Federal income taxation / Joseph Bankman, Daniel N. Shaviro, Kirk J. Stark, Edward D. Kleinbard.
2017
KF6369 .B265 2017 (Map It)
Available at Cellar
Formats
| Format | |
|---|---|
| BibTeX | |
| MARCXML | |
| TextMARC | |
| MARC | |
| DublinCore | |
| EndNote | |
| NLM | |
| RefWorks | |
| RIS |
Items
Details
Title
Federal income taxation / Joseph Bankman, Daniel N. Shaviro, Kirk J. Stark, Edward D. Kleinbard.
Published
New York : Wolters Kluwer, [2017]
Call Number
KF6369 .B265 2017
Edition
Seventeenth Edition.
ISBN
9781454871026
1454871024
1454871024
Description
xxvii, 751 pages : illustrations ; 26 cm.
System Control No.
(OCoLC)966274946
Bibliography, etc. Note
Includes bibliographical references and index.
Series
Record Appears in
Gift
Purchased from the income of the Edith L. Fisch Fund
Gift
The Arthur W. Diamond Law Library
Purchased from the income of the Edith L. Fisch Fund
Table of Contents
Preface
xxiii
Acknowledgments
xxv
Editorial Notice
xxvii
1.
Introduction
1
A.
Taxing and Spending
1
B.
Some Data on Taxes and the Distribution of Income
3
1.
Income Tax Data
3
2.
Distributional Data
9
C.
Why Is Tax Law So Complicated?
13
1.
Model of Economic Activity
13
2.
How Hard Can It Be?
16
D.
Fundamental Tax Terminology and Concepts
20
1.
Tax Base: From Gross Income to Tax Payable
20
2.
Deduction, Exemption, Exclusion, and Credit
24
3.
Tax Brackets, Progressive Tax Structures, and Effective and Marginal Tax Rates
26
4.
Tax Incidence
29
5.
Capital Gain and Dividend Income; Ordinary Income; Losses and Expenses
30
6.
Tax Accounting
34
7.
Recovery of Cost, Depreciation, and Basis
35
8.
Realization and Recognition
35
9.
Types of Entities
36
10.
Inflation
37
E.
Conversion and Deferral
38
F.
Compliance and Administration
40
1.
Self-Assessment, Audits, and Tax Litigation
40
2.
Penalties for Noncompliance
42
G.
Sources of Federal Tax Law in a Nutshell
43
2.
Why And The What Of Taxing Income
47
A.
Why Tax Income?
48
1.
Tax Base and Ability to Pay
48
2.
Alternative Measures to Ability to Pay
49
3.
Efficiency of an Income Tax
52
4.
Allocative and Distributive Effects
54
B.
What Is "Income" Anyway?
55
1.
What Do We Tax?
55
2.
Limits of Intuition
56
C.
Back to the Ballpark
59
Commissioner v. Glenshaw Glass Co.
61
Notes and Questions
63
Cesarini v. United States
64
Notes and Questions
66
D.
Paying Another's Bills
67
Notes and Questions
67
Notes and Questions
68
E.
Noncash Benefits
69
1.
Meals and Lodging Provided to Employees
70
Silicon Valley's Mouthwatering Tax Break
71
Notes and Questions
72
Questions
73
Benaglia v. Commissioner
73
Notes and Questions
77
Statutory Aftermath to Benaglia
78
United States v. Gotcher
80
Notes and Questions
82
2.
Other Fringe Benefit Statutes
83
Section 132 Fringe Benefits
83
Questions
84
Further Notes on Fringe Benefits
85
Questions
88
3.
Health Insurance
89
4.
Another Approach to Valuation
89
Turner v. Commissioner
90
Notes and Questions
91
F.
Price Adjustment or Income?
92
Residents May Have to Pay Taxes on Their Turf Rebate Money
94
G.
Recovery of Capital
95
1.
Sale of Easements
96
Inaja Land Co. v. Commissioner
96
Notes and Questions
97
2.
Gains and Losses from Gambling
98
3.
Recovery of Loss
100
Clark v. Commissioner
100
Current Legal Status of Clark
102
Notes and Questions
102
Hypothetical
104
H.
Recoveries for Personal and Business Injuries
105
1.
Basic Rules
105
Murphy v. United States
106
Notes and Questions
115
Perez v. Commissioner
117
2.
Deferred Payments and Structured Settlements
122
3.
Medical Expenses and Other Recoveries and Benefits
122
I.
Illegal Income
123
Gilbert v. Commissioner
123
Notes and Questions
126
J.
Gain on the Sale of a Home
128
Notes and Questions
129
3.
Private Sphere And The Public Sphere
131
A.
Imputed Income
132
1.
Imputed Income, Psychic Income, In-Kind Income
132
Questions
136
2.
Drawing the Line
137
Revenue Ruling 79-24
137
Questions
138
3.
Imputed Income, Implicit Income, Substitute Taxation
138
B.
Gifts
140
1.
Gift: The Basic Concept
140
Notes and Questions
143
Commissioner v. Duberstein
144
Notes and Questions
150
United States v. Harris
152
Notes
159
2.
Gift: Some Applications
160
Questions
163
3.
Transfer of Unrealized Gain by Gift While the Donor Is Alive
164
Taft v. Bowers
165
Notes and Questions
167
4.
Transfers at Death
169
Questions
171
C.
Transfers Incident to Marriage and Divorce
172
1.
Introduction
172
2.
Property Settlements
173
a.
Transfers Incident to a Divorce or Separation Agreement
173
United States v. Davis
173
Notes and Questions
177
Problems
178
b.
Antenuptial Settlements
178
Farid-Es-Sultaneh v. Commissioner
178
Questions
181
3.
Alimony, Child Support, and Property Settlements
182
a.
Basic Scheme
182
b.
Rules
182
c.
Policy Questions
184
d.
Tax Planning Angle
184
e.
Final Question
185
Problems
185
4.
Child-Support Obligations in Default
186
Diez-Arguelles v. Commissioner
186
Notes and Questions
188
4.
When Is It Income?
191
Value of Deferral
193
A.
Annual Accounting and Its Consequences
195
1.
Use of Hindsight
195
Burnet v. Sanford & Brooks Co.
195
Notes and Questions
197
Problems
198
2.
Capital Expenditures
199
3.
Claim of Right
201
Notes and Questions
202
4.
Tax Benefit Rule
203
Notes and Questions
205
B.
Cash and Accrual Methods of Accounting for Income
206
1.
Introduction to Accounting Methods
206
Questions
208
Ford Motor Co. v. Commissioner
209
Notes and Questions
216
Notes and Questions
217
2.
Delay in Receiving Cash
217
Georgia School-Book Depository v. Commissioner
217
Notes and Questions
220
3.
Prepaid Income
221
American Automobile Association v. United States
221
Notes and Questions
225
4.
Deposits Versus Advance Payments
227
Questions
228
C.
Realization Doctrine: The Root of Many Tax Evils
228
1.
Legal Origins of the Realization Doctrine
229
Eisner v. Macomber
230
Notes and Questions
237
Are Stock Dividends Income?
241
Excerpt from Personal Income Taxation
242
2.
Some Implications of the Realization Doctrine in Practice
243
3.
Decline of Realization as a Constitutional Requirement
244
Helvering v. Bruun
245
Notes and Questions
248
4.
Limits of Realization: Nonrecourse Borrowing in Excess of Basis
250
Woodsam Associates, Inc. v. Commissioner
251
Notes and Questions
252
5.
Contemporary Understandings of the Realization Doctrine
253
Cottage Savings Association v. Commissioner
254
Notes
261
Questions
263
Problems
263
D.
Statutory Nonrecognition Provisions
264
1.
Introduction to Nonrecognition Rules
264
2.
Like-Kind Exchanges
265
a.
Like-Kind Requirement
266
PLR 200203033
267
Notes and Questions
269
b.
Boot and Basis in Like-Kind Exchanges
270
c.
Multiparty Transactions
272
E.
Open Transactions and Installment Sales
274
1.
Open Transaction Doctrine
274
Burnet v. Logan
274
Notes and Questions
276
2.
Executory Contract or Completed Sale?
279
Lucas v. North Texas Lumber
279
Notes and Questions
280
Commissioner v. Segall
280
Notes
281
3.
Installment Method
282
F.
Constructive Receipt and Related Doctrines
284
1.
Basic Principles
284
Amend v. Commissioner
284
Notes
288
Pulsifer v. Commissioner
288
Question
290
G.
Nonqualified Deferred Compensation
290
1.
Background
290
Minor v. United States
292
Notes
295
2.
Nonqualified Deferred Compensation: Current Practice Overview
296
Problem
300
3.
Nonqualified Deferred Compensation: Constructive Receipt and [§] 409A
301
4.
Nonqualified Deferred Compensation: Stock Options
303
5.
Nonqualified Deferred Compensation: Shortcuts
304
6.
Nonqualified Deferred Compensation: Policy
304
H.
Qualified Employee Plans and Incentive Stock Options
306
1.
Qualified Employee Plans
306
a.
Basic Choices and Rules
306
b.
Amount of the Benefit
308
c.
Antidiscrimination Rules
309
d.
Individuals
310
e.
Penalty for Early Withdrawal
311
f.
Mandatory Distributions
311
g.
Limitations on Contributions and Benefits
311
2.
Incentive Stock Options
312
Questions
312
5.
Debt And Certain Other Financial Instruments
315
A.
Financial Instruments and the Income Tax
315
B.
Loans and Cancellation of Indebtedness Income
316
1.
Exclusion of Loan Proceeds from Income
316
2.
True Discharge of Indebtedness
318
United States v. Kirby Lumber Co.
319
Notes and Questions
319
3.
Relief Provisions
320
a.
Involvent Debtors
320
b.
Solvent Farmers
321
c.
Adjustment of Purchase Money Debt
321
d.
Student Loan Forgiveness
322
e.
Mortgage Forgiveness
322
4.
Contested or Uncertain Liabilities
322
Zarin v. Commissioner
323
Notes
331
C.
Transfers of Property Subject to Debt
332
1.
Basic Rules
332
2.
Nonrecourse Debt, Part I: Crane and Tufts
335
Crane v. Commissioner
335
Notes and Questions
340
Commissioner v. Tufts
343
Notes and Questions
349
3.
Nonrecourse Debt, Part II: Property Worth Less at Acquisition Than the Face Amount of the Debt
351
a.
Seller Financing
352
b.
Mid-Stream Acquisition of "Distressed" Property
352
4.
Gift Tax Liability Created by the Transfer
354
Diedrich v. Commissioner
355
Notes and Questions
357
D.
Interest Income and Original Issue Discount
358
1.
Compounding and the Economic Accrual of Interest Income
358
2.
When and Why It Matters: Counterparty Effects
360
3.
Mechanics of the OID Rules
362
E.
Interest on State and Local Bonds
365
1.
Basic Concepts
365
Notes and Questions
366
2.
Limitations on Exempt Status
368
3.
Constitutional Barrier?
369
4.
Tax Arbitrage
369
5.
U.S. Treasury Bonds
371
F.
Certain Other Financial Instruments
372
1.
Life Insurance
372
2.
Annuities
376
G.
Deemed Realizations: Constructive Sales
379
Joint Committee on Taxation General Explanation of Tax Legislation Enacted in 1997
382
Questions
382
6.
Whose Income Is It?
385
A.
Income from Services: Diversion by Private Agreement
387
Lucas v. Earl
387
Notes and Questions
388
B.
Income from Services: Diversion by Operation of Law
390
Poe v. Seaborn
390
Notes and Questions
392
C.
Marriage Penalty (and Bonus)
394
1.
Legislative "Solution": The Income-Splitting Joint Return
394
2.
Addressing the Marriage Penalty/Bonus
395
3.
Filing Status: Summary and Data
396
D.
Transfers of Property and Income from Property
397
Blair v. Commissioner
398
Helvering v. Horst
399
Notes and Questions
403
E.
Services Transformed Into Property
404
Helvering v. Eubank
405
Heim v. Fitzpatrick
406
Notes and Questions
408
F.
Shifting Income Through Legal Entities
409
1.
Family Partnerships and S Corporations
409
2.
Income-Splitting Through Corporations
411
7.
Expenses Of Earning Income
413
A.
Introduction
413
1.
Expenses and the Net Income Concept
413
2.
Deduction Mechanics
414
B.
Current Expenses Versus Capital Expenditures
415
1.
Which Expenditures Must Be Capitalized?
416
Encyclopaedia Britannica v. Commissioner
416
Notes and Questions
420
2.
Uniform Capitalization Rules of Section 263A
422
3.
INDOPCO Decision and the Capitalization Regulations
423
C.
Repair and Maintenance Expenses
425
Midland Empire Packing Co. v. Commissioner
425
Notes and Questions
427
Treatment of Environmental Remediation Expenses Under Section 263A
430
D.
Inventory Accounting
432
Problem
433
E.
"Ordinary and Necessary"
433
1.
Payments for "Goodwill" and Other Assets
433
Welch v. Helvering
433
Notes and Questions
435
2.
Extraordinary Behavior
437
Gilliam v. Commissioner
437
Notes and Questions
442
3.
Reasonable Compensation
444
F.
Depreciation and Amortization
445
1.
Significance of the Timing of Cost Recovery
445
2.
Overview of Depreciation Rules
446
3.
Current System
449
a.
Tangible Assets Depreciable Under [§] 168
449
Comparative Focus: The UK "Industrial Buildings Allowance"
450
4.
Goodwill and Other Intangibles
451
G.
Depletion and Intangible Drilling Costs
452
H.
Other Loss Deduction Issues
455
1.
Timing of Loss Allowance
456
2.
Was the Taxpayer Seeking to Earn Income?
459
3.
Determining the Amount of Allowable Loss
460
4.
Section 165 in Action: The Madoff Fraud
460
Revenue Ruling 2009-9
460
Notes and Questions
464
I.
Investments in Human Capital
464
1.
Educational Expenses in Theory
464
Present Law and Analysis Relating to Tax Benefits for Higher Education
465
2.
Defining Deductible Educational Expenses in Practice
467
Carroll v. Commissioner
467
Notes and Questions
468
Kopaigora v. Commissioner
469
Notes and Questions
471
8.
Tax Shelters And Tax Planning
475
A.
Nature of the Problem
475
B.
Origin of Substance-Over-Form Doctrine
477
Notes and Questions
480
1.
Gregory v. Helvering on Appeal
480
Notes and Questions
481
C.
Requiring Economic Substance in Response to Loss-Generating Tax Shelters
482
Knetsch v. United States
483
Notes and Questions
486
Development of the Economic Substance Doctrine
489
D.
Common Law and Other Responses to Sale-Leasebacks
489
1.
Two Distinct Reasons for Engaging in Sale-Leasebacks
489
2.
Overvaluation Sale-Leasebacks
491
Estate of Franklin v. Commissioner
491
Notes and Questions
495
3.
Sale-Leasebacks That Change the Tax Owner for Depreciation Purposes
496
E.
Tax Shelters More Generally
498
1.
Definition and Elements of a Tax Shelter
498
2.
Real Estate and Other Tax Shelters of the 1970s and Early 1980s
499
3.
Congressional Response to the Tax Shelters of the 1980s
500
Notes and Questions
503
4.
More Recent Corporate and Individual Tax Shelters
504
Winn-Dixie Stores, Inc. v. Commissioner
505
Notes
507
5.
Codification of Economic Substance
508
6.
Rules v. Standards
510
7.
Rules Aimed at the Tax Lawyer
511
9.
Mixed Business And Personal Expenses
513
A.
Clothing Expenses
515
Pevsner v. Commissioner
516
Note
518
Questions
519
B.
Home Offices and Vacation Homes
519
1.
Home Offices
519
Popov v. Commissioner
520
Questions
523
Problems
524
2.
Vacation Homes
524
C.
Child-Care Expenses
525
Smith v. Commissioner
526
Notes and Questions
527
D.
Commuting Expenses
529
Commissioner v. Flowers
529
Notes and Questions
534
Comparative Focus: A Comparative Perspective: Commuting Expenses Auf Deutschland
534
Hantzis v. Commissioner
535
Notes and Questions
540
Problems: Testing and Rationale
542
E.
Travel and Entertainment Expenses
544
1.
Deductibility of Business Travel
544
Rudolph v. United States
545
2.
Limitations Under Section 274
549
Problems
551
3.
Business Lunches
552
Moss v. Commissioner
552
Questions
555
4.
More on Entertaining Customers
556
Churchill Downs, Inc. v. Commissioner
556
Questions
561
F.
Legal Expenses
562
United States v. Gilmore
562
Notes and Questions
566
G.
Hobby Losses
568
Nickerson v. Commissioner
568
Notes and Questions
573
10.
Personal Deductions, Exemptions, And Credits
575
A.
Introduction
575
1.
Basic Structure of Personal Deductions
575
2.
Rationale for Personal Deductions
576
B.
Casualty Losses
578
Dyer v. Commissioner
579
Notes and Questions
580
Chamales v. Commissioner
581
Questions
588
Problems
588
Blackman v. Commissioner
589
Questions
591
C.
Medical Expenses: Exclusion for Employer-Provided Health Care and Deduction for Extraordinary Medical Expenses
592
1.
Overview and Policy
592
2.
What Is "Medical Care"?
593
Taylor v. Commissioner
594
Ochs v. Commissioner
595
Notes and Questions
597
D.
Charitable Contributions and Treatment of Nonprofit Institutions
598
1.
Overview
598
2.
Rules Governing Charitable Contributions
599
3.
Treatment of Nonprofit Organizations
600
4.
Policy
601
Taxing Yale's Endowment
602
Comparative Focus: Canada's Charitable Contribution Credit
603
5.
Gifts with Private Objectives or Benefits
604
Ottawa Silica Co. v. United States
604
Notes and Questions
607
6.
More, on Private Benefits
608
a.
Quid Pro Quo Contributions
608
b.
Complicitous Role of Some Charitable Organizations
609
7.
Overvaluation of Contributed Property
609
8.
Special Case of Collegiate Athletics
610
9.
Religious Benefits and Services
610
10.
Voluntariness
611
11.
Public Policy and Charitable Purpose
612
Bob Jones University v. United States
612
Notes and Questions
619
12.
Loss of Exemption Due to Private Inurement
619
E.
Interest
620
1.
Rules
620
2.
Asymmetrical Treatment of Interest Income and Expense
621
3.
Policy Justification and Transition Issues
622
4.
Tracing
622
Problems
623
5.
Interest on Student Loans
623
F.
Taxes
623
1.
Rationale for the SALT Deduction
624
2.
Basic Structure of U.S. State and Local Taxation
624
G.
Personal and Dependency Exemptions
626
H.
Alternative Minimum Tax
627
1.
Individual Alternative Minimum Tax
627
2.
Corporate AMT
629
Klaassen v. Commissioner
629
Questions
632
11.
Tax And Poverty: The Earned Income Tax Credit
633
A.
Introduction
633
B.
Income Tax and the Earned Income Tax Credit
635
1.
Features of the Tax Law that Reduce Liability to Zero
635
2.
Overview of the EITC
636
3.
Operation of the EITC
636
4.
Efficiency of the EITC
638
5.
Reform Proposals
639
12.
Capital Gains And Losses
641
A.
Background and Statutory Framework
641
1.
Net Capital Gain
641
2.
Statutory Tax Rates for Net Capital Gain
643
3.
Net Capital Loss
644
B.
Definition of "Capital Asset"
647
C.
Policy Considerations
648
1.
Rationale for Favorable Treatment of Capital Gain
648
2.
Rationale for Limiting the Deductibility of Capital Losses
650
Comparative Focus: South Africa's Decision to Tax Capital Gains
651
D.
Property Held "Primarily for Sale to Customers"
652
1.
Sale to "Customers"
652
Bielfeldt v. Commissioner
652
Notes and Questions
654
2.
"Primarily for Sale"
655
Biedenharn Realty Co. v. United States
655
Notes and Questions
662
E.
Transactions Related to the Taxpayer's Business
665
Corn Products Refining Co. v. Commissioner
667
Arkansas Best Corporation v. Commissioner
670
Notes and Questions
673
F.
Substitutes for Ordinary Income
674
1.
Payment for Cancellation of a Lease
674
Hort v. Commissioner
674
Notes and Questions
676
2.
Sale of Interest in a Trust
679
McAllister v. Commissioner
679
Notes and Questions
682
3.
Lottery Winnings
683
Womack v. Commissioner
683
Questions
687
4.
Oil Payments
688
Commissioner v. P.G. Lake, Inc.
688
Notes and Questions
690
G.
Other Claims and Contract Rights
691
1.
Termination Payments
691
Baker v. Commissioner
691
Notes and Questions
698
2.
Theatrical Production Rights
699
Commissioner v. Ferrer
699
Notes and Questions
707
3.
Right of Privacy or of Exploitation
708
Miller v. Commissioner
708
Question
711
4.
Patents and Copyrights
711
H.
Correlation with Prior Related Transactions
712
Merchants National Bank v. Commissioner
712
Arrowsmith v. Commissioner
713
Notes
715
I.
Requirement of a Sale or Exchange
716
Table of Cases
717
Table of Internal Revenue Code Sections
723
Table of Treasury Regulations
729
Table of IRS Revenue Rulings
731
Table of Miscellaneous IRS Pronouncements
733
Index
735