▲APPENDIX D Statements on Responsibilities in Tax Practice

▲APPENDIX A Tax Rate Schedules and Tax Tables

▲PARTⅠCONCEPTUAL FOUNDATIONS OF THE TAXLAW

APPENDIX D Statements on Responsiblities in Tax Practice

▲APPENDIX B Tax Return Problem

Glossary

▲APPENDIX C Tax Forms

APPENDIX A Tax Rate Schedules and Tax Tables

APPENDIX B Tax Return Problem

GLOSSARY

PARTΙ CONCEPTUAL FOUNDATIONS OF THE TAX LAW

Index

APPENDIX C Tax Forms

INDEX

CHAPTER 1 Federal Income Taxation―An Overview

▲CHAPTER 1 FEDERAL INCOME TAXATION―AN OVERVIEW

Introduction

Definition and Evaluation of a Tax

Definition of a Tax

Standards for Evaluating a Tax

Tax Rates and Structures

Tax Rate Definitions

Tax Rate Structures

Income Taxes

Major Types of U.S. Taxes

Employment Taxes

Social Security Taxes

Unemployment Taxes

Sales Tax

Property Taxes

Other Taxes

Excise Taxes

Wealth Transfer Taxes

Sources of Federal Income Tax Law

Income

Federal Income Tax Terminology

Deductions

Income Tax Rates

Tax Prepayments

Tax Credits

Filing Returns

The Audit and Appeal Process within the IRS

Tax Return Selection Processes

Types of Examinations

Settlement Procedures

Individual Income Tax Calculation

Administrative Appeals

Deductions for Adjusted Gross Income

Deductions from Adjusted Gross Income

Tax Planning

Mechanics of Tax Planning

Personal and Dependency Exemptions

Timing Income and Deductions

Income Shifting

Tax Evasion and Tax Avoidance

Ethical Considerations in Tax Practice

Summary

Key Terms

Primary Tax Law Sources

Discussion Questions

Problems

Discussion Cases

Ethics Discussion Case

Tax Planning Case

CHAPTER 2 Income Tax Concepts

▲CHAPTER 2 Income Tax Concepts

Introduction

Ability-to-Pay Concept

General Concepts

Administrative Convenience Concept

Arm s-Length Transaction Concept

Pay-as-You-Go Concept

Entity Concept

Accounting Concepts

Assignment-of-Income Doctrine

Annual Accounting Period Concept

Accounting Method

Tax Bencfit Rule

Substance-over-Form Doctrine

Income Concepts

All-Inclusive Income Concept

Capital Recovery Concept

Legislative Grace Concept

Claim-of-Right Doctrine

Realization Concept

Constructive Receipt Doctrine

Comparing Claim of Right and Constructive Receipt

Wherewithal-to-Pay Concept

Legislative Grace Concept

Deduction Concepts

Business Purpose Concept

Capital Recovery Concept

Summary

Key Terms

Primary Tax Law Sources

Discussion Questions

Problems

Discussion Case

Tax Planning Case

Ethics Discussion Case

▲PARTⅡGROSS INCOME

PARTⅡ CROSS INCOME

▲CHAPTER 3 Income Sources

CHAPTER 3 Income Sources

Concept Review

Introduction

What Constitutes Income

Income Is Derived from Labor and Capital

Income as an Increase in Wealth

What Constitutes Income Current View

Common Income Sources

Earned Income

Unearned Income

Rental and Royalty Income

Annuities

Calculation of Gain/Loss on Sa?e of Investments

Income from Conduit Entitres

Transfers from Others

Prizes and Awards

Social Security Benefits

Unemployment Compensation

Alimony Received

Imputed Income

Below Market-Rate Loans

Payment of Expenses by Others

Bargain Purchases

Capital Gains and Losses―An Introduction

Capital Gain-and-Loss Netting Procedure

Tax Treatment of Capital Gains

Tax Treatment of Capital Losses

Capital Gains and Losses of Conduit Entities

Effect of Accounting Method

Cash Method

Exceptions Applicable to the Cash Method

Accrual Method

Exceptions Applicable to the Accrual Method

Hybrid Method

Exceptions Applicable to All Methods

Installment Sales

Long-Term Construction Contracts

Key Terms

Summary

Primary Tax Law Sources

Discussion Questions

Problems

Discussion Cases

Tax Planning Case

Ethics Discussion Case

CHAPTER 4 Income Exclusions

▲CHAPTER 4 Income Exclusions

Concept Review

Introduction

Donative ltems

Gifts

Inheritances

Life Insurance Proceeds

Scholarships

Certain Death Benefits

Payments Made on Behalf of an Employee

Employment-Related Exclusions

Foreign Earned Income

Payments to Qualified Pension Plans

Group Term Life Insurance

Health and Accident Insurance Premiums

Meals and Lodging Prouided by the Employer

General Fringe Benefits

Employer Benefit Plans

Other Benefits Paid by an Employer

Medical Savings Accounts

Returns of Human Capital

Damage Payments for Personal Physical Injury or Phydsical Sickness

Workers Compensation

Payments from Health and Accident Policies

Investment-Related Exclusions

Municipal Bond Interest

Stock Dividends

Discharge of Indebtedness

Improvements by a Lessee

Summary

Key Terms

Primary Tax Law Sources

Discussion Questions

Problems

Integrative Problems

Tax Planning Case

Discussion Case

Ethics Discussion Case

PART Ⅲ DEDUCTIONS

▲PART Ⅲ DEDUCTIONS

CHAPTER 5 Introduction to Business Expenses

▲CHAPTER 5 Introduction to Business Expenses

Introduction

Concept Review

Reporting Deductions

Conduit Entity Reporting

Profit-Motivated Expenditures

Classification of Deductions

Trade or Business Expenses

Trade or Business of Production-of-Income Expenses?

Expenses for the Production of Income

Rental Aclivity

Personal Expenditures

Mixed Business and Personal Expenditures

Mixed-Use Assets

Mixed-Use Expenditures

Tests for Deductibility

Ordinary Expense

Ordinary,Necessary,and Reasonable in Amount

Reasonable in Amount

Necessary Expense

Not a Personal Expense

Not a Capital Expenditure

Start-up Costs

Repair-and-Maintenance Expense

Not Frustrate Public Policy

Expenses of an Illegal Business

Lobbying Expenses and Other Political Activities

Not Related to Tax-Exempt Income

Expenditure Must Be for Taxpaver s Benefit

Hobby Expenses

Limited Mixed-Use Expenses

Vacation Home Expenses

Home Office Expenses

Timing of Deductions―Effect of Accounting Method

Cash Method

Accrual Method

Financial and Taxable Income Differences

Related Party Accrued Expenses

Summary

Key Terms

Primary Tax Law Sources

Discussion Questions

Problems

Comprehensive Problem

Discussion Cases

Tax Planning Case

Ethics Discussion Case

CHAPTER 6 Business Expenses

▲CHAPTER 6 Business Expenses

Concept Review

Introduction

Entertainment,Auto,Travel,Gift,and Education Expenses

Business Expenses

Meals and Entertainment

Auto Expenses

Travel Expenses

Business Gifts

Substantiation Requirements

Education Expenses

Compensation of Employees

Bad Debts

Other Business Expenses

Insurance Expense

Taxes

Individual Deductions for Adjusted Gross Income

Legal Fees

Reimbursed Employee Business Expenses

Accountable Reimbursement Plans

Nonaccountable Reimbursement Plans

Deductions for Self-Employed Taxpayers

Retirement Plan Contribution Deductions

Individual Retirement Accounts

Moving Expenses

Primary Tax Law Sources

Summary

Key Terms

Discussion Questions

Problems

Integrative Problem

Discussion Cases

Tax Planning Case

Ethics Discussion Case

CHAPTER 7 Losses Deductions and Limitations

▲CHAPTER 7 Losses―Deductions and Limitations

Introduction

Concept Review

Net Operating Losses

Annual Losses

Tax-Shelter Losses:An Overview

The At-Risk Rules

Passive Activity Losses

Passive Activity Definition

Types of Income

General Rule for Passive Activities

Taxpayers Subject to the Limits

Dispositions of Passive Activities

Exceptions for Rental Real Estate

Transaction Losses

Trade or Business Losses

Business Casualty and Theft Losses

Capital Losses

Investment-Related Losses

Specially Treated Inoestment Losses

Personal Use Losses

Summary

Key Terms

Primary Tax Law Sources

Discussion Questions

Problem3

Comprehensive Problem

Tax Planning Case

Ethics Discussion Case

Discussion Cases

CHAPTER 8 Taxation of Individuals

▲CHAPTER 8 Taxation of Individuals

Introduction

Concept Review

Personal and Dependency Exemptions

Gross Income Test

Support Test

Relationship or Member of Household Test

Citizen or Residency Test

Joint Return Test

Filing Status

Married,Filing Jointly

Married,Filing Separately

Single

Head of Household

Deductions from Adjusted Gross Income

Standard Deduction

Itemized Deductions

Medical Expenses

Taxes

Interest Expense

Charitable Contributions

Miscellaneous Itemized Deductions

Itemized Deductions and Exemptions―Reductions by High-:Income Taxpayers

Exemption and Standard Deduction Restrictions on Dependents

Calculating Tax Liability

Tax on Unearned Income of a Minor Child

Income Tax Credits

Earned Income Credit

Dependency Requirements

Adoption Tax Credit

Child-and Dcpendent-Care Credit

Filing Requirements

Summary

Primary Tax Law Sources

Key Terms

Discussion Questions

Problems

Integrative Problems

Discussion Cases

Tax Planning Case

Ethics Discussion Case

1996 Earned Income Credit Table

PARTⅣPROPERTY TRANSACTIONS

▲PART Ⅳ PROPERTY TRANSACTIONS

CHAPTER 9 Acquisitions of Property

▲CHAPTER 9 Acquisitions of Property

Concept Review

Introduction

Classes of Property

The Property Investment Cycle

Adjusted Basis

Increases in Basis

Decreases in Basis

Basis in Conduit Entities

Property Dispositions

Determining the Amount Invested

Initial Basis

Purchase of Assets

Purchase of Multiple Assets

Basis of a Bargain Purchase

Purchase of the Assets of a Business

Purchase of a Business

Constructed Assets

Purchase of Corporate Stock

Basis of Property Acquired by Gift

Specially Valued Property Acquisitions

General Rule for Gift Basis

Split Basis Rule for Loss Property

Holding Period

Basis of Property Acquired by Inheritance

Primary Valuation Date

Special Sales Price Basis

Alternate Valuation Date

Distribution Date

Other Considerations

Property Acquired from a Spouse

Personal Use Property Converted to Business Use

General Rule for Basis

Split Basis Rule

Stock Dividends

Basis in Securities

Taxable Stock Dividends

Wash Sale Stock Basis

Summary

Key Terms

Primary Tax Law Sources

Discussion Questions

Problems

Integrative Problem

Discussion Cases

Ethics Discussion Case

Tax Planning Case

CHAPTER 10 Cost Recovery on Property:Depreciation,Depletion and Amortization

▲CHAPTER 10 Cost Recovery on Property:Depreciation,Depletion,and Amortization

Introduction

Concept Review

Capital Recovery from Depreciation or Cost Recovery

Election to Expense Assets

Qualified Taxpayers

Limitations on Deduction

Annual Deduction Limit

Qualified Property

Annual Investment Limit

Active Trade or Business Income Limit

Modified Accelerated Cost Recovery(MACRS)

Property Subject to MACRS

Basis Subject to Cost Recovery

MACRS Recovery Period

MACRS Conventions

Mid-quarter Convention

Depreciation Method Alternatives

Using MACRS Percentage Tables

MACRS Straight-line Election

Alternative Depreciation System(ADS)

Limitations on Listed Property

Listed Property in General

Limitation on Passenger Autos

Adequate Record Keeping

Depletion Methods

Depletion

Cost Depletion

Percentage Depletion

Intangible Assets

Summary

Key Terms

Discussion Questions

Primary Tax Law Sources

Problems

Integrative Problems

Discussion Cases

Ethics Discussion Case

Tax Planning Cases

APPENDIX TO CHAPTER 10 MACRS Class Lives and MACRS Depreciation Schedules

CHAPTER 11 Property Dispositions

▲CHAPTER 11 Property Dispositions

Introduction

Concept Review

Realized Gain or Loss

Amount Realized

Effect of Debt Assumptions

Capital Gains and Losses

Character of Gain or Loss

Long-Term versus Short-Term Classification

Capital Asset Definition

Capital Gain-and-Loss Netting Procedure

Capital Gain Exclusion on Qualified Small Business Stock

Net Capital Loss Position

Net Capital Gain Position

Capital Gains and Losses―Planning Strategies

Short Sales

Basis of Securities Sold

Worthless Securities

Section 1231 Gains and Losses

Definition of Section 1231 Property

Section 1231 Netting Procedure

Disposition of Rental Activities

Depreciation Recapture

Section 1245 Recapture Rule

Section 1250 Recapture Rule

Installmenl Sales of Depreciable Assets

Section 1245 and Section 1250 Properties

Summary

Primary Tax Law Sources

Key Terms

Discussion Questions

Problems

Integrative Problem

Comprehensive Problems

Tax Planning Cases

Discussion Cases

Ethics Discussion Case

CHAPTER 12 Nonrecognition Transactions

▲CHAPTER 12 Nonrecognition Transactions

Introduction

Concept Review

Commonalities of Nonrecognition Transactions

Rationales for Nonrecognition

Exchange Requirement

Life-Kind Exchanges

Life-Kind Property Requirements

Receipt of Boot

Effect of Boot

Related Party Exchanges

Carryover of Tax Attributes

Involuntary Conversions

Treatment of Involuntary Conversion Gains and Losses

Qualified Replacement Property

Principal Residence

Sale of a Principal Residence

Replacement Period

Deferral of Gain

Gain Exclusion Requirements

Sale of a Principal Residence―Taxpayers Older Than 55

One-Time Exclusion of Gain

Interaction of Deferral and Exclusion Provisions

Summary

Key Terms

Discussion Questions

Primary Tax Law Sources

Problems

Comprehensive Problem

Tax Planning Cases

Discussion Cases

Ethics Discussion Case

APPENDIX TO CHAPTER 12 Selected SIC Product Classes

▲PART Ⅴ INCOME TAX ENTITIES

PARTⅤINCOME TAX ENTITIES

▲CHAPTER 13 Choice of Business Entity―Part1

CHAPTER 13 Choice of Business Entity―PartⅠ

Concept Review

Introduction

Nontax Factors

Sole Proprietorship

Partnership

Corporation

S Corporation

Limited Liability Company

Limited Liability Partnership

General Income Tax Factors

Incidence of Income Taxation

Planning Commentary

Sole Proprietorship

Partnership

Corporation

S Corporation

Personal Service Corporation

Double Taxation

Employee versus Owner

Planning Commentary

Formation

Transfers to an Entity

Partnership

Sole Proprietorship

Corporation

Basis Consicerations

Sole Proprietorship

Partnership

Partnership Debt Effects

Recourse and Nonrecourse Loans

Corporation

Organizational Costs

Corporation Debt Effects

Accounting Periods

Partnership

S Corporation

Accounting Methods

Partnership

Corporation

S Corporation

Operations

Sole Proprietorship

Planning Commentary

Investment Income and Expenses

Section 1231 Gains and Losses

Passive Activity Items

Charitable Contributions

Personal Expenses

Capital Gains and Losses

Tax Credits

Net Operating Losses

Partnership

Income Reporting

Net Operating Losses

Transactions between Partners and Partnerships

Basis Considerations

Corporation

Capital Gains and Losses

Depreciation Recapture

Dividends-Received Deduction

Passive Activity Losses

Charitable Contributions

Tax Credits

Basis Considerations

Net Operating Losses

S Corporation

Dividends-Received Deduction

Corporate Depreciation Recapture

Net Operating Losses

Basis Considerations

Planning Commentary

Summary

Key Terms

Primary Tax Law Sources

Discussion Questions

Problems

Discussion Cases

Tax Planning Cases

Ethics Discussion Case

▲CHAPTER 14 Choice of Business Entity―PartⅡ

CHAPTER 14 Choice of Business Entity―PartⅡ

Concept Review

Introduction

Qualified and Nonqualified.Pension Plans

Compensation Plans

Keogh Plan

Other Pension Plans

Individual Retirement Accounts

Simplified Employee Pension Plan

Savings Incentive Match Plan for Employees

Distributions

Penalties

Planning Commentary

Nonqualified Stock Options

Stock Options

Incentive Stock Options

Reasonableness of Compensation

Fringe Benefits

Planning Commentary

Other Tax Liability Considerations

Social Security Taxes

Investment Tax Credit

Income Tax Credits

Foreign Tax Credit

Research and Experimental Credit

Rehabilitation Tax Credit

Reporting of Tax Credits

General Business Credit

The Alternative Minimum Tax

Basic Alternative Minimum Tax Computation

Alternative Minimum Tax Adjustments

Alternative Minimum Tax Preferences

Alternative Minimum Tax Exemptions

Alternative Minimum Tax Credits

Alternative Minimum Tax Credit against the Regular Tax

Tax Planning and the Alternative Minimum Tax

Accumulated Earnings Tax

Penalty Taxes on Corporations

Personal Holding Company Tax

Planning Commentary

Sole Proprietorship

Entity Distributions

Partnership

Corporation

S Corporation

Planning Commentary

Tax Planning

Children as Employees

Income Splitting

Family Entities

Planning Commentary

Summary

Key Terms

Primary Tax Law Sources

Discussion Questions

Problems

Discussion Cases

Ethics Discussion Case

Tax Planning

PARTⅥ TAX RESEARCH

▲CHAPTER 15 Tax Research

Legislative Sources

The U.S. Constitution

Primary Sources of Federal Income Tax Law

▲PART Ⅵ TAX RESEARCH

Introduction

CHAPTER 15 Tax Research

Internal Revenue Code of 1986

Tax Treaties

Administrative Sources

Treasury Regulations

Acquiescence and Nonacquiescence

Revenue Rulings and Procedures

Other Pronouncements

Judicial Sources

Trial Courts

Appellate Courts

Citations to Primary Authorities

Commitlee Reports

Supreme Court

Code and Regulations

Other IRS Pronouncements

Court Decisions

Secondary Sources of Federal Income Tax Law

Tax Services

Citators

Tax Periodicals

Computer Assisted Tax Research

Tax Research

Step1:Establish the Facts and Determine the Issues

Tax Compliance versus Tax Planning

Step2:Locate the Relevant Authorities

Step3:Assess the Importance of the Authorities

Code and Regulations

Pronouncements

Court Decisions

Step4:Reach Conclusions, Make Recommendations, and Communicate the Results

Comprehensive Research Example

Step1:Establish the Facts and Determine the Issues

Step2:Locate the Relevant Authorities

The Code

Step3:Assess the Importance of the Authorities

Regulations

Summary

Court Decision

Step4:Reach Conclusions,Make Recommendations, and Communicate the Rseults

Primary Tax Law Sources

Key Terms

Discussion Questions

Problems

Research Cases