ACT550 – Advanced Income Taxation Credit Hours: 3 Contact Hours: This is a 3-credit course, offered in accelerated format. This means that 16 weeks of material is covered in 8 weeks. The exact number of hours per week that you can expect to spend on each course will vary based upon the weekly coursework, as well as your study style and preferences. You should plan to spend 10-25 hours per week in each course reading material, interacting on the discussion boards, writing papers, completing projects, and doing research. Course Description and Outcomes This course is an introduction to tax planning principles from a business perspective. Topics covered include C corporations, S corporations, partnerships, pass throughs, taxation of estates and trusts, as well as international taxation. The emphasis of each topic is on tax planning, and formulation of business strategy around tax laws to minimize tax liability, not on the strict preparation of tax forms. The course concludes with a portfolio project requiring students to demonstrate compliance ability through the preparation of a complete entity tax return. Course Learning Outcomes: 1. Explain the federal taxation systems for various pass-through entities, estates and trusts. 2. Apply the uniform tax code through citation of applicable federal tax law. 3. Describe how tax planning is utilized through the use of estates, trusts and gifts. 4. Demonstrate the ability to communicate tax research to clients as well as other stakeholders who rely on professional tax advice. 5. Develop working knowledge of federal tax forms to various entities. 6. Explain how principles of international taxation impact business decisions. 7. Describe the advantages and disadvantages of various pass through entities. Participation & Attendance Prompt and consistent attendance in your online courses is essential for your success at CSU-Global Campus. Failure to verify your attendance within the first 7 days of this course may result in your withdrawal. If for some reason you would like to drop a course, please contact your advisor. SAMPLE
Transcript
ACT550 – Advanced Income Taxation Credit Hours: 3
Contact Hours: This is a 3-credit course, offered in accelerated format. This means that 16 weeks of material is covered in 8 weeks. The exact number of hours per week that you can expect to spend on each course will vary based upon the weekly coursework, as well as your study style and preferences. You should plan to spend 10-25 hours per week in each course reading material, interacting on the discussion boards, writing papers, completing projects, and doing research.
Course Description and Outcomes
This course is an introduction to tax planning principles from a business perspective. Topics covered include C corporations, S corporations, partnerships, pass throughs, taxation of estates and trusts, as well as international taxation. The emphasis of each topic is on tax planning, and formulation of business strategy around tax laws to minimize tax liability, not on the strict preparation of tax forms. The course concludes with a portfolio project requiring students to demonstrate compliance ability through the preparation of a complete entity tax return. Course Learning Outcomes:
1. Explain the federal taxation systems for various pass-through entities, estates and trusts. 2. Apply the uniform tax code through citation of applicable federal tax law. 3. Describe how tax planning is utilized through the use of estates, trusts and gifts. 4. Demonstrate the ability to communicate tax research to clients as well as other stakeholders who rely
on professional tax advice. 5. Develop working knowledge of federal tax forms to various entities. 6. Explain how principles of international taxation impact business decisions. 7. Describe the advantages and disadvantages of various pass through entities.
Participation & Attendance
Prompt and consistent attendance in your online courses is essential for your success at CSU-Global Campus. Failure to verify your attendance within the first 7 days of this course may result in your withdrawal. If for some reason you would like to drop a course, please contact your advisor. SAMPLE
Online classes have deadlines, assignments, and participation requirements just like on-campus classes. Budget your time carefully and keep an open line of communication with your instructor. If you are having technical problems, problems with your assignments, or other problems that are impeding your progress, let your instructor know as soon as possible.
Course Materials
Textbook Information is located in the CSU-Global Booklist on the Student Portal.
Course Schedule
Due Dates The Academic Week at CSU-Global begins on Monday and ends the following Sunday.
Discussion Boards: The original post must be completed by Thursday at 12 midnight MT and Peer Responses posted by Sunday 12 midnight MT. Late posts may not be awarded points.
Mastery Exercises: Students may access and retake mastery exercises through the last day of class until they achieve the scores they desire.
Critical Thinking Activities: Assignments are due Sunday at 12 midnight MT.
Week # Readings Assignments
1 Chapter 9 in Federal Taxation Discussion (25 points)
Critical Thinking (30 points)
2 Chapter 10 in Federal Taxation Discussion (25 points)
Critical Thinking (60 points)
3 Chapter 11 in Federal Taxation Discussion (25 points)
Critical Thinking (60 points)
4 Chapter 12 in Federal Taxation Discussion (25 points)
Critical Thinking (75 points)
5 Chapter 13 in Federal Taxation Discussion (25 points)
Critical Thinking (75 points)
6 Chapter 14 in Federal Taxation Discussion (25 points)
Critical Thinking (75 points)
7 Chapter 16 in Federal Taxation Discussion (25 points)
Critical Thinking (75 points)
8 Chapter 15 in Federal Taxation Discussion (25 points)
Portfolio (350 points) SAMPLE
Assignment Details
This course includes the following assignments/projects: Module 1
Critical Thinking: Partnership Characteristics (30 points) Mary Black, Nell Brown, and Louise Gray each has her own computer equipment and a service retail store. In an effort to potentially reduce costs and to increase control over supply channels, they buy a plant which manufactures selected computer supplies and equipment. Each makes an equal cash contribution toward the purchase of the plant, each has an equal capital and profits interest in the plant, and they agree to share all losses equally. They own the plant as tenants in common. The co-owners have a written operating agreement specifying that each has an equal share of expenses, and each owns a proportionate, undivided part of the plant’s equipment. The agreement also provides that the plant, as such, does not have the right to market the manufactured computer supplies and equipment to other purchasers. Mary, Nell and Louise agree that each will take one-third of the plant’s annual output and commingle it with other computer equipment and supplies in their respective computer equipment and service retail stores and sells it to customers. With regard to the plant, research and respond to the following questions:
1. Is the plant a partnership for federal income tax purposes? 2. If the plant is a partnership for federal income tax purposes, may it hold an election not to be subject to
the partnership provisions of Subchapter K of the Internal Revenue Code? Explain why or why not. 3. Without regard to your answer to Question 2, assume that the plant may elect out of Subchapter K. Are
Mary, Nell and Louise subject to the self-employment tax on their distributive shares of the plant’s earnings, assuming the output was purchased by Mary, Nell and Louise rather than being distributed to each? Explain your answer.
Your paper must be in a Word document of two to three pages in length. Outside references are not required but may be included. The CSU-Global Library is a good place to find these references. Format your paper in accordance with CSU-Global APA requirements.
Module 2 Critical Thinking: Partnership Purchase Exceeding Book Value (60 points)
Smith Properties is a real estate partnership that focuses on the acquisition and management of commercial and residential real estate in the southwestern United States. Edna Zapata has been a partner in the partnership for the past 15 years. This year, she decided to sell her partnership interest and focus on other interests. The partnership has the following balance sheets as of the date she sold her interest, shown in the table below:
Categories Tax Basis FMV
Cash/Cash Equivalents $250,0000 $250,000
Real Estate Portfolio (includes multiple properties)
$2,400,000 $6,000,000
Other Tangible Assets $500,000 $500,000
Total Assets $3,150,000 $6,750,000
Liabilities (principally mortgage liabilities on the partnership’s real estate portfolio)
$1,350,000 $1,350,000 SAMPLE
Partner Capital $1,800,000 $5,400,000
Total Liabilities & Capital $3,150,000 $6,750,000
Edna owned a one-third interest in partnership capital and profits. As such, the fair market value of her interest in the partnership was $1,800,000. However, the partnership has a reputation for wise investment and management of properties. The buyer of Edna’s interest in the partnership was willing to pay a premium for this expertise. Thus, Edna sold her interest in the partnership for $2,000,000. The buyer also assumed responsibility for Edna’s one-third share of the partnership’s liabilities. The partnership has a section 754 election in effect. Determine the amount of the partnership’s basis adjustment under Section 643(b), and allocate this adjustment among the partnership’s assets. Assume that all of the partnership’s real estate properties are business-use assets which will generate capital gain upon disposition under Code Section 1231. Analyze how the excess of the purchase price over the fair market value of the partnership’s tangible assets will affect the partnership’s post-adjustment balance sheet. For a research aid see IRS regulation, Reg 1.755 Your paper must be in a Word document of two to three pages in length. Outside references are not required but may be included. The CSU-Global Library is a good place to find these references. Format your paper in accordance with CSU-Global APA requirements.
Module 3 Critical Thinking: Sale of S-Corporation Assets Purchased Prior to S-Corporation Status (60 points)
A corporation acquired a machine for $100,000 and placed it in service on August 15, 2006. The corporation elected S corporation status at the beginning to 2010. On February 13, 2011, the property was sold for $40,000, payable in four yearly installments of $10,000 plus interest. What is the amount of ordinary income to be reported from the sale? Write a one- to two-page paper to explain the calculation, analyzing how it works, and explaining the influence S corporation status has on your answer. Include your calculations in a table, and be sure to submit only one document in response to this assignment. Outside references are not required but may be included. The CSU-Global Library is a good place to find these references. Format your paper in accordance with CSU-Global APA requirements.
Module 4 Critical Thinking: Gift Tax Principles (75 points) In 2011, Bert Richards transferred a $100,000 savings account to his wife in trust. The terms of the trust are that income is to be distributed annually to his wife, Mary Beth, the remainder to his two children, Oscar and Bertha, in equal shares or to their estate. The value of Mary Beth’s income interest is $50,000. Respond to these questions:
1. Is this a taxable gift to Mary Beth? See Code Sec. 2523(b)(1) and (e). 2. Have taxable gifts been made for Oscar and Bertha? 3. How many annual exclusions are available? (See Code Sec. 2503(b).)
Provide an analysis of the applicable code in your explanation of each question in the case study. Your paper must be in a Word document of three to four pages. Outside references are not required but may be included. The CSU-Global Library is a good place to find these references. Format your paper in accordance with CSU-Global APA requirements.
The estate of Hugh P. Hughes includes a cabbage farm and incurred a loss of crops due to an unanticipated and
rare flash flood. The date-of-death value of the crops lost was $48,000. The post-flood value of these crops was
$66,000.
What is the amount that can be claimed as a casualty loss deduction by the estate?
Read the case of Estate of Clyde L. Rinaldi, Plaintiff, v. The United States, Defendant. United States Court of Federal
Claims. 38 Fed. C1. 341. No. 95 493 T. (July 11, 1997). It may be accessed through the database found at
www.legalbitstream.com.
Write a two- to three-page paper in response to the case study. Include any calculations you wish in a table, and be sure to submit only one document in response to this assignment. Outside references are not required but may be included. The CSU-Global Library is a good place to find these references. Format your paper in accordance with CSU-Global APA requirements.
Module 6 Critical Thinking: Evaluation of Cases and Research (75 points) The following two court cases have helped to clarify the rightful recipient of depreciation of property held by an estate or trust. Read these judicial decisions and prepare a written summary, analyzing the impact of each case.
Write a two- to three-page paper presenting your analysis. Format your paper in accordance with CSU-Global APA requirements. *The links to the court cases can be found on the Week 6 assignments page in Blackboard.
Module 7 Critical Thinking: Credits Against US Tax Liability (75 points) Determine whether each of the foreign taxes listed below may be credited against a U.S. income tax liability.
1. Saudi Arabian tax on companies producing petroleum 2. French Company Income Tax 3. Ontario (Canada) Corporations Tax 4. Japanese Corporation Tax
Write a two- or three-page paper presenting your analysis of whether these foreign taxes may be credited against U.S. income tax liability. Format your paper in accordance with CSU-Global APA requirements.
Healthwise Medical Supplies Company is located at 2400 Second Street, City, ST 12345. The company is a general partnership that uses the calendar year and accrual basis for both book and tax purposes. It engages in the development and sales of specialized surgical tools to hospitals. The employer identification number (EIN) is XX-2013011. The company formed and began business on January 1, 2010. It has no foreign partners or other foreign dealings. The company is neither a tax shelter not a publically traded partnership. The company has made no distributions other than cash, and no changes in ownership have occurred during the current year. Dr. Bailey is the Tax Matter Partner. The partnership makes no special elections. See the Week 8 Assignments page to view tables containing book balance sheet information at the beginning and end of the current year. The tables provided present a book income statement for the current year. Other information follows: Information on Partnership Formation: Two individuals formed the partnership on January 1, 2010: Dr. Leisa H. Bailey (1200 First Pike, City, ST 12345) and Dr. Thomas J. Firth (3600 Third Blvd., City, ST 54321). For a 30 percent interest, Dr. Bailey contributed $960,000 in cash. She is an active general partner who manages the company. For a 70 percent interest, Dr. Firth contributed $1,856,000 cash and 1,000 shares of Fastgrowth, Inc., stock having, at the time of contribution, a $384,000 fair market value (FMV) and a $76,800 adjusted basis. Dr. Firth is an active general partner who designs and develops new products. For book purposes, the company recorded the contribution of stock at fair market value. Inventory and Cost of Goods Sold (Form 1125-A): The company uses the periodic inventory method and prices its inventory using the lower of FIFO cost or market. Only beginning inventory, ending inventory and purchases should be reflected on Schedule A. No other costs or expenses are allocated to cost of goods sold. Note: the company is exempt from the uniform capitalization (UNICAP) rules because average gross income for the previous year was less than $10 million [Section 263A(b)(2)(B)].
Line 9 (a) Check (ii)
(b)---(d)
Not applicable
(e) & (f)
No
Capital Gains and Losses (Schedule D): The company sold all 1,000 shares of the Fastgrowth, Inc., common stock on July 1, 2011, for $1,152,000. Dr. Firth acquired the stock on January 2, 2008, for $76,800 and contributed the stock to the company on January 1, 2010, when its FMV was $384,000. Fixed Assets and Depreciation (Form 4562) The company acquired equipment on January 2, 2010, and placed it in service on that date. The equipment, which originally cost $1.6 million, is MACRS seven-year property. The company did not elect Section 179 expensing in the acquisition year and elected out of bonus depreciation. The company claimed the following depreciation on this property:
Year Book and Regular Tax Depreciation
AMT Depreciation
2010 $228,640 $171,360
2011 391,840 306,080
SAMPLE
On March 1, 2011, the company acquired and placed in service additional equipment costing $400,000. The company made the Section 179 expensing election for the entire cost of this new equipment. No depreciation or expensing is reported on Schedule A. Other information:
The company paid Dr. Bailey a $170,000 guaranteed payment for her management services.
The company made a $51,200 cash contribution to Fort Sanders Hospital System on December 1 of the current year.
During the current year, the company made a $576,000 cash distribution to Dr. Bailey and a $1,344,000 million cash distribution to Dr. Firth.
The municipal bonds, acquired in 2010, are general revenue bonds, not private-activity bonds. Assume that no expenses of the company are allocable to the tax-exempt interest generated from the municipal bonds.
Assume qualified production services income (QPAI) equals $1.92 million. Employer’s W-2 wages allocable to U.S. production activities equal $896,000. The company, being an eligible small pass-through partnership, uses the small business simplification overall method for reporting these activities (see discussion for Line 13d of Schedule K and Line 13 of Schedule K-1 in the Form 1065 instructions).
Use book numbers for Schedule L, Schedule M-2, and Line 1 of Schedule M-1. Also, use book numbers for Item L of Schedule K-1, and check the box for Section 704(b) book.
The partners share liabilities, which are recourse, in the same proportion as their ownership percentages.
Required: Prepare the 2011 partnership tax return (Form 1065), including the following additional schedules and forms: Schedule D, Form 1125 A, Form 4562, and Schedule K-1. To complete this project, you should use 2011 IRS Tax forms. These forms can be downloaded and completed using the IRS website at www.irs.gov. 2011 tax preparation software may also be used. Should you elect to use it the effort to locate applicable software and the cost of purchase will be your responsibility. It is not a requirement and your grade will not suffer if you do not use such software tools. There are five grading rubrics covering the forms you will be submitting for the Portfolio Project. You should review all of these rubrics, which can be accessed from the Course Information page, to see how you will be graded for this project.
Course Policies
Course Grading 20% Discussion Participation 45% Critical Thinking Activities 35% Final Portfolio Paper
Grading Scale and Policies
A 95.0 – 100
A- 90.0 – 94.9
B+ 86.7 – 89.9
B 83.3 – 86.6 SAMPLE
B- 80.0 – 83.2
C+ 75.0 – 79.9
C 70.0 – 74.9
D 60.0 – 69.9
F 59.9 or below
In-Classroom Policies For information on late work and Incomplete grade policies, please refer to our In-Classroom Student Policies and Guidelines or the Academic Catalog for comprehensive documentation of CSU-Global institutional policies.
Academic Integrity Students must assume responsibility for maintaining honesty in all work submitted for credit and in any other work designated by the instructor of the course. Academic dishonesty includes cheating, fabrication, facilitating academic dishonesty, plagiarism, reusing /re-purposing your own work (see CSU-Global Guide to Writing and APA Requirements for percentage of repurposed work that can be used in an assignment), unauthorized possession of academic materials, and unauthorized collaboration. The CSU-Global Library provides information on how students can avoid plagiarism by understanding what it is and how to use the Library and Internet resources. Citing Sources with APA Style All students are expected to follow the CSU-Global Guide to Writing and APA Requirements when citing in APA (based on the APA Style Manual, 6th edition) for all assignments. For details on CSU-Global APA style, please review the APA resources within the CSU-Global Library under the “APA Guide & Resources” link. A link to this document should also be provided within most assignment descriptions on your course’s Assignments page. Netiquette Respect the diversity of opinions among the instructor and classmates and engage with them in a courteous,
respectful, and professional manner. All posts and classroom communication must be conducted in accordance
with the student code of conduct. Think before you push the Send button. Did you say just what you meant?
How will the person on the other end read the words?
Maintain an environment free of harassment, stalking, threats, abuse, insults or humiliation toward the
instructor and classmates. This includes, but is not limited to, demeaning written or oral comments of an ethnic,
religious, age, disability, sexist (or sexual orientation), or racist nature; and the unwanted sexual advances or
intimidations by email, or on discussion boards and other postings within or connected to the online classroom.
If you have concerns about something that has been said, please let your instructor know. SAMPLE
