West Federal Taxation Corporations, Partnerships, Estates and Trusts 2004, Professional Version

by Hoffman, William H.; Raabe, William A.; Smith, James E.; Maloney, David M.

• ISBN13: 9780324275179
• ISBN10: 032427517X
• Format: Hardcover
• Copyright: 2003-04-24
• Publisher: South-Western College/West

Table of Contents

Preface	iii
PART ONE Introduction
Understanding and Working with the Federal Tax Law	1	(1)
The Whys of the Tax Law	2	(14)
Revenue Needs	2	(1)
Economic Considerations	3	(2)
Social Considerations	5	(1)
Equity Considerations	6	(5)
Political Considerations	11	(1)
Influence of the Internal Revenue Service	12	(2)
Influence of the Courts	14	(2)
Summary	16	(1)
Working with the Tax Law---Tax Sources	16	(17)
Statutory Sources of the Tax Law	17	(2)
Tax in the News: Naming Tax Benefits	19	(2)
Administrative Sources of the Tax Law	21	(1)
Global Tax Issues: Protection against Double Taxation	21	(4)
Judicial Sources of the Tax Law	25	(3)
Ethical Considerations: Choosing Cases for Appeal	28	(5)
Working with the Tax Law---Tax Research	33	(9)
Identifying the Problem	34	(2)
Locating the Appropriate Tax Law Sources	36	(1)
Assessing the Validity of Tax Law Sources	37	(3)
Arriving at the Solution or at Alternative Solutions	40	(1)
Communicating Tax Research	40	(2)
Working with the Tax Law---Tax Planning	42	(7)
Nontax Considerations	43	(1)
Tax Avoidance and Tax Evasion	43	(1)
Follow-Up Procedures	43	(1)
Tax Planning---A Practical Application	43	(1)
Electronic Tax Research	44	(1)
Tax in the News: Help for Harassed Taxpayers	45	(4)
Use of the RIA Citator	49	(6)
Problem Materials	55
PART TWO Corporations
Corporations: Introduction, Operating Rules, and Related Corporations	1	(1)
Tax Treatment of Various Business Forms	2	(7)
Sole Proprietorships	2	(1)
Partnerships	3	(1)
Tax in the News: Corporate Tax Welfare?	3	(1)
Regular Corporations	4	(3)
Limited Liability Companies	7	(1)
Entity Classification Prior to 1997	8	(1)
Entity Classification After 1996	8	(1)
Global Tax Issues: Entity Choice: S Corporation versus C Corporation	8	(1)
An Introduction to the Income Taxation of Corporations	9	(10)
An Overview of Corporate versus Individual Income Tax Treatment	9	(1)
Specific Provisions Compared	10	(1)
Accounting Periods and Methods	10	(2)
Capital Gains and Losses	12	(1)
Passive Losses	13	(1)
Charitable Contributions	13	(2)
Ethical Considerations: Is It Better Not to Know?	15	(1)
Net Operating Losses	16	(1)
Deductions Available Only to Corporations	17	(2)
Determining the Corporate Income Tax Liability	19	(6)
Corporate Income Tax Rates	19	(1)
Alternative Minimum Tax	20	(1)
Tax Liability of Related Corporations	20	(1)
Controlled Groups	21	(3)
Ethical Considerations: A Bookkeeper's Mistake	24	(1)
Procedural Matters	25	(6)
Filing Requirements for Corporations	25	(1)
Estimated Tax Payments	26	(1)
Tax in the News: Should CEOs Be Required to Attest to Corporate Tax Returns?	26	(1)
Reconciliation of Taxable Income and Financial Net Income	27	(2)
Form 1120 Illustrated	29	(2)
Consolidated Returns	31	(1)
Tax Planning Considerations	31	(10)
Corporate versus Noncorporate Forms of Business Organization	31	(5)
Operating the Corporation	36	(3)
Related Corporations	39	(2)
Problem Materials	41
Corporations: Organization and Capital Structure	1	(1)
Organization of and Transfers to Controlled Corporations	2	(13)
In General	2	(1)
Global Tax Issues: Choice of Organizational Form When Operating Overseas	3	(1)
Property Defined	4	(1)
Stock Transferred	5	(1)
Control of the Corporation	6	(3)
Assumption of Liabilities---§ 357	9	(1)
Ethical Considerations: Rectifying a Mistake?	10	(2)
Basis Determination and Related Issues	12	(3)
Global Tax Issues: Does § 351 Cover the Incorporation of a Foreign Business?	15	(1)
Capital Structure of a Corporation	15	(3)
Capital Contributions	15	(1)
Debt in the Capital Structure	16	(1)
Tax in the News: Some Corporations Pass on the Advantages of Debt	17	(1)
Investor Losses	18	(3)
Stock and Security Losses	18	(1)
Business versus Nonbusiness Bad Debts	19	(1)
Section 1244 Stock	20	(1)
Gain from Qualified Small Business Stock	21	(1)
Tax in the News: Loss Treatment for Stock Investors: Time for a Change?	21	(1)
Ethical Considerations: A Professional-Free Incorporation	22	(1)
Tax Planning Considerations	22	(4)
Working with § 351	22	(2)
Selecting Assets to Transfer	24	(1)
Debt in the Capital Structure	24	(1)
Investor Losses	25	(1)
Problem Materials	26
Corporations: Earnings & Profits and Dividend Distributions	1	(1)
Taxable Dividends---In General	2	(1)
Earnings and Profits (E & P)---§ 312	3	(7)
Computation of E & P	3	(3)
Summary of E & P Adjustments	6	(1)
Current versus Accumulated E & P	6	(1)
Allocating E & P to Distributions	7	(2)
Ethical Considerations: Shifting E & P	9	(1)
Property Dividends---In General	10	(2)
Property Dividends---Effect on the Shareholder	11	(1)
Property Dividends---Effect on the Corporation	11	(1)
Constructive Dividends	12	(4)
Types of Constructive Dividends	13	(1)
Tax in the News: The $6,000 Shower Curtain: Compensation or Constructive Dividend?	14	(2)
Tax Treatment of Constructive Dividends	16	(1)
Stock Dividends and Stock Rights	16	(4)
Stock Dividends---§ 305	16	(1)
Global Tax Issues: Deemed Dividends from Controlled Foreign Corporations	17	(1)
Tax in the News: The REIT Kind of Dividends	18	(1)
Stock Rights	18	(1)
Tax in the News: Stock Right Distribution Provides Insurance against Corporate Takeover	19	(1)
Tax Planning Considerations	20	(4)
Corporate Distributions	20	(1)
Ethical Considerations: Playing Games with the Statute of Limitations	21	(1)
Constructive Dividends	21	(3)
Problem Materials	24
Corporations: Redemptions and Liquidations	1	(1)
Stock Redemptions---In General	3	(1)
Stock Redemptions---Sale or Exchange Treatment	3	(9)
Global Tax Issues: Foreign Shareholders Prefer Sale or Exchange Treatment in Stock Redemptions	5	(1)
Historical Background and Overview	5	(1)
Stock Attribution Rules	5	(1)
Not Essentially Equivalent Redemptions	6	(1)
Disproportionate Redemptions	7	(1)
Complete Termination Redemptions	8	(1)
Tax in the News: Fringe Benefits Not a Prohibited Interest	9	(1)
Ethical Considerations: Good Friend or Good CPA?	10	(1)
Partial Liquidations	10	(1)
Redemptions to Pay Death Taxes	11	(1)
Effect on the Corporation Redeeming Its Stock	12	(2)
Recognition of Gain or Loss	12	(1)
Effect on Earnings and Profits	13	(1)
Tax in the News: Baseball Team Owner Strikes Out on Deduction of Redemption Costs	13	(1)
Redemption Expenditures	14	(1)
Stock Redemptions---Additional Limitations	14	(4)
Preferred Stock Bailouts	15	(2)
Redemptions through the Use of Related Corporations	17	(1)
Distribution of Stock and Securities of a Controlled Corporation	17	(1)
Liquidations---In General	18	(2)
The Liquidation Process	18	(1)
Liquidations and Other Distributions Compared	19	(1)
Tax in the News: Decision to Liquidate Prompts Shareholder Lawsuit	19	(1)
Liquidations---Effect on the Distributing Corporation	20	(4)
The General Rule	20	(1)
Antistuffing Rules	21	(3)
Liquidations---Effect on the Shareholder	24	(2)
The General Rule	25	(1)
Ethical Considerations: Shareholder Liability for Tax Deficiency of Liquidated Corporation	25	(1)
Special Rule for Certain Installment Obligations	25	(1)
Liquidations---Parent-Subsidiary Situations	26	(5)
Minority Shareholder Interests	27	(1)
Indebtedness of the Subsidiary to the Parent	27	(1)
Basis of Property Received by the Parent Corporation---The General Rule	28	(1)
Basis of Property Received by the Parent Corporation---§ 338 Election	28	(3)
Tax Planning Considerations	31	(3)
Stock Redemptions	31	(1)
Global Tax Issues: Exception to § 332 for Liquidations of U.S. Subsidiaries of Foreign Corporations	31	(1)
Disposing of § 306 Stock	32	(1)
Corporate Liquidations	32	(1)
Parent-Subsidiary Liquidations	33	(1)
Asset Purchase versus Stock Purchase	33	(1)
Problem Materials	34
Alternative Minimum Tax and Certain Penalty Taxes Imposed on Corporations	1	(1)
Alternative Minimum Tax	2	(9)
Small Corporation Exemption	3	(1)
AMT Adjustments	4	(2)
Tax Preferences	6	(1)
Computing Alternative Minimum Taxable Income	6	(1)
Adjusted Current Earnings (ACE)	7	(3)
Exemption	10	(1)
Minimum Tax Credit	10	(1)
Other Aspects of the AMT	11	(1)
Penalty Tax on Unreasonable Accumulations	11	(10)
The Element of Intent	12	(1)
Imposition of the Tax and the Accumulated Earnings Credit	12	(1)
Tax in the News: Ralph Nader versus Microsoft	13	(1)
Reasonable Needs of the Business	14	(3)
Tax in the News: Applying the Bardahl Formula Could Be Misleading	17	(2)
Mechanics of the Penalty Tax	19	(2)
Personal Holding Company Penalty Tax	21	(11)
Definition of a Personal Holding Company	22	(5)
Calculation of the PHC Tax	27	(5)
Comparison of the Accumulated Earnings and PHC Taxes	32	(1)
Global Tax Issues: Foreign Investment Vehicles Can Trigger U.S. Tax	32	(1)
Tax Planning Considerations	33	(6)
Alternative Minimum Tax	33	(1)
Tax in the News: ``Bungled and Wrongheaded''?	33	(1)
The Penalty Tax on Unreasonable Accumulations	34	(3)
Avoiding the PHC Tax	37	(2)
Problem Materials	39
Corporations: Reorganizations	1	(1)
Reorganizations---In General	5	(5)
Summary of the Different Types of Reorganizations	5	(1)
Summary of Tax Consequences in a Tax-Free Reorganization	6	(1)
Tax in the News: Reevaluation of FCC Rules Could Spur Mergers	7	(3)
Types of Tax-Free Reorganizations	10	(15)
Type A	10	(4)
Ethical Considerations: A White Knight Merger Gone Astray	14	(1)
Type B	14	(2)
Type C	16	(2)
Type D	18	(3)
Type E	21	(3)
Tax in the News: Merger and Acquisition Downturn Hits the Investment Bankers Hard	24	(1)
Type F	24	(1)
Type G	25	(1)
Tax in the News: ``Type G'' Reorganizations Devastate Employee Retirement Plans	25	(1)
Judicial Doctrines	25	(4)
Sound Business Purpose	27	(1)
Continuity of Interest	27	(1)
Continuity of Business Enterprise	28	(1)
Step Transaction	28	(1)
Carryover of Corporate Tax Attributes	29	(6)
Assumption of Liabilities	29	(1)
Allowance of Carryovers	29	(1)
Net Operating Loss Carryovers	30	(1)
Global Tax Issues: Europe Moves toward U.S.-Style Disclosures	30	(2)
Earnings and Profits	32	(1)
Other Carryovers	33	(1)
Disallowance of Carryovers	34	(1)
The Role of the Letter Ruling	34	(1)
Tax Planning Considerations	35	(3)
Assessing the Possible Benefits of Restructuring Options	35	(3)
Problem Materials	38
Consolidated Tax Returns	1	(1)
Context of the Consolidated Return Rules	2	(4)
Motivations to Consolidate	2	(1)
Ethical Considerations: Sheltering Corporate Assets	3	(1)
Tax in the News: Do Conglomerates Create Conflicts of Interest?	4	(1)
Source and Philosophy of Consolidated Return Rules	4	(1)
Ethical Considerations: Delegating Authority to the Nonelected	5	(1)
Assessing Consolidated Return Status	6	(2)
Electing Consolidated Return Status	8	(9)
Affiliated Group	9	(2)
Tax in the News: Some States Don't Allow Consolidation	11	(1)
Eligibility for the Consolidation Election	12	(1)
Compliance Requirements	13	(4)
Stock Basis of Subsidiary	17	(2)
Computing Consolidated Taxable Income	19	(13)
Computational Procedure	20	(1)
Typical Intercompany Transactions	20	(5)
Global Tax Issues: Consolidated Returns and NOLs	25	(3)
Computation of Group Items	28	(2)
Deferral and Restoration Events	30	(2)
Tax Planning Considerations	32	(2)
Choosing Consolidated Return Partners	32	(1)
Consolidation versus 100 Percent Dividends Received Deduction	32	(1)
Protecting the Group Members' Liability for Tax Payments	32	(1)
Electing to Postpone Recognition of the Excess Loss Account	33	(1)
Problem Materials	34
Taxation of International Transactions	1	(1)
Overview of International Taxation	2	(1)
Tax Treaties	3	(2)
Global Tax Issues: Other Countries' Taxes Are Strange, Too	4	(1)
Global Tax Issues: Why the Treaty Process Stalls	5	(1)
Sourcing of Income and Deductions	5	(6)
Income Sourced Inside the United States	5	(3)
Income Sourced Outside the United States	8	(1)
Tax in the News: Sourcing Income in Cyberspace	9	(1)
Allocation and Apportionment of Deductions	9	(1)
Section 482 Considerations	10	(1)
Foreign Currency Transactions	11	(3)
Tax in the News: APAs Reduce Uncertainty in Transfer Pricing Disputes	11	(1)
Tax Issues	12	(1)
Functional Currency	12	(1)
Branch Operations	13	(1)
Distributions from Foreign Corporations	13	(1)
Foreign Taxes	13	(1)
Section 988 Transactions	14	(1)
U.S. Persons with Foreign Income	14	(21)
Export Property Tax Incentives	14	(3)
Ethical Considerations: Export Tax Benefits: Unnecessary Subsidy or Important Incentive?	17	(1)
Cross-Border Asset Transfers	17	(1)
Global Tax Issues: Boom in Cross-Border Mergers	18	(2)
Tax Havens	20	(1)
Foreign Corporations Controlled by U.S. Persons	21	(1)
Tax in the News: A Move to the Beach for U.S. Corporations Seeking a Vacation from U.S. Tax Rules	21	(2)
Tax in the News: Who Are These CFCs?	23	(4)
The Foreign Tax Credit	27	(7)
Possessions Corporations	34	(1)
U.S. Taxation of Nonresident Aliens and Foreign Corporations	35	(8)
Nonresident Alien Individuals	35	(1)
Ethical Considerations: Should There Be Some ``Heart'' in Tax Law?	36	(2)
Foreign Corporations	38	(2)
The Foreign Investment in Real Property Tax Act	40	(2)
Expatriation to Avoid U.S. Taxation	42	(1)
Reporting Requirements	43	(1)
Global Tax Issues: Filing Deadlines When You're Overseas	43	(1)
Tax Planning Considerations	44	(2)
The Foreign Tax Credit Limitation and Sourcing Provisions	44	(1)
The Foreign Corporation as a Tax Shelter	45	(1)
Planning Under Subpart F	45	(1)
Using the Check-The-Box Regulations	45	(1)
Transferring Intangible Assets Offshore	46	(1)
Problem Materials	46
PART THREE Flow-Through Entities
Partnerships: Formation, Operation, and Basis	1	(1)
Overview of Partnership Taxation	2	(7)
Forms of Doing Business---Federal Tax Consequences	2	(1)
Tax in the News: Partnerships in the Movies	3	(1)
What is a Partnership?	4	(1)
Elections Related to Partnership Status	4	(1)
Partnership Taxation	5	(1)
Partnership Reporting	6	(1)
Partner's Ownership Interest in a Partnership	7	(1)
Conceptual Basis for Partnership Taxation	8	(1)
Anti-Abuse Provisions	9	(1)
Formation of a Partnership: Tax Effects	9	(11)
Gain or Loss on Contributions to the Partnership	9	(1)
Exceptions to § 721	10	(2)
Tax Issues Relative to Contributed Property	12	(2)
Inside and Outside Bases	14	(1)
Tax Accounting Elections	15	(1)
Initial Costs of a Partnership	16	(2)
Method of Accounting	18	(1)
Taxable Year of the Partnership	18	(2)
Operations of the Partnership	20	(17)
Measuring and Reporting Income	21	(2)
Ethical Considerations: A Preparer's Responsibility for Partners' Tax Returns	23	(1)
Partnership Allocations	23	(3)
Ethical Considerations: Built-in Appreciation on Contributed Property	26	(1)
Basis of a Partnership Interest	26	(6)
Loss Limitations	32	(5)
Transactions between Partner and Partnership	37	(3)
Guaranteed Payments	37	(1)
Other Transactions Between a Partner and a Partnership	38	(2)
Partners as Employees	40	(1)
Tax Planning Considerations	40	(3)
Choosing Partnership Taxation	40	(1)
Formation and Operation of a Partnership	40	(1)
Transactions between Partners and Partnerships	41	(1)
Tax in the News: Partnerships Around the World---and Beyond	42	(1)
Drafting the Partnership Agreement	42	(1)
Problem Materials	43
Partnerships: Distributions, Transfer of Interests, and Terminations	1	(1)
Distributions from a Partnership	3	(15)
Proportionate Nonliquidating Distributions	4	(5)
Ethical Considerations: Arranging Tax-Advantaged Distributions	9	(1)
Proportionate Liquidating Distributions	9	(3)
Property Distributions with Special Tax Treatment	12	(4)
Disproportionate Distributions	16	(1)
Tax in the News: Simplifying Partnership Taxation---A Losing Battle?	16	(2)
Ethical Considerations: Deferring Partners' Taxes by Delaying Liquidation	18	(1)
Liquidating Distributions to Retiring or Deceased Partners	18	(4)
Property Payments	19	(2)
Income Payments	21	(1)
Series of Payments	22	(1)
Sale of a Partnership Interest	22	(5)
General Rules	23	(2)
Effect of Hot Assets	25	(2)
Other Dispositions of Partnership Interests	27	(2)
Transfers to a Corporation	28	(1)
Like-Kind Exchanges	29	(1)
Death of a Partner	29	(1)
Gifts	29	(1)
Ethical Considerations: Assignment of Income	29	(1)
Optional Adjustments to Property Basis	29	(4)
Adjustment: Sale or Exchange of an Interest	30	(1)
Adjustment: Partnership Distributions	31	(2)
Termination of a Partnership	33	(1)
Other Issues	34	(5)
Family Partnerships	34	(1)
Tax in the News: Family Limited Partnerships for Estate Planning	35	(1)
Limited Liability Companies	36	(2)
Limited Liability Partnerships	38	(1)
Anti-Abuse Regulations	38	(1)
Tax Planning Considerations	39	(2)
Sales and Exchanges of Partnership Interests	39	(1)
Planning Partnership Distributions	39	(1)
Comparing Sales to Liquidations	40	(1)
Other Partnership Issues	41	(1)
Problem Materials	41
S Corporations	1	(1)
Introduction	2	(3)
An Overview of S Corporations	3	(1)
Tax in the News: S Corporation Elections Continue to Grow	4	(1)
When to Elect S Corporation Status	4	(1)
Qualifying for S Corporation Status	5	(8)
Definition of a Small Business Corporation	5	(1)
Tax in the News: Flexibility with QSSSs	6	(2)
Ethical Considerations: Extortion Payments	8	(1)
Making the Election	9	(1)
Shareholder Consent	10	(1)
Loss of the Election	11	(1)
Ethical Considerations: A Voluntary ``Involuntary'' Termination	12	(1)
Operational Rules	13	(20)
Computation of Taxable Income	14	(1)
Allocation of Income and Loss	15	(1)
Tax Treatment of Distributions to Shareholders	16	(4)
Tax Treatment of Property Distributions by the Corporation	20	(1)
Tax in the News: AAA versus OAA	21	(1)
Shareholder's Basis	22	(3)
Treatment of Losses	25	(3)
Tax on Pre-Election Built-In Gain	28	(3)
Passive Investment Income Penalty Tax	31	(1)
Other Operational Rules	32	(1)
Tax Planning Considerations	33	(7)
When the Election Is Advisable	33	(1)
Making a Proper Election	34	(1)
Preserving the Election	34	(1)
Ethical Considerations: A Divorce Threatens S Status	35	(1)
Planning for the Operation of the Corporation	35	(5)
Problem Materials	40
PART FOUR Advanced Tax Practice Considerations
Comparative Forms of Doing Business	1	(1)
Forms of Doing Business	3	(3)
Principal Forms	3	(1)
Tax in the News: Tax Reform: How Easy Is It?	3	(1)
Limited Liability Company	4	(1)
Ethical Considerations: Avoiding Double Taxation with an LLC	5	(1)
Tax in the News: Professional Service Firms and Organizational Form	6	(1)
Nontax Factors	6	(2)
Capital Formation	6	(1)
Limited Liability	7	(1)
Other Factors	8	(1)
Single versus Double Taxation	8	(4)
Overall Impact on Entity and Owners	8	(2)
Alternative Minimum Tax	10	(1)
State Taxation	11	(1)
Controlling the Entity Tax	12	(5)
Favorable Treatment of Certain Fringe Benefits	12	(1)
Minimizing Double Taxation	13	(2)
Tax in the News: Reducing or Eliminating Double Taxation	15	(1)
Tax in the News: C Corporations versus S Corporations	16	(1)
Conduit versus Entity Treatment	17	(6)
Effect on Recognition at Time of Contribution to the Entity	17	(1)
Effect on Basis of Ownership Interest	18	(1)
Effect on Results of Operations	19	(1)
Effect on Recognition at Time of Distribution	20	(1)
Effect on Passive Activity Losses	20	(1)
Effect of At-Risk Rules	21	(1)
Effect of Special Allocations	22	(1)
Disposition of a Business or an Ownership Interest	23	(4)
Sole Proprietorship	23	(1)
Partnership and Limited Liability Company	24	(2)
Ethical Considerations: Modifying the Legal Form of a Sales Transaction and the Allocation of the Sales Price	26	(1)
C Corporation	26	(1)
S Corporation	27	(1)
Overall Comparison of Forms of Doing Business	27	(1)
Tax Planning Considerations	27	(7)
Problem Materials	34
Exempt Entities	1	(1)
Types of Exempt Organizations	3	(2)
Tax in the News: Equitable Treatment of Charities	3	(2)
Requirements for Exempt Status	5	(1)
Serving the Common Good	5	(1)
Not-For-Profit Entity	5	(1)
Net Earnings and Members of the Organization	5	(1)
Political Influence	6	(1)
Tax Consequences of Exempt Status: General	6	(4)
Prohibited Transactions	6	(3)
Feeder Organizations	9	(1)
Private Foundations	10	(4)
Tax Consequences of Private Foundation Status	10	(1)
Tax in the News: Private Foundation Investment Strategy	11	(1)
Taxes Imposed on Private Foundations	12	(2)
Unrelated Business Income Tax	14	(10)
Ethical Considerations: Unfair Competition: Exempt Entity versus Taxable Entity	15	(1)
Unrelated Trade or Business	15	(3)
Tax in the News: Gambling: Going Beyond Bingo	18	(1)
Unrelated Business Income	19	(1)
Unrelated Business Taxable Income	19	(2)
Unrelated Debt-Financed Income	21	(3)
Reporting Requirements	24	(3)
Obtaining Exempt Organization Status	24	(1)
Ethical Considerations: Tax-Exempt Bingo	25	(1)
Annual Filing Requirements	26	(1)
Disclosure Requirements	27	(1)
Tax Planning Considerations	27	(3)
General	27	(1)
Maintaining Exempt Status	28	(1)
Private Foundation Status	28	(1)
Unrelated Business Income Tax	29	(1)
Problem Materials	30
Multistate Corporate Taxation	1	(1)
Tax in the News: Searching for New Taxpayers	3	(1)
Ethical Considerations: Encouraging Economic Development through Tax Concessions	4	(1)
Overview of Corporate State Income Taxation	4	(6)
Tax in the News: Up to Bat for the State Treasury, It's A-Rod!	5	(1)
Computing State Taxable Income	5	(1)
Operational Implications	5	(1)
State Modifications	6	(3)
The UDITPA and the Multistate Tax Commission	9	(1)
Jurisdiction to Impose Tax: Nexus and Public Law 86--272	9	(1)
Allocation and Apportionment of Income	10	(14)
Tax in the News: Where Will We Bee Taxed?	12	(1)
The Apportionment Procedure	12	(1)
Business and Nonbusiness Income	13	(2)
Apportionment Factors: Elements and Planning	15	(2)
The Sales Factor	17	(2)
The Payroll Factor	19	(3)
The Property Factor	22	(2)
The Unitary Theory	24	(4)
What Is a Unitary Business?	24	(1)
Tax Effects of the Unitary Theory	25	(2)
Consolidated and Combined Returns	27	(1)
Global Tax Issues: Water's Edge Is Not a Day at the Beach	27	(1)
Taxation of S Corporations	28	(2)
Eligibility	29	(1)
Corporate-Level Tax	29	(1)
Composite Tax Return	30	(1)
Other State and Local Taxes	30	(4)
State and Local Sales and Use Taxes	30	(1)
Tax in the News: You Pick: Clicks or Bricks?	31	(1)
Local Property Taxes	31	(1)
Tax in the News: Tax Holiday---For Whom?	32	(1)
Other Taxes	32	(2)
Tax Planning Considerations	34	(7)
Selecting the Optimal State in Which to Operate	34	(2)
Restructuring Corporate Entities	36	(2)
Subjecting the Corporation's Income to Apportionment	38	(1)
Tax in the News: Holding Companies Make Other States Angry	38	(1)
Ethical Considerations: Can You Be a Nowhere Adviser?	39	(1)
Planning with Apportionment Factors	39	(1)
Sales/Use Taxes on Capital Changes	40	(1)
Capital Stock Taxation	40	(1)
Problem Materials	41
Tax Administration and Practice	1	(1)
Tax Administration	2	(23)
Tax in the News: Should the IRS Be Larger?	3	(1)
Organizational Structure of the IRS	4	(1)
IRS Procedure---Letter Rulings	5	(1)
IRS Procedure---Other Issuances	6	(1)
Administrative Powers of the IRS	7	(1)
The Audit Process	8	(1)
Ethical Considerations: Do You Live in an Audit-Friendly Part of the Country?	8	(2)
Tax in the News: IRS Inside Information	10	(2)
The Taxpayer Appeal Process	12	(2)
Offers in Compromise and Closing Agreements	14	(1)
Interest	14	(2)
Tax in the News: The IRS Strives to Become Consumer-Friendly	16	(1)
Taxpayer Penalties	16	(3)
Global Tax Issues: Advance Pricing Agreements Reduce International Uncertainty	19	(2)
Ethical Considerations: Good Faith Valuations	21	(2)
Statutes of Limitations	23	(2)
Tax Practice	25	(7)
The Tax Practitioner	25	(4)
AICPA Statements on Standards for Tax Services	29	(3)
Tax Planning Considerations	32	(4)
Strategies in Seeking an Administrative Ruling	32	(1)
Considerations in Handling an IRS Audit	32	(1)
Ethical Considerations: Should the Client Attend an Audit?	33	(1)
Litigation Considerations	34	(1)
Penalties	35	(1)
Problem Materials	36
PART FIVE Family Tax Planning
The Federal Gift and Estate Taxes	1	(1)
Transfer Taxes---In General	2	(8)
Nature of the Taxes	2	(1)
Tax in the News: An Erratic Approach to Transfer Taxes	3	(1)
Global Tax Issues: Expatriation to Avoid U.S. Taxes	4	(4)
Tax in the News: What Are the Chances?	8	(1)
Valuation for Estate and Gift Tax Purposes	8	(1)
Key Property Concepts	9	(1)
The Federal Gift Tax	10	(9)
General Considerations	10	(1)
Ethical Considerations: What Constitutes Support?	11	(1)
Transfers Subject to the Gift Tax	12	(2)
Annual Exclusion	14	(2)
Deductions	16	(1)
Computing the Federal Gift Tax	16	(2)
Procedural Matters	18	(1)
The Federal Estate Tax	19	(22)
Gross Estate	20	(7)
Ethical Considerations: A Joint Bank Account and a Subsequent Marriage	27	(3)
Taxable Estate	30	(7)
Computing the Federal Estate Tax	37	(1)
Estate Tax Credits	38	(1)
Tax in the News: Sorry, but We Won't Go Along	39	(2)
Procedural Matters	41	(1)
The Generation Skipping Transfer Tax	41	(1)
The Problem	42	(1)
The Solution	42	(1)
Tax Planning Considerations	42	(1)
Problem Materials	43
Family Tax Planning	1	(1)
Valuation Concepts	2	(11)
Valuation in General	2	(1)
Valuation of Specific Assets	3	(3)
Real Estate and the Special Use Valuation Method	6	(1)
Ethical Considerations: A Temporary Election?	7	(1)
Valuation Problems with a Closely Held Business	7	(4)
Ethical Considerations: Income Tax Consequences from a Botched Buy-Sell Agreement	11	(2)
Income Tax Concepts	13	(6)
Tax in the News: Use of FLPs Requires Caution	13	(1)
Basis of Property Acquired by Gift	14	(1)
Basis of Property Acquired by Death	15	(1)
Tax in the News: Carryover Basis---Will It Ever Happen?	15	(4)
Gift Planning	19	(5)
Minimizing Gift Taxes	19	(1)
Minimizing Estate Taxes	20	(2)
Income Tax Considerations	22	(2)
Estate Planning	24	(8)
Probate Costs	24	(1)
Tax in the News: How Long Should Probate Take?	25	(1)
Controlling the Amount of the Gross Estate	25	(1)
Proper Handling of Estate Tax Deductions	25	(2)
Tax in the News: How to Save Taxes by Protecting the Environment	27	(2)
Providing Estate Liquidity	29	(3)
Problem Materials	32
Income Taxation of Trusts and Estates	1	(1)
An Overview of Subchapter J	2	(4)
What Is a Trust?	3	(1)
Other Definitions	4	(1)
What Is an Estate?	5	(1)
Nature of Trust and Estate Taxation	6	(3)
Filing Requirements	6	(1)
Tax Accounting Periods, Methods, and Payments	6	(1)
Tax Rates and Personal Exemption	7	(1)
Tax in the News: Everyone Gets Wet When You Soak the Rich	8	(1)
Alternative Minimum Tax	8	(1)
Taxable Income of Trusts and Estates	9	(13)
Entity Accounting Income	10	(2)
Gross Income	12	(2)
Ordinary Deductions	14	(1)
Tax in the News: Coordinate Your Deductions	15	(2)
Deductions for Losses	17	(1)
Charitable Contributions	17	(1)
Deduction for Distributions to Beneficiaries	18	(3)
Tax Credits	21	(1)
Taxation of Beneficiaries	22	(5)
Distributions by Simple Trusts	22	(1)
Distributions by Estates and Complex Trusts	22	(2)
Character of Income	24	(2)
Losses in the Termination Year	26	(1)
The Sixty-Five-Day Rule	27	(1)
Grantor Trusts	27	(1)
Reversionary Trusts	27	(1)
Powers Retained by the Grantor	27	(1)
Tax Planning Considerations	28	(5)
Tax in the News: Don't Trust Your Dictionary	29	(1)
A Trust or Estate as an Income-Shifting Device	29	(1)
Income Tax Planning for Estates	30	(2)
Ethical Considerations: Should a Tax Adviser Also Be a Trustee?	32	(1)
Income Tax Planning with Trusts	32	(1)
Distributions of In-Kind Property	32	(1)
Deductibility of Fiduciary Expenses	33	(1)
Problem Materials	33
APPENDIXES
Tax Rate Schedules and Tables	1	(1)
Tax Forms	1	(1)
Glossary of Tax Terms	1	(1)
Table of Code Sections Cited	1	(10)
Table of Regulations Cited	11	(3)
Table of Revenue Procedures and Revenue Rulings Cited	14
Table of Cases Cited	1	(1)
Comprehensive Tax Return Problems	1	(1)
Subject Index	1