Preface and Acknowledgments
Part I: Basic Structure of the Income Tax
Chapter 1 · Introduction
I. Problems
II. Overview
A. Tax Policy
1. Fairness
2... [Show More] . Efficiency
3. Neutrality
B. Tax Expenditures
C. Structure of Current Income Tax System
Computational Overview
D. Tax Reference Resources and Authorities
1. Internal Revenue Code
2. Treasury Regulations
3. IRS Rulings and Procedures
4. Case Law
5. Legislative History
Tax Research Caveats
E. The Structure of This Book and How to Use It
III. Materials
Mayo Foundation v. United States
Chapter 2 · Gross Income
I. Assignment
II. Problems
III. Overview
A. The Definition of Gross Income
1. The Realization Requirement
2. Statutory Exclusions from Gross Income
3. Long-Standing Administrative Practices
B. Gross Income May Be Realized in Any Form
C. A Note on “Basis”
D. Impact of Obligations to Repay
IV. Materials
Commissioner v. Glenshaw Glass Co.
Cesarini v. United States
Old Colony Trust Co. v. Commissioner
V. Related Matters
Chapter 3 · Gains and Losses from Dealings in Property
I. Assignment
II. Problems
III. Overview
A. Sale or Other Disposition
B. Computation of Gain or Loss Realized
Gain Realized
Loss Realized
1. Amount Realized
2. Adjusted Basis
C. “Recognition” of Realized Gain or Loss
D. Impact of Liabilities in Property Transactions
1. General Framework
2. Specialized Aspects of Debt in Property Transactions
IV. Materials
Philadelphia Park Amusement Co. v. United States
Crane v. Commissioner
V. Related Matters
Chapter 4 · Gifts and Inheritances
I. Assignment
II. Problems
III. Overview
A. General Exclusionary Rule for Gifts and Inheritances—§
102(a)
1. Exclusion for Inter Vivos Gifts
2. Exclusion for Bequests, Devises, and Inheritances
3. Policy Reasons Behind Section 102(a)
B. Statutory Limitations on the Exclusion—§ 102(b) and § 102(c)
C. Basis of Property Received by Gift, Bequest, Devise, or
Inheritance
1. Property Acquired by Gift
2. Property Acquired by Inheritance
3. Basis and Tax Planning
D. Part Sale, Part Gift Situations
IV. Materials
Commissioner v. Duberstein
Wolder v. Commissioner
V. Related Matters
Chapter 5 · Discharge of Indebtedness
I. Assignment
II. Problems
III. Overview
A. “Contested Liability” or “Disputed Debt” Exception
B. Bankruptcy and Insolvency Exceptions
C. Debt Discharge Outside the Scope of Debt Discharge Rules
D. Discharge of Recourse Debt in Property Transactions
E. Tax Treatment of the Lender
IV. Materials
United States v. Kirby Lumber Co.
Preslar v. Commissioner
V. Related Matters
Chapter 6 · Fringe Benefits
I. Assignment
II. Problems
III. Overview
A. The Major Exclusions Under Section 132
1. No Additional Cost Services and Qualified Employee
Discounts
2. Working Condition and De Minimis Fringe Benefits
B. Meals or Lodging for the Employer's Convenience
C. Employment Related Payments from Third Parties
D. Employer Provided Health Care Benefits
E. The Strange Cases of Frequent Flyer Miles, Free Meals and
Other Untaxed Benefits
IV. Materials
J. Grant Farms, Inc. v. Commissioner
Charley v. Commissioner
V. Related Matters
Chapter 7 · Business and Investment Expense Deductions
I. Assignment
II. Problems
III. Overview
A. The Main Provisions
B. Some Limitations
C. Section 162(a)—General Principles
1. Ordinary and Necessary
2. What Is an “Expense”?
3. Carrying On
4. Trade or Business
D. Substantiation
E. Section 162(a)(1)—Reasonable Salaries
F. Section 162(a)(2)—Travel Expenses
1. Where Is Home?
2. Commuting Expenses
3. The Sleep or Rest Rule
4. Temporary Reassignments
G. Section 280E—The Curious Case of Legalized Marijuana
H. Section 212—Investment Expenses
IV. Materials
Welch v. Helvering
Jenkins v. Commissioner
Henderson v. Commissioner
V. Related Matters
Chapter 8 · Capital Expenditures
I. Assignment
II. Problems
III. Overview
A. Section 263(a)
1. In General
2. Distinguishing Deductible Expenses from Nondeductible
Capital Expenditures
a. Case Law
b. Administrative Rulings
c. Treasury Regulations
3. Capitalization Rules Governing Tangible Property
a. Amounts Paid to Acquire Tangible Property
b. Amounts Paid to Construct Tangible Property
c. Amounts Paid to Sell Tangible Property
d. Amounts Paid to Defend or Perfect Title to Tangible
Property
e. Amounts Paid to Improve Tangible Property
4. Capitalization Rules Governing Intangible Assets
a. Amounts Paid to Acquire Intangible Property
b. Amounts Paid to Create Intangible Property
c. Transaction Costs
B. Section 263A
IV. Materials
Midland Empire Packing Co. v. Commissioner
Mt. Morris Drive-In Theatre Co. v. Commissioner
V. Related Matters
Chapter 9 · Depreciation and Amortization
I. Assignment
II. Problems
III. Overview
A. Depreciation of Tangible Property
1. Applicable Recovery Period
2. Applicable Depreciation Method
Determining the Straight-Line Percentage
3. Applicable Convention
4. Example of ACRS Depreciation
B. Bonus Depreciation
1. Section 179
Planning Pointer
2. Section 168(k)
C. Amortization of Intangible Property
IV. Materials
Simon v. Commissioner
Revenue Procedure 87-56 (Excerpt)
Revenue Procedure 87-57 (Excerpt)
V. Related Matters
Chapter 10 · Deductible Personal Expenses: Casualty and Theft Losses
I. Assignment
II. Problems
III. Overview
A. A Look at the Tax Treatment of Business, Investment, and
Personal Losses
B. The Personal Casualty Loss Deduction
C. Rationale for the Deduction
D. Proof of Causation
E. Measuring the Loss
1. Effect of Reimbursements
2. Examples
F. Restrictions on the Deduction
1. The $100 Threshold
2. The Ten Percent of Adjusted Gross Income Threshold
G. Adjustments to Basis for Casualty Loss Deduction and
Reimbursements
IV. Materials
Chamales v. Commissioner
Blackman v. Commissioner
V. Related Matters
Chapter 11 · Other Deductible Personal Expenses: Taxes, Interest,
Charitable Gifts, Moving Expenses, and Medical Expenses
I. Assignment
II. Problems
III. Overview
A. Qualified Residence Interest
B. State and Local Taxes
C. Charitable Contributions
D. Moving Expenses
E. Medical Expenses
IV. Materials
Revenue Ruling 87-106
Revenue Ruling 2003-57
V. Related Matters
Chapter 12 · The Deduction Hierarchy: Adjusted Gross Income,
Taxable Income, the Standard Deduction, and the Personal Exemptions
I. Assignment
II. Problems
III. Overview
A. Itemized Deductions versus the Standard Deduction
B. Miscellaneous Itemized Deductions
Getting to Taxable Income
C. Personal and Dependency Exemptions
1. Qualifying Child
a. Tie Breakers
b. Children of Divorced Parents
2. Qualifying Relative
3. Phase Out Rules
IV. Materials
Form 1040
Form 8332
V. Related Matters
Chapter 13 · Timing Rules and Related Principles
I. Assignment
II. Problems
III. Overview
A. Introduction
B. The Cash Method
1. Income under the Cash Method
a. The Doctrine of Cash Equivalence and the Related
Principle of Economic Benefit
b. The Doctrine of Constructive Receipt
2. Deductions under the Cash Method
a. Prepayment of Expenses
b. The Special Rule for Interest Expenses
C. The Accrual Method
1. Income under the Accrual Method
a. Prepayments
2. Deductions under the Accrual Method
a. Inventory Accounting
D. Principles Applicable to Both the Cash Method and the
Accrual Method
1. The Claim of Right Doctrine
2. The Tax Benefit Rule
3. The Ancillary Effects of Paying Expenses with Services
or Appreciated Property
IV. Materials
Ames v. Commissioner
Schlude v. Commissioner
V. Related Matters
Chapter 14 · Ordinary Tax Rates and Taxpayer Classification
I. Assignment
II. Problems
III. Overview
A. Introduction
Computing a Final Tax Liability
B. The Rate Structure for Ordinary Income
1. The Basic Rates
2. The Principle of Progressivity
C. Taxpayer Classifications
1. Marital Status
2. Surviving Spouse
3. Head of Household
D. Alternative Minimum Tax
IV. Materials
Revenue Procedure 2015-53 (Excerpt)
V. Related Matters
Chapter 15 · Tax Credits
I. Assignment
II. Problems
III. Overview
Computing a Final Tax Liability
A. Non-Refundable Credits
1. The Dependent Care Credit
2. The Child Tax Credit
3. The Hope Scholarship Credit and the Lifetime Learning
Credit
B. Refundable Credits
1. The Credit for Withholding on Wages
2. The Earned Income Credit
C. Ordering Rules
IV. Related Matters
Chapter 16 · First Review Problem
Part II: Characterization of Gains and Losses from Property
Chapter 17 · Capital Gains and Losses
I. Assignment
II. Problems
III. Overview
A. The Mechanics of Capital Gains
Net Capital Gain
Net Long Term Capital Gain
Net Short Term Capital Loss
1. The Sale or Exchange Requirement
2. The Capital Asset Requirement
a. Inventory and Inventory-Like Property—Section
1221(a)(1)
b. Trade or Business Property—Section 1221(a)(2)
c. Self-Created Copyrights and Similar Property—
Section 1221(a)(3)
d. Accounts Receivable for Service or Inventory—
Section 1221(a)(4)
e. Federal Publications—Section 1221(a)(5)
f. Hedging Transactions—Section 1221(a)(7)
g. Supplies Used in a Trade or Business—Section
1221(a)(8)
3. The Holding Period Requirement
4. Special Characterization Provisions
5. Determining the Appropriate Capital Gains Rate on “Net
Capital Gain”
B. The Mechanics of Capital Losses
IV. Materials
Bynum v. Commissioner
Williams v. McGowan
V. Related Matters
Chapter 18 · Quasi-Capital Assets
I. Assignment
II. Problems
III. Overview
A. Transactions to Which Section 1231 Applies
B. The Mechanics of Section 1231
C. Recapture of “Net Ordinary Loss”
D. Summary
Section 1231 Checklist
IV. Materials
Wasnok v. Commissioner
V. Related Matters
Chapter 19 · Recapture of Depreciation
I. Assignment
II. Problems
III. Overview
A. Recapture under Section 1245 for Certain Depreciable
Property
1. An Overview
2. The Statutory Mechanics
a. Amount Recaptured as Ordinary Income
b. Meaning of “Section 1245 Property”
c. Meaning of “Disposed Of”
B. Recapture under Section 1250 for Certain Depreciable Realty
C. Characterization under Section 1239
IV. Materials
Revenue Ruling 69-487
V. Related Matters
Chapter 20 · The Charitable Contribution Deduction
I. Assignment
II. Problems
III. Overview
A. Introduction
B. The Structure of the Code: Sluices and Gates
1. Defining Terms
2. Section 170(e)
3. Sections 170(b)(1)(A) & (B)
4. Section 170(b)(1)(C)
5. Section 170(b)(1)(D)
The Charitable Deduction Summarized
C. Gifts of Intellectual Property: Section 170(m)
D. Bargain Sales to Charities
E. Substantiation
F. Tax Policy and the Charitable Deduction
G. Tax Planning and the Charitable Deduction
IV. Materials
Sklar v. Commissioner
V. Related Matters
Chapter 21 · Second Set of Review Problems
Part III: Real Estate Taxation
Chapter 22 · Residential Real Estate
I. Assignment
II. Problems
III. Overview
A. Home Office Deductions
B. Vacation Home Deductions
1. Use as a Residence
2. Deductible Expenses and Their Limits
C. Exclusion of Gain on Sale of Residence
1. Ownership and Use Requirements
2. One Sale Every Two Years Limitation
3. Amount of Exclusion
4. Principal Residence
5. Tax Planning [Show Less]
