About the Authors viii About the Regulation Professors ix Welcome to Regulation x Ethics, Professional Responsibilities, and Federal Tax Procedures 1 Ethics and Responsibility in Tax Practice 2 Regulations Governing Practice before the IRS 2 IRC Code and Regulations Related to Tax Return Preparers 7 Licensing and Disciplinary Systems 12 Federal Tax Practice and Procedures 15 Substantiation and Disclosure of Tax Positions 15 Taxpayer Penalties 18 Sources of Tax Authority and Research 23 Tax Practice and Procedure 27 Compliance Responsibilities 30 Legal Duties and Responsibilities 37 Common Law Duties and Liabilities to Clients and Third Parties 37 Privileged Communications, Confidentiality, and Privacy Acts 46 Business Law 51 Agency 52 Types of Agency Relationships and Creation 52 Authority of Agents and Principals 55 Duties of Agents and Principals 57 Contract Liability of Agents and Principals 62 Tort Liability of Agents and Principals 65 Contracts 69 Introduction and Classification 69 Applicable Laws 69 Types of Contracts 72 Formation 75 Offer and Acceptance 75 Consideration 83 Writing and Records: The Statute of Frauds 88 Defenses to Formation 94 Performance: Defining Performance and Breach 100 Performance: Discharge of Performance 106 Passage of Title and Risk of Loss 110 Remedies 117 Types of Remedies 117 Formulas for Damages 120 Third-Party Rights 124 Debtor-Creditor Relationships 129 Rights, Duties, and Liabilities of Debtors, Creditors, and Guarantors 129 Suretyship Introduction, Creation, and Types 129 Suretyship Rights of Parties 133 Article 9 UCC Secured Transactions 138 Introduction and Creation of Security Interests 138 Perfection of Security Interests 141 Priorities in Security Interests 146 Rights of Secured Parties and Debtors 150 Bankruptcy and Insolvency 153 Prebankruptcy Options, and Introduction to and Declaration of Bankruptcy 153 Bankruptcy Process 159 Distribution of Debtor s Estate 163 Discharge and Reaffirmation Agreements 166 Government Regulation of Business 168 Federal Securities Regulation 168 Defining a Security 168 The Registration Process 170 Exempt Transactions and Securities 173 The JOBS Act of 2012 179 Liability Provisions 1933 Act 183 Purposes, Requirements, and Provisions of the 1934 Act 189 Criminal Liability 196 Other Federal Laws and Regulations 198 Employment Tax 198 Affordable Care Act 203 Worker Classification Laws and Regulations 211 Business Structure 217 Selection and Formation of Business Entity and Related Operation and Termination 217 Selection of a Business Entity 217 Formation 223 Operations: Nonfinancial Factors 225 Financial Structure 228 Termination 234 Rights, Duties, Legal Obligations, and Authority of Owners and Management 237 Rights and Duties 237 Authority of Owners and Managers 242 Federal Taxation 245 Introduction to Tax Review 246 Property Transactions 253 Sales and Dispositions of Assets 253 Capital Gains and Losses 257 Section 1231 Assets 265 Section 1231 Assets Cost Recovery 270 Like-Kind Exchanges and Involuntary Conversions 281 Other Nonrecognition Transactions 286 Federal Taxation of Individuals 291 Income 292 Gross Income General Concepts and Interest 292 Gross Income Other Inclusions 297 Gross Income Exclusions 300 Taxation of Items from Business Entities 303 Accounting Methods and Periods Individuals 308 Taxation of Employee Benefits 315 Taxation of Retirement Plans 321 Deductions 327 Deductions Basic Principles 327 Deductions for AGI 329 Itemized Deductions Medical, Taxes, Interest 333 Itemized Deductions Other 337 Employee Business Expenses 343 Deductions Losses and Bad Debts 346 Limitations on Business Deductions 348 Individual Tax Issues 353 Personal and Dependency Exemptions 353 Filing Status 357 Alternative Minimum Tax and Other Taxes 361 Tax Planning Strategies for Individuals 366 Tax Credits 371 Personal Tax Credits 371 Estate and Gift Taxation 380 Federal Gift Tax 380 Federal Estate Tax 387 Federal Taxation of Entities 395 Corporate Taxation 396 Formation of a Corporation 396 Corporate Income 401 Accounting Methods and Periods Corporations 406 Special Corporate Deductions 409 Corporate Alternative Minimum Tax 415 Penalty Taxes 419 Taxation of Related Corporations 423 Distributions from a Corporation 426 Corporate Redemptions and Liquidations 430 Corporate Reorganizations 436 Multijurisdictional Tax Issues 442 State and Local Taxation 442 Taxation of Foreign Income 447 Tax-Exempt Entities 452 Tax-Exempt Organizations 452 Partnership Taxation 455 Formation and Basis 455 Flow-Through of Income and Losses 462 Transactions with Partners 465 Partnership Distributions 468 Sales and Terminations 473 S Corporation Taxation 477 Eligibility, Election, Termination 477 Income and Basis 480 Distributions and Special Taxes 485 Fiduciary Taxation 488 Income Taxation of Fiduciaries 488 Tax Credits 493 Business Tax Credits 493 Other Tax Issues 497 Tax Planning Strategies for Business Entities 497 Business Entity Choice 499 Multiple Choice Questions 503 Task-Based Simulations 615 Index 717
