Description
TABLE OF CONTENTS
Preface xx
About the Authors xxv
PART I Introduction to Taxation and Its Environment
1 An Introduction to Taxation 2
Setting the Stage—An Introductory Case 3
1.1 An Introduction to Taxes 3
1.2 Types of Tax Rate Systems 12
1.3 Characteristics of a Good Tax 15
1.4 The Taxing Units and the Basic Income Tax Model 18
1.5 Choice of Business Entity 29
Revisiting the Introductory Case 38
Summary 38
Key Terms 39
Test Yourself 39
Problem Assignments 40
Answers to Test Yourself 44
2 The Tax Practice Environment 45
Setting the Stage—An Introductory Case 46
2.1 Tax Compliance 46
2.2 Professional Responsibilities and Ethics 54
2.3 Tax Planning 59
2.4 Tax Research 69
Revisiting the Introductory Case 89
Summary 89
Table of Contents ix
Key Terms 90
Test Yourself 90
Problem Assignments 90
Answers to Test Yourself 97
Appendix: Authorities for Sample Research Problem 97
PART II Income Expenses and Individual Taxes
3 Determining Gross Income 108
Setting the Stage—An Introductory Case 109
3.1 What Is Income? 109
3.2 When Is Income Recognized? 112
3.3 Who Recognizes the Income? 118
3.4 Sources of Income 119
3.5 Exclusions 134
3.6 Expanded Topics—Jurisdictional Issues 139
Revisiting the Introductory Case 142
Summary 142
Key Terms 143
Test Yourself 143
Problem Assignments 144
Answers to Test Yourself 152
4 Employee Compensation 153
Setting the Stage—An Introductory Case 154
4.1 Employee Compensation 154
4.2 Employee Fringe Benefits 161
4.3 Employee Stock and Stock Options 174
4.4 Deferred Compensation and Retirement Planning 179
4.5 Self-Employed Individuals 187
4.6 Expanded Topics—Foreign Assignments 191
Revisiting the Introductory Case 195
Summary 195
Key Terms 196
Test Yourself 197
Problem Assignments 198
Answers to Test Yourself 205
5 Deductions for Individuals and Tax Determination 206
Setting the Stage—An Introductory Case 207
5.1 The Individual Tax Model 207
5.2 Deductions for Adjusted Gross Income 209
5.3 Standard Deduction 212
5.4 Itemized Deductions 217
5.5 Qualified Business Income Deduction 228
5.6 Dependents 230
5.7 Tax Credits 233
5.8 Computing the Tax 239
5.9 Payment of Tax and Filing the Return 247
Revisiting the Introductory Case 250
Summary 253
Key Terms 253
Test Yourself 253
Problem Assignments 254
Answers to Test Yourself 264
PART III Business and Property Concepts
6 Business Expenses 266
Setting the Stage—An Introductory Case 267
6.1 Criteria for Deductibility 267
6.2 Timing of Deductions 271
6.3 Costs of Starting a Business 275
6.4 Operating Expenses 277
6.5 Limited Expense Deductions 285
6.6 Expanded Topics—Book/Tax Differences 292
Revisiting the Introductory Case 301
Summary 303
Key Terms 304
Test Yourself 304
Problem Assignments 305
Answers to Test Yourself 314
7 Property Acquisitions and Cost Recovery Deductions 316
Setting the Stage—An Introductory Case 317
7.1 Capital Expenditures 317
7.2 MACRS 322
7.3 Special Expensing Provisions 329
7.4 Provisions Limiting Depreciation 334
7.5 Depletion 338
7.6 Amortization 339
Revisiting the Introductory Case 341
Summary 342
Key Terms 342
Test Yourself 343
Problem Assignments 344
Answers to Test Yourself 351
PART IV Property Dispositions
8 Property Dispositions 354
Setting the Stage—An Introductory Case 355
8.1 Determining Gain or Loss on Dispositions 356
8.2 Disposition of Capital Assets 363
8.3 Disposition of Section 1231 Property 371
8.4 Mixed-Use Property 378
8.5 Special Rules for Small Business Stock 379
8.6 Sale of Principal Residence—Section 121 382
8.7 Navigating Individual Capital Gains Tax Rates 385
Revisiting the Introductory Case 388
Summary 389
Key Terms 390
Test Yourself 390
Problem Assignments 391
Answers to Test Yourself 400
9 Tax-Deferred Exchanges 401
Setting the Stage—An Introductory Case 402
9.1 Basics of Tax-Deferred Exchanges 402
9.2 Like-Kind Exchanges—Section 1031 404
9.3 Involuntary Conversions 409
9.4 Other Tax-Deferred Exchanges or Dispositions 418
9.5 Asset Transfers to Businesses 422
9.6 An Introduction to Corporate Reorganizations 431
Revisiting the Introductory Case 432
Summary 432
Key Terms 433
Test Yourself 433
Problem Assignments 434
Answers to Test Yourself 443
Appendix: Corporate Reorganizations 444
PART V Business Taxation
10 Taxation of Corporations 452
Setting the Stage—An Introductory Case 453
10.1 Introduction to Corporations 453
10.2 Taxation of C Corporations 457
10.3 Corporate Dividend Distributions 468
10.4 Corporate Redemptions and Liquidations 475
10.5 Issues for Closely Held Corporations 480
10.6 Consolidated Returns 484
Revisiting the Introductory Case 486
Summary 487
Key Terms 487
Table of Contents xvii
Test Yourself 488
Problem Assignments 488
Answers to Test Yourself 496
Appendix: Exempt Organizations 496
11 Sole Proprietorships and Flow-Through Entities 501
Setting the Stage—An Introductory Case 502
11.1 Introduction to Flow-Through Business Entities 502
11.2 The Sole Proprietorship 503
11.3 Partnerships 509
11.4 S Corporation Characteristics 528
11.5 Expanded Topics—The Passive Deduction Limitations 540
Revisiting the Introductory Case 544
Summary 545
Key Terms 545
Test Yourself 546
Problem Assignments 547
Answers to Test Yourself 558
PART VI Wealth Taxation
12 Estates Gifts and Trusts 560
Setting the Stage—An Introductory Case 561
12.1 Overview of Wealth Transfer Taxation 561
12.2 The Federal Gift Tax 566
12.3 Tax Consequences for Donees 574
12.4 The Taxable Estate 577
12.5 Transfer Tax Planning 582
12.6 Fiduciary Income Tax Issues 585
12.7 Expanded Topics—The Tax Calculations 588
Revisiting the Introductory Case 592
Summary 592
Key Terms 593
Test Yourself 593
Problem Assignments 594
Answers to Test Yourself 601
Appendix Selected Tax Tables for 2018 and 2017 603
Corporate Tax Rates for 2018 and 2017 603
Individual Income Tax Rate Schedules for 2018 and 2017 603
Social Security and Medicare Taxes for 2018 and 2017 605
Standard Deductions for 2018 and 2017 606
Tax Rates for Estates Gifts and Trusts for 2018 and 2017 606
Depreciation Tables 607
Present Value and Future Value Tables 609
Index 613
