Income Tax Fundamentals 2004

A concise, practical guide to personal federal income tax form preparation, Whittenburg and Altus-Buller's text/workbook format presents material in easy-to-digest sections with self-checks, on-line quizzes,multiple examples and review problems. Perfect for a hands-on approach to taxes!

Preface

ix

As We Go to Press

xi

How to Use This Text

xii

The Individual Income Tax Return

History and Objectives of the Tax System

1

(1)

Reporting and Taxable Entities

2

(3)

The Tax Formula for Individuals

5

(3)

Who Must File and Where to File

8

(3)

Filing Status and Tax Computation

11

(5)

Personal and Dependency Exemptions

16

(5)

The Standard Deduction

21

(1)

Limitation on Total Itemized Deductions

22

(2)

Gains and Losses

24

(2)

Tax and the Internet

26

(1)

Electronic Filing (e-Filing)

27

(1)

Questions and Problems

28

Gross Income and Exclusions

The Nature of Gross Income

1

(3)

Interest and Dividend Income

4

(2)

Alimony

6

(4)

Prizes and Awards

10

(1)

Annuities

11

(3)

Life Insurance

14

(2)

Gifts and Inheritances

16

(1)

Scholarships

16

(1)

Accident and Health Insurance

17

(1)

Meals and Lodging

18

(1)

Municipal Bond Interest

18

(1)

Social Security Benefits

19

(2)

Unemployment Compensation

21

(1)

Employee Fringe Benefits

21

(3)

Questions and Problems

24

Business Expenses and Retirement Plans

Rental Income and Expenses

1

(3)

Passive Loss Limitations

4

(3)

Bad Debts

7

(4)

Inventories

11

(1)

Net Operating Losses

12

(2)

Individual Retirement Accounts

14

(4)

Keogh (H.R. 10) Plans

18

(1)

Qualified Retirement Plans Including Section 401(k) Plans

18

(4)

Rollovers

22

(1)

Simple Plans

23

(3)

Questions and Problems

26

Self-Employed and Employee Expenses

Classification of Deductions

1

(1)

Travel Expenses

2

(3)

Transportation

5

(3)

Office in the Home

8

(4)

Entertainment

12

(1)

Educational Expenses

13

(2)

Dues, Subscriptions, and Publications

15

(1)

Special Clothing and Uniforms

16

(1)

Business Gifts

17

(1)

Schedule C

18

(2)

Questions and Problems

20

Itemized Deductions and Other Incentives

Medical Expenses

1

(4)

Taxes

5

(3)

Interest

8

(3)

Contributions

11

(4)

Casualty and Theft Losses

15

(2)

Miscellaneous Deductions

17

(4)

Moving Expenses

21

(1)

Hobby Losses

22

(3)

Educational Incentives

25

(4)

Questions and Problems

29

Credits and Special Taxes

Tax Credit for the Elderly and Disabled

1

(1)

Child Tax Credit

2

(3)

Earned Income Credit

5

(3)

Child and Dependent Care Credit

8

(1)

Education Tax Credits

9

(4)

Foreign Tax Credit

13

(1)

Work Credits

14

(1)

Disabled Access Credit

15

(2)

Adoption Expenses

17

(2)

The Individual Alternative Minimum Tax (AMT)

19

(5)

Unearned Income of Minor Children

24

(4)

Community Property

28

(4)

Questions and Problems

32

Accounting Periods and Methods and Depreciation

Accounting Periods

1

(3)

Accounting Methods

4

(2)

Depreciation

6

(1)

Modified Accelerated Cost Recovery System (MACRS)

7

(6)

Election to Expense

13

(4)

Listed Property

17

(1)

Limitation on Depreciation of Luxury Automobiles

18

(3)

Intangibles

21

(1)

Related Parties (§267)

22

(2)

Questions and Problems

24

Capital Gains and Losses

What Is a Capital Asset?

1

(1)

Holding Period

2

(1)

Calculation of Gain or Loss

3

(3)

Net Capital Gains

6

(4)

Net Capital Losses

10

(1)

Section 1231 Gains and Losses

11

(1)

Depreciation Recapture

12

(6)

Capital Gains and Casualty Gains and Losses

18

(3)

Installment Sales

21

(4)

Like-Kind Exchanges

25

(1)

Involuntary Conversions

26

(1)

Sale of a Personal Residence

27

(2)

Questions and Problems

29

Withholding, Estimated Payments, and Payroll Taxes

Withholding Methods

1

(7)

Estimated Payments

8

(1)

The FICA Tax

9

(2)

Federal Tax Deposit System

11

(1)

Employer Reporting Requirements

12

(5)

Self-Employment Tax

17

(1)

The FUTA Tax

18

(2)

The Nanny Tax

20

(9)

Questions and Problems

29

Partnership Taxation

Nature of Partnership Taxation

1

(1)

Partnership Formation

2

(2)

Partnership Income Reporting

4

(1)

Current Distributions and Guaranteed Payments

5

(1)

Tax Years

6

(7)

Transactions between Partners and the Partnership

13

(1)

The At-Risk Rule

14

(1)

Limited Liability Companies

15

(2)

Questions and Problems

17

The Corporate Income Tax

Corporate Tax Rates

1

(1)

Corporate Capital Gains and Losses

2

(1)

Special Deductions and Limitations

3

(2)

Schedule M-1

5

(1)

Filing Requirements and Estimated Tax

6

(2)

S Corporations

8

(4)

Corporate Formation

12

(8)

Corporate Accumulations

20

(1)

The Corporate Alternative Minimum Tax

20

(2)

Questions and Problems

22

Tax Administration and Tax Planning

The Internal Revenue Service

1

(3)

The Audit Process

4

(1)

Interest and Penalties

5

(6)

Statute of Limitations

11

(1)

Preparers, Proof, and Privilege

12

(2)

The Taxpayer Bill of Rights

14

(1)

Tax Planning

15

(6)

Questions and Problems

21

Appendices

Appendix A Tax Rate Schedules and Tax Tables

1

(1)

Appendix B Earned Income Credit Table

1

(1)

Appendix C Withholding Tables

1

(1)

Appendix D Additional Comprehensive Tax Return Problems

1

(1)

Glossary of Tax Terms

1

(1)

Solutions to Self-Study Problems

1

(1)

Index

1

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Income Tax Fundamentals 2004

Summary

Table of Contents

Supplemental Materials