Prentice Hall's Federal Taxation 1999

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ISBN: 9780136468783 | 0136468780
Cover: Hardcover
Copyright: 5/1/1998

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Contains coverage of Tax Planning Considerations -- using corporations to split income, timing of distributions, using an S corporation to when liquidating, qualifying the estate for the installment payment of estate taxes, etc.; and Compliance and Procedural Considerations -- important due dates for filing, penalty avoidance, elections to file, etc. Features special chapters on consolidated tax returns and international taxation.

PREFACE

CHAPTER 1 TAX RESEARCH

1-1

Overview of Tax Research

1-2

(1)

Steps in the Tax Research Process

1-3

(2)

Importance of the Facts to the Tax Consequences

1-5

(1)

Ability to Design a Factual Situation Favoring the Taxpayer

1-6

(1)

The Sources of Tax Law

1-6

(18)

The Legislative Process

1-7

(1)

The Internal Revenue Code

1-8

(1)

Treasury Regulations

1-9

(2)

Administrative Interpretations

1-11

(3)

Judicial Decisions

1-14

(9)

Tax Treaties

1-23

(1)

Tax Periodicals

1-24

(1)

Tax Services

1-24

(3)

United States Tax Reporter

1-25

(1)

Standard Federal Tax Reporter

1-25

(1)

Federal Tax Coordinator 2d

1-26

(1)

Law of Federal Income Taxation (Mertens)

1-26

(1)

Tax Management Portfolios

1-27

(1)

CCH federal Tax Service

1-27

(1)

Citators

1-27

(5)

Commerce Clearing House Citator

1-27

(3)

Research Institute of America Citator 2nd Series

1-30

(2)

Computers as a Research Tool

1-32

(1)

Statements on Responsibilities in Tax Practice

1-32

(4)

Sample Work Papers and Client Letter

1-36

(1)

Problem Materials

1-36

Discussion Questions

1-36

(1)

Problems

1-37

(4)

Case Study Problem

1-41

(1)

Tax Research Problems

1-41

CHAPTER 2 CORPORATE FORMATIONS AND CAPITAL STRUCTURE

2-1

Organization Forms Available

2-2

(5)

Sole Proprietorships

2-2

(1)

Partnerships

2-3

(1)

Corporations

2-4

(3)

Tax Definition of Common Business Entity Forms

2-7

(2)

Check-The-Box Regulations

2-7

(2)

Legal Requirements for Forming a Corporation

2-9

(1)

Tax Considerations in Forming a Corporation

2-10

(2)

Section 351: Deferring Gain Or Loss Upon Incorporation

2-12

(15)

The Property Requirement

2-13

(1)

The Control Requirement

2-13

(3)

The Stock Requirement

2-16

(1)

Effect of Sec. 351 on the Transferors

2-17

(3)

Effect of Sec. 351 on Transferee Corporation

2-20

(1)

Assumption of the Transferor's Liabilities

2-21

(3)

Other Considerations in a Sec. 351 Exchange

2-24

(3)

Choice of Capital Structure

2-27

(5)

Characterization of Obligations as Debt or Equity Capital

2-27

(1)

Debt Capital

2-28

(1)

Equity Capital

2-29

(1)

Capital Contributions by Shareholders

2-30

(1)

Capital Contributions by Nonshareholders

2-31

(1)

Worthlessness of Stock or Debt Obligations

2-32

(2)

Securities

2-32

(1)

Unsecured Debt Obligations

2-33

(1)

Tax Planning Considerations

2-34

(2)

Avoiding Sec. 351

2-34

(2)

Compliance and Procedural Considerations

2-36

(1)

Reporting Requirements Under Sec. 351

2-36

(1)

Problem Materials

2-37

Discussion Questions

2-37

(1)

Issue Identification Questions

2-38

(1)

Problems

2-38

(5)

Comprehensive Problem

2-43

(1)

Case Study Problems

2-43

(1)

Tax Research Problems

2-44

CHAPTER 3 THE CORPORATE INCOME TAX

3-1

Corporate Elections

3-2

(3)

Choosing a Calendar or Fiscal Year

3-2

(2)

Accounting Methods

3-4

(1)

General Formula For Determining the Corporate Tax Liability

3-5

(1)

Computing a Corporation's Taxable Income

3-5

(17)

Differences Between Individual and Corporate Taxable Income

3-6

(1)

Sales and Exchanges of Property

3-7

(2)

Business Expenses

3-9

(5)

Special Deductions

3-14

(6)

Exceptions for Closely-held Corporations

3-20

(2)

Computing a Corporation's Income Tax Liability

3-22

(2)

General Rules

3-22

(1)

Personal Service Corporations

3-23

(1)

Controlled Groups of Corporations

3-24

(6)

Why Special Rules Are Needed

3-24

(1)

What Is a Controlled Group?

3-25

(3)

Application of the Controlled Group Test

3-28

(1)

Special Rules Applying to Controlled Groups

3-28

(1)

Consolidated Tax Returns

3-29

(1)

Tax Planning Considerations

3-30

(4)

Compensation Planning for Shareholder-employees

3-30

(2)

Special Election to Allocate Reduced Tax Rate Benefits

3-32

(1)

Using No1 Carryovers and Carrybacks

3-33

(1)

Compliance and Procedural Considerations

3-34

(7)

Estimated Taxes

3-34

(3)

Requirements for Filing and Paying Taxes

3-37

(1)

When the Return Must Be Filed

3-37

(1)

Tax Return Schedules

3-37

(4)

Problem Materials

3-41

Discussion Questions

3-41

(1)

Issue Identification Questions

3-42

(1)

Problems

3-42

(6)

Tax Form/return Preparation Problem

3-48

(1)

Case Study Problems

3-49

(1)

Tax Research Problems

3-50

CHAPTER 4 CORPORATE NONLIQUIDATING DISTRIBUTIONS

4-1

Nonliquidating Distributions in General

4-2

(1)

Earnings and Profits (E&P)

4-3

(6)

Current Earnings and Profits

4-3

(4)

Distinction Between Current and Accumulated E&p

4-7

(2)

Nonliquidating Property Distributions

4-9

(5)

Consequences of Nonliquidating Property Distributions to the Shareholders

4-9

(1)

Consequences of Property Distributions to the Distributing Corporation

4-10

(2)

Constructive Dividends

4-12

(2)

Stock Dividends and Stock Rights

4-14

(2)

Tax-free Stock Dividends

4-15

(1)

Tax-free Stock Rights

4-15

(1)

Effect of Nontaxable Stock Dividends on the Distributing Corporation

4-16

(1)

Taxable Stock Dividends and Stock Rights

4-16

(1)

Stock Redemptions

4-16

(13)

Effect of the Redemption on the Shareholder

4-17

(2)

Attribution Rules

4-19

(2)

Substantially Disproportionate Redemptions

4-21

(1)

Complete Termination of the Shareholder's Interest

4-22

(2)

Redemptions Not Essentially Equivalent to a Dividend

4-24

(1)

Partial Liquidations

4-24

(2)

Redemptions to Pay Death Taxes

4-26

(2)

Effect of Redemptions on the Distributing Corporation

4-28

(1)

Preferred Stock Bailouts

4-29

(2)

Sec. 306 Stock Defined

4-29

(1)

Dispositions of Sec. 306 Stock

4-30

(1)

Redemptions of Sec. 306 Stock

4-30

(1)

Exceptions to Sec. 306 Treatment

4-31

(1)

Stock Redemptions By Related Corporations

4-31

(3)

Brother-Sister Corporations

4-31

(2)

Parent-Subsidiary Corporations

4-33

(1)

Tax Planning Considerations

4-34

(3)

Avoiding Unreasonable Compensation

4-34

(1)

Bootstrap Acquisitions

4-35

(1)

Timing of Distributions

4-36

(1)

Compliance and Procedural Considerations

4-37

(1)

Corporate Reporting of Nondividend Distributions

4-37

(1)

Agreement to Terminate Interest Under Sec. 302(b)(3)

4-38

(1)

Problem Materials

4-38

Discussion Questions

4-38

(1)

Issue Identification Questions

4-39

(1)

Problems

4-40

(6)

Case Study Problems

4-46

(1)

Tax Research Problems

4-46

CHAPTER 5 OTHER CORPORATE TAX LEVIES

5-1

The Corporate Alternative Minimum Tax

5-2

(12)

The General Formula

5-2

(1)

Definitions

5-2

(2)

Tax Preference Items

5-4

(1)

Adjustments to Taxable Income

5-5

(2)

Adjusted Current Earnings (ACE) Adjustment

5-7

(5)

Minimum Tax Credit

5-12

(1)

Tax Credits and the AMT

5-12

(2)

Personal Holding Company Tax

5-14

(9)

Personal Holding Company Defined

5-14

(1)

Stock Ownership Requirement

5-15

(1)

Passive Income Requirement

5-15

(4)

Determining the PHC Penalty Tax

5-19

(1)

Avoiding the PHC Designation and Tax Liability by Making Dividend Distributions

5-20

(2)

PHC Tax Calculation

5-22

(1)

Accumulated Earnings Tax

5-23

(9)

Corporations Subject to the Penalty Tax

5-23

(1)

Proving a Tax-Avoidance Purpose

5-24

(1)

Evidence Concerning the Reasonableness of an Earnings Accumulation

5-24

(5)

Determining the Accumulated Earnings Tax Liability

5-29

(2)

Accumulated Earnings Tax Calculation

5-31

(1)

Tax Planning Considerations

5-32

(3)

Special AMT Elections

5-33

(1)

Eliminating the ACE Adjustment

5-33

(1)

Avoiding the Personal Holding Company Tax

5-33

(1)

Avoiding the Accumulated Earnings Tax

5-34

(1)

Compliance and Procedural Considerations

5-35

(1)

Alternative Minimum Tax

5-35

(1)

Personal Holding Company Tax

5-35

(1)

Accumulated Earnings Tax

5-35

(1)

Problem Materials

5-35

Discussion Questions

5-35

(3)

Issue Identification Questions

5-38

(1)

Problems

5-38

(6)

Tax Form/Return Preparation Problem

5-44

(1)

Case Study Problems

5-44

(1)

Tax Research Problems

5-45

CHAPTER 6 CORPORATE LIQUIDATING DISTRIBUTIONS

6-1

Overview of Corporate Liquidations

6-2

(2)

The Shareholder

6-2

(1)

The Corporation

6-3

(1)

Definition of a Complete Liquidation

6-3

(1)

General Liquidation Rules

6-4

(6)

Effects of Liquidating on the Shareholders

6-5

(1)

Effects of Liquidating on the Liquidating Corporation

6-6

(4)

Liquidation of a Controlled Subsidiary Corporation

6-10

(4)

Requirements

6-11

(1)

Effects of Liquidating on the Shareholders

6-12

(1)

Effects of Liquidating on the Subsidiary Corporation

6-13

(1)

Special Shareholder Reporting Issues

6-14

(2)

Partially Liquidating Distributions

6-14

(1)

Subsequent Assessments Against the Shareholders

6-15

(1)

Open Versus Closed Transactions

6-15

(1)

Installment Obligations Received by a Shareholder

6-16

(1)

Special Corporate Reporting Issues

6-16

(1)

Expenses of the Liquidation

6-16

(1)

Treatment of Net Operating Losses

6-17

(1)

Recognition of Gain or Loss When Property Is Distributed In Retirement of Debt

6-17

(1)

General Rule

6-17

(1)

Satisfaction of the Subsidiary's Debt Obligations

6-17

(1)

Tax Planning Considerations

6-18

(2)

Timing the Liquidation Transaction

6-18

(1)

Recognition of Ordinary Losses When a Liquidation Occurs

6-19

(1)

Using Sec. 332 to Obtain a Double Tax Exemption

6-19

(1)

Avoiding Sec. 332 in Order to Recognize Losses

6-20

(1)

Compliance and Procedural Considerations

6-20

(1)

General Liquidation Procedures

6-20

(1)

Section 332 Liquidations

6-20

(1)

Plan of Liquidation

6-21

(1)

Problem Materials

6-21

Discussion Questions

6-21

(2)

Issue Identification Questions

6-23

(1)

Problems

6-24

(4)

Case Study Problems

6-28

(1)

Tax Research Problems

6-29

CHAPTER 7 CORPORATE ACQUISITIONS AND REORGANIZATIONS

7-1

Taxable Acquisition Transactions

7-2

(8)

Asset Acquisitions

7-2

(2)

Stock Acquisitions

7-4

(6)

Comparison of Taxable and Tax-Free Acquisitions

7-10

(3)

Taxable and Tax-Free Asset Acquisitions

7-10

(1)

Comparison of Taxable and Tax-Free Stock Acquisitions

7-11

(2)

Types of Reorganizations

7-13

(2)

Tax Consequences of Reorganizations

7-15

(4)

Target or Transferor Corporation

7-15

(1)

Acquiring or Transferee Corporation

7-16

(1)

Shareholders and Security Holders

7-16

(3)

Acquisitive Reorganizations

7-19

(14)

Type A Reorganization

7-19

(6)

Type C Reorganization

7-25

(3)

Type D Reorganization

7-28

(2)

Type B Reorganization

7-30

(3)

Type G Reorganization

7-33

(1)

Divisive Reorganizations

7-33

(6)

Divisive Type D Reorganization

7-33

(6)

Type G Divisive Reorganization

7-39

(1)

Other Reorganization Transactions

7-39

(2)

Type E Reorganization

7-39

(1)

Type F Reorganization

7-40

(1)

Judicial Restrictions on the Use of Corporate Reorganizations

7-41

(2)

Continuity of Proprietary Interest

7-41

(1)

Continuity of Business Enterprise

7-42

(1)

Business Purpose Requirement

7-42

(1)

Step Transaction Doctrine

7-43

(1)

Tax Attributes

7-43

(4)

Assumption of Tax Attributes

7-43

(1)

Limitation on Use of Tax Attributes

7-44

(3)

Tax Planning Considerations

7-47

(1)

Why Use a Reorganization Instead of a Taxable Transaction?

7-47

(1)

Avoiding the Reorganization Provisions

7-48

(1)

Compliance and Procedural Considerations

7-48

(1)

Section 338 Deemed Liquidations

7-48

(1)

Plan of Reorganization

7-48

(1)

Party to a Reorganization

7-48

(1)

Ruling Requests

7-49

(1)

Problem Materials

7-49

Discussion Questions

7-49

(1)

Issue Identification Questions

7-50

(1)

Problems

7-51

(7)

Case Study Problems

7-58

(1)

Tax Research Problems

7-59

CHAPTER 8 CONSOLIDATED TAX RETURNS

8-1

Source of the Consolidated Tax Return Rules

8-2

(1)

Definition of an Affiliated Group

8-3

(1)

Requirements

8-3

(1)

Comparison with Controlled Group Definitions

8-4

(1)

Should a Consolidated Return Be Filed?

8-4

(1)

Advantages of Filing a Consolidated Tax Return

8-4

(1)

Disadvantages of Filing a Consolidated Tax Return

8-5

(1)

Consolidated Taxable Income

8-5

(5)

Income Included in the Consolidated Tax Return

8-6

(2)

Affiliated Group Elections

8-8

(1)

Termination of the Affiliated Group

8-8

(2)

Computation of the Affiliated Group's Tax Liability

8-10

(2)

Regular Tax Liability

8-10

(1)

Corporate Alternative Minimum Tax Liability

8-10

(1)

Consolidated Tax Credits

8-10

(1)

Foreign Tax Credit

8-11

(1)

Intercompany Transactions

8-12

(7)

Property Transactions

8-12

(6)

Other Intercompany Transactions

8-18

(1)

Dividends Received by Group Members

8-19

(2)

Exclusion Procedure

8-20

(1)

Consolidated Dividends-Received Deduction

8-20

(1)

Consolidated Charitable Contributions Deduction

8-21

(1)

Net Operating Losses (Nols)

8-22

(10)

Current Year Nols

8-22

(1)

Carrybacks and Carryforwards of Consolidated NOLs

8-23

(1)

Carryback of Consolidated NOL to Separate Return Year

8-24

(1)

Carryforward of Consolidated NOL to Separate Return Year

8-25

(1)

Special Loss Limitations

8-26

(6)

Consolidated Capital Gains and Losses

8-32

(2)

Section 1231 Gains and Losses

8-32

(1)

Capital Gains and Losses

8-32

(2)

Stock Basis Adjustments

8-34

(1)

Tax Planning Considerations

8-35

(1)

100% Dividends-Received Deduction Election

8-35

(1)

Estimated Tax Payments

8-35

(1)

Compliance and Procedural Considerations

8-36

(2)

The Basic Election and Return

8-36

(1)

Parent Corporation as Agent for the Affiliated Group

8-37

(1)

Liability for Taxes Due

8-38

(1)

Problem Materials

8-38

Discussion Questions

8-38

(2)

Issue Identification Questions

8-40

(1)

Problems

8-41

(5)

Tax Form/Return Preparation Problem

8-46

(1)

Case Study Problems

8-47

(1)

Tax Research Problems

8-47

CHAPTER 9 PARTNERSHIP FORMATION AND OPERATION

9-1

Definition of a Partnership

9-2

(2)

General and Limited Partnerships

9-2

(2)

Overview of Taxation of Partnership Income

9-4

(1)

Partnership Profits and Losses

9-4

(1)

The Partner's Basis

9-4

(1)

Partnership Distributions

9-5

(1)

Tax Implications of Formation of a Partnership

9-5

(7)

Contribution of Property

9-5

(5)

Contribution of Services

9-10

(2)

Organizational and Syndication Expenditures

9-12

(1)

Partnership Elections

9-12

(3)

Partnership Taxable Year

9-12

(3)

Other Partnership Elections

9-15

(1)

Partnership Reporting of Income

9-15

(2)

Partnership Taxable Income

9-15

(1)

Separately Stated Items

9-15

(2)

Partnership Ordinary Income

9-17

(1)

Partner Reporting of Income

9-17

(3)

Partner's Distributive Share

9-17

(1)

Special Allocations

9-18

(2)

Basis for Partnership Interest

9-20

(4)

Beginning Basis

9-21

(1)

Effects of Liabilities

9-21

(2)

Effects of Operations

9-23

(1)

Special Loss Limitations

9-24

(2)

At-risk Loss Limitation

9-24

(1)

Passive Activity Limitations

9-25

(1)

Transactions Between a Partner and the Partnership

9-26

(3)

Sales of Property

9-26

(1)

Guaranteed Payments

9-27

(2)

Family Partnerships

9-29

(1)

Capital Ownership

9-29

(1)

Donor-donee Allocations of Income

9-30

(1)

Tax Planning Considerations

9-30

(1)

Timing of Loss Recognition

9-30

(1)

Compliance and Procedural Considerations

9-31

(2)

Reporting to the IRS and the Partners

9-31

(1)

Irs Audit Procedures

9-32

(1)

Problem Materials

9-33

Discussion Questions

9-33

(1)

Issue Identification Questions

9-34

(1)

Problems

9-35

(8)

Tax Form/Return Preparation Problem

9-43

(1)

Case Study Problems

9-43

(1)

Tax Research Problems

9-44

CHAPTER 10 SPECIAL PARTNERSHIP ISSUES

10-1

Nonliquidating Distributions

10-2

(6)

Recognition of Gain

10-2

(2)

Basis Effects of Distributions

10-4

(3)

Holding Period and Character of Distributed Property

10-7

(1)

Nonliquidating Distributions with Sec. 751

10-8

(4)

Section 751 Assets Defined

10-8

(1)

Exchange of Sec. 751 Assets and Other Property

10-9

(3)

Terminating an Interest in a Partnership

10-12

(15)

Liquidating Distributions

10-12

(4)

Sale of a Partnership Interest

10-16

(3)

Retirement or Death of a Partner

10-19

(2)

Exchange of a Partnership Interest

10-21

(1)

Income Recognition and Transfers of a Partnership Interest

10-22

(1)

Termination of a Partnership

10-22

(4)

Mergers and Consolidations

10-26

(1)

Division of a Partnership

10-27

(1)

Special Forms of Partnerships

10-27

(5)

Tax Shelters and Limited Partnerships

10-27

(1)

Publicly Traded Partnerships

10-27

(1)

Limited Liability Companies

10-28

(1)

Limited Liability Partnerships

10-29

(1)

Electing Large Partnerships

10-29

(3)

Tax Planning Considerations

10-32

(1)

Liquidating Distribution or Sale to Partners

10-32

(1)

Problem Materials

10-33

Discussion Questions

10-33

(1)

Issue Identification Questions

10-34

(1)

Problems

10-35

(9)

Case Study Problems

10-44

(1)

Tax Research Problems

10-45

CHAPTER 11 S CORPORATIONS

11-1

Should an S Election Be Made?

11-3

(1)

Advantages of S Corporation Treatment

11-3

(1)

Disadvantages of S Corporation Treatment

11-3

(1)

S Corporation Requirements

11-4

(3)

Shareholder-Related Requirements

11-4

(1)

Corporation-Related Requirements

11-5

(2)

Election of S Corporation Status

11-7

(6)

Making the Election

11-8

(1)

Termination of the Election

11-9

(4)

S Corporation Operations

11-13

(6)

Taxable Year

11-13

(1)

Accounting Method Elections

11-14

(1)

Ordinary Income or Loss

11-14

(2)

Special S Corporation Taxes

11-16

(3)

Taxation of the Shareholder

11-19

(5)

Income Allocation Procedures

11-19

(1)

Loss and Deduction Pass-Through to Shareholders

11-20

(3)

Family S Corporations

11-23

(1)

Basis Adjustments

11-24

(2)

Basis Adjustments to S Corporation Stock

11-25

(1)

Basis Adjustments to Shareholder Debt

11-26

(1)

S Corporation Distributions

11-26

(5)

Corporations Having No Earnings and Profits

11-26

(1)

Corporations Having Accumulated Earnings and Profits

11-27

(4)

Other Rules

11-31

(2)

Tax Preference Items and Other AMT Adjustments

11-31

(1)

Transactions Involving Shareholders and Other Related Parties

11-32

(1)

Fringe Benefits Paid to a Shareholder-Employee

11-32

(1)

Tax Planning Considerations

11-33

(3)

Election to Allocate Income Based on the S Corporation's Accounting Methods

11-33

(1)

Increasing the Benefits From S Corporation Losses

11-34

(1)

Passive Income Requirements

11-35

(1)

Compliance and Procedural Considerations

11-36

(2)

Making the Election

11-36

(1)

Filing the Corporate Tax Return

11-36

(1)

Estimated Tax Payments

11-37

(1)

Consistency Rules

11-38

(1)

Sample S Corporation Tax Return

11-38

(1)

Problem Materials

11-38

Discussion Questions

11-38

(2)

Issue Identification Questions

11-40

(1)

Problems

11-40

(7)

Tax Form/Return Preparation Problem

11-47

(1)

Case Study Problems

11-47

(3)

Tax Research Problems

11-50

CHAPTER 12 THE GIFT TAX

12-1

Concept of Transfer Taxes

12-2

(1)

History and Purpose of Transfer Taxes

12-2

(1)

The Unified Transfer Tax System

12-3

(1)

Unified Rate Schedule

12-3

(1)

Impact of Taxable Gifts on Death Tax Base

12-3

(1)

Unified Credit

12-4

(1)

Gift Tax Formula

12-4

(2)

Determination of Gifts

12-4

(1)

Exclusions and Deductions

12-4

(1)

Gift-Splitting Election

12-4

(1)

Cumulative Nature of Gift Tax

12-5

(1)

Unified Credit

12-6

(1)

Transfers Subject to the Gift Tax

12-6

(10)

Transfers for Inadequate Consideration

12-7

(1)

Statutory Exemptions from the Gift Tax

12-7

(3)

Cessation of Donor's Dominion and Control

12-10

(1)

Valuation of Gifts

12-11

(2)

Gift Tax Consequences of Certain Transfers

12-13

(3)

Exclusions

12-16

(2)

Amount of the Exclusion

12-16

(1)

Present Interest Requirement

12-16

(2)

Gift Tax Deductions

12-18

(4)

Marital Deduction

12-18

(2)

Charitable Contribution Deduction

12-20

(2)

The Gift-Splitting Election

12-22

(1)

Computation of the Gift Tax Liability

12-23

(2)

Effect of Previous Taxable Gifts

12-23

(1)

Unified Credit Available

12-24

(1)

Comprehensive Illustration

12-25

(1)

Background Data

12-25

(1)

Calculation of Tax Liability

12-25

(1)

Basis Considerations for a Lifetime Giving Plan

12-25

(2)

Property Received By Gift

12-26

(1)

Property Received At Death

12-27

(1)

Below-Market Loans: Gift and Income Tax Consequences

12-27

(2)

General Rules

12-27

(2)

Tax Planning Considerations

12-29

(1)

Tax-Saving Features of Inter Vivos Gifts

12-29

(1)

Negative Aspects of Gifts

12-30

(1)

Compliance and Procedural Considerations

12-30

(3)

Filing Requirements

12-30

(1)

Due Date

12-31

(1)

Gift-Splitting Election

12-31

(1)

Short-Form Gift Tax Return

12-31

(1)

Liability for Tax

12-31

(1)

Determination of Value

12-31

(1)

Statute of Limitations

12-32

(1)

Problem Materials

12-33

Discussion Questions

12-33

(1)

Issue Identification Questions

12-34

(1)

Problems

12-34

(3)

Tax Form/Return Preparation Problems

12-37

(1)

Case Study Problems

12-38

(1)

Tax Research Problems

12-39

CHAPTER 13 THE ESTATE TAX

13-1

Estate Tax Formula

13-2

(3)

Gross Estate

13-2

(1)

Deductions

13-3

(1)

Adjusted Taxable Gifts and Tax Base

13-3

(1)

Tentative Tax on Estate Tax Base

13-4

(1)

Reduction for Post-1976 Gift Taxes

13-4

(1)

Unified Credit

13-5

(1)

Other Credits

13-5

(1)

The Gross Estate: Valuation

13-5

(3)

Date-of-Death Valuation

13-5

(2)

Alternate Valuation Date

13-7

(1)

The Gross Estate: Inclusions

13-8

(10)

Comparison of Gross Estate with Probate Estate

13-8

(1)

Exclusion for Family-Owned Businesses

13-9

(1)

Property in Which the Decedent Had an Interest

13-9

(1)

Dower or Curtesy Rights

13-10

(1)

Transferor Provisions

13-10

(3)

Annuities and Other Retirement Benefits

13-13

(1)

Jointly Owned Property

13-14

(1)

General Powers of Appointment

13-15

(1)

Life Insurance

13-15

(1)

Consideration Offset

13-16

(1)

Recipient Spouse's Interest in QTIP Trust

13-17

(1)

Deductions

13-18

(5)

Debts and Funeral and Administration Expenses

13-18

(1)

Losses

13-19

(1)

Charitable Contribution Deduction

13-19

(1)

Marital Deduction

13-20

(3)

Computation of Tax Liability

13-23

(2)

Taxable Estate and Tax Base

13-23

(1)

Tentative Tax and Reduction for Post-1976 Gift Taxes

13-23

(1)

Unified Credit

13-23

(1)

Other Credits

13-24

(1)

Comprehensive Illustration

13-25

(2)

Background Data

13-25

(1)

Calculation of Tax Liability

13-26

(1)

Liquidity Concerns

13-27

(3)

Deferral of Payment of Estate Taxes

13-28

(1)

Stock Redemptions to Pay Death Taxes

13-29

(1)

Special Use Valuation of Farm Realty

13-30

(1)

Generation-Skipping Transfer Tax

13-30

(1)

Tax Planning Considerations

13-31

(4)

Use of Inter Vivos Gifts

13-31

(1)

Use of Exemption Equivalent

13-32

(1)

What Size Marital Deduction is Best?

13-32

(1)

Use of Disclaimers

13-33

(1)

Role of Life Insurance

13-34

(1)

Qualifying the Estate for Installment Payments

13-34

(1)

Where to Deduct Administration Expenses

13-35

(1)

Compliance and Procedural Considerations

13-35

(1)

Filing Requirements

13-35

(1)

Due Date

13-35

(1)

Valuation

13-35

(1)

Election of Alternate Valuation Date

13-35

(1)

Documents to be Included with Return

13-36

(1)

Problem Materials

13-36

Discussion Questions

13-36

(1)

Issue Identification Questions

13-37

(1)

Problems

13-38

(3)

Comprehensive Problems

13-41

(1)

Tax Form/Return Preparation Problems

13-42

(1)

Case Study Problems

13-43

(1)

Tax Research Problems

13-44

CHAPTER 14 INCOME TAXATION OF TRUSTS AND ESTATES

14-1

Basic Concepts

14-2

(2)

Inception of Trusts

14-2

(1)

Inception of Estates

14-2

(1)

Reasons for Creating Trusts

14-2

(1)

Basic Principles of Fiduciary Taxation

14-3

(1)

Principles of Fiduciary Accounting

14-4

(3)

The Importance of Identifying Income and Principal

14-4

(1)

Effects of State Law or Terms of Trust Instrument

14-5

(1)

Principal and Income: The Uniform Act

14-5

(1)

Categorization of Depreciation

14-6

(1)

Formula for Taxable Income and Tax Liability

14-7

(3)

Gross Income

14-7

(1)

Deductions for Expenses

14-7

(2)

Distribution Deduction

14-9

(1)

Personal Exemption

14-9

(1)

Credits

14-10

(1)

Distributable Net Income

14-10

(3)

Significance of DNI

14-10

(1)

Definition of DNI

14-11

(1)

Manner of Computing DNI

14-12

(1)

Determining a Simple Trust's Taxable Income

14-13

(3)

Allocation of Expenses to Tax-Exempt Income

14-13

(1)

Determination of DNI and the Distribution Deduction

14-14

(1)

Tax Treatment for Beneficiary

14-15

(1)

Short-Cut Approach to Proving Correctness of Taxable Income

14-15

(1)

Effect of a Net Operating Loss

14-16

(1)

Effect of a Net Capital Loss

14-16

(1)

Comprehensive Illustration: Determining a Simple Trust's Taxable Income

14-16

(3)

Background Data

14-17

(1)

Trustee's Fee

14-17

(1)

Distribution Deduction and DNI

14-17

(1)

Trust's Taxable Income

14-18

(1)

Categorizing a Beneficiary's Income

14-19

(1)

Determining Taxable Income for Complex Trusts and Estates

14-19

(5)

Determination of DNI and the Distribution Deduction

14-19

(1)

Tax Treatment for Beneficiary

14-20

(4)

Effect of a Net Operating Loss

14-24

(1)

Effect of a Net Capital Loss

14-24

(1)

Comprehensive Illustration: Determining a Complex Trust's Taxable Income

14-24

(4)

Background Data

14-24

(1)

Trustee's Fee

14-25

(1)

Distribution Deduction and Dni

14-25

(2)

Trust's Taxable Income

14-27

(1)

Additional Observations

14-27

(1)

Income in Respect of a Decedent

14-28

(2)

Definition and Common Examples

14-28

(1)

Significance of IRD

14-28

(2)

Grantor Trust Provisions

14-30

(4)

Purpose and Effect

14-30

(1)

Revocable Trusts

14-31

(1)

Post-1986 Reversionary Interest Trusts

14-32

(1)

Retention of Administrative Powers

14-32

(1)

Retention of Economic Benefits

14-32

(1)

Control of Others' Enjoyment

14-33

(1)

Tax Planning Considerations

14-34

(1)

Ability to Shift Income

14-34

(1)

Timing of Distributions

14-34

(1)

Property Distributions

14-34

(1)

Choice of Year-End for Estates

14-35

(1)

Deduction of Administration Expenses

14-35

(1)

Compliance and Procedural Considerations

14-35

(1)

Filing Requirements

14-35

(1)

Due Date for Return and Tax

14-35

(1)

Documents to Be Furnished to IRS

14-36

(1)

Sample Simple and Complex Trust Returns

14-36

(1)

Problem Materials

14-36

Discussion Questions

14-36

(1)

Issue Identification Questions

14-37

(1)

Problems

14-38

(2)

Tax Form/Return Preparation Problems

14-40

(1)

Case Study Problems

14-41

(1)

Tax Research Problems

14-42

CHAPTER 15 ADMINISTRATIVE PROCEDURES

15-1

Role of the Internal Revenue Service

15-2

(3)

Enforcement and Collection

15-2

(1)

Interpretation of the Statute

15-2

(1)

Organization of the IRS

15-2

(3)

Audits of Tax Returns

15-5

(7)

Percentage of Returns Examined

15-5

(1)

Selection of Returns for Audit

15-5

(3)

Alternatives for a Taxpayer Whose Return Is Audited

15-8

(3)

Ninety-Day Letter

15-11

(1)

Litigation

15-11

(1)

Requests for Rulings

15-12

(3)

Information to Be Included in Taxpayer's Request

15-13

(1)

Will the IRS Rule?

15-13

(1)

When Rulings Are Desirable

15-14

(1)

Due Dates and Penalties

15-15

(4)

Due Dates for Returns

15-15

(1)

Extensions

15-15

(1)

Due Dates for Payment of the Tax

15-16

(1)

Interest on Tax Not Timely Paid

15-16

(1)

Penalties

15-17

(2)

Estimated Taxes

15-19

(3)

Payment Requirements

15-19

(2)

Penalty for Underpaying Estimated Taxes

15-21

(1)

Exceptions to the Penalty

15-22

(1)

Other More Severe Penalties

15-22

(6)

Negligence

15-22

(1)

Substantial Understatement

15-23

(2)

Civil Fraud

15-25

(1)

Criminal Fraud

15-26

(2)

Statute of Limitations

15-28

(4)

General Three-Year Rule

15-28

(1)

Six-Year Rule for Substantial Omissions

15-28

(2)

When No Return Is Filed

15-30

(1)

Other Exceptions to Three-Year Rule

15-30

(1)

Refund Claims

15-31

(1)

Liability for Tax

15-32

(2)

Joint Returns

15-32

(1)

Transferee Liability

15-33

(1)

Tax Practice Issues

15-34

(3)

Statutory Provisions Concerning Tax Return Preparers

15-34

(1)

Rules of Circular 230

15-35

(1)

Tax Accounting and Tax Law

15-36

(1)

Problem Materials

15-37

Discussion Questions

15-37

(1)

Issue Identification Questions

15-38

(1)

Problems

15-38

(3)

Case Study Problem

15-41

(1)

Tax Research Problems

15-41

CHAPTER 16 U.S. TAXATION OF FOREIGN-RELATED TRANSACTIONS

16-1

Jurisdiction to Tax

16-2

(1)

Taxation of U.S. Citizens and Resident Aliens

16-3

(10)

Foreign Tax Credit

16-3

(5)

Foreign-earned Income Exclusion

16-8

(5)

Taxation of Nonresident Aliens

16-13

(5)

Definition of Nonresident Alien

16-13

(2)

Investment Income

16-15

(1)

Trade or Business Income

16-16

(2)

Taxation of U.S. People Doing Business Abroad

16-18

(17)

Domestic Subsidiary Corporations

16-19

(1)

Foreign Branches

16-19

(1)

Foreign Corporations

16-19

(3)

Controlled Foreign Corporations

16-22

(9)

Special Foreign Corporation Forms

16-31

(1)

Foreign Sales Corporations

16-31

(3)

Domestic International Sales Corporations

16-34

(1)

Tax Planning Considerations

16-35

(4)

Deduction Versus Credit for Foreign Taxes

16-35

(1)

Election to Accrue Foreign Taxes

16-36

(1)

Special Earned Income Elections

16-37

(1)

Tax Treaties

16-37

(1)

Special Resident Alien Elections

16-38

(1)

Compliance and Procedural Considerations

16-39

(1)

Reporting the Foreign Tax Credit

16-39

(1)

Reporting the Earned Income Exclusion

16-39

(1)

Filing Requirements for Aliens and Foreign Corporations

16-39

(1)

Fsc and Disc Filing Requirements

16-40

(1)

Problem Materials

16-40

Discussion Questions

16-40

(1)

Issue Identification Questions

16-41

(1)

Problems

16-42

(4)

Tax Form/Return Preparation Problems

16-46

(1)

Case Study Problems

16-47

(1)

Tax Research Problems

16-47

APPENDICES

APPENDIX A Tax Research Working Paper File

A-1

APPENDIX B Completed Tax Forms

B-1

APPENDIX C MACRS and ACRS Tables

C-1

APPENDIX D Glossary

D-1

APPENDIX E Statements on Responsibilities in Tax Practice (SRTPs)

E-1

APPENDIX F Comparison of Tax Attributes for C Corporations, Partnerships, and S Corporations

F-1

APPENDIX G Credit for State Death Taxes

G-1

APPENDIX H Acturial Tables

H-1

APPENDIX I Index of Code Sections

I-1

APPENDIX J Index of Treasury Regulations

J-1

APPENDIX K Index of Government Promulgations

K-1

APPENDIX L Index of Court Cases

L-1

APPENDIX M Subject Index

M-1

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