FROM THE PUBLISHER

Highly recommended by professors and students, FEDERAL INCOME TAX: Examples & Explanations, Second Edition, continues its tradition of helping students gain a thorough understanding of Federal Income Tax Law. This highly effective study guide offers thorough, clear, lucid text that explores and explains the concepts under consideration. Both timely and accurate, this new edition thoroughly examines the 1996 and 1997 Tax Acts.

Look to this superior study guide for:

—Adaptable text that is compatible with almost any coursebook on Federal Income Tax Law

—Clear and lucid writing style

—Comprehensive coverage

—Well—defined questions coupled with clear answers that allow students to actively test their understanding of each specific rule or concept

—Well—crafted examples

—Seven sample final examinations with answers

—A number of helpful tools which allow students to easily locate material for the topic they are assigned

Coverage of the 1996 and 1997 Tax Acts includes:

—Capital Gains

—Personal Injury Recoveries

—Education Expenses

—Child Tax Credit

Following the format of the Examples & Explanations Series, the authors present:

—Examples, starting with the basics and gradually building in complexity, raise the essential issues covered in each chapter and challenge students to resolve hypothetical situations.

—Explanations follow each example and allow students to analyze the examples and reinforce their understanding.

—Plenty of charts, figures, and other graphics illustrate the legal standards, concepts, issues, and procedures studentsmust understand.

Table of Contents

Contents

An Introductory Note to Students

Acknowledgements

1. Introduction

A. Introduction to Terminology and Structure

B. Time Value of Money and the Value of Deferring Tax

C. Tax Administration and Litigation

D. Tax Legislation

E. Tax Research

2. Some Characteristics of Gross Income

A. The Haig—Simons Definition of Income

B. Noncash Compensation: Fringe Benefits

C. Imputed Income

D. Windfalls, Gifts, Scholarships, Prizes, and Transfer Payments

E. Selected Recovery of Capital Issues: Partial Sales, Annuities, Insurance Policies, Life Estates, and Remainder Interests

F. Annual Accounting

G. Personal Injury Recoveries

H. Transactions Involving Loans and Income from Discharge of Indebtedness

I. Tax—Exempt Bonds

J. Gain from the Sale of a Personal Residence

3. Problems of Timing

A. Gains and Losses from Investment in Property

B. Transfers Incident to Marriage and Divorce

C. Installment Sale and Open Transaction Reporting

D. Original Issue Discount

E. The Cash Method of Accounting

F. Section 83 Transfers

G. The Accrual Method of Accounting

H. Alternative Tax Bases: Consumption Tax and Value Added Tax

4. Personal Deductions, Exemptions, and Credits

A. Introduction

B. Casualty Losses

C. Extraordinary Medical Expenses

D. Charitable Contributions

E. Personal Interest

F. Taxes

5. Deductions for the Costs of Earning Income

A. The Statutory Framework

B. Current Expenses versus Capital Expenditures

C. Repair and Maintenance Expenses

D. Inventory Accounting

E. Rent Payments versus Installment Purchase

F. Goodwill and Other Intangible Assets

G. "Ordinary and Necessary" Expenses

H. Depreciation and the Accelerated Cost Recovery System

I. Depletion Deductions

J. Tax Shelters

6. Mixed Personal and Business Expenditures

A. Controlling the Abuse of Business Deductions

B. Travel and Entertainment Expenses

C. Child Care Expenses

D. Commuting Expenses

E. Clothing Expenses

F. Legal Expenses

G. Educational Expenses

7. Income Shifting

A. Income from Services and Property

B. Trusts

C. Grantor Trusts

D. Family Partnerships

E. Below—Market Loans

8. Capital Gains and Losses

A. The Tax Treatment of Capital Gains and Losses

B. Policy Rationale for the Treatment of Capital Gain and Loss

C. The Definition of "Capital Asset"

D. Section 1231 and Depreciation Recapture

E. Substitutes for Ordinary Income

F. The Sale of a Business

G. Connected Current and Prior Transactions

Appendix: \x09

Sample Examinations

Table of Cases

Table of Internal Revenue Code Sections

Table of Treasury Regulations

Table of Revenue Rulings

Table of Revenue Procedures

Topical Index