Federal Income Tax: A Student's Guide to the Internal Revenue Code

, by Kahn, Douglas A.

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ISBN: 9781566627139 | 1566627133
Cover: Paperback
Copyright: 8/1/1999

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Supplemental Materials

Introduction

(37)

History

(36)

Rate Structure

(2)

Indexing for Inflation

(1)

Retroactive Increase in Tax

(1)

Sources of the Tax Law

(1)

The Internal Revenue Code

(1)

Amendments

(1)

Legislative History

(1)

Treasury Department Regulations

(1)

Validity of Regulations

(1)

Retroactive Application

(1)

Proposed and Temporary Regulations

(1)

Significance of Proposed Regulations

(1)

Significance of Temporary Regulations

(1)

Revenue Rulings

(1)

Acquiescences

(1)

Information Releases

(1)

Internal Memoranda

(1)

Significance

(1)

Letter Rulings

(1)

User Fees for Seeking a Ruling

(1)

Tax Litigation

(1)

Review of Tax Court Decisions by the Entire Court

(1)

Memorandum Decisions of the Tax Court

(1)

Board of Tax Appeals (BTA)

(1)

Burden of Proof

(1)

Recovery of Litigating Costs

(1)

Checklist of Issues

(1)

Accounting for Tax Purposes

(1)

Accounting Period

(1)

Election Period

(1)

Short Year

(1)

Variable Year

(1)

Method of Accounting

(1)

Cash Receipts and Disbursements Method

(1)

Constructive Receipt

(1)

Economic Benefit

(1)

Accrual Method

(1)

Other Methods

(1)

Computations of Tax

(1)

Method of Computation

(1)

Illustration of Computation

(1)

Civil Penalties

(1)

Accuracy-Related Penalty

(3)

Fraud Penalty

(1)

Failure to File Return

(1)

Failure to Pay Tax

(1)

Other Penalties

(1)

Suspension of Penalty

(1)

Criminal Penalties

(1)

Interest on Underpayments and Overpayments

(1)

Interest on Penalties

(1)

Annual Accounting

(1)

Concept of Income

(1)

Gross Income Generally

(1)

Less Cost-of-Goods Sold

(1)

Statutory Interpretation

(1)

Rule-of-Thumb Test: Increase in Net Worth

(1)

Realization of Income or Loss

(1)

Illustration

(1)

Constitutional Limitation

(1)

The Concept of Basis

(1)

Definition

(1)

Use of Basis

(1)

Illustration 1

(1)

Illustration 2

(1)

Illustration 3

(1)

Determination of Basis

(1)

Cost Basis

(1)

Transferred Basis

(1)

Exchanged Basis

(1)

Illustration

(1)

Substituted Basis Property

(1)

Constructive Basis

(1)

Adjusted Basis

(1)

Capital Improvement

(1)

Recapture of Investment

(1)

Illustration

(1)

Mortgages and Liens

(1)

The Concept of Recognition

(1)

Effect of Nonrecognition

(1)

Adjustment of Basis

(1)

Illustration 1

(1)

Illustration 2

(1)

Illustration 3

(1)

Imputed Income from Property or Services

(1)

Home Ownership

(1)

Improvements

(1)

Services

(1)

Significance of State Law and Form of Transaction

(1)

State Law

(1)

Substance Versus Form

(1)

Economic Substance

(1)

Estoppel of the Commissioner

(1)

Gross Income

(192)

Items Included in and Excluded from Gross Income

(192)

Items Included in Gross Income

(1)

Borrowed Funds

(1)

Deposits

(4)

Discharge of Indebtedness

(1)

Income to Debtor

(1)

Statutory Rules

(1)

Distinguish Realization from Recognition and Exclusion from Nonrecognition

(1)

Illustration 1: Satisfaction at Less than Face Amount

(1)

Illustration 2: Redemption of Bonds

(1)

Illustration 3: Expiration of Period of Limitations

(1)

Illustration 4: Prepayment of Mortgage Debt at a Discount

(1)

Acquisition of Debt by Person Related to the Debtor

(1)

Related Parties

(1)

Direct and Indirect Acquisitions

(2)

Acquisition Date

(1)

Exceptions

(1)

Tax Consequences of A Direct Acquisition

(1)

Debtor's Recognition of Discharge of Indebtedness Income

(1)

Constructive Issuance of New Debt Instrument

(2)

Tax Consequences to the Holder Apart from OID Allocations

(1)

Examples

(3)

Tax Consequences of An Indirect Acquisition

(1)

Spurious Discharge of a Debt

(1)

Student Loans

(1)

Modification of the Terms of a Debt Instrument

(1)

Lost Deduction

(1)

Rationale

(1)

Insolvency of Debtor

(1)

Nonrecognition of Income

(1)

Reason for the Insolvency Exception

(1)

Nonrecourse Debts

(1)

Illustration 1: Insolvent Before and After Discharge

(1)

Illustration 2: Solvent After Discharge

(1)

Illustration 3: Nonrecourse Debt that is Secured by Property with a Greater Value than the Amount of the Debt

(1)

Illustration 4: Nonrecourse Debt that is Greater in Amount than the Property Securing It

(1)

Discharge of Nonrecourse Debt

(1)

Reduction of Tax Attributes

(1)

Net Operating Loss

(1)

General Business Credits

(1)

Minimum Tax Credit

(1)

Capital Loss

(1)

Basis of Property

(1)

Passive Activity Loss and Credit Carryovers

(1)

Foreign Tax Credit

(1)

Election to Prevent Reduction of Net Operating Loss, Capital Loss, Credits and Credit Carryovers

(1)

Exclusion Versus Nonrecognition

(1)

Qualified Farm Indebtedness and Qualified Real Property Business Indebtedness

(1)

Purchase-Money Debt Reduction

(1)

Illustration 1: Genuine Discharge

(1)

Illustration 2: Spurious Discharge

(1)

Discharge As a Gift

(1)

Contribution to a Corporation's Capital

(1)

Statutory Treatment

(1)

Corporation's Satisfaction of Debt With Its Own Stock

(1)

Tax Benefit Rule

(1)

Transactional View

(1)

Illustration 1: Charitable Pledges

(1)

Illustration 2: Cost of Inventory

(1)

Severability of Credit

(1)

Illustration 3: Payment from Third Party as Reduction of Purchase Price

(1)

Third Party's Discharge of Debt as Reduction of Purchase Price

(2)

Overview of Transactional Approach

(1)

Suggested Rationale

(1)

Effect of 1980 Amendment of IRC § 108

(1)

Discharge of an Unenforceable Debt

(1)

The Facts of the Zarin case

(2)

Harsh Result In The Tax Court

(1)

Application of Transactional Approach

(1)

The Third Circuit's Decision

(1)

Compensatory Damages

(1)

Damage to Tangible Property

(1)

Deduction Illustration

(1)

Illustration 2

(1)

Illustration 3

(1)

Recovery Not Required by Law

(1)

Recovery of Lost Dollars

(1)

Illustration 4

(1)

Illustration 5

(2)

Damage Caused to Intangible Property

(1)

Damage to Goodwill

(1)

Determining Basis in Goodwill

(1)

Reimbursement for Lost Profits

(1)

Illustration 1

(1)

Illustration 2

(1)

Illustration 3

(1)

Characterization of Insurance Proceeds

(1)

Illustration

(1)

Damages Received on Account of Personal Injuries

(1)

Tort-Type Claims

(1)

Physical and Nonphysical Personal Injuries

(1)

Illustration 1

(1)

Illustration 2

(1)

Illustration 3

(1)

Damages for Victims of Discrimination or Defamation

(1)

Punitive Damages

(1)

Allocation of Damages Between Punitive and Compensatory Elements

(2)

Allocation of Lump Sum Award or Settlement Into Its Likely Component Parts

(1)

Liquidated Damages

100

(1)

Rationale for Exclusion

101

(1)

Rationale for the Exclusion of Back Pay

102

(2)

Sale of Parts of Taxpayer's Body

104

(1)

Installment Payments of Damages

105

(1)

Alimony, Separate Maintenance, and Child Support

106

(1)

Alimony or Separate Maintenance Payment

106

(1)

Payments of Property in Kind

107

(1)

Cash Paid to a Third Party Pursuant to a Divorce or Separation Instrument

107

(1)

Cash Paid to a Third Party at W's Request or Ratification

107

(1)

Not Members of the Same Household

108

(1)

No Liability to Make Payments After Death of Payee Spouse

108

(1)

Lump Sum Payment Required by Divorce or Separation Instrument

108

(2)

Payment of Spouse's Legal Fees Pursuant to Divorce or Separation Instrument

110

(1)

Late Payment of Defaulted Alimony

110

(1)

No Substitute Payments

111

(1)

Illustration

112

(1)

Divorce or Separation Instrument

112

(1)

Front-Loading of Payments---Definitions of 1st, 2nd and 3rd, ``Post-Separation Years.''

112

(1)

Recapture Rules

113

(1)

Payee's Deduction of Recaptured Amount

113

(1)

Taxable Year of Payor and Payee

114

(1)

``Excess Alimony Payments''

114

(1)

Excess Payments for the Second Post-Separation Year

114

(1)

Excess Payments for the First Post-Separation Year

114

(1)

Illustration 1

115

(1)

Illustration 2

116

(1)

Illustration 3

117

(1)

Exceptions to the Recapture Rules

118

(1)

Payments Made After Remarriage

118

(2)

Treatment of Payments That Do Not Qualify as Alimony

120

(1)

Modification of Agreement in Anticipation of Divorce

120

(1)

Property Settlements

121

(1)

Transfers of Property in Kind

121

(1)

Related to the Cessation of Marriage

122

(1)

Illustration 1

123

(1)

Illustration 2

123

(2)

Divorce Trusts

125

(1)

Child Support

125

(1)

Contingency Relating to a Child

125

(1)

Illustration

126

(1)

Income Splitting

126

(1)

Marital Status

126

(1)

Rule of Validation

127

(1)

Status of the Rule of Validation

127

(1)

Sham Divorces

128

(1)

Compensation for Services

129

(1)

Cash Compensation

129

(1)

Tips

129

(1)

Services in Exchange for Services

130

(1)

Illustration

130

(1)

Property in Kind

130

(1)

Illustration 1

130

(1)

Illustration 2

131

(1)

Interest-Free and Below Market Interest Rate Loans

131

(1)

The Time Value of Money

132

(1)

Increased Significance of Deferral

132

(1)

Loans to Which IRC § 7872 Applies

133

(1)

Constructive Payment to Borrower

133

(1)

Constructive Interest Payment to Lender

134

(1)

Definitions

134

(1)

Gift Loans and Demand Loans

135

(1)

Below-Market Loans

135

(1)

Foregone Interest

135

(1)

De Minimis Exception for Gift Loans Between Individuals

135

(1)

Amount Treated as Retransferred Limited to Net Investment Income

135

(1)

Treatment of Term Loans That Are Not Gift Loans

136

(1)

Present Value

136

(1)

Discount Rate

137

(1)

Simple or Compounded Interest

137

(1)

Computation of Present Value

137

(1)

Choosing the Discount Rate

138

(1)

De Minimis Exception for Compensation-Related Loans and Corporation-Shareholder Loans

139

(1)

Exception for Certain Loans to Qualified Continuing Care Facilities

139

(1)

Exclusion of Certain Loans

140

(1)

Uncompensated Loan of Property in Kind

140

(1)

Bargain Purchases

140

(1)

Illustration 1

140

(1)

Illustration 2

141

(1)

Illustration 3

141

(1)

Stock Options

141

(1)

Problems of Valuation

141

(1)

Restrictions on Acquired Property

142

(3)

Illustration 1

145

(1)

Illustration 2

146

(1)

Illustration 3

146

(1)

Illustration 4

146

(1)

Incentive Stock Options

146

(1)

Holding and Employment Requirements

146

(1)

Other Requirements

147

(1)

Deferred Compensation

148

(1)

Nonqualified Plans

148

(1)

Illustration 1

149

(1)

Illustration 2

149

(1)

Illustration 3

150

(1)

Illustration 4

150

(1)

Rabbi Trust

150

(2)

Qualified Retirement Plans

152

(1)

Self-Employed

152

(1)

Individual Retirement Arrangements

152

(1)

Employee Life Insurance

152

(1)

Illustration

153

(1)

Group-Term Exception

153

(1)

Fringe Benefits

153

(1)

Medical Insurance Payments

153

(1)

Certain Fringe Benefits

154

(1)

No-Additional-Cost Service

154

(1)

Qualified Employee Discount

155

(1)

Limitation

155

(1)

No Discrimination

156

(1)

Certain Individuals Treated as Employees

156

(1)

Same Line of Business Requirement

156

(1)

Illustration 1

157

(1)

Illustration 2

157

(1)

Working Condition Fringe

158

(1)

De Minimis Fringe

158

(1)

Eating Facilities

158

(1)

Qualified Transportation Fringe

159

(1)

Qualified Moving Expense Reimbrusement

160

(1)

Reimbursed Expenses

161

(1)

Rationale

161

(1)

Moving Expenses

161

(1)

Travel Expenses

161

(1)

Expenses of Interviewing for a Job

162

(1)

Expenses Incurred on Behalf of Another in a Non-Employment Context

162

(1)

Meals and Lodging

163

(1)

Excluded Meals and Lodging

163

(1)

Meaning of Convenience of Employer

163

(1)

Illustration

163

(1)

Meaning of Business Premises

164

(1)

Furnished in Kind

165

(1)

Furnishing of Groceries

165

(1)

Reimbursement for Employee's Meals Taken When Working Late

165

(1)

Payment by Employee

166

(1)

Illustration

166

(1)

Qualified Campus Lodging

166

(1)

Annuities

167

(1)

Percentage of Annuity in Gross Income

167

(1)

Exclusion Ratio

167

(1)

Illustration

168

(1)

Termination of Exclusion Ratio

168

(1)

Deduction Allowable for Unrecovered Investment

169

(1)

Employee Annuity

169

(1)

Private Annuity

170

(1)

Annuity Contract Not Held by a Natural Person

170

(1)

Life Insurance

170

(1)

Lump-Sum Proceeds

170

(1)

Life Insurance Proceeds Payable in Installments

170

(1)

Illustration

171

(1)

Cessation of Installment Payments Before the Entire Amount of the Death Benefit is Distributed

172

(1)

Insurance Proceeds Earning Interest

172

(1)

Transfer for Value

172

(1)

Permissible Assignees

173

(1)

Tax-Free Transfers

173

(1)

Amount Taxable

173

(1)

Illustration 1

173

(1)

Illustration 2

173

(1)

Illustration 3

174

(1)

Miscellaneous Inclusions in Gross Income

174

(1)

Income of Child

174

(1)

Prizes and Awards

174

(1)

Exception: Awards Transferred to Charities

174

(1)

Effect of Transfer

174

(1)

Exception: Employee Achievement Awards

175

(1)

Employee Achievement Award Defined

175

(1)

Length of Service Awards

175

(1)

Safety Achievement Awards

176

(1)

Qualified Plan Award

176

(1)

Dollar Limitations on the Employer's Deduction

176

(1)

Other Than Qualified Plan Awards

176

(1)

Qualified Plan Awards

176

(1)

De Minimis Fringe Benefit

177

(1)

Exceptions: Scholarship

177

(1)

Fair Market Value

177

(1)

Income Received by Error

178

(1)

Illustration

178

(1)

Illegally Obtained Income

178

(1)

Control As a Practical Matter

179

(1)

Interest

179

(1)

Exclusion of Certain Interest

179

(1)

Imputed Interest

179

(1)

Dividend Income

180

(1)

Definition of Dividend

180

(1)

Illustration 1

180

(1)

Illustration 2

180

(1)

Illustration 3

180

(1)

Deduction for Receipt of Dividend By a Corporate Shareholder

181

(1)

Unemployment Compensation

181

(1)

Tax Benefit Rule

181

(1)

General Rule of Inclusion

181

(1)

Illustration 1

182

(1)

Illustration 2

182

(2)

Actual Recovery vs. Fundamental Inconsistency

184

(1)

Inconsistent Use of Expensed Goods

185

(1)

Expensed Cost of Having Purchased Unsold Inventory

186

(1)

Expensed Costs of Maintaining and Cultivating Unsold Inventory

187

(1)

Expensed Research Costs

188

(1)

Expenses Incurred in the Year in Which the Inconsistent Event Occurred

188

(1)

Liquidation of a Corporation

189

(1)

Exclusion Where No Tax Benefit

189

(1)

Illustration

189

(1)

Standard Deduction

190

(1)

Illustration

190

(2)

Gratuitous Recovery

192

(1)

Recovery of Erroneously Deducted Item

193

(2)

Items Excluded from Gross Income

195

(1)

Inherited Property

195

(1)

Income Earned from Inherited Property

196

(1)

Decedent's Unrecognized Income

196

(1)

Basis of Property Acquired from a Decedent

196

(1)

Property Acquired by Decedent As a Gift Within One Year of Death

197

(1)

Income in Respect of a Decedent

198

(1)

Illustration

198

(1)

Penalty for Valuation Overstatement

198

(1)

Generation-Skipping Transfers

199

(1)

Holding Period

199

(1)

Holding Period of Inherited Property

199

(1)

Taxation of Gifts

200

(1)

Examples

200

(1)

Illustration 1

200

(1)

Illustration 2

200

(1)

Definition of a Gift

200

(1)

Mixed Motivations

201

(1)

Term of Art

202

(1)

Factual Issue

202

(1)

Employee Gifts

202

(1)

Illustration 1

203

(1)

Illustration 2

203

(1)

Basis of Gifts

203

(1)

Illustration 1

204

(1)

Illustration 2

204

(1)

Illustration 3

205

(1)

Illustration 4

205

(1)

Bargain Purchases

206

(1)

Illustration 1

207

(1)

Illustration 2

207

(1)

Basis in Bargain Purchase Situation

207

(1)

Illustration

208

(1)

Political Contributions

208

(1)

Accident and Health Benefits

209

(1)

Medical Insurance

209

(1)

Disability Insurance

210

(1)

Workman's Compensation Benefits

210

(1)

Employee Health and Accident Plans

210

(1)

Benefits Attributable to Employer

210

(1)

Reimbursement or Payment of Medical Expenses

211

(1)

Payments Unrelated to Medical Expenses and to Absence from Work

212

(1)

Premiums Paid for Medical Insurance

213

(1)

Improvements Made by a Tenant on Lessor's Realty

213

(1)

Construction of the Improvement: Rent Substitute

213

(1)

Termination of the Lease

213

(1)

Illustration

214

(1)

Qualified Scholarships

214

(1)

Qualified Tuition and Related Expenses

215

(1)

Degree Candidates

215

(1)

Payments for Teaching, Research or Other Services

215

(1)

Athletic and Other Extracurricular Activity Scholarships

216

(1)

Qualified Tuition Reducation

217

(1)

Teaching and Research Assistants

218

(1)

Considered Earned Income

218

(1)

Educational Assistance Program

219

(1)

Tax Policy Justification for Scholarship Exclusion

220

(2)

General Welfare Fund Distributions

222

(1)

Illustration 1

222

(1)

Illustration 2

223

(1)

Social Security Benefits

223

(1)

Definition of ``Social Security Benefit''

223

(1)

Definition of ``Modified Adjusted Gross Income'' and of ``Provisional Income''

223

(1)

Modified Adjusted Gross Income

224

(1)

Provisional Income

224

(1)

Definitions of ``Base Amount'' and of ``Adjusted Base Amount''

224

(1)

Base Amount

224

(1)

Adjusted Base Amount

224

(1)

Determination of Amount Included in Gross Income

225

(1)

Taxpayer's Provisional Income Does Not Exceed His Base Amount

225

(1)

Taxpayer's Provisional Income Exceeds His Base Amount But Does Not Exceed His Adjusted Base Amount

225

(1)

Taxpayer's Provisional Income Exceeds His Adjusted Base Amount

225

(1)

Illustration 1

226

(1)

Illustration 2

226

(1)

Illustration 3

226

(1)

Illustration 4

227

(1)

Benefits From Another Country

227

(1)

Unemployment Benefits

227

(1)

Rental Value of Parsonage

228

(1)

Receipt of Windfalls and Penalties

228

(1)

Adjusted Gross Income and the Standard Deduction

229

(8)

Role of AGI and Standard Deduction in Determining Texable Income

229

(8)

Concept of Adjusted Gross Income

229

(1)

Function of AGI

230

(1)

Miscellaneous Itemized Deductions

230

(1)

Overall Limitation on Itemized Deductions

230

(1)

IRC § 62 Deductions

231

(1)

Standard Deduction

232

(1)

Qualification for the Standard Deduction

232

(1)

Individuals Who Are Barred from Using the Standard Deduction

233

(1)

Dependent's Use of Standard Deduction

233

(1)

Illustration 1

233

(1)

Illustration 2

233

(1)

Illustration 3

233

(1)

Illustration 4

234

(1)

Amount of the Standard Deduction

234

(1)

Basic Standard Deduction

234

(1)

Additional Standard Deduction

234

(1)

Illustration

235

(1)

Illustration

235

(1)

Illustration

236

(1)

Personal and Dependent Exemption Deductions

237

(6)

Exemptions and Deductions in General

237

(6)

Deductible from Adjusted Gross Income (AGI)

237

(1)

Corporations

237

(1)

Types of Exemptions and the Exemption Amount

237

(1)

Personal Exemption

238

(1)

Marital Status of Taxpayer

238

(1)

Legal Separation

238

(1)

Validity of Divorce

239

(1)

Dependent Exemption Deduction

239

(1)

Definition of Dependent

239

(1)

Significance of Qualifying as a Dependent

240

(1)

Old Age and Blindness Exemption

240

(1)

Phase-Out of Exemption Amount

240

(1)

Threshold Amount

241

(1)

Illustration 1

241

(1)

Illustration 2

241

(1)

Illustration 3

242

(1)

Standard Deduction

242

(1)

Business and Nonbusiness Deductions in General

242

(1)

Burden of Proof

242

(1)

Interest Expense

243

(28)

Deduction for Interest Expenses

243

(28)

Interest Incurred by Noncorporate Taxpayer

244

(1)

Material Participation in Trade or Business

244

(1)

Trades and Businesses in Which Taxpayer Does Not Materially Participate and Investments

245

(1)

Passive Activities

245

(1)

Investment Interest

245

(2)

Personal Interest

247

(1)

Exceptions

247

(1)

Interest on Income Tax Deficiency Attributable to Self-Employed Income

247

(2)

Qualified Residence

249

(1)

Qualified Residence Interest

249

(1)

Acquisition Indebtedness

249

(1)

Home Equity Indebtedness

250

(1)

Illustration 1

250

(1)

Illustration 2

251

(1)

Illustration 3

251

(1)

Illustration 4

251

(1)

Loan to Cash Method Taxpayer to Obtain Funds to Pay Interest on Another Loan from the Same Creditor

251

(1)

Illustration

252

(1)

Definition of Interest

252

(1)

Illustration 1: Nonrecourse Debt

252

(1)

Illustration 2: Interest on Another's Debt

253

(1)

Illustration 3: Interest on Tax Deficiency

253

(1)

Illustration 4: Finder's Fee

253

(1)

Guarantor's Payment of Interest

253

(1)

Ascertaining Portion of Carrying Charges for Certain Installment Purchases That Constitute Interest

254

(1)

Inadequate Interest

254

(1)

Deferred Purchase Payments

254

(1)

Exceptions

255

(1)

Loans Bearing Inadequate Interest

255

(1)

Original Issue Discount

256

(1)

Definitions of Terms

256

(1)

Stated Redemption Price at Maturity

257

(1)

Issue Price

257

(1)

Applicable Federal Rate

258

(1)

De Minimis Exception

258

(1)

Illustrations

259

(1)

De Minimis Rule

259

(1)

Issue Price When Debt or Property is Traded on an Established Securities Market

259

(1)

Imputed Issue Price

259

(1)

Accrual and Allocation of OID

260

(1)

Yield to Maturity

260

(1)

Computation of OID

260

(1)

Adjustment to Creditor's Basis

261

(1)

Illustration

261

(1)

Sale or Exchange of Property

261

(1)

Subsequent Holder of Debt Instrument

262

(1)

Characterization of Gain from the Retirement, Sale or Exchange of Debt Instrument

262

(1)

Market Discount

263

(1)

Partial Principal Payments

264

(1)

Stripped Bonds or Coupons

264

(1)

Denial of Deduction

264

(1)

Construction Period Interest

264

(1)

Prepaid Interest

265

(1)

``Points''---Current Deduction

265

(1)

Safe Harbor for the Current Deduction of Points

265

(1)

``Points'' Paid on Refinancing a Home Mortgage

266

(1)

Unamortized Loan Costs Deductible on Taxpayer's Death

267

(1)

Prepayment Penalty

268

(1)

Sham Transactions

268

(1)

Economic Substance Doctrine

268

(3)

State and Local Taxes

271

(4)

Deduction for Payment of Taxes

271

(4)

Deductible Taxes

271

(1)

Definition of ``Tax''

272

(1)

Taxes Not Deductible

273

(1)

Capitalization of Taxes Allocable to the Production of Commercial Realty

273

(1)

Tax Imposed on Another

274

(1)

Apportionment of Real Estate Tax

274

(1)

Illustration: Method of Apportionment

274

(1)

Itemized Deductions

274

(1)

Losses

275

(46)

Deduction of Losses

275

(46)

Denial of Deduction on Public Policy Grounds

275

(2)

Casualty and Theft Losses

277

(2)

Illustration: No Deduction for Loss Incurred on Condemnation of Residence

279

(1)

Rationale

279

(1)

Definition of Casualty

279

(1)

Requirement That a Loss Be Sudden

280

(1)

The Application of the Foreseeability Standard

281

(1)

Weighing Foreseeability

281

(1)

Examples of the Commissioner's Application of the Foreseeability Requirement

282

(1)

The Treatment of Droughts

282

(1)

Damage to or Destruction of Property Contrasted with Losing Property

283

(1)

Timing of Deduction

284

(1)

Itemized or Nonitemized Deduction

284

(1)

Caveat

284

(1)

Judicial Construction

284

(1)

Taxpayer's Negligence

285

(1)

Computation of Amount of Deductible Loss

285

(1)

Alternate Methods

285

(1)

Replacement Cost

286

(1)

No Replacement Is Available

286

(1)

Business Property

286

(1)

Illustration 1: Partial Loss

286

(1)

Illustration 2: Complete Destruction When Basis Exceeds Value

287

(1)

Illustration 3: Complete Destruction When Value Exceeds Basis

287

(1)

Application to Business Property

287

(1)

Limitations on Deduction

288

(1)

Prospect of Reimbursement

288

(1)

Refusal to Seek Reimbursement from Insurer

288

(1)

Effect of Suing for Recovery

289

(1)

Insurance as an Indirect Reimbursement

290

(1)

Subsequent Recovery

290

(1)

Inventory

291

(1)

$100 Floor

291

(1)

Illustration

291

(1)

The Ten Percent of AGI Floor for a Net Casualty Loss

292

(1)

The Definitions

292

(1)

Personal Casualty Gain Limitation

292

(1)

The Ten Percent of AGI Floor

293

(1)

Characterization of Personal Casualty Gains and Losses

293

(1)

Illustration 1

293

(1)

Illustration 2

293

(1)

Illustration 3

294

(1)

Separate Application

294

(1)

Reimbursement Prospects

294

(1)

Illustration: Effect of Reimbursement Prospect on the AGI Floor

295

(1)

Itemized and Nonitemized Deductions

296

(1)

Table of Deductible Losses

296

(1)

Adjustment to Basis

297

(1)

Costs of Repairing Business Property

297

(2)

Costs of Repairing Personally Used Property

299

(1)

Double Deduction

299

(1)

Theft Losses

300

(1)

Illustration: Inconsistent Treatment

300

(1)

Definition of Theft

301

(1)

Illustration: Importance of State Law Definition of Theft

301

(1)

Proof That Casualty or Theft Occurred

302

(1)

Net Operating Loss

302

(1)

Wagering Losses

302

(1)

Residence and Other Non-Income Producing Property

303

(1)

Conversion to Business Property

303

(1)

At Risk Limitation

303

(1)

Limitations on the Deductibility of Losses and Credits Generated by a Passive Activity

304

(1)

Division of Investment and Business Activities into Three Categories

305

(1)

Passive Activity Category

305

(1)

Portfolio Activity

305

(1)

Third Category and Material Participation

305

(1)

Significance of Devision into Categories

306

(1)

Recharacterization of Passive Income

307

(1)

Passive Activity Deductions---Exclusion of Certain Deductions

308

(1)

Passive Activity Gross Income

308

(1)

Carryover of Disallowed Losses and Credits

309

(1)

Disposition of Passive Activity

309

(1)

The Twelve-Month Rule

310

(1)

Substantially Appreciated Property

311

(1)

Transfers at Death or by Gift

311

(1)

Former Passive Activity

312

(1)

Persons Subject to Passive Activity Limitations

312

(1)

Definition of ``Passive Activity''

312

(1)

Rental Activity

313

(1)

Definition of ``Rental Activity''

313

(1)

Exclusions From Rental Activity

313

(1)

Exception for Certain Losses and Credits from Rental Real Estate Activity

314

(1)

Low Income Housing and Rehabilitation Credits

315

(1)

Special Rules for a Taxpayer Who Materially Participates in a Real Property Trade or Business

316

(1)

Earned Income

317

(1)

Interests in Passive Activities Acquired Prior to Adoption of the 1986 TRA

317

(1)

Regulatory Exclusion From Passive Activity Category

317

(1)

Interaction with At Risk Rules

318

(1)

Operation of the PAL

318

(1)

Illustration 1

318

(1)

Illustration 2

318

(1)

Demolition of Structure

319

(2)

Medical Expenses

321

(16)

Medical Expenses

321

(16)

Definition of Medical Care

321

(1)

Personal Expenditure

322

(1)

Cosmetic Surgery

322

(1)

Religious Cure

323

(1)

Divided Purpose

323

(1)

Doctor's Instruction

324

(1)

Illegal Expenditures

325

(1)

Transportation

325

(1)

Limitations on Deduction of Transportation Expenses

325

(1)

Standard Mileage Allowance

326

(1)

Payment with Borrowed Funds

326

(1)

Credit Cards

326

(1)

Insurance Premiums

326

(1)

Travel Expenses

327

(1)

Institutional Care

327

(1)

Primary Purpose Not Medical

328

(1)

Limited Deduction for Lodging Expenses

328

(1)

Illustration: Travel Expenses

328

(1)

Specific Illness

329

(1)

Illustration: Luxury Vacation

330

(1)

Weight Reduction and Stop-Smoking Programs

330

(1)

Abortion

330

(1)

Itemized Deduction

331

(1)

Business Expense

331

(1)

Limitations on Medical Expense Deductions

331

(1)

Amount Deductible

331

(1)

Illustrations of Computation

332

(1)

Illustration 1

332

(1)

Illustration 2

332

(1)

Illustration 3

332

(1)

Reimbursed Expenses

333

(1)

Capital Acquisitions for Medical Care

333

(1)

Illustration 1: Improvement of Taxpayer's Property

334

(1)

Illustration 2: Improvement of Rented Property

334

(1)

Excessive Costs

334

(1)

Illustration 3: Accommodation to Handicap

335

(1)

Specially Prepared Food

335

(2)

Charitable Contributions

337

(32)

Charitable Contributions in General

337

(32)

Definition of Charitable Contribution

337

(1)

Religious Purpose of an Organization

338

(1)

Qualification as a Church

339

(1)

Fixed Fee for Religious Service or Benefit

339

(2)

Contribution or Gift

341

(1)

Substantiation Requirements

342

(1)

Disclosure of Information

343

(1)

Tickets as Compensation

343

(1)

Reward Money

344

(1)

Substantial Benefit to Donor

344

(1)

Contributions to Colleges that Entitle the Taxpayer to Purchase Tickets to Athletic Events

345

(1)

Insubstantial Benefit to Donor

345

(1)

Payment of Expenses of Other Persons Performing Services for a Charity

345

(1)

Gift Subject to Contingency

346

(1)

Administrative Inconsistency

346

(1)

Indirect Payment for Lobbying

347

(1)

Nondeductibility of Depreciation Allowance

347

(1)

Travel Expenses

347

(1)

Borrowed Funds

348

(1)

Declaratory Judgment

348

(1)

Scope of Review

348

(1)

Advance Notice Requirement

349

(1)

Public Policy Exclusions from Exempt Status

349

(1)

Limitations on Amount of Deduction

350

(1)

Gifts of Appreciated Property

350

(1)

Illustration 1: Property with Zero Basis

350

(1)

Illustration 2: Property with Dollar Basis

351

(1)

Illustration 3: Appreciation is Partially Capital Gain and Partially Ordinary Income

351

(1)

Illustration 4: Installment Obligation

351

(1)

Percentage Limitation on an Individual's Charitable Deduction

351

(1)

Definition of Contribution Base

352

(1)

Maximum Limitation

352

(1)

Limitation on Other Charitable Gifts

352

(1)

Illustration 1: Fifty Percent Limitation

353

(1)

Illustration 2: Thirty Percent Limitation

353

(1)

Maximum Limitation on Deductions for a Corporation's Charitable Gifts

354

(1)

Carryover of Unused Deduction

354

(1)

Illustration 1: Computation of Amount of Carryover

354

(1)

Illustration 2: Limitation on Use of Carryover

354

(1)

Illustration 3: Effect of Carryover Deduction on Gifts to ``B'' Charities

355

(1)

Illustration 4: Use of Carryover Deduction

355

(1)

Gift of Capital Gain Property

355

(1)

Tangible Personal Property

355

(1)

Illustration 1: Limitation of Amount of Gift

356

(1)

Illustration 2: Donee's Use of Property in Conduct of Charitable Function

356

(1)

Gifts to Certain Private Foundations

356

(1)

Other Gifts of Capital Gain Property

357

(1)

Thirty Percent Limitation

357

(1)

Carryover of Excess Contributions

357

(1)

Illustration 1: Operation of Thirty Percent Limitation and Carryover

357

(1)

Illustration 2: Effect that Gift of Capital Gain Property to an ``A'' Charity Has on Deductibility of a Cash Gift to a ``B'' Charity

358

(1)

Gifts of Capital Gain Property to ``B'' Charities

358

(1)

Election to Reduce Amount of Gift

359

(1)

Illustration 1: Acceleration of Timing of Deduction

360

(1)

Illustration 2: Effect on Gifts to ``B'' Charities

360

(1)

Bargain Sales

361

(1)

Illustration: Allocation of Basis

361

(1)

Gifts of Partial Interest in Property

362

(1)

Gifts of an Income Interest in a Trust

362

(1)

Gifts of Remainder Interests in a Trust

363

(1)

Charitable Remainder Annuity Trust

363

(1)

Charitable Remainder Unitrust

363

(1)

Pooled Income Fund

364

(1)

Exceptions for Gifts of Complete Interests

364

(1)

Contributions Not Made in Trust of Partial Interest in Property

364

(1)

Exceptions

364

(1)

Illustration: Uncompensated Lease of Property

365

(1)

Contribution of a Future Interest in Tangible Personalty

365

(1)

Illustration 1: Retention of Possession by Donor

365

(1)

Illustration 2: Donation of Possessory Interest to a Related Party

365

(1)

Illustration 3: Donation of Possessory Interest to a Nonrelated Party

366

(1)

Illustration 4: Restrictions on Donee's Use of Property

366

(1)

Contribution of Services

366

(1)

Donation of Blood to a Charity

366

(1)

Expenses Incurred in Providing Services

367

(1)

Assignment of Income

367

(1)

Itemized Deduction

367

(1)

Penalty for Overvaluation

367

(1)

Information Return

368

(1)

Business and Nonbusiness Expenses

369

(112)

Business and Nonbusiness Expenses

369

(112)

Ordinary Expenses: General

369

(1)

Trade or Business

370

(1)

Facts and Circumstances Test

371

(1)

Stock Investment Activity

371

(1)

Time When Business Commences

372

(1)

Interruption of Business

372

(1)

Activity Not Engaged in for Profit

372

(1)

Determining ``Profit-Making Activity''

373

(1)

Presumption

373

(1)

Taxable Income

374

(1)

Illustration 1: Hobby Expenses

374

(1)

Illustration 2: Non-Profit Oriented Deductions

375

(1)

Rental of a Dwelling Unit

375

(1)

Allocation

376

(1)

Limitation on Deductions

376

(1)

Allocation of Non-Profit Oriented Expenses

377

(1)

Exception for Principal Residence

378

(1)

Illustration

378

(2)

Rental for a Brief Period

380

(1)

Coordination with IRC § 183

380

(1)

Temporary Rental of Residence

381

(1)

Nonitemized Deductions

381

(1)

Nonbusiness Expenses

381

(1)

Compared with ``Trade or Business'' Expense

382

(1)

Illustration 1: Expenses of Seeking Alimony

382

(1)

Illustration 2: Expenses Incurred in Seeking Damages

382

(1)

Illustration 3: Expenses Incurred in Management of Income-Producing Property

383

Expenses Incurred in Reducing Taxpayer's Obligation to Pay Deductible Expenses

382

(1)

Tax-Related Expenses

383

(1)

Personal Expenses

384

(1)

Mixed Purposes

384

(1)

Deductibility Determined from the Source of the Obligation or from the Immediate Objective of the Expense

384

(1)

Illustration: Defense of Divorce Suit

384

(1)

Immediate Objective Controls Characterization

385

(1)

The Origin Test

385

(1)

Proper Use of the Origin Test

386

(1)

Business Deductions

387

(1)

Nonbusiness Deductions

387

(1)

Summary

388

(1)

Capital Expenditures

388

(1)

Illustration 1: Expense Arising from Acquisition of a Capital Asset

389

(1)

Illustration 2: Expense Arising from Acquisition of a Capital Asset

389

(1)

Illustration 3: Mixed Business and Personal Objectives

390

(1)

Illustration 4: Distinguishing Purposes of Closely Held Corporation from Purposes of Its Shareholder

390

(1)

Illustration 5: Difficulty of Identifying Origin

391

(1)

Illustration 6: Multiple Disputes

392

(1)

Misuse of the Origin Test

392

(1)

Capital Expenditures in Defending a Divorce Action

393

(1)

Tax Advice Incident to a Divorce

393

(1)

Conversion of Residence

394

(2)

Statutory Restrictions

396

(1)

Percent Limitation on Deduction of Entertainment and Meal Expenses

396

(1)

Illustration

396

(1)

Limitation on Deduction for Executive Compensation

397

(1)

Capital Expenditures

398

(3)

Small Cost Exception

401

(1)

Allocation to Year of Use

401

(1)

Illustration 1: Purchase of Tangible Property

401

(1)

Illustration 2: Purchase of Intangible Property

401

(1)

Illustration 3: Purchase of Property with an Inexhaustible Life

402

(1)

Illustration 4: Use of Depreciable Property in Constructing an Asset

402

(1)

Wages

402

(1)

Prepaid Expenses and the Cost of Currently Consumable Assets

402

(1)

Determining the Property of Expensing Prepayments or the Cost of Consumable Assets

403

(1)

Capital Expenditure versus Repairs

404

(1)

Caveat

404

(1)

Major Renovations

404

(1)

The Indopco Decision Has No Effect on the Deductibility of Repairs

405

(1)

Repair of Damage Caused by a Casualty

405

(1)

Environmental Clean-Up Costs

405

(1)

Developing or Purchasing Software

406

(1)

Purchase or Sale of an Asset

407

(1)

Expanding a Business

407

(2)

Congressional Action

409

(1)

Date on Which Active Trade or Business Begins

410

(1)

Current Deduction of Start-Up Expenditures

411

(1)

Abandoned Project

411

(1)

Investigatory Search

412

(1)

Expenses of Producing Property---the Uniform Capitalization Rule

413

(1)

Defense of Title

413

(1)

Illustration: Dispute Over Title

413

(1)

Protection of Goodwill

413

(1)

Expense of Seeking or Obtaining Employment

414

(1)

Taxpayer Already in the Business

414

(1)

The Expense of Obtaining or Retaining a Political Office

414

(1)

The Commissioner's View

415

(1)

Administrative Feasibility

416

(1)

Reimbursed Expenses for Interviewing for a Job

416

(1)

Deductibility of Capital Expenditures

417

(1)

Depreciation and Amortization

417

(1)

Illustration 1: Allocation of Cost Between Depreciable and Nondepreciable Items

417

(1)

Illustration 2: Depreciation of Intangible Asset

417

(1)

Uniforms

418

(1)

Itemized Deduction

418

(1)

Test for Determining ``Adaptable to General Use''

418

(1)

Books, Films, Plays, Photographs, Sound Recordings, Fine Art Products, and Similar Properties

419

(1)

Ordinary and Necessary

420

(1)

Necessary Defined

420

(1)

Failure to Seek Reimbursement

420

(1)

Ordinary Defined

421

(1)

Current View

422

(1)

Roles of the Term ``Ordinary''

422

(1)

Office in Home

423

(1)

Exceptions

423

(1)

Principal Place of Business

424

(3)

Illustration 1. Others Perform Administrative Tasks Too

427

(1)

Illustration 2. Taxpayer Carries Out Minor Administrative Duties At Another Fixed Location

427

(1)

Place of Business Used by Patients, Clients, or Customers in Meeting or Dealing with the Taxpayer

428

(1)

Employee's Home Office

428

(1)

Storage Use

429

(1)

Limitation on Deductions

429

(1)

Unreasonably Large Expenses

430

(1)

Bribes, Illegal Kickbacks, and Other Illegal Payments

430

(1)

Payments to Government Officials

430

(1)

Other Bribes and Kickbacks

430

(1)

Illegal Payments

430

(1)

No Penalty

431

(1)

Applications of Illegal Payment Rule

431

(1)

Miscellaneous

431

(1)

Lobbying Expenses

431

(1)

Fines and Penalties

431

(1)

Illustration: Characterization of a Fine

432

(1)

Deductible Civil Penalty

432

(1)

Purpose of Penalty

433

(1)

Restitution Payments

433

(1)

Treble Damages Under the Antitrust Laws

434

(1)

Contributions to Charitable Organizations

434

(1)

Credit for Child Care and Household Expenses

434

(1)

Qualifying Individuals

435

(1)

Employment-Related Expenses

435

(1)

Limitations on Credit

436

(1)

Dollar Limit

436

(1)

Earned Income Limitation

436

(1)

Maximum Income

436

(1)

Payments to Dependents

437

(1)

Married Taxpayers

437

(1)

Travel Expenses

437

(1)

General

437

(1)

Conditions to be Satisfied

438

(1)

``Transportation Costs'' Distinguished

438

(1)

Deduction of the Cost of Meals That Are Not Incurred as Travel Expenses

439

(1)

Travel Expense of Individual Accompanying Taxpayer

439

(1)

Away From Home: General

440

(1)

Military Assignment

440

(1)

Stidger and Non-Military Taxpayers

441

(1)

Overnight or ``Sleep or Rest'' Rules

441

(1)

Transportation Between Residence and Work Location (Commuting Expense)

441

(2)

Major and Minor Post

443

(1)

Illustration

444

(1)

Travel Among Multiple Jobs

444

(1)

Office in Residence as Minor Post

445

(1)

Boundaries of a Taxpayer's ``Home''

445

(1)

No Principal Place of Business but a Regular Place of Abode

445

(1)

No Principal Place of Business and No Permanent Residence

446

(1)

Temporary Jobs

447

(1)

Summer Employment of a Student

447

(1)

Exigencies of the Business

448

(1)

Commuting Expenses

448

(1)

Transportation of Tools

448

(1)

Requisities for Deduction

448

(1)

The Fausner Decision

448

(1)

The Supreme Court's Decision

449

(1)

The Commissioner's Revised Position

449

(1)

Litigation Position of the Commissioner

450

(1)

Future Treatment

450

(1)

Temporary Job Exception

451

(1)

Meaning of Temporary

451

(2)

Applicability to the General Provisions of IRC § 162(a)

453

(1)

Overnight Rule

453

(1)

Unreasonableness of Application

454

(1)

Policy Considerations for Allowing a Deduction for Extraordinary Expenses for Commuting to a Temporary Job

455

(1)

Deductible if Necessary to Trade or Business

455

(1)

Extraordinary Away from Home Expenses

456

(1)

No Regular Place of Business

456

(1)

Travel to Nearest Habitable Community

456

(1)

Illustration

457

(1)

Justification for the Deduction

457

(1)

Commuting Combined With Tour of Duty

457

(1)

Moving Expenses

458

(1)

Deductible Items

458

(1)

Deductions For Relocation Expenses

459

(1)

Nonitemized Deduction

459

(1)

Reimbursement by Employer

459

(1)

Members of the Armed Forces

459

(1)

Substantiation and Records

459

(1)

Education Expenses

460

(1)

Deductible Expenses

460

(1)

Nondeductible Education Expenses

460

(1)

Illustration 1: Continuing Professional Education Courses

460

(1)

Illustration 2: Law School Course

460

(1)

Illustration 3: University Courses

461

(1)

Bar Review Courses

461

(1)

Common Sense

462

(1)

Teachers

462

(1)

Previously Engaged in a Trade or Business

463

(1)

Travel Expenses

463

(1)

Frustration of Public Policy

464

(1)

Illegal Under State Law

464

(1)

Reconciliation

464

(1)

Expenses to Defend Criminal Action

465

(1)

Illustration 1: Defending Tax Fraud Charges

465

(1)

Illustration 2: Resisting Forfeiture of an Asset

465

(1)

Theft Loss from Illegal Transaction

465

(1)

Loss Deductions That Contravene Public Policy

466

(1)

Bad Debts

467

(1)

Nature of Deduction

467

(1)

Business versus Nonbusiness Debts

467

(1)

Definition

467

(1)

Debt of Corporation to Its Shareholder

467

(1)

Primary Purpose

468

(1)

Extension of Generes

468

(1)

Guarantee of a Corporate Debt

469

(1)

Guarantee of a Noncorporate Debt

469

(1)

Guarantee Creating Deductible Bad Debt

469

(1)

Amount Deductible

469

(1)

Disallowance of Bad Debt Reserve

469

(1)

Collection of Previously Deducted Debt

470

(1)

Illustration: Operation of Tax Benefit Rule

470

(1)

Worthless Securities

471

(1)

At Risk Limitation

472

(1)

Separately Identified Activities

472

(1)

Safe Harbors

472

(1)

Partnerships and S Corporations

472

(1)

Limitation on Deductions

473

(1)

Carryover of Nondeductible Losses

473

(1)

Gain Recognized on the Disposition of an Activity

474

(1)

Real Property

474

(1)

Liberal Definition of ``At Risk''

474

(1)

Qualified Nonrecourse Financing

474

(1)

Qualified Person

475

(1)

Related Person

475

(1)

Basis

476

(1)

Computation of At Risk Amount

476

(1)

Additions to the At Risk Amount

476

(1)

Reduction of At Risk Amount

477

(1)

Recapture of Loss Deduction

478

(1)

Computation of Amount of Recapture Section 465(d) Losses

478

(1)

Illustration: Operation of Recapture Rule

478

(1)

Interaction with Passive Activity Losses and Credits

479

(1)

Donative Transfer of Entire Interest in Activity With Suspended Section 465(d) Loss

479

(1)

Donative Transfer of Entire Interest in Activity In Which Transferor Has a Positive Amount at Risk

479

(1)

Transfer of an Interest in an Activity by Reason of Death

480

(1)

Depreciation and Amortization

481

(18)

Cost Recovery

481

(18)

General

481

(1)

Meaning of Depreciation

482

(1)

Accelerated Cost Recovery System (ACRS)

483

(1)

Modified Accelerated Cost Recovery System (MACRS)

483

(1)

Continuing Significance of IRC § 167

483

(1)

Sufficiency of Interest

484

(1)

Depreciation as a Capital Expenditure

484

(1)

Starting Date for Depreciation

484

(1)

Depreciable Property

484

(1)

Tangible Property

484

(1)

Intangible Property

485

(1)

Goodwill and Similar Intangible Properties

485

(3)

Inventory or Stock in Trade

488

(1)

Importance of Distinction Between Depreciation and Amortization

488

(1)

Shortened Amortization Period

488

(1)

Elements of a Depreciation Deduction

488

(1)

Useful Life

488

(1)

No Exhaustible Life

489

(1)

General Asset Accounts

489

(1)

Conclusive Guidelines

489

(1)

Depreciation or Amortization of a Term Interest

490

(1)

Salvage Value

490

(1)

Methods of Depreciation

490

(1)

Units of Production Method

491

(1)

Illustration

491

(1)

Straight-Line Method

491

(1)

Illustration

491

(1)

Declining Balance Method

491

(1)

Salvage Value Disregarded

492

(1)

Minimum Useful Life

492

(1)

New Property

492

(1)

Illustration

492

(1)

Rate of Depreciation

492

(1)

Illustration

493

(1)

Sum of the Years-Digits Method

493

(1)

Illustration

493

(1)

Shorthand Technique

494

(1)

Remaining Life

494

(1)

Illustration

494

(1)

Required Useful Life

495

(1)

New Property

495

(1)

Accelerated Methods

495

(1)

Other Methods of Depreciation

495

(1)

Income Forecast Method

495

(1)

Land

496

(1)

Illustration

496

(1)

Depreciation of Improved Real Estate

496

(1)

Adjustment to Basis

497

(1)

Recapture of Depreciation

497

(1)

Depreciation in the Year of Sale

497

(2)

Modified Accelerated Cost Recovery System (MACRS)

499

(22)

Cost Recovery

499

(22)

General

499

(1)

Expensing of the Cost of Certain Business Assets

499

(3)

Estates and Trusts

502

(1)

Illustration

502

(1)

MACRS (The Modified Accelerated Cost Recovery System)

503

(1)

MACRS Property

503

(1)

Determinable Useful Life

504

(1)

Adjusted Basis

505

(1)

Salvage Value

505

(1)

Works of Art

505

(1)

Determination of the Amount of Depreciation

506

(1)

Classification of Property

506

(1)

Use of ADR Class Lives

506

(1)

Classification by Class Life

507

(1)

Classification by Specific Provision in IRC § 168

508

(1)

Monitoring of MACRS Categories

509

(1)

Buildings

509

(1)

Change in Use

509

(1)

Short Taxable Year

509

(1)

Applicable Method of Depreciation

509

(1)

Method for Depreciating Buildings

510

(1)

Method for Depreciating 15-Year and 20-Year Property

510

(1)

Method for Depreciating Other Properties

510

(1)

Election to Use the Straight-Line or 150 Percent Declining Balance Method

510

(1)

Illustration

511

(1)

Straight-Line under the Alternative System

511

(1)

Applicable Recovery Period

512

(1)

Alternative System

512

(1)

Applicable Convention

512

(1)

Mid-Month Convention

513

(1)

Half-Year Convention

513

(1)

Mid-Quarter Convention

513

(1)

Illustrations

514

(1)

Illustration 1

514

(1)

Illustration 2

514

(1)

Illustration 3

515

(1)

Illustration 4

516

(1)

Alternative Depreciation System

516

(1)

Properties for Which the Alternative System is Required

517

(1)

Election

517

(1)

Corporations' Earnings and Profits

517

(1)

Minimum Tax

518

(1)

Optional Tables

518

(1)

Luxury Automobiles

518

(1)

Disposition of MACRS Property in a Nonrecognition Transaction

518

(3)

Miscellaneous Credits and Deductions

521

(16)

Miscellaneous Credits and Deductions

521

(16)

Credits and Deductions in General

521

(1)

Examples of Tax Credits and Deductions

521

(1)

Repeal of the Regular Investment Tax Credit

521

(1)

Earned Income Credit

522

(1)

Determination of Credit

522

(1)

Earned Income Amount

523

(1)

Earned Income

524

(1)

Eligible Individual

524

(1)

Qualifying Child

524

(1)

Credit Percentage

525

(1)

Phaseout of Credit

525

(1)

Illustration

526

(1)

Refundable Credit

527

(1)

Married Individual

527

(1)

Alternative Minimum tax

527

(1)

Tables Provided by the Service

527

(1)

Advance Receipt of A Portion of an Individual's Credit

527

(1)

Return of Income Held Under a Claim of Right

527

(1)

Illustration

528

(1)

Tax Bracket Differential

528

(1)

Statutory Relief

528

(1)

Limitations

529

(1)

Unrestricted Right

529

(1)

Embezzled Funds and Other Funds Obtained by Intentional Wrongdoing

530

(1)

Obligation to Repay

530

(1)

Validity

531

(1)

Mathematical or Clerical Error

531

(1)

Net Operating Loss

532

(1)

Prompt Refund

532

(1)

Significance of IRC § 1341

532

(1)

Other Credits

532

(1)

Net Operating Loss Carryover and Carryback

532

(1)

Computation

533

(1)

Types of Losses Deductible

533

(1)

Chronology of Carryover

533

(1)

Depletion

533

(1)

Depletable Property

533

(1)

Economic Interest

534

(1)

Methods of Depletion

534

(1)

Cost Depletion

534

(1)

Illustration 1

534

(1)

Illustration 2

534

(1)

Percentage Depletion

535

(1)

Percentage Based on Type of Deposit

535

(1)

Cumulative Depletion Deduction Allowed in Excess of Taxpayer's Basis

535

(1)

Alimony

535

(1)

Income in Respect of a Decedent (IRD)

536

(1)

Deductions in Respect of a Decedent

536

(1)

Joint Returns, Head of Household, and Surviving Spouse

537

(8)

Joint Returns, Head of Household, and Surviving Spouse

537

(8)

Joint Return

537

(1)

Qualifications

537

(1)

Election for Nonresident Alien

537

(1)

Marital Status

537

(1)

Change of Election

538

(1)

Joint Return with a Deceased Spouse

538

(1)

Tax Computation for Joint Returns

538

(1)

Marriage Bonus and Marriage Penalty

538

(1)

Combining Deductions

539

(1)

Increase of Limitations on Deductions

539

(1)

Qualification for Tax Advantage

539

(1)

Disadvantages of Joint Returns

540

(1)

Joint and Several Liability

540

(1)

Relief from Joint Liability

540

(1)

Innocent Spouse Election

540

(1)

Separate Liability Election

541

(1)

Loss of Dependency Deduction

542

(1)

Medical Deduction

542

(1)

Marriage Penalty

542

(1)

Surviving Spouse

542

(1)

Definition

542

(1)

Limited to Two Years

543

(1)

Head of Household

543

(1)

Definition

543

(2)

Alternative Minimum Tax

545

(16)

Alternative Minimum Tax

545

(16)

Establishment of the Minimum Tax

545

(1)

Alternative versus Add-On Minimum Tax

545

(1)

Exclusivity of the Alternative Minimum Tax

545

(1)

Alternative Minimum Taxable Income (AMTI)

546

(1)

``Adjustments'' and ``Tax Preferences''

546

(1)

Determination of Alternative Minimum Tax (AMT)

546

(1)

Noncorporate Taxpayers---Taxable Excess, Tentative Minimum Tax, and AMT

547

(1)

Corporate Taxpayers---Tentative Minimum Tax and AMT

547

(1)

Minimum Tax Income Alterations (MTIA)

548

(1)

Tax Preference Items (TPI)

548

(1)

Percentage Depletion

548

(1)

Intangible Drilling Costs

548

(1)

Accelerated Depreciation or Amortization of Certain Properties Placed in Service Prior to 1987

548

(1)

Tax-Exempt Interest

549

(1)

Small Business Stock

549

(1)

AMTI Adjustments

549

(1)

AMTI Adjustments Applicable to All Taxpayers

549

(1)

Depreciation

549

(1)

Tangible Property Placed in Service after 1986 and before 1999

550

(1)

Tangible Property Placed in Service after 1998

551

(1)

No Adjustments for Deductions Allowed as Expenses under IRC § 179

551

(1)

Basis Adjustment

551

(1)

Use of the Completed Contract Method

552

(1)

Mining Exploration and Development Costs

552

(1)

Certified Pollution Control Facilities

552

(1)

Alternative Tax Net Operating Loss Deduction (ATNOL)

552

(1)

Alcohol Fuel Credit

552

(1)

AMTI Adjustments Applicable to Noncorporate Taxpayers and to Certain Corporations

553

(1)

Denial of Tax Shelter Farm Losses

553

(1)

Corporate and Noncorporate Taxpayers

553

(1)

Disallowance of Passive Activity Losses (PAL)

553

(1)

Corporate and Noncorporate Taxpayers

553

(1)

AMTI Adjustments Applicable Only to Individuals

553

(1)

Itemized Deductions

553

(1)

Medical Expenses

554

(1)

Taxes

554

(1)

Interest

554

(1)

Miscellaneous Itemized Deductions

554

(1)

Standard Deduction and Personal Exemption

554

(1)

Other Itemized Deductions

554

(1)

Circulation, Research, and Experimental Expenditures

555

(1)

Noncorporate Taxpayers

555

(1)

Incentive Stock Options

555

(1)

AMTI Adjustments Applicable Only to Corporations

555

(1)

AMTI Adjustment for Book Income

555

(1)

Adjusted Net Book Income

555

(1)

AMTI Adjustment Based on Adjusted Current Earnings

556

(1)

Negative Adjustments

556

(1)

Adjusted Current Earnings (ACE)

556

(1)

Corporate Taxpayers

557

(1)

Computation of Alternative Minimum Tax

557

(1)

Alternative Minimum Taxable Income (AMTI)

557

(1)

Alternative Minimum Tax Rates

558

(1)

Noncorporate Taxpayers

558

(1)

Corporate Taxpayers

558

(1)

Exemption Amounts

558

(1)

Noncorporate Taxpayers

558

(1)

Married Individual Filing Jointly and Surviving Spouses

558

(1)

Single Individual Other Than a Surviving Spouse

558

(1)

Married Individual Filing Separately, Estate, or Trusts

558

(1)

Corporate Taxpayers

558

(1)

Adjusted Basis of Certain Properties for Adjusted Minimum Tax Purposes

559

(1)

Credits

559

(1)

Alternative Minimum Tax Foreign Tax Credit (AMTFTC)

559

(1)

Regular Tax

559

(1)

Minimum Tax Credit

559

(1)

Special Election for Prolonged Writeoffs of Certain Expenditures

560

(1)

Attribution of TPI

560

(1)

Tax Benefit Requirement

560

(1)

Realization of Gain or Loss on the Disposition of Property

561

(26)

Realization of Gain or Loss on the Disposition of Property

561

(26)

Recovery of Cost

561

(1)

Gain Attributable to Inflation

562

(1)

Cost Reflecting Unlawful Expenditure

563

(1)

Part Gift, Part Sale

563

(1)

Illustration

564

(1)

Disguised Sales

564

(1)

Sale of a Term Interest

564

(1)

Disregard of Basis

564

(1)

Definition of ``Term Interest''

565

(1)

Exception

565

(1)

Illustration 1

565

(1)

Illustration 2

565

(1)

Amount Realized

566

(1)

Encumbered Property

566

(1)

Nonrecourse Debt in Excess of Value

566

(1)

Recourse Debt in Excess of Value---Transfer to Creditor Who Cancels Debt

567

(1)

Illustration

567

(1)

Rationale for Different Treatment of Recourse and Nonrecourse Debts

568

(1)

Recourse Debt in Excess of Value of Property---Transfer to Creditor Who Does Not Cancel Debt

569

(1)

Recourse Debt in Excess of Value of Property---Transfer to Third Party Who Assumes the Debt

569

(1)

Transfer Subject to a Liability That Was Incurred on Taxpayer's Acquisition of the Transferred Property

570

(1)

Illustration 1

570

(1)

Illustration 2

571

(1)

Illustration 3

571

(1)

Insolvent Transferor

572

(1)

Gift of Property Subject to Nonrecourse Debt

572

(1)

Transfer in Trust for Spouse or Former Spouse

573

(1)

Illustration

573

(1)

Expenses of Sale

573

(1)

Selling Commissions

573

(1)

Transfer Subject to Gift Tax (Net Gifts)

573

(1)

Illustration

574

(1)

Computation of Donor's Gain

574

(1)

Donee's Basis

574

(1)

Illustration

575

(1)

Receipt of Property with Unascertainable Value

575

(1)

Installment Sale Treatment

576

(1)

Illustration

576

(1)

Extraordinary Circumstances

577

(1)

Material Differences in Exchanged Properties

577

(1)

The Treatment of the Modification of A Debt Instrument as an Exchange of Properties

578

(1)

Significant Modification

578

(3)

Installment Instruments

581

(1)

Basis

581

(1)

General

581

(1)

Encumbered Property

581

(1)

Illustration 1

582

(1)

Illustration 2

582

(1)

Allocation of Basis

582

(1)

General

582

(1)

Illustration

582

(1)

Sale of Stocks

583

(1)

No Means of Allocations

583

(1)

Illustration

583

(1)

Settlement of Obligation

584

(1)

Illustration 1

584

(1)

Illustration 2

584

(1)

Marital Transfers

584

(1)

Gifts of Appreciated Property to a Political Organization

585

(1)

Item by Item Determination

585

(2)

Recognition of Gain or Loss on the Disposition of Property

587

(42)

Recognition of Gain or Loss on the Disposition of Property

587

(42)

General

587

(1)

Illustration

587

(1)

Nonrecognition of Gain or Loss on Certain Exchanges of Property

587

(1)

General

587

(1)

Illustration

588

(1)

Exchanges of Like-Kind Property

588

(1)

Like Kind

588

(2)

Personal Properties

590

(1)

Depreciable Tangible Personal Property

590

(2)

Intangible Personal Property

592

(1)

Illustration 1. Copyrights on Novels

592

(1)

Illustration 2. Copyrights on Novels and Songs

592

(1)

Goodwill or Going Concern Value

592

(1)

Nondepreciable Tangible Personal Property

592

(1)

Mandatory Nonrecognition

593

(1)

Property Acquired for Purpose of Exchanging It for Other Property

593

(1)

Multiple Party Exchanges

593

(1)

Illustration

594

(1)

Deferred Exchanges---The Starker Principle

594

(1)

Starker I

595

(1)

Starker II and Starker III

595

(1)

Deferred Exchanges---Time Limitations

596

(1)

Acquisition Directly from Third Party

597

(1)

Momentary Ownership of Acquired Property

597

(1)

Momentary Ownership of Property Prior to the Exchange

598

(1)

Exchanges With A Related Person

599

(1)

Boot

600

(1)

Effect of Boot on Recognition of Gain

600

(1)

Illustration

600

(1)

Liabilities as Boot

601

(1)

Illustration 1

601

(1)

Illustration 2

602

(1)

Effect of Boot on Recognition of Loss

603

(1)

Basis of Property Received in a Section 1031 Exchange

603

(1)

Illustration 1

604

(1)

Illustration 2

604

(1)

Overview

605

(1)

Multiple Properties

605

(9)

Illustration

614

(4)

Involuntary Conversions

618

(1)

Elective

618

(1)

Requirements

618

(1)

Statutory Period

619

(1)

Election

619

(1)

Similar or Related in Service or Use

619

(1)

Investment in a Partnership

619

(1)

Residence

620

(1)

Basis

620

(1)

Illustration

620

(1)

Other Nonrecognition Provisions

620

(1)

Sale of Residence

620

(3)

Interface of IRC § 121 and 1033

623

(1)

Basis

623

(1)

Other Sales or Exchanges

623

(1)

Disallowance of Loss Deduction for Certain Sales or Exchanges

624

(1)

Sales Between Related Parties

624

(1)

Transferee's Gain on Subsequent Sale

624

(1)

Illustrations

624

(1)

Illustration 1

624

(1)

Illustration 2

625

(1)

Illustration 3

625

(1)

Sales Between Two Related Trusts

625

(1)

Denial of Certain Deductions

625

(1)

Wash Sales

625

(1)

Forbidden Period

626

(1)

Basis of Purchased Stocks or Securities

626

(1)

Matching Stocks or Securities Sold with Those Acquired

626

(1)

Illustrations

626

(1)

Illustration 1

626

(1)

Illustration 2

627

(1)

Illustration 3

627

(2)

Capital Gains and Losses

629

(40)

Capital Gains and Losses

629

(40)

General

629

(1)

Tax Treatment of Capital Gains and Losses

629

(1)

Groupings of Long- and Short-Term Gains and Losses

629

(1)

Netting of Gains and Losses

630

(1)

Net Capital Gain

630

(1)

Significance of Net Capital Gain Concept

630

(1)

Application of the Maximum Tax Rates to Net Capital Gains of Noncorporate Taxpayers

631

(1)

Treatment of Gains

632

(4)

Allocation of Capital Losses

636

(1)

Illustration 1

637

(1)

Illustration 2

638

(2)

Additional Tax Rate

640

(1)

Significance of Groupings

640

(1)

Limitation on Capital Loss Deductions: General

641

(1)

Deductible from Capital Gains

641

(1)

Illustration 1

641

(1)

Illustration 2

641

(1)

Deductible from Ordinary Income

642

(1)

Illustration

642

(1)

Carryover of Capital Loss: Corporations

642

(1)

Limitations

643

(1)

Loss Not Absorbed by Carryback

643

(1)

Carryover of Capital Loss: Noncorporate Taxpayers

643

(1)

Contrasted with Corporate Taxpayers

643

(1)

Priority of Allocation

644

(1)

Unclaimed Carryover Loss Deduction

644

(1)

Definition of ``Capital Asset''

644

(1)

Statutory Definition

644

(1)

Meaning of the Term ``Property''

645

(1)

Compensatory Payments

645

(1)

Relinquishment of Personal Rights

645

(1)

Validity of Narrow Construction of the Term ``Property''

645

(1)

Statutory Exclusions

646

(1)

Property Held Primarily for Sale to Customers in the Ordinary Course of the Taxpayer's Trade or Business

646

(1)

Taxpayer's Purpose

646

(1)

Customers

646

(1)

Ordinary Course of Trade or Business

647

(1)

Illustration 1

647

(1)

Illustration 2

647

(1)

Definition of ``Primarily''

647

(1)

Dual Purpose

648

(1)

Illustration

648

(1)

Change of Purpose

649

(1)

Illustration 1

649

(1)

Illustration 2

650

(1)

Undecided Purpose

651

(1)

Treatment in the Courts

651

(1)

Appellate Review

651

(1)

Real Property Used in a Trade or Business and Depreciable Property Used in a Trade or Business

652

(1)

Illustration 1

652

(1)

Illustration 2

652

(1)

Illustration 3. Goodwill

653

(1)

Copyrights, Literary or Musical Compositions, and Similar Properties

653

(1)

Patents

653

(1)

Accounts Receivable

654

(1)

Real Property Subdivided for Sale

654

(2)

Judicial Exceptions to Capital Gains Treatment

656

(1)

Anticipation of Ordinary Income

656

(1)

Corn Products Doctrine

656

(1)

Rationale

656

(1)

Repudiation of the Doctrine

657

(1)

Corporate Stock

657

(2)

Sale of Right to Personal Services or Contract Rights

659

(1)

Personal Services

659

(1)

Contract Rights

659

(1)

Illustration

659

(1)

Characterizing Payment

660

(1)

Illustration

660

(1)

Leasehold Interest

660

(1)

Correlation with Prior Transactions

661

(1)

Illustration 1

661

(1)

Illustration 2

661

(1)

Insider Stock Profits

661

(1)

Application

662

(1)

Sale or Exchange

662

(1)

Involuntary Conversion

663

(1)

Abandonment

663

(1)

Bootstrap Sales

663

(1)

Cancellation of Lease or Distributor's Agreement

663

(1)

Statutory Characterization of Certain Transactions

664

(1)

Bad Debt Deduction

664

(1)

Worthless Security

664

(1)

Holding Period

664

(1)

Tacking

664

(1)

Illustration

664

(1)

Tacking in Tax-Free Exchanges

665

(1)

Illustration 1

665

(1)

Illustration 2

665

(1)

Gain from Qualified Small Business Stock

665

(1)

Exclusion from Gross Income

665

(1)

Limitation on Amount of Exclusion

666

(1)

Eligible Gain

666

(1)

Treatment of Non-Excluded Eligible Gain

666

(1)

Minimum Tax

666

(1)

Section 1202 Gain

666

(1)

Qualified Small Business

667

(1)

Qualified Small Business Stock

667

(2)

Quasi-Capital Assets and Recapture of Depreciation

669

(22)

Quasi-Capital Assets and Recapture of Depreciation

669

(22)

Background: Property Used in Trade or Business

669

(1)

Congressional Relief

669

(1)

IRC § 1231

670

(1)

Transactions Included in IRC § 1231

670

(1)

Involuntary Conversion Qualified

671

(1)

Illustration 1

671

(1)

Illustration 2

671

(1)

Definition of ``Property Used in the Trade or Business''

671

(1)

Property Excluded

672

(1)

Compared with Exclusion from Capital Assets

672

(1)

Corn Products Doctrine

673

(1)

Illustration 1

673

(1)

Illustration 2

674

(1)

How IRC § 1231 Applies to Gain and Losses

674

(1)

Computation of the Hotchpot

674

(1)

Gains and Losses Included

674

(1)

Gains Excluded

674

(1)

Gains and Losses from Certain Involuntary Conversions

675

(1)

Unrecaptured Section 1250 Gain

675

(1)

Recapture of Net Section 1231 Losses

675

(1)

Allocation of Recapture

675

(1)

Illustrations: Operation of IRC § 1231

676

(1)

Illustration 1

676

(1)

Illustration 2

676

(1)

Illustration 3

677

(1)

Illustration 4

677

(1)

Illustration 5

678

(1)

Illustration 6

678

(1)

Recapture of Depreciation: General

679

(1)

Illustration of Purported Abuse of Trading a Capital Gain for Ordinary Deductions

679

(1)

Statutory Imposition of Recapture

679

(1)

IRC § 1245: In General

680

(1)

Priority of Recapture of Depreciation Deductions

680

(1)

Section 1245 Property

681

(1)

Computation of Ordinary Income

682

(1)

Recomputed Basis

682

(1)

Illustration 1

682

(1)

Illustration 2

683

(1)

Illustration 3

683

(1)

Illustration 4

683

(1)

Exceptions to IRC § 1245

684

(1)

Recapture of Depreciation Taken on Buildings

684

(1)

Recapture for the Disposition of Buildings That Were Placed into Service Between 1981 and 1986

685

(1)

Current Treatment

685

(1)

Corporate Disposition

686

(1)

Sale of a Business

686

(1)

Gain and Loss

686

(1)

Goodwill

686

(1)

Going Concern Value

687

(1)

Covenant Not to Compete

687

(1)

Substance over Form Doctrine---Availability to Taxpayer

688

(3)

Assignment and Anticipation of Income, ``Kiddie Tax,'' and Installment Sales

691

(28)

Assignment and Anticipation of Income, ``Kiddie Tax,'' and Installment Sales

691

(28)

Splitting of Income

691

(1)

Illustration

691

(1)

Devices

691

(1)

Citizens of Community Property States

691

(1)

Citizens of States Having a Marital Property Act

692

(1)

Anticipatory Assignment of Income

692

(1)

Assignment of Income from Services

692

(1)

Illustration of Attempted Income Splitting

692

(1)

Illustration: Assignment of Renewal Commissions

692

(1)

Services in Consideration of Payment to Third Parties

693

(1)

Illustration 1

693

(1)

Illustration 2

693

(1)

Illustration 3

694

(1)

Assignment of Income from Property

694

(1)

Illustration

694

(1)

Assignment of Income Interest

695

(1)

Illustration 1: Transfer of Interest from Bonds

695

(1)

Illustration 2: Transfer of Term Interest for a Period of Less Than Ten Years

696

(1)

Illustration 3: Transfer of Entirety of Transferor's Interest

696

(1)

Illustration 4: Transfer of Fraction of Transferor's Interest or Transfer of an Annuity for the Period of the Transferor's Interest

697

(1)

Illustration 5: Transfer of Term Interest for a Period of More Than Ten Years

697

(1)

Illustration 6: Income Earned by an Agent

698

(1)

Conversion of Services to Property

698

(1)

Discharge of Debt

699

(1)

Waiver of Statutory Fee

700

(1)

Anticipation of Future Income

700

(1)

Illustration 1

700

(1)

Illustration 2

701

(1)

Illustration 3

701

(1)

Illustration 4

701

(1)

Illustration 5

702

(1)

Change of Timing of Recognition

702

(1)

Family Partnerships

702

(1)

General

702

(1)

Income Splitting

703

(1)

Judicially Imposed Restriction

703

(1)

Statutory Resolution

703

(1)

Bona Fides

704

(1)

Corporate Tax Parallel

704

(1)

Taxation of Child's Unearned Income---Kiddie Tax

704

(1)

Income Splitting with Minor Children

704

(1)

Dependent's Deduction for Personal Exemption

705

(1)

Dependent's Use of Standard Deduction

705

(1)

Kiddie Tax on Passive Income

705

(1)

Children Who Are Subject to the Kiddie Tax

705

(1)

Operation of the Kiddie Tax

706

(1)

``Earned Income''

706

(1)

Net Unearned Income

706

(1)

Amount of Child's Income That is Subject to Kiddie Tax

707

(1)

Application of the Kiddie Tax

707

(1)

Computation of the Child's Tax

707

(1)

Partial Tax on Net Unearned Income---The ``Allocable Parental Tax''

708

(1)

Total Tax Liability

708

(1)

Illustrations

708

(1)

Illustration 1

709

(1)

Illustration 2

709

(1)

Illustration 3

710

(1)

Sales Under the Installment Method

711

(1)

Property Disqualified from Installment Treatment

711

(1)

Sale of Depreciable Property to or by a Controlled Entity

712

(1)

Recognition of Recapture Income

712

(1)

Contingent Selling Price

712

(1)

Nondealer Dispositions

713

(1)

Interest Payments

713

(1)

Pledges of Installment Obligations

714

(1)

Installment Sale to Related Party

714

(1)

Definitions

714

(1)

Selling Price

714

(1)

Total Contract Price

715

(1)

Gross Profit

715

(1)

Payments

715

(1)

Installment Reporting

715

(1)

Illustration

715

(1)

Disposition of Installment Obligation

716

(1)

Illustration

716

(1)

Exceptions

717

(1)

Cancellation at Obligee's Death

717

(1)

Change of Terms of Installment Obligation

717

(2)

Income in Respect of a Decedent (IRD)

719

(6)

Income in Respect of a Decedent (IRD)

719

(6)

Definition of ``Income in Respect of a Decedent'' (IRD)

719

(1)

Common Examples of IRD

719

(1)

Reporting of IRD

720

(1)

Illustrations of IRD

721

(1)

Illustration 1

721

(1)

Illustration 2

721

(1)

Characterization

721

(1)

Basis

721

(1)

Disposition of Rights to IRD

721

(1)

General

721

(1)

Illustration

722

(1)

Exceptions

722

(1)

Income Tax Deductions Allowed

722

(1)

Deductions for Federal Estate Taxes Paid

722

(1)

Net Value of IRD

723

(1)

Computation of Deduction for IRD

723

(1)

Collection of a Portion of an IRD Item

723

(1)

Deduction in Respect of a Decedent

723

(1)

Restriction

724

(1)

Double Deductions Allowed

724

(1)

Table of Internal Revenue Code Sections

725

(10)

Index

735

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Federal Income Tax: A Student's Guide to the Internal Revenue Code

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