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Principles of Business Taxation (2013)

Principles of Business Taxation (2013)

Author: Nicholas J. Johnson
Publisher: CCH U.S.
ISBN: 9780808029717
Published In: March 2012
Format: Paperback , 760 pages
Jurisdiction: U.S. ? Disclaimer:
Countri(es) stated herein are used as reference only

New Edition is available now !

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The CCH Principles of Business Taxation course approaches the study of taxation from the perspective of the student who will become a business person faced with business decisions that are inevitably affected by tax considerations. This perspective leads to a very different coverage in this textbook -- coverage that is useful for accounting, finance and general business majors. The new edition focuses on the central concepts that build our tax framework and avoids small exceptions and details to ensure that the student can confidently master the critical underpinnings of federal taxation. It abandons minutia that not only affects a very small number of taxpayers, but also tends to change often. In this way, there are no wasted motions and students gain a stronger, more solid understanding of federal tax principles.

Many items that pertain specifically to businesses (for example, inventory valuation issues) usually not discussed in a traditional undergraduate tax textbook are covered in this book. Although so many of the exclusions, deductions, and credits apply equally to individual and corporate taxpayers, this book focuses on the business perspective. An advantage to this approach is that most of the students who take only one course in taxation will learn how businesses are taxed and, in turn, will have a better appreciation for how taxes affect business decisions. Another advantage to this approach is that the topics dovetail into other business, finance and accounting course work.

While the focus is on concepts and how taxes affect business decisions, individual income taxation is not abandoned. After all, many core tax concepts apply to individuals as well as businesses, and thePrinciples of Business Taxation course is not shy in pointing out such application. The book also includes a special chapter on individuals (sole proprietorships) and one on pass-through entities that tie together the underlying threads concerned with these taxpayers throughout the text.

PART I: OVERVIEW OF TAXES AND THE FEDERAL INCOME TAX SYSTEM

Part I of the textbook introduces students to the concept of taxes to gain a better appreciation for why taxes exist and how taxes allow governments to provide goods and services. The discussion involves equity considerations, and introduces the "ability to pay" and "wherewithal to pay" concepts, among others. After providing students with a survey of the various taxes that governments impose, the federal income tax is discussed in detail, since it is the focus of this book. An overview of the individual and corporate taxable income formulas is provided, as well as an introduction to the concept of flow-through entities as another alterative to operating a business. This discussion sets the groundwork for the rest of the book. The second half of this Part discusses sources of U.S. federal income tax laws -- the Internal Revenue Code, Treasury regulations and case law. In addition to introducing students to the various types of tax authority, the "hierarchy" of these sources are discussed along with an introduction to tax planning and tax research.

PART II: FEDERAL TAXATION OF BUSINESS INCOME AND DEDUCTIONS

Part II illustrates how businesses calculate taxable income starting with a discussion of accounting periods and methods, a more detailed overview of taxable income and how taxes are owed or refunded. The focus then shifts to a discussion of which items of income are taxed and which expenditures can be deducted against taxable income.

PART III: TRANSACTIONS INVOLVING BUSINESS PROPERTY

Part III provides a substantive discussion of the tax consequences of owning property, such as depreciation, gain/loss on disposal, and the rules pertaining to property transactions. A comparison of the financial accounting depreciation methods and tax laws is emphasized in the chapter.

PART IV: CALCULATING TAX LIABILITY AND TAXES OWED

Part IV discusses calculation of tax liability and taxes owed (refunded) in detail, with the focus on businesses that pay taxes -- sole proprietorships and corporations.

PART V: SPECIFIC BUSINESS ENTITY ISSUES

Part V discusses the tax laws unique to each of the three types of business: corporations, sole proprietorships, and flow-through entities. This Part starts with the discussion of corporate distributions and the reconciliation of net income and taxable income. Then the book provides an understanding of how businesses operated as sole proprietorships fit into the owner's individual tax return, as individuals are often shareholders in corporations or the owners of flow-through entities. The expanded taxable income formula for individuals is discussed keeping the discussion of the personal deduction (from AGI) kept to a minimum. The progressive rate structure that applies to individuals, and the reduced tax rates that apply to qualified dividends and net capital gains are emphasized in the chapter. The role of flow-through entities as an option for operating a business rounds out the coverage for this Part.

PART I: OVERVIEW OF TAXES AND THE FEDERAL INCOME TAX SYSTEM

Chapter 1: Introduction to Taxation

I. Introduction
II. Society's Need for Taxes
III. Who Should Bear the Tax Burden?
IV. Characteristics of a "Good" Tax
V. Other Considerations Used in Assessing a Tax
VI. Types of Taxes
VII. The Importance of Studying Federal Income Taxes Imposed on Businesses

Chapter 2: Understanding the Tax Laws

I. Introduction
II. Brief History of Federal Income Tax
III. Understanding Federal Tax Law
IV. Federal Tax Research

PART II: FEDERAL TAXATION OF BUSINESS INCOME AND DEDUCTIONS

Chapter 3: Tax Accounting Rules

I. Introduction
II. Accounting Periods
III. Accounting Methods

Chapter 4: Overview of the Taxable Income and the Calculation of Taxes Owed

I. Gross Income (Income Minus Exclusions)
II. Taxable Income (Gross Income Minus Deductions)
III. Taxes Owed (Tax Liability Minus Tax Credits Minus Estimated Payments)

Chapter 5: Gross Income

I. Introduction
II. Gross Income Defined
III. Gross Profit
IV. Dividend Income
V. Interest Income
VI. Other Items of Gross Income

Chapter 6: Business Deductions: Ordinary and Necessary Business Expenses

I. Introduction
II. Elements of a Business Expense
III. Interest, Taxes, and Carrying Charges
IV. Research and Experimentation
V. Manufacturer's Deduction
VI. Bad Debts
VII. Charitable Contributions

Chapter 7: Business Deductions: Employment-related Expenses

I. Introduction
II. Employee Compensation
III. Meals and Entertainment
IV. Travel and Transportation
V. Education
VI. Employment taxes

PART III: TRANSACTIONS INVOLVING BUSINESS PROPERTY

Chapter 8: Property Transactions: Depreciation, Depletion and Amortization

I. Introduction
II. Overview of Depreciation
III. Depreciation of Personal Property
IV. Depreciation of Real Property
V. Depletion
VI. Amortization of Intangibles

Chapter 9: Property Transactions: Realized and Recognized Gains and Losses

I. Introduction
II. Realized Gains and Losses
III. Recognized Gains and Losses

Chapter 10: Property Transactions: Character of Gain or Loss

I. Introduction
II. Capital Gains and Losses
III. Section 1231 Gains and Losses
IV. The Netting Process

PART IV: CALCULATING TAX LIABILITY AND TAXES OWED

Chapter 11: NOLs, AMT and the AET

I. Introduction
II. Net Operating Losses
III. Alternative Minimum Tax
IV. Taxes Imposed on Excessive Corporate Accumulations

Chapter 12: Tax Credits

I. Introduction
II. Tax Credits
III. Foreign Tax Credit
IV. General Business Credit
V. Disabled Access Credit

PART V: SPECIFIC BUSINESS ENTITY ISSUES

Chapter 13: Corporate Distributions and Schedules M-1, M-2 and M-3

I. Introduction
II. Corporate Distributions
III. Reconciliation of Net Income and Taxable Income

Chapter 14: The Sole Proprietorship

I. Introduction
II. Taxable Income Formula
III. NOLs, Tax Rates and AMT
IV. Employment Issues
V. Passive Activity Loss and Hobby Loss Rules

Chapter 15: Flow-Through Entities: Partnerships, LLPs and LLCs

I. Introduction
II. Tax and Nontax Aspects of Flow-through Entities
III. Forming a Partnership
IV. Operating the Partnership
V. Adjustments to Basis of Partner's Interest
VI. Partnership vs. LLC

Chapter 16: Flow-Through Entities: S Corporations

I. Introduction
II. Advantages and Disadvantages of S Corporation Versus Other Entity Choices
III. Operating an S Corporation
IV. Special Rules

Linda M. Johnson, Ph.D., CPA, received her Bachelor of Science degree in Accountancy from the University of Illinois, Urbana-Champaign and her doctorate from Arizona State University. In her over 20 years of collegiate teaching of graduate and undergraduate tax courses, Professor Johnson has received over a dozen departmental, college, and university teaching awards, including the university's top teaching award while on the faculty at Northern Illinois University, and as a teaching assistant at Arizona State University. In addition to being the author of Essentials, Professor Johnson is the coordinating editor of CCH's Federal Tax Course.

Her professional experience includes working in the tax department for three years at Arthur Young & Co. in Houston, Texas and as a faculty intern with Crowe Chizek & Co. at the Oakbrook, Illinois office. Professor Johnson has published several articles on topics in taxation at various professional journals, including the Journal of Accountancy, Taxes The Tax Magazine, The CPA Journal and The Tax Advisor.