Selective Incorporation	20	(1)
Operating The Corporation	20	(3)
Dividend Distributions	20	(1)
Global Tax Issues: Transferring Assets to Foreign Corporations---Forget § 351?	21	(1)
Ethical Considerations: An Art Lover's Dream Come True	22	(1)
Stock Redemptions	23	(1)
Liquidating The Corporation	23	(2)
General Rule of § 331	23	(1)
Ethical Considerations: Eliminating Burdensome Paperwork	24	(1)
Exception to the General Rule	24	(1)
Basis Determination---§§ 334 and 338	24	(1)
Effect of the Liquidation on the Corporation	25	(1)
The S Election	25	(5)
Qualification for S Status	25	(1)
Tax in the News: Explosive Growth May Lead To Increased Audits	26	(1)
Operational Rules	27	(1)
Tax in the News: S Corporations and Salaries: More Trauma On the Way!	28	(2)
Partnerships	30	(5)
Nature of Partnership Taxation	30	(1)
Partnership Formation	31	(2)
Partnership Operation	33	(2)
Tax Planning Considerations	35	(4)
Corporate versus Noncorporate Forms of Business Organization	35	(1)
Global Tax Issues: Taxing the Income of Foreign Corporations	36	(1)
Regular Corporation versus S Status	37	(1)
Use of an Entity to Reduce the Family Income Tax Burden	37	(2)
Problem Materials	39
APPENDIXES
Tax Rate Schedules And Tables	1	(1)
Tax Forms	1	(1)
Glossary Of Tax Terms	1	(1)
Table Of Code Sections Cited	1	(1)
Table Of Regulations Cited	1	(12)
Table Of Revenue Procedures And Revenue Rulings Cited	13
Citator Example	1	(1)
Comprehensive Tax Return Problems	1	(1)
Table Of Cases Cited	1	(1)
Depreciation	1	(1)
Index	1