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Federal Income Taxation

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Federal Income Taxation
Relevant texts
Basic Federal Income Taxation 6e
William D. Andrews



Basic Federal Income Taxation of Individuals
Richard a. Westin


Related course(s)

Chapter 1 -- Introduction

A. In General
B. Procedure and Administration

1. The Internal Revenue Service
2. Annual Returns
3. Investigation, Assessment, and Collection of Deficiencies
4. Refund Procedure
5. The Tax Court
6. Appellate Review
7. Statutes of Limitations
8. Interest, Penalties, and Costs
9. Withholding and Estimated Taxes

C. Constitutional Background
D. Sources of Federal Income Tax Law
E. A Glossary of Basic Terms and Issues
Bibliography

Part I -- Income

Chapter 2 -- Income in Kind

A. Noncash Receipts in General

Old Colony Trust Co. v. Commissioner
Arthur Benaglia
Reginald Turner
Haverly v. United States

B. Statutory Exclusions

1. Meals and Lodging: §119
Commissioner v. Kowalski
Sibla v. Commissioner
2. Certain Other Fringe Benefits: §132
Fringe Benefits Provisions [new §§132 and 117(d)]

C. Imputed Income

1. Owner-Occupied Housing
2. Other Consumer Durables
3. Household Services
4. Leisure
5. Borderlines

D. Alternative Formulations
E. Deductions
F. Microeconomic Effects
G. Taxing Employers in Lieu of Employees

1. Withholding
2. Other Possibilities

H. Other Items

Chapter 3 -- Compensation for Losses

A. Damage Payments (In General)

Edward H. Clark
Raytheon Production Corp. v. Commissioner
Commissioner v. Glenshaw Glass Co.

B. Personal Injuries

1. In General
2. Nonphysical Injuries and Nonphysical Sickness
Revenue Ruling 74-77
Murphy v. Internal Revenue Service
3. Punitive Damages

C. Insurance

1. Medical Insurance
2. Deducting Extraordinary Medical Expenses (Self-Insurance)
Ochs v. Commissioner
3. Disability Insurance
4. Life Insurance

D. Previously Deducted Losses

1. Annual Accounting
Burnet v. Sanford & Brooks Co.
2. Tax-Benefit Limitations
Dobson v. Commissioner
3. The Inclusionary Side of the Tax-Benefit Rule

Chapter 4 -- Gifts and Kindred Items

A. Income Interests

Irwin v. Gavit
Commissioner v. Early

B. Appreciated Property

1. Inter Vivos Gifts: §1015
Taft v. Bowers
2. Property Acquired from Decedents: §§1014, 1022, & 691

C. Gratuitous Transfers Outside the Family

1. Prizes and Awards
Pauline C. Washburn
Paul V. Hornung
Maurice M. Wills
2. Scholarships and Fellowship Grants
3. Commercial and Compensatory Gifts
Commissioner v. Duberstein
Stanton v. United States
United States v. Kaiser
Revenue Ruling 61-136
Estate of Sydney Carter v. Commissioner http://bulk.resource.org/courts.gov/c/F2/453/453.F2d.61.40.71-1201.html
4. Social Insurance and Welfare Payments

Chapter 5 -- Capital Appreciation

A. Unrealized Gains

Eisner v. Macomber

B. Time Value of Money

1. Interest
2. Present Discounted Value
3. After-Tax Returns
4. Effective Tax Rates
5. Tax Deferral as a Source of Capital
6. Fruits and Trees
7. The Equivalence of Tax Deferral and Yield Exemption

C. Realization

1. Leasehold Improvements
Helvering v. Bruun
2. Mortgage Participation Exchanges
Cottage Savings Assn. v. Commissioner
3. Constructive Sales

D. Nonrecognition Exchanges

1. Like-Kind Exchanges
Alderson v. Commissioner
Revenue Ruling 79-143
Jordan Marsh Co. v. Commissioner
2. Nonrecognition on Dispositions for Cash
3. Corporate Reorganizations and Transfers to Controlled Corporations

E. Deferred and Contingent Payment Sales

Bernice Patton Testamentary Trust v. United States

F. Capital Gains
G. Inflation

1. Bracket Creep
2. Income Mismeasurement

H. Taxing Consumption Instead of Total Accretion

Chapter 6 -- Return of Capital and Timing Issues

A. Return of Capital

1. Timing Alternatives
Fairfield Plaza, Inc. v. Commissioner
Revenue Ruling 70-510
2. Capital Expenditures, Depreciation, and Loss Deductions

B. Annuity Contracts

1. Life Annuities
2. Deferred Annuities [§72]

C. Cash Method Accounting and Its Limits

1. Constructive Receipt
Revenue Ruling 60-31
2. Inclusion in Advance of Receipt: Debt Instruments

D. Accrual Method Accounting and Its Limits

1. Prepaid Income
American Automobile Ass'n. v. United States
Revenue Procedure 2004-34
2. Security Deposits
Commissioner v. Indianapolis Power & Light Co.
3. Inventories
Thor Power Tool Co. v. Commissioner
4. Accruing Future Expenses
United States v. General Dynamics Corp.
Premature Accruals [§461(h)]

E. Inconsistent Methods and Matching

1. Related Party Transactions
Treatment of Certain Related Party Transactions [§267]
2. Inconsistency Between Years
a. Erroneous Treatment in Closed Year
b. Changes in Accounting Method

F. Compensating Employees

1. Deferred Compensation
Albertson's, Inc. v. Commissioner
2. Stock Options and Restricted Property
Commissioner v. LoBue
Alves v. Commissioner

Chapter 7 -- Receipts Subject to Offsetting Liabilities

A. Cancellation of Indebtedness

United States v. Kirby Lumber Co.
Bankruptcy Tax Act of 1980
David Zarin

B. Claim of Right

North American Oil Consolidated v. Burnet
United States v. Lewis
Alcoa, Inc. v. United States

C. Embezzled Funds

James v. United States
McKinney v. United States

D. Nonrecourse Borrowing

Crane v. Commissioner
Parker v. Delaney
1. Inadequately Secured Nonrecourse Debt
Commissioner v. Tufts
Revenue Ruling 91-31
2. Mortgaging Out
Woodsam Associates, Inc. v. Commissioner
3. Gifts of Encumbered Property
Estate of Levine v. Commissioner
Diedrich v. Commissioner

Chapter 8 -- Tax Expenditures: State and Municipal Bond Interest

A. The Exclusion of Interest on State and Local Obligations

1. Constitutional Considerations
South Carolina v. Baker
2. The Subsidy to Issuers of Tax-Exempt Obligations
Municipal Taxable Bond Alternative Bill of 1976
3. Tax-Exempt Borrowing to Finance Private Activities
Tax-Exempt Bonds

B. Tax Expenditures in General

Analytical Perspectives, Budget of the U.S. Government, Fiscal Year 2009
Rethinking Tax Expenditures

C. Concepts of Income

Part II -- Deductions and Credits

Chapter 9 -- Deductions, Credits, and Computation of Tax

A. Adjusted Gross Income

1. Costs Incurred in Carrying on a Business (Other than Employment)
2. Other Nonitemized (Above-the-Line) Deductions

B. Personal Exemptions and the Standard Deduction
C. Itemized Deductions
D. Miscellaneous Itemized Deductions
E. Applying the Rate Schedules
F. Credits
G. Additional Taxes

Chapter 10 -- Interest, Taxes, and Casualty Losses (Home Ownership)

A. Interest

1. What Is Interest? §163(a)
Knetsch v. United States
Goldstein v. Commissioner
2. Debt to Purchase or Carry Tax-Exempt Obligations: §265(a)(2)
Revenue Procedure 72-18
3. Investment Interest
Estate of Yaeger v. Commissioner
4. Home Mortgage and Other Personal Interest
White, Proper Income Tax Treatment of Deductions for Personal Expense

B. Taxes

Revenue Ruling 79-180

C. Homeowners

1. Distortion Produced by the Deductions
2. Exclusion of Imputed Rental Value
Analytical Perspectives, Budget of the U.S. Government, Fiscal Year 2007
President's Advisory Panel on Tax Reform, Simple, Fair and Pro-Growth

D. Casualty Losses

William H. Carpenter

Chapter 11 -- Charitable Contributions and Tax Exemption

A. Qualified Organizations

Regan v. Taxation with Representation of Washington
Bob Jones University v. United States

B. Unrelated Business Income

United States v. American Bar Endowment

C. What Is a Contribution?

Dowell v. United States

D. Appreciated Property

Hilla Rebay

Chapter 12 -- Personal, Living, or Family Expenses

A. Childcare

Henry C. Smith

B. Clothing

Pevsner v. Commissioner

C. Traveling: §162(a)(2)

1. Away
United States v. Correll

2. From Home

Commissioner v. Flowers
Revenue Ruling 75-432
Hantzis v. Commissioner

D. Travel and Entertainment

Rudolph v. United States
Sanitary Farms Dairy, Inc.
Moss v. Commissioner
Cohan v. Commissioner
1. The 1962 Legislation
2. The 1986 Legislation
Percentage Reduction for Meals & Entertainment

E. Activities Not for Profit (Hobbies)

Bessenyey v. Commissioner

F. Housing

1. Loss on Sale
Weir v. Commissioner
2. Rental Losses
3. Home Offices
Drucker v. Commissioner
Commissioner v. Soliman

G. Marital Litigation]]

United States v. Gilmore
United States v. Patrick
Hunter v. United States
Ruth K. Wild

H. Education and Training

1. Business Expense Deduction
Jorgensen v. Commissioner
2. Tax Benefits for Education

Chapter 13 -- Business and Investment Expenses

A. Ordinary and Necessary

Welch v. Helvering

B. Public Policy Limitations

Commissioner v. Tellier
Raymond Mazzei

C. Capital Expenditures

Mt. Morris Drive-In Theatre Co.
Mt. Morris Drive-In Theatre Co. v. Commissioner
Commissioner v. Idaho Power Co.
INDOPCO, Inc. v. Commissioner

D. A Reasonable Allowance for Salaries

Patton v. Commissioner

E. Carrying on Any Trade or Business

Estate of Rockefeller v. Commissioner

Chapter 14 -- Losses

A. In General: §165

United States v. S.S. White Dental Manufacturing Co.

B. Wash Sales and Transactions Among Related Parties

McWilliams v. Commissioner

C. Capital Losses: §1211

O. L. Burnett

D. Section 1231

1. Property Used in a Trade or Business
2. Involuntary Conversions
3. Statutory Structure and Interpretation

E. Bad Debts

Whipple v. Commissioner

Chapter 15 -- Capital Cost Recovery

A. What Is Depreciable

1. Antique Musical Instruments
Richard L. Simon
2. Land and Improvements
World Publishing Co. v. Commissioner
3. Goodwill and Other Intangibles
Newark Morning Ledger Co. v. United States
4. Section 197
Amortization of Goodwill and Certain Other Intangibles

B. Rates and Methods

1. The Straight-Line Method
2. Declining Balance Methods
3. Useful Lives
4. Optional Expensing
5. Alternative Depreciation -- §168(g)
6. Purposes for Setting Rates and Methods

C. The Economics of Capital Cost Allowances

1. Complete Acceleration, or Expensing
2. No Acceleration -- Economic Depreciation
3. Other Cases

D. Other Investment Stimuli
E. Disposition of Depreciable Property: Recapture or Conversion
F. Depletion of Mineral Deposits

Chapter 16 -- Leverage, Leasing, and Tax Shelter Limitations

A. Leverage

1. Overvaluation
Estate of Franklin v. Commissioner
Pleasant Summit Land Corp. v. Commissioner
2. The At-Risk Limitation
3. The Economics of Leverage and Taxes

B. Leasing

1. Real Estate
Carol W. Hilton
2. Machinery and Equipment
Objective Guidelines Used in Structuring Transactions
3. Leasing to Tax-Exempt Entities
Reform of Tax Treatment of Certain Leasing Arrangements

C. The Passive Activity Loss Limitation

1. Passive Activities
2. Disposition of Interests
3. Activities
4. Portfolio and Earned Income
5. Rental and Oil and Gas Activities

D. The Alternative Minimum Tax

Present Law and Background Relating to the Individual Alternative Minimum Tax

E. Corporate Tax Shelters

Part III -- Attribution of Income Among Taxpayers

Chapter 17 -- Taxation and the Family

A. Interspousal Income Attribution

1. First Principles
Lucas v. Earl
Poe v. Seaborn
2. Split Income and Joint Returns

B. The Marriage Bonus and the Marriage Penalty

1. Constitutionality of the Marriage Penalty
Mapes v. United States
2. Legislative Relief
Repeal Two-Earner Deduction
3. Self-Help
Boyter v. Commissioner

C. Support, Gift, or Compensation?

United States v. Harris

D. Children and Dependents

Adjust Tax Rate on Unearned Income of Minor Children

E. Separation and Divorce

1. Support Payments
Bernatschke v. United States
2. Property Transfers
United States v. Davis
Farid-es-Sultaneh v. Commissioner
Transfer of Property Between Spouses or Incident to Divorce [§1041]

Chapter 18 -- Investment Income

A. The Basic Supreme Court Cases

Corliss v. Bowers
Douglas v. Willcuts
Burnet v. Wells
Blair v. Commissioner
Helvering v. Clifford
Helvering v. Horst
Helvering v. Eubank

B. Statutory Rules for Nongrantor Trusts

1. Simple Trusts and Distributable Net Income
2. Complex Trusts and the Tier System
3. Accumulation Distributions
4. Fiscal Years

C. Grantor Trusts D. Interest-Free Loans

Below-Market and Interest-Free Loans [§7872]

Part IV -- Capital Gains and Losses

Chapter 19 -- Capital Gains

A. The Statutory Scheme

1. The Deduction for Capital Gains
2. Maximum Rates for Capital Gains
3. Capital Losses
4. Short-term Capital Gains (and Losses)
5. Section 1231
6. Definitional Problems -- Sale or Exchange
7. Definitional Problems -- Capital Assets
8. Depreciation Recapture
9. Qualified Dividends
10. The Multiple Rate Ceilings in §1(h)

B. The Quest for a Concept

1. Sale of a Business
Williams v. McGowan
2. A Temporary Taking
Commissioner v. Gillette Motor Transport, Inc.
3. Discounted Notes and Bonds
United States v. Midland-Ross Corp.
4. Purchased Remainder Interests
Jones v. Commissioner

C. Property Held Primarily for Sale to Customers

Curtis Co. v. Commissioner
Malat v. Riddell

D. Reasons for Preferential Treatment of Capital Gains

Chapter 20 -- Capital Losses

A. The Arrowsmith Doctrine

Arrowsmith v. Commissioner

B. The Corn Products Doctrine

Corn Products Refining Co. v. Commissioner
Arkansas Best Corporation v. Commissioner

Chapter 21 -- Future Income Streams

A. Receipt of a Lump-sum Payment for a Future Income Stream

Hort v. Commissioner
McAllister v. Commissioner
Commissioner v. P.G. Lake, Inc.

B. Receipt of Payments out of a Future Income Stream

Commissioner v. Carter
Commissioner v. Brown
Stern v. United States
Busse v. Commissioner
Commissioner v. Ferrer