This chapter discusses special tax rules that apply to C corporations. It covers topics like the definition of a corporation, different types of C corporations like personal service corporations, and rules around tax years and accounting methods. It also summarizes the C corporation tax formula and compares tax treatment between C corporations and individuals. Finally, it provides examples of income items, exclusions, and deductions that have special rules for C corporations, such as organizational expenses, dividends received deductions, and charitable contributions.
This document provides an overview of tax accounting methods and concepts. It discusses the cash method of accounting, which recognizes income when cash is received and expenses when paid. The document provides examples of constructive receipt, where a taxpayer has income even if not yet received in cash. It also briefly mentions the accrual method and hybrid accounting methods. The document appears to be an introductory chapter on tax accounting from a textbook.
This document provides an overview of key topics related to partnerships covered in Chapter 16, including:
1) The definition of a partnership as an unincorporated association with two or more persons who associate for profit.
2) Partnerships are generally treated as pass-through entities where income/loss and separately stated items are allocated to partners.
3) Separately stated items such as capital gains/losses must be stated separately since tax treatment may vary between partners.
This document provides an overview and exhibits about selecting an entity form for a new business from the perspectives of tax and non-tax differences. It compares key aspects of C corporations, S corporations, and general partnerships. The exhibits include tables that outline differences in areas like exposure of owners, continuity of ownership, rights of owners, raising equity/debt capital, tax rates, accounting methods, and eligibility requirements.
This document summarizes the key rules and concepts around the treatment of capital assets and Section 1231 assets for tax purposes. It defines capital assets and outlines the determination of capital gains and losses. Section 1231 assets are defined as depreciable business property held for over 12 months. The steps for determining Section 1231 gains and losses are provided. The document also summarizes the rules for recapturing depreciation taken under Sections 1245 and 1250.
This document provides exhibits related to Chapter 18 on taxation of trusts and estates. It includes definitions of key terms like simple trust, complex trust, and grantor trust. It also illustrates the life cycle of a trust and compares the process of computing tax liability for estates/trusts versus individuals. The exhibits provide worksheets and examples for calculating items like gross income, deductions, distribution deductions, and taxable income for estates and trusts.
This document contains a summary of key concepts regarding deductions for business and investment losses and passive activity losses from Chapter 7. It includes 20 exhibits that cover topics such as abusive tax shelters, at-risk rules, passive activity loss rules, disposing of a passive activity interest, inheriting a passive activity, and material participation. The exhibits provide definitions and examples to explain these complex areas of tax law.
This document summarizes a presentation on recent federal income tax incentives targeted at small businesses. It discusses policy considerations for supporting small businesses and reviews choices of business entities such as sole proprietorships, partnerships, S-corporations and C-corporations. It also summarizes tax incentives for small business investments including qualified small business stock gains exclusion and ordinary loss treatment for small business stock. The document concludes by reviewing employment related tax incentives such as the federal unemployment tax rate reduction and the deduction for health insurance costs for self-employed individuals.
This document provides an overview of Chapter 9 topics related to tax credits, prepayments, and the Alternative Minimum Tax (AMT) in the form of exhibits and summaries. The chapter covers various tax credits like the child tax credit, education credits, earned income credit, and foreign tax credit. It also discusses obtaining credit for excess tax withholdings and prepayments. Finally, it summarizes how the AMT system works by adding back certain deductions and preferences to calculate Alternative Minimum Taxable Income.
This document provides an overview of tax accounting methods and concepts. It discusses the cash method of accounting, which recognizes income when cash is received and expenses when paid. The document provides examples of constructive receipt, where a taxpayer has income even if not yet received in cash. It also briefly mentions the accrual method and hybrid accounting methods. The document appears to be an introductory chapter on tax accounting from a textbook.
This document provides an overview of key topics related to partnerships covered in Chapter 16, including:
1) The definition of a partnership as an unincorporated association with two or more persons who associate for profit.
2) Partnerships are generally treated as pass-through entities where income/loss and separately stated items are allocated to partners.
3) Separately stated items such as capital gains/losses must be stated separately since tax treatment may vary between partners.
This document provides an overview and exhibits about selecting an entity form for a new business from the perspectives of tax and non-tax differences. It compares key aspects of C corporations, S corporations, and general partnerships. The exhibits include tables that outline differences in areas like exposure of owners, continuity of ownership, rights of owners, raising equity/debt capital, tax rates, accounting methods, and eligibility requirements.
This document summarizes the key rules and concepts around the treatment of capital assets and Section 1231 assets for tax purposes. It defines capital assets and outlines the determination of capital gains and losses. Section 1231 assets are defined as depreciable business property held for over 12 months. The steps for determining Section 1231 gains and losses are provided. The document also summarizes the rules for recapturing depreciation taken under Sections 1245 and 1250.
This document provides exhibits related to Chapter 18 on taxation of trusts and estates. It includes definitions of key terms like simple trust, complex trust, and grantor trust. It also illustrates the life cycle of a trust and compares the process of computing tax liability for estates/trusts versus individuals. The exhibits provide worksheets and examples for calculating items like gross income, deductions, distribution deductions, and taxable income for estates and trusts.
This document contains a summary of key concepts regarding deductions for business and investment losses and passive activity losses from Chapter 7. It includes 20 exhibits that cover topics such as abusive tax shelters, at-risk rules, passive activity loss rules, disposing of a passive activity interest, inheriting a passive activity, and material participation. The exhibits provide definitions and examples to explain these complex areas of tax law.
This document summarizes a presentation on recent federal income tax incentives targeted at small businesses. It discusses policy considerations for supporting small businesses and reviews choices of business entities such as sole proprietorships, partnerships, S-corporations and C-corporations. It also summarizes tax incentives for small business investments including qualified small business stock gains exclusion and ordinary loss treatment for small business stock. The document concludes by reviewing employment related tax incentives such as the federal unemployment tax rate reduction and the deduction for health insurance costs for self-employed individuals.
This document provides an overview of Chapter 9 topics related to tax credits, prepayments, and the Alternative Minimum Tax (AMT) in the form of exhibits and summaries. The chapter covers various tax credits like the child tax credit, education credits, earned income credit, and foreign tax credit. It also discusses obtaining credit for excess tax withholdings and prepayments. Finally, it summarizes how the AMT system works by adding back certain deductions and preferences to calculate Alternative Minimum Taxable Income.
Tax Cuts & Jobs Act Implications for Banking Institutions Polsinelli PC
This document summarizes a presentation by Polsinelli PC on the implications of the Tax Cuts and Jobs Act for banking institutions. It discusses several key provisions of the new tax law that affect banks, including reduced corporate tax rates, limitations on interest expense deductions, changes to depreciation rules, and limitations on state and local tax deductions. It also provides an analysis of how these changes impact decisions for banks on whether to operate as S corporations or C corporations. The presentation examines potential tax savings for a sample community bank that converts from an S corp to a C corp structure under the new law.
This document discusses various types of deductions allowed for individuals, including trade or business deductions, deductions for producing income, and deductions for losses. It provides examples of expenses that fall under each category and whether they are deductible "above the line" or "below the line" on a tax return. The document also examines business investigation and start-up expenses in more detail, outlining how they are treated depending on whether the business is similar or new.
This document discusses the allocation and apportionment of expenses and how it affects foreign tax credit benefits. It covers key definitions such as class of income, statutory groupings, and residual groupings. It provides examples of how interest, research and experimental, stewardship, and state taxes and charitable deductions are allocated and apportioned. It also discusses adopting a plan to apportion selling, general and administrative expenses. The document examines how expense apportionment impacts the calculation of foreign source taxable income and the foreign tax credit limitation.
Section 367 and the dual consolidated loss rules prevent taxpayers from obtaining double tax benefits by using losses to offset income in both the United States and a foreign jurisdiction. The dual consolidated loss rules under Section 1503(d) define a dual consolidated loss as any net operating loss incurred by a domestic corporation that is also considered a resident for tax purposes in a foreign country. The rules are intended to prevent a dual resident company from using the same losses to obtain tax benefits in both the United States and another country.
The document summarizes key concepts related to business, tax, and financial environments. It discusses the four main forms of business organization in the US - sole proprietorships, partnerships, corporations, and limited liability companies. It also covers topics like corporate and personal income taxes, depreciation, losses and gains. Additionally, it describes the financial markets and how funds flow in the economy through financial intermediaries and brokers. Key factors that influence expected security returns like risk, marketability, default risk, taxability, maturity, inflation and embedded options are also summarized.
This document provides an overview of the taxation of foreign taxpayers in the United States. It discusses two types of income subject to tax: income effectively connected to a U.S. business, which is taxed at progressive rates, and fixed or determinable annual or periodic income from U.S. sources, which is generally taxed at a 30% rate. Exceptions include portfolio interest, interest on securities, and gains from the sale of property that are not effectively connected. The Foreign Investment in Real Property Tax Act treats gains from the sale of U.S. real property as effectively connected income. The branch profits tax and earnings stripping rules aim to prevent base erosion through interest payments between related parties.
This chapter discusses tax planning strategies for individuals, including:
1) General principles such as avoiding income recognition, deferring income or deductions, and accelerating deductions.
2) Differences in tax treatment between self-employed individuals and employees.
3) Family tax planning strategies like income shifting, college savings plans, and divorce settlements.
4) Asset-related planning including the Section 179 deduction, home ownership, and retirement accounts.
This document provides an overview and exhibits related to itemized deductions allowed on individual tax returns. It discusses various types of itemized deductions including medical expenses, taxes, interest, charitable contributions and others. The exhibits provide more detail on specific itemized deductions such as medical care capital expenditures, transportation and lodging costs, types of allowable interest, and limitations on charitable deductions.
The document discusses Subpart F of the US tax code, which accelerates the taxation of certain types of income earned by controlled foreign corporations (CFCs). It covers the policy overview of Subpart F, how it taxes "tainted income" like foreign base company sales income and foreign base company services income. It also discusses the branch rules, which treat branches of CFCs as separate corporations if they have substantially the same tax effect. The document provides examples to illustrate how the rules apply to different scenarios involving CFCs with manufacturing and sales branches in different countries.
This document provides summaries of two presenters who will be speaking on business entity selection and its benefits and pitfalls. Kevin Learned is a founding partner at a law firm specializing in advising small and mid-sized federal services contractors on matters including company formation, mergers and acquisitions, private offerings, and certifications. Aman Badyal counsels clients on various transactions including choice of entity, formation, private placements, and mergers. The document then covers various topics related to different types of business entities including sole proprietorships, partnerships, corporations and LLCs and their characteristics regarding liability, taxes, ownership restrictions, and management.
(a) The adjusted basis of the original common stock shares remains $8,800 (100 shares x $88 per share). The basis of the new stock rights is $0 since they are worth less than 15% of the original stock's FMV.
(b) The holding period of the original common stock shares remains March 31, 2011. The holding period of the new stock rights includes the holding period of the original shares, which is March 31, 2011.
This chapter introduces federal taxation in the United States. It discusses the four major types of federal taxes: income taxes, employment taxes, estate and gift taxes, and excise and customs taxes. It also provides an overview of tax revenue statistics, the differences between tax avoidance and tax evasion, the history of the federal income tax, the tax legislative process, and the objectives of tax law.
This document discusses partnership taxation and abusive tax shelters. It provides an overview of federal partnership tax audit proceedings, summarizes the 2013 U.S. Supreme Court case U.S. v. Woods which involved an abusive tax shelter, and concludes that attorneys should avoid assisting with abusive tax shelters due to the risks of penalties and malpractice litigation. The Woods case found that partnerships formed solely for tax avoidance and lacking economic substance can be disregarded, and the valuation misstatement penalty applies when partnership basis is inflated.
The general partner of Riverside Park Associates LP is Riverside Park
Associates, Inc. The limited partners are individual and institutional investors.
c.
The limited partnership agreement specifies that the general partner is responsible for
managing the day-to-day operations of the partnership and its real estate holdings.
The limited partners have limited liability and do not participate in management.
Profits, losses, cash distributions and liquidation proceeds are allocated 99% to the
limited partners and 1% to the general partner.
d.
The balance sheet shows total assets of $145.4 million as of December 31, 2006.
The largest asset is the $135.4 million net book value of the real
Curbing profit shifting in international transaction un oecd model _ JenaChidananda Jena
The document discusses various ways that multinational enterprises shift profits for tax avoidance purposes. It begins by covering the use of tax holidays and incentives, capital allowances, inter-company transactions like royalty payments and management fees, and selling goods through low-tax countries. It then contrasts the challenges facing developing versus developed countries in addressing profit shifting. Finally, it outlines the scope for profit shifting across different types of income like business profits, dividends, interest, royalties, and more to avoid taxation.
Brochure - Corporate Income Tax R.01/09taxman taxman
Florida imposes a corporate income tax of 5.5% on adjusted federal taxable income. Corporations conducting business in Florida or earning income in the state must file a return. Estimated tax payments are due quarterly if more than $2,500 is owed annually. In addition to the regular tax, corporations may owe alternative minimum tax if they paid federal AMT, with credits available in later years.
AC102 PPT8 - Partnership Liquidation Lump Sum (PPT from Sir Leandro Fua) Carla
The document provides details about the liquidation of the partnership firm of Encina, Endrada, and Elina. It includes their statement of financial position before liquidation begins and statements of liquidation showing the realization of assets, distribution of gains or losses, payment of liabilities, and distribution of cash to partners under different scenarios of asset sale prices and treatment of capital deficiencies.
Prepared by CA Sandesh Mundra - An exhaustive presentation on Consolidation of Accounts covering the Standards - AS 21, AS23 and AS 27 with indepth analysis of the finer aspects involved.
This document summarizes the key rules and concepts around the treatment of capital assets and Section 1231 assets for tax purposes. It defines capital assets and outlines the determination of capital gains and losses. Section 1231 assets are defined as depreciable business property held for over 12 months. The steps for determining Section 1231 gains and losses are presented. The document also provides summaries of depreciation recapture rules under Sections 1245 and 1250.
This document provides exhibits related to Chapter 14 on deferred compensation and education savings plans. The exhibits cover topics such as qualified versus nonqualified employer-sponsored retirement plans, calculating required minimum distributions, common retirement plans for large and small employers, and savings plans for education. Examples of qualified plans include 401(k) plans and 403(b) plans, while nonqualified plans include stock options and informal short-term arrangements. The exhibits provide comparisons of different savings vehicles and their tax implications.
Tax Cuts & Jobs Act Implications for Banking Institutions Polsinelli PC
This document summarizes a presentation by Polsinelli PC on the implications of the Tax Cuts and Jobs Act for banking institutions. It discusses several key provisions of the new tax law that affect banks, including reduced corporate tax rates, limitations on interest expense deductions, changes to depreciation rules, and limitations on state and local tax deductions. It also provides an analysis of how these changes impact decisions for banks on whether to operate as S corporations or C corporations. The presentation examines potential tax savings for a sample community bank that converts from an S corp to a C corp structure under the new law.
This document discusses various types of deductions allowed for individuals, including trade or business deductions, deductions for producing income, and deductions for losses. It provides examples of expenses that fall under each category and whether they are deductible "above the line" or "below the line" on a tax return. The document also examines business investigation and start-up expenses in more detail, outlining how they are treated depending on whether the business is similar or new.
This document discusses the allocation and apportionment of expenses and how it affects foreign tax credit benefits. It covers key definitions such as class of income, statutory groupings, and residual groupings. It provides examples of how interest, research and experimental, stewardship, and state taxes and charitable deductions are allocated and apportioned. It also discusses adopting a plan to apportion selling, general and administrative expenses. The document examines how expense apportionment impacts the calculation of foreign source taxable income and the foreign tax credit limitation.
Section 367 and the dual consolidated loss rules prevent taxpayers from obtaining double tax benefits by using losses to offset income in both the United States and a foreign jurisdiction. The dual consolidated loss rules under Section 1503(d) define a dual consolidated loss as any net operating loss incurred by a domestic corporation that is also considered a resident for tax purposes in a foreign country. The rules are intended to prevent a dual resident company from using the same losses to obtain tax benefits in both the United States and another country.
The document summarizes key concepts related to business, tax, and financial environments. It discusses the four main forms of business organization in the US - sole proprietorships, partnerships, corporations, and limited liability companies. It also covers topics like corporate and personal income taxes, depreciation, losses and gains. Additionally, it describes the financial markets and how funds flow in the economy through financial intermediaries and brokers. Key factors that influence expected security returns like risk, marketability, default risk, taxability, maturity, inflation and embedded options are also summarized.
This document provides an overview of the taxation of foreign taxpayers in the United States. It discusses two types of income subject to tax: income effectively connected to a U.S. business, which is taxed at progressive rates, and fixed or determinable annual or periodic income from U.S. sources, which is generally taxed at a 30% rate. Exceptions include portfolio interest, interest on securities, and gains from the sale of property that are not effectively connected. The Foreign Investment in Real Property Tax Act treats gains from the sale of U.S. real property as effectively connected income. The branch profits tax and earnings stripping rules aim to prevent base erosion through interest payments between related parties.
This chapter discusses tax planning strategies for individuals, including:
1) General principles such as avoiding income recognition, deferring income or deductions, and accelerating deductions.
2) Differences in tax treatment between self-employed individuals and employees.
3) Family tax planning strategies like income shifting, college savings plans, and divorce settlements.
4) Asset-related planning including the Section 179 deduction, home ownership, and retirement accounts.
This document provides an overview and exhibits related to itemized deductions allowed on individual tax returns. It discusses various types of itemized deductions including medical expenses, taxes, interest, charitable contributions and others. The exhibits provide more detail on specific itemized deductions such as medical care capital expenditures, transportation and lodging costs, types of allowable interest, and limitations on charitable deductions.
The document discusses Subpart F of the US tax code, which accelerates the taxation of certain types of income earned by controlled foreign corporations (CFCs). It covers the policy overview of Subpart F, how it taxes "tainted income" like foreign base company sales income and foreign base company services income. It also discusses the branch rules, which treat branches of CFCs as separate corporations if they have substantially the same tax effect. The document provides examples to illustrate how the rules apply to different scenarios involving CFCs with manufacturing and sales branches in different countries.
This document provides summaries of two presenters who will be speaking on business entity selection and its benefits and pitfalls. Kevin Learned is a founding partner at a law firm specializing in advising small and mid-sized federal services contractors on matters including company formation, mergers and acquisitions, private offerings, and certifications. Aman Badyal counsels clients on various transactions including choice of entity, formation, private placements, and mergers. The document then covers various topics related to different types of business entities including sole proprietorships, partnerships, corporations and LLCs and their characteristics regarding liability, taxes, ownership restrictions, and management.
(a) The adjusted basis of the original common stock shares remains $8,800 (100 shares x $88 per share). The basis of the new stock rights is $0 since they are worth less than 15% of the original stock's FMV.
(b) The holding period of the original common stock shares remains March 31, 2011. The holding period of the new stock rights includes the holding period of the original shares, which is March 31, 2011.
This chapter introduces federal taxation in the United States. It discusses the four major types of federal taxes: income taxes, employment taxes, estate and gift taxes, and excise and customs taxes. It also provides an overview of tax revenue statistics, the differences between tax avoidance and tax evasion, the history of the federal income tax, the tax legislative process, and the objectives of tax law.
This document discusses partnership taxation and abusive tax shelters. It provides an overview of federal partnership tax audit proceedings, summarizes the 2013 U.S. Supreme Court case U.S. v. Woods which involved an abusive tax shelter, and concludes that attorneys should avoid assisting with abusive tax shelters due to the risks of penalties and malpractice litigation. The Woods case found that partnerships formed solely for tax avoidance and lacking economic substance can be disregarded, and the valuation misstatement penalty applies when partnership basis is inflated.
The general partner of Riverside Park Associates LP is Riverside Park
Associates, Inc. The limited partners are individual and institutional investors.
c.
The limited partnership agreement specifies that the general partner is responsible for
managing the day-to-day operations of the partnership and its real estate holdings.
The limited partners have limited liability and do not participate in management.
Profits, losses, cash distributions and liquidation proceeds are allocated 99% to the
limited partners and 1% to the general partner.
d.
The balance sheet shows total assets of $145.4 million as of December 31, 2006.
The largest asset is the $135.4 million net book value of the real
Curbing profit shifting in international transaction un oecd model _ JenaChidananda Jena
The document discusses various ways that multinational enterprises shift profits for tax avoidance purposes. It begins by covering the use of tax holidays and incentives, capital allowances, inter-company transactions like royalty payments and management fees, and selling goods through low-tax countries. It then contrasts the challenges facing developing versus developed countries in addressing profit shifting. Finally, it outlines the scope for profit shifting across different types of income like business profits, dividends, interest, royalties, and more to avoid taxation.
Brochure - Corporate Income Tax R.01/09taxman taxman
Florida imposes a corporate income tax of 5.5% on adjusted federal taxable income. Corporations conducting business in Florida or earning income in the state must file a return. Estimated tax payments are due quarterly if more than $2,500 is owed annually. In addition to the regular tax, corporations may owe alternative minimum tax if they paid federal AMT, with credits available in later years.
AC102 PPT8 - Partnership Liquidation Lump Sum (PPT from Sir Leandro Fua) Carla
The document provides details about the liquidation of the partnership firm of Encina, Endrada, and Elina. It includes their statement of financial position before liquidation begins and statements of liquidation showing the realization of assets, distribution of gains or losses, payment of liabilities, and distribution of cash to partners under different scenarios of asset sale prices and treatment of capital deficiencies.
Prepared by CA Sandesh Mundra - An exhaustive presentation on Consolidation of Accounts covering the Standards - AS 21, AS23 and AS 27 with indepth analysis of the finer aspects involved.
This document summarizes the key rules and concepts around the treatment of capital assets and Section 1231 assets for tax purposes. It defines capital assets and outlines the determination of capital gains and losses. Section 1231 assets are defined as depreciable business property held for over 12 months. The steps for determining Section 1231 gains and losses are presented. The document also provides summaries of depreciation recapture rules under Sections 1245 and 1250.
This document provides exhibits related to Chapter 14 on deferred compensation and education savings plans. The exhibits cover topics such as qualified versus nonqualified employer-sponsored retirement plans, calculating required minimum distributions, common retirement plans for large and small employers, and savings plans for education. Examples of qualified plans include 401(k) plans and 403(b) plans, while nonqualified plans include stock options and informal short-term arrangements. The exhibits provide comparisons of different savings vehicles and their tax implications.
This document provides an overview of key tax research sources, including:
1. Primary sources such as the Internal Revenue Code, Treasury Regulations, and IRS Rulings.
2. Secondary sources such as textbooks, treatises, and periodicals.
3. The five-step tax research method involving gathering facts, locating authorities, updating authorities, re-examining research, and arriving at conclusions.
4. Sources for different types of authorities including legislative sources like the Code and treaties, and administrative sources like Regulations, Revenue Rulings, letter rulings, and technical advice memoranda.
This document provides an overview and contents of Chapter 16, which discusses S corporations. Key points include:
1) S corporations allow income and losses to flow through to shareholders but the character of items is determined at the entity level. Distributions are generally not taxable but gains may be recognized on property distributions.
2) S corporations must generally use a calendar year but may elect a fiscal year if certain deferral or business purpose tests are met. Accrual, cash, and hybrid accounting methods are allowed.
3) Basis accounts include outside basis, at-risk basis, accumulated adjustment account (AAA), and previously taxed income account, which determine tax treatment of losses, distributions, and sales.
This chapter discusses various types of gross income including compensation, business income, rental income, dividends, alimony, and discharge of debt. It provides exhibits on key topics such as the constructive receipt doctrine, community property income, items included in gross income, prizes and awards, scholarships and fellowships, and below-market interest loans. The exhibits describe the relevant tax rules and concepts for each topic in a clear and concise manner.
This document provides an overview of chapter 17 exhibits related to federal estate, gift, and generation-skipping transfer taxes. It lists 27 exhibits that cover topics such as the formula for computing estate tax liability, definitions of key terms, different forms of property ownership like tenancy by the entirety and joint tenancy, life insurance proceeds, annuities, gifts, deductions from the gross estate, and generation-skipping transfers. The exhibits provide examples and explanations of these various concepts.
This document contains 13 exhibits that summarize key provisions related to nonrecognition of gains and losses from property transactions under sections 1031, 1033, and 121 of the Internal Revenue Code. The exhibits cover topics such as like-kind exchanges, involuntary conversions, and the sale of a principal residence. Each exhibit provides an overview of the relevant rules, qualifications, time limitations, and tax treatment for these various property transactions.
This document provides an overview of taxation of trusts and estates, including:
1) Key definitions such as simple vs complex trusts, grantor trusts, and income in respect of a decedent.
2) The tax treatment of income and deductions for estates and trusts differs from individuals, including personal exemptions and the distribution deduction.
3) Estates and trusts may receive income in respect of a decedent, which is taxable to the estate or trust and was earned by the decedent but not reported on their final return.
This document provides exhibits summarizing various exclusions from gross income under Chapter 5 of the CCH Federal Taxation Basic Principles textbook. The exhibits cover topics such as Social Security benefits, interest on U.S. savings bonds, fringe benefits, group life insurance, annuities, damage awards, cafeteria plans, adoption assistance, tuition reduction plans, and dependent care assistance programs. The exhibits include definitions, examples, thresholds, and calculations for determining the tax treatment of these various income items.
This document provides an overview of Chapter 3 and its exhibits on individual taxation. It includes 15 exhibits that cover topics such as the federal tax formula, definitions of gross income and adjusted gross income, personal and dependency exemptions, standard deductions, itemized deductions, filing status requirements, tax rates and schedules, self-employment taxes, and special rules for dependents. The exhibits provide definitions, examples, and criteria for key concepts in individual income taxation.
Spatial Sound 4: Getting the Best Surround AroundRichard Elen
The document discusses distributing Ambisonic recordings by decoding them to conventional surround sound formats. It proposes decoding Ambisonic content to speaker feeds and distributing them on a medium like DVD that everyone can already play. This G-Format approach allows anyone to listen while letting the producer control the decoding process. While it loses some Ambisonic benefits, it makes the content widely available now using popular formats like DTS on a CD. Initial tests decoding older Ambisonic mixes to 5.1 speaker feeds were successful.
Dev 2.0 @ OW2: from forge to distributed developer's services, OW2con'12, ParisOW2
OW2 has traditionally provided an infrastructure based on Subversion and GForge. However, software development is evolving toward a more distributed, social, flexible, and lean process. This talk presents how OW2 is embracing this new trend and the new tools and possibilities offered for your OW2 project.
Automating SpagoBI installation and deployment can simplify setup and reduce errors. New technologies like containers, cloud platforms, and automation tools allow SpagoBI to be up and running in minutes without complex configuration. These changes increase visibility of SpagoBI, make contributions from the community easier, and create a more integrated product experience.
The document summarizes various topics related to business income and expenses for individual taxpayers, including:
- Rules for rental property income and expenses
- Categories of passive, active, and portfolio income and limitations on passive losses
- Contribution and distribution rules for different types of retirement plans like Traditional and Roth IRAs, Keogh, SEP, and 401(k) plans
- Tax treatment of items like bad debts, inventories, and net operating losses
South-Western Federal Taxation 2024 Corporations, Partnerships, Estates and Trusts, 47th Edition Solution Manual ISBN-13 9780357900673, full product at https://coursecost.com/product/solution-manual-for-south-western-federal-taxation-2024-corporations-partnerships-estates-and-trusts-47th-edition/
This document summarizes various provisions of the Tax Cuts and Jobs Act (TCJA) including:
1) Individual and corporate tax rates that were reduced under the TCJA.
2) Changes to itemized deductions such as capping state and local tax deductions, mortgage interest deductions, medical expense deductions, and suspending some miscellaneous itemized deductions.
3) Strategies like "bunching" deductions, qualified charitable distributions, and investing in Qualified Opportunity Funds to maximize savings under the new tax law.
The first seminar of a four-part series on growing a business and preparing it for sale led by the co-chair of Kegler Brown's M+A practice, Eric Duffee. Eric partnered with Jeff Tubaugh and Maggie Gilmore of BDO for this presentation, which focused on the fundamentals of entity selection. It detailed different entity types and the related impacts from tax reform affecting them. It also discussed concerns related to outside investors, partnerships, various structural forms and the tax impact of each.
Tax Cuts & Job Act Implications for Small Business Investments Companies Polsinelli PC
On December 22, 2017, the President signed into law a federal tax reform bill commonly known as the Tax Cuts & Jobs Act (the “Tax Act”). The Tax Act resulted in significant changes to the U.S. tax system on a number of fronts. This webinar will provide an overview the provisions of the Tax Act relevant to SBIC’s. We will also address the impact of the Tax Act upon the choice of entity decisions and a number of ancillary matters.
The document discusses capital structure and corporate finance, covering topics such as how much a corporation should borrow, the impact of corporate and personal taxes on capital structure decisions, and the costs of financial distress. It provides examples and analyses of capital structure considerations for companies and aims to help determine the optimal amount of debt a firm should take on given tradeoffs between tax benefits and financial distress costs.
The document provides an overview of key concepts related to business organizations, taxation, and financial markets. It discusses the four main forms of business organization in the US - sole proprietorships, partnerships, corporations, and limited liability companies. It also covers corporate income tax calculation, various depreciation methods like straight-line and MACRS, and how the Jobs and Growth Tax Relief Reconciliation Act of 2003 temporarily increased bonus depreciation deductions. The goal is for readers to understand these important business, tax, and financial environments.
Wassim Zhani Chapter 1 Income Taxation of Corporations.pdfWassim Zhani
- Linda's regular corporate form will not be suitable to hold her investment property because losses will remain in the corporation and not pass through to her.
- Using an S corporation also has limitations as her deductible losses would be limited to her $40,000 capital account basis, which could be reduced to zero within several years given the high interest rate on her loan and investment risk.
- Linda's third option of forming a regular corporation treated as her agent for tax purposes is viable according to the Bollinger Supreme Court case. If certain guidelines are followed, all losses would pass through to Linda and be deductible against her total $240,000 basis in the investment.
The document outlines the timeline and process for passing the Tax Cuts and Jobs Act of 2017 in the U.S. Congress. It then provides a high-level overview of some of the major provisions introduced in the new tax law, including lower corporate tax rates, limitations on interest expense deductibility, immediate expensing, changes to net operating loss rules, new FDII rules, lowered rates for pass-through entities, related party anti-hybrid rules, and the new Base Erosion and Anti-Abuse Tax (BEAT). The provisions are complex due to existing rules layered on top of the new rules, and regulations will be needed to provide further guidance. Tax planning flexibility will be important given elements that
This document discusses business income, deductions, and accounting methods under tax law. It covers the requirements for deducting business expenses, common deductions, and limitations. It also explains accounting periods, permissible accounting methods including cash and accrual methods, and how to determine taxable income and expense deductions using different accounting methods. Special topics like inventories, UNICAP rules, and changing accounting methods are also addressed.
Deductions. ETHIOPIAN TAX LAW FOR LAW STUDENTSSaabbaaMan
The document discusses deductions, exemptions, and exclusions under Ethiopia's income tax law. It explains that deductions are allowed to arrive at taxable income and reflect a person's ability to pay tax. Business expenses are generally deductible while personal expenses are not. Ethiopia's law contains both general deduction provisions and specific rules allowing or disallowing certain deductions. Capital expenditures are not deductible when incurred but are recovered through depreciation allowances over time. The document provides examples of how deductions and depreciation are applied under Ethiopia's income tax system.
This document discusses the benefits of incorporating a professional business. Tax deferral is a key benefit, as corporate tax rates are generally lower than personal tax rates, allowing business owners to retain more income. Incorporation also enables income splitting between family members through dividend distributions or paying a spouse/children through the corporation. Limited liability protects personal assets from business debts and liabilities. The document provides tax rates and strategies for compensation, investments, transferring assets, and common CRA audit topics. It emphasizes that incorporation is best for tax deferral and planning but has costs like taxes when withdrawing corporate funds.
5. Taxation of Business Entities and their members.pptxgetabelete
The document discusses the taxation of business entities and their members under Ethiopian law. It examines the different tax treatments of corporations/companies and their shareholders, as well as partnerships and their partners. Some key issues discussed include the justification for taxing corporations separately from shareholders, approaches to eliminating double taxation, and major legal issues surrounding defining taxable entities and characterizing various distributions from companies to shareholders.
Residential property can be a lucrative business, but profits or gains will be subject to tax. In this post we discuss some of the property tax planning options, including using limited companies or LLPs, trading vs investment property, capital gains tax and entrepreneurs relief.
Milly and Doug are considering starting a dot-com business and need to choose between a C corporation or general partnership structure. They expect $200,000 in annual pre-tax earnings. As single filers with a 28% tax rate, an S corporation or LLC would minimize total taxes of $56,000, leaving $144,000 after-tax cash flow compared to $82,062 for a C corporation. The LLC offers additional flexibility over an S corporation.
A presentation made by Craig Morris to the Long Island Not-for-Profit Conference at SUNY Old Westbury with the following goals:
To introduce the various tax threats and concerns Non-Profit Organizations face;
To provide you with resources to:
* research them further
* avoid them
* resolve them
Taxation for IT in Ukraine. Diia City. Conventa Legal presentationMikhail Ivanenko
Big hopes for the digital economy in Ukraine, aiming at 10% GDP in 3-5 years. To achieve that the government introduced favorable taxation as a part of its Diia City legal regime.
Companies will be able to choose 9% distributed profit tax - basically not to pay any corporate tax in case there is no distribution of profits like dividends, or some other forms. An option to choose net profit tax at 18% will remain as well if an IT company is willing to do so.
Taxation of salaries has been lowered drastically - personal income tax and military levy make 6.5% combined and around USD 50 shall be paid as a social security tax. For high salaries, this may mean that an effective tax rate will be in the range of 7-8% which is pretty competitive globally, leave alone EU and Eastern Europe.
This chapter discusses various types of gross income that are taxable under the US tax code. It covers 15 common items that are included in gross income, such as compensation, business income, interest, rents and royalties. It also examines specific types of income in more detail such as prizes and awards, scholarships, below-market interest loans, rental income, and alimony. The chapter provides examples and explanations of the tax treatment for each type of income.
There are various forms of business entities including sole proprietorships, partnerships, S corporations, and regular or C corporations. C corporations are separate taxable entities that report income and expenses on Form 1120 and are subject to double taxation as income is taxed at the corporate level and again when distributed as dividends to shareholders. When selecting an entity form, non-tax issues to consider include liability, capital raising ability, transferability of ownership interests, and continuity of the business.
The document discusses the US "check-the-box" system of classifying foreign entities and issues that have arisen. It allows companies to choose whether foreign entities are treated as corporations or partnerships for tax purposes. This has led companies to create hybrid entities that take advantage of inconsistent tax treatment between countries to reduce taxes. Reforms have been proposed but not enacted to address problems like profit shifting through interest deductions on loans between related disregarded entities. The system has increased tax planning complexity rather than simplifying taxation as originally intended.
Double taxation occurs when both a corporation and its shareholders are taxed on the same income. Corporations pay tax on their income, and shareholders also pay tax when they receive dividends from the corporation. This can be avoided by using a pass-through entity like a partnership or S corporation, where the income "flows through" to the shareholders without double taxation. Alternatively, a C corporation can retain earnings and treat distributions as deductible payments to avoid double taxation.
Similar to 2013 cch basic principles ch16 piii (20)
This document discusses various tax representation techniques. It begins by outlining the typical audit process, noting that audits are usually office or field audits and provide tips for cooperating with audits. It then discusses options for appealing an auditor's findings like fast track settlements, which use mediators to resolve cases in around 60 days. The document also covers collection issues like different collection tiers, working with revenue officers, tax liens, levies, and collection due process hearings which allow taxpayer challenges to liens or levies.
The document discusses different types of business entities that could be formed for a new catering business, including corporations, partnerships, and limited liability companies. It recommends that the sisters form an S corporation or LLC to obtain limited liability protection while also benefitting from the tax advantages of a pass-through entity that allows losses to offset their personal income. The chapter covers topics like corporate versus individual tax rules, deductions, and the dividends received deduction.
SEP plans allow employers to make deductible contributions to traditional IRAs established for each eligible employee; contributions are discretionary but must be based on a written allocation formula and cannot exceed a certain percentage of compensation for each employee; SEP plans provide an easy way for small businesses to offer retirement benefits to employees.
The document discusses accounting periods and methods for partnerships and S corporations. It states that a partnership's tax year must end on the tax year of the majority interest partners, or if no majority, the principal partners. If there is no majority or principal partners, the tax year that results in the least aggregate deferral of income is used. Exceptions allow other fiscal year ends if valid business purposes or section 444 elections are met. The document also discusses short tax years, accounting methods, and provisions that mitigate the effects of an arbitrary accounting period.
Hazel Brown owns an arts and crafts store. In 2012, she is planning to sell the store equipment she purchased in 2009 for $450,000 and has since depreciated.
- If she sells the equipment for $128,000, she will have a $53,040 gain. This full amount will be treated as ordinary income under §1245 recapture rules rather than potential §1231 capital gain, since the gain is less than her total depreciation of $375,040.
- If she sells the equipment for more than its original $450,000 cost, the portion of gain up to her $375,040 in total depreciation would be ordinary income under §12
Maurice inherited $500,000 and invested it in various assets on the advice of a financial advisor. He is now considering selling some investments and moving money between bonds. The summary provides an overview of the tax treatment of capital gains and losses, including the classification of different assets as capital or ordinary assets, what qualifies as a "sale or exchange," and how gains or losses from various transactions are treated for tax purposes. It also notes that long-term capital gains may be taxed at a lower rate than ordinary gains.
Alice owns a house that she inherited from her mother 7 months ago. She is considering selling the house to her nephew Dan for $275,000 and thinks she will have no gain or loss. As Alice's tax advisor, you need information to determine the tax consequences, such as whether Alice received the house as a gift or inheritance, the basis of the property, and whether it has been her primary residence. You will also need to advise Alice on the tax consequences of selling her car that she has owned for 4 months, as well as transactions involving the sale of stock at a loss and subsequent repurchase.
The document discusses several tax credits available to individuals and businesses, including:
1) Education tax credits that can help offset tuition and other education expenses.
2) The research and experimentation tax credit that incentives private sector investment in research.
3) Tax credits for rehabilitation expenditures, hiring targeted groups of employees, and other activities.
Bob and Carol paid different amounts of federal income tax even though they had identical incomes, deductions, and investments. Carol paid $15,000 more than Bob due to an oversight in the treatment of interest from private activity bonds they both owned. These bonds were issued in 2010 and interest from such bonds is not a tax preference item for the alternative minimum tax in that year. After reviewing the returns, Adam determined Carol was eligible for a $15,000 refund due to an error on her Form 6251 in treating the bond interest as a tax preference.
The rental activity is incidental if gross rental income is less than 2% of all gross income from the trade or business of the taxpayer for the taxable year.
The document discusses itemized deductions for individuals, including medical expenses, taxes, interest expenses, and qualified residence interest. It provides examples to illustrate how these deductions are calculated and applied. It also summarizes how these deductions would apply to the specific scenario of John and Susan Williamson purchasing their first home, as presented in an earlier example.
Morgan has accepted a new sales job that requires travel and some entertainment expenses. She will work out of her apartment and be reimbursed for some travel expenses. Some of Morgan's expenses may be deductible, including transportation between client sites, home office expenses if the office space is exclusively used for work, and moving expenses if she meets certain tests. However, commuting costs and some education or entertainment expenses would not be deductible.
Dr. Payne correctly calculated the depreciation expense for his dental practice assets using MACRS depreciation rates. He will also be able to claim depreciation deductions for the rental properties he converted his original residence and purchased condo into, using the fair market value of the residence as its basis since it was previously used for personal purposes. The document provides an overview of depreciation, amortization, and depletion deductions for business and rental property assets, and examples and rules for calculating MACRS depreciation using conventions like half-year and mid-quarter.
Martha experienced significant financial losses in the current year. She loaned a friend money to start a business that failed, resulting in a bad debt. She also lost money investing in a pharmaceutical company that declared bankruptcy. Additionally, her sole proprietorship bookstore experienced losses due to increased competition. Martha is hoping that tax law provisions related to deductions and losses can provide some relief.
Dr. Payne has incorrectly calculated some of the business expenses deductible on Schedule C of his tax return. Specifically, the contributions to political campaigns are not deductible, and hobby losses are only deductible up to the amount of hobby income. Dr. Payne should re-examine the expenses from his dental practice to ensure they meet the requirements of being ordinary, necessary, and substantiated to be deductible as trade or business expenses.
Paul received a $1,500 bonus from his summer internship employer that must be included in his gross income as it was compensation for services. His $400 monthly stipend from his graduate assistantship teaching accounting must also be included in gross income. However, the $6,000 tuition waiver can be excluded. Most of the damages from his accident settlement can be excluded from income as compensation for personal physical injuries, except the punitive damages which are taxable.
Dr. Cliff Payne, a dentist, opened a sole proprietorship dental practice at the beginning of the year with a December 31 year-end. He contracted to have a building constructed for his medical practice and used extra money to purchase stock. The document discusses the calculation of gross income for Dr. Payne's dental practice and whether he correctly calculated it as the $385,000 billed to patients. It then provides an overview of the concepts of gross income, accounting periods and methods, income sources including dividends and partnerships, and other inclusions like imputed interest.
Polly supports her unemployed husband Nick, stepdaughter Paige, and family friend Maude who lived with Polly. Paige works part-time but trains for a college scholarship. Nick left in March. Polly sold her wedding rings for $8,000. Polly may be able to claim dependency exemptions for Paige and Maude depending on whether they meet the tests for qualifying child, qualifying relative, gross income, support and other rules. Polly should review her tax situation considering these dependency exemption rules.
This document provides an overview of the statutory and administrative sources of US tax law, as well as the federal judicial system for tax disputes. It discusses the Internal Revenue Code, Treasury regulations, revenue rulings, revenue procedures, letter rulings, and other administrative pronouncements. It also describes the four courts that have original jurisdiction over tax cases and their roles, as well as the appeals process. Precedent and citations for Tax Court, District Court, Court of Appeals, and Supreme Court decisions are covered.
The document provides an overview of US taxation including:
1) It describes different types of taxes such as income taxes, property taxes, employment taxes, and gift/estate taxes.
2) It discusses key concepts related to taxation including tax bases, tax rates, tax structures, and criteria for evaluating tax systems.
3) It provides examples and explanations of how different taxes could apply to a fictional married couple described in the introductory scenario.
Let's Integrate MuleSoft RPA, COMPOSER, APM with AWS IDP along with Slackshyamraj55
Discover the seamless integration of RPA (Robotic Process Automation), COMPOSER, and APM with AWS IDP enhanced with Slack notifications. Explore how these technologies converge to streamline workflows, optimize performance, and ensure secure access, all while leveraging the power of AWS IDP and real-time communication via Slack notifications.
Threats to mobile devices are more prevalent and increasing in scope and complexity. Users of mobile devices desire to take full advantage of the features
available on those devices, but many of the features provide convenience and capability but sacrifice security. This best practices guide outlines steps the users can take to better protect personal devices and information.
Generating privacy-protected synthetic data using Secludy and MilvusZilliz
During this demo, the founders of Secludy will demonstrate how their system utilizes Milvus to store and manipulate embeddings for generating privacy-protected synthetic data. Their approach not only maintains the confidentiality of the original data but also enhances the utility and scalability of LLMs under privacy constraints. Attendees, including machine learning engineers, data scientists, and data managers, will witness first-hand how Secludy's integration with Milvus empowers organizations to harness the power of LLMs securely and efficiently.
How to Get CNIC Information System with Paksim Ga.pptxdanishmna97
Pakdata Cf is a groundbreaking system designed to streamline and facilitate access to CNIC information. This innovative platform leverages advanced technology to provide users with efficient and secure access to their CNIC details.
In the rapidly evolving landscape of technologies, XML continues to play a vital role in structuring, storing, and transporting data across diverse systems. The recent advancements in artificial intelligence (AI) present new methodologies for enhancing XML development workflows, introducing efficiency, automation, and intelligent capabilities. This presentation will outline the scope and perspective of utilizing AI in XML development. The potential benefits and the possible pitfalls will be highlighted, providing a balanced view of the subject.
We will explore the capabilities of AI in understanding XML markup languages and autonomously creating structured XML content. Additionally, we will examine the capacity of AI to enrich plain text with appropriate XML markup. Practical examples and methodological guidelines will be provided to elucidate how AI can be effectively prompted to interpret and generate accurate XML markup.
Further emphasis will be placed on the role of AI in developing XSLT, or schemas such as XSD and Schematron. We will address the techniques and strategies adopted to create prompts for generating code, explaining code, or refactoring the code, and the results achieved.
The discussion will extend to how AI can be used to transform XML content. In particular, the focus will be on the use of AI XPath extension functions in XSLT, Schematron, Schematron Quick Fixes, or for XML content refactoring.
The presentation aims to deliver a comprehensive overview of AI usage in XML development, providing attendees with the necessary knowledge to make informed decisions. Whether you’re at the early stages of adopting AI or considering integrating it in advanced XML development, this presentation will cover all levels of expertise.
By highlighting the potential advantages and challenges of integrating AI with XML development tools and languages, the presentation seeks to inspire thoughtful conversation around the future of XML development. We’ll not only delve into the technical aspects of AI-powered XML development but also discuss practical implications and possible future directions.
GraphRAG for Life Science to increase LLM accuracyTomaz Bratanic
GraphRAG for life science domain, where you retriever information from biomedical knowledge graphs using LLMs to increase the accuracy and performance of generated answers
Digital Marketing Trends in 2024 | Guide for Staying AheadWask
https://www.wask.co/ebooks/digital-marketing-trends-in-2024
Feeling lost in the digital marketing whirlwind of 2024? Technology is changing, consumer habits are evolving, and staying ahead of the curve feels like a never-ending pursuit. This e-book is your compass. Dive into actionable insights to handle the complexities of modern marketing. From hyper-personalization to the power of user-generated content, learn how to build long-term relationships with your audience and unlock the secrets to success in the ever-shifting digital landscape.
Introduction of Cybersecurity with OSS at Code Europe 2024Hiroshi SHIBATA
I develop the Ruby programming language, RubyGems, and Bundler, which are package managers for Ruby. Today, I will introduce how to enhance the security of your application using open-source software (OSS) examples from Ruby and RubyGems.
The first topic is CVE (Common Vulnerabilities and Exposures). I have published CVEs many times. But what exactly is a CVE? I'll provide a basic understanding of CVEs and explain how to detect and handle vulnerabilities in OSS.
Next, let's discuss package managers. Package managers play a critical role in the OSS ecosystem. I'll explain how to manage library dependencies in your application.
I'll share insights into how the Ruby and RubyGems core team works to keep our ecosystem safe. By the end of this talk, you'll have a better understanding of how to safeguard your code.
HCL Notes und Domino Lizenzkostenreduzierung in der Welt von DLAUpanagenda
Webinar Recording: https://www.panagenda.com/webinars/hcl-notes-und-domino-lizenzkostenreduzierung-in-der-welt-von-dlau/
DLAU und die Lizenzen nach dem CCB- und CCX-Modell sind für viele in der HCL-Community seit letztem Jahr ein heißes Thema. Als Notes- oder Domino-Kunde haben Sie vielleicht mit unerwartet hohen Benutzerzahlen und Lizenzgebühren zu kämpfen. Sie fragen sich vielleicht, wie diese neue Art der Lizenzierung funktioniert und welchen Nutzen sie Ihnen bringt. Vor allem wollen Sie sicherlich Ihr Budget einhalten und Kosten sparen, wo immer möglich. Das verstehen wir und wir möchten Ihnen dabei helfen!
Wir erklären Ihnen, wie Sie häufige Konfigurationsprobleme lösen können, die dazu führen können, dass mehr Benutzer gezählt werden als nötig, und wie Sie überflüssige oder ungenutzte Konten identifizieren und entfernen können, um Geld zu sparen. Es gibt auch einige Ansätze, die zu unnötigen Ausgaben führen können, z. B. wenn ein Personendokument anstelle eines Mail-Ins für geteilte Mailboxen verwendet wird. Wir zeigen Ihnen solche Fälle und deren Lösungen. Und natürlich erklären wir Ihnen das neue Lizenzmodell.
Nehmen Sie an diesem Webinar teil, bei dem HCL-Ambassador Marc Thomas und Gastredner Franz Walder Ihnen diese neue Welt näherbringen. Es vermittelt Ihnen die Tools und das Know-how, um den Überblick zu bewahren. Sie werden in der Lage sein, Ihre Kosten durch eine optimierte Domino-Konfiguration zu reduzieren und auch in Zukunft gering zu halten.
Diese Themen werden behandelt
- Reduzierung der Lizenzkosten durch Auffinden und Beheben von Fehlkonfigurationen und überflüssigen Konten
- Wie funktionieren CCB- und CCX-Lizenzen wirklich?
- Verstehen des DLAU-Tools und wie man es am besten nutzt
- Tipps für häufige Problembereiche, wie z. B. Team-Postfächer, Funktions-/Testbenutzer usw.
- Praxisbeispiele und Best Practices zum sofortigen Umsetzen
Main news related to the CCS TSI 2023 (2023/1695)Jakub Marek
An English 🇬🇧 translation of a presentation to the speech I gave about the main changes brought by CCS TSI 2023 at the biggest Czech conference on Communications and signalling systems on Railways, which was held in Clarion Hotel Olomouc from 7th to 9th November 2023 (konferenceszt.cz). Attended by around 500 participants and 200 on-line followers.
The original Czech 🇨🇿 version of the presentation can be found here: https://www.slideshare.net/slideshow/hlavni-novinky-souvisejici-s-ccs-tsi-2023-2023-1695/269688092 .
The videorecording (in Czech) from the presentation is available here: https://youtu.be/WzjJWm4IyPk?si=SImb06tuXGb30BEH .
Monitoring and Managing Anomaly Detection on OpenShift.pdfTosin Akinosho
Monitoring and Managing Anomaly Detection on OpenShift
Overview
Dive into the world of anomaly detection on edge devices with our comprehensive hands-on tutorial. This SlideShare presentation will guide you through the entire process, from data collection and model training to edge deployment and real-time monitoring. Perfect for those looking to implement robust anomaly detection systems on resource-constrained IoT/edge devices.
Key Topics Covered
1. Introduction to Anomaly Detection
- Understand the fundamentals of anomaly detection and its importance in identifying unusual behavior or failures in systems.
2. Understanding Edge (IoT)
- Learn about edge computing and IoT, and how they enable real-time data processing and decision-making at the source.
3. What is ArgoCD?
- Discover ArgoCD, a declarative, GitOps continuous delivery tool for Kubernetes, and its role in deploying applications on edge devices.
4. Deployment Using ArgoCD for Edge Devices
- Step-by-step guide on deploying anomaly detection models on edge devices using ArgoCD.
5. Introduction to Apache Kafka and S3
- Explore Apache Kafka for real-time data streaming and Amazon S3 for scalable storage solutions.
6. Viewing Kafka Messages in the Data Lake
- Learn how to view and analyze Kafka messages stored in a data lake for better insights.
7. What is Prometheus?
- Get to know Prometheus, an open-source monitoring and alerting toolkit, and its application in monitoring edge devices.
8. Monitoring Application Metrics with Prometheus
- Detailed instructions on setting up Prometheus to monitor the performance and health of your anomaly detection system.
9. What is Camel K?
- Introduction to Camel K, a lightweight integration framework built on Apache Camel, designed for Kubernetes.
10. Configuring Camel K Integrations for Data Pipelines
- Learn how to configure Camel K for seamless data pipeline integrations in your anomaly detection workflow.
11. What is a Jupyter Notebook?
- Overview of Jupyter Notebooks, an open-source web application for creating and sharing documents with live code, equations, visualizations, and narrative text.
12. Jupyter Notebooks with Code Examples
- Hands-on examples and code snippets in Jupyter Notebooks to help you implement and test anomaly detection models.
For the full video of this presentation, please visit: https://www.edge-ai-vision.com/2024/06/building-and-scaling-ai-applications-with-the-nx-ai-manager-a-presentation-from-network-optix/
Robin van Emden, Senior Director of Data Science at Network Optix, presents the “Building and Scaling AI Applications with the Nx AI Manager,” tutorial at the May 2024 Embedded Vision Summit.
In this presentation, van Emden covers the basics of scaling edge AI solutions using the Nx tool kit. He emphasizes the process of developing AI models and deploying them globally. He also showcases the conversion of AI models and the creation of effective edge AI pipelines, with a focus on pre-processing, model conversion, selecting the appropriate inference engine for the target hardware and post-processing.
van Emden shows how Nx can simplify the developer’s life and facilitate a rapid transition from concept to production-ready applications.He provides valuable insights into developing scalable and efficient edge AI solutions, with a strong focus on practical implementation.
AI 101: An Introduction to the Basics and Impact of Artificial IntelligenceIndexBug
Imagine a world where machines not only perform tasks but also learn, adapt, and make decisions. This is the promise of Artificial Intelligence (AI), a technology that's not just enhancing our lives but revolutionizing entire industries.
Ocean lotus Threat actors project by John Sitima 2024 (1).pptxSitimaJohn
Ocean Lotus cyber threat actors represent a sophisticated, persistent, and politically motivated group that poses a significant risk to organizations and individuals in the Southeast Asian region. Their continuous evolution and adaptability underscore the need for robust cybersecurity measures and international cooperation to identify and mitigate the threats posed by such advanced persistent threat groups.
Cosa hanno in comune un mattoncino Lego e la backdoor XZ?Speck&Tech
ABSTRACT: A prima vista, un mattoncino Lego e la backdoor XZ potrebbero avere in comune il fatto di essere entrambi blocchi di costruzione, o dipendenze di progetti creativi e software. La realtà è che un mattoncino Lego e il caso della backdoor XZ hanno molto di più di tutto ciò in comune.
Partecipate alla presentazione per immergervi in una storia di interoperabilità, standard e formati aperti, per poi discutere del ruolo importante che i contributori hanno in una comunità open source sostenibile.
BIO: Sostenitrice del software libero e dei formati standard e aperti. È stata un membro attivo dei progetti Fedora e openSUSE e ha co-fondato l'Associazione LibreItalia dove è stata coinvolta in diversi eventi, migrazioni e formazione relativi a LibreOffice. In precedenza ha lavorato a migrazioni e corsi di formazione su LibreOffice per diverse amministrazioni pubbliche e privati. Da gennaio 2020 lavora in SUSE come Software Release Engineer per Uyuni e SUSE Manager e quando non segue la sua passione per i computer e per Geeko coltiva la sua curiosità per l'astronomia (da cui deriva il suo nickname deneb_alpha).
2. Chapter 16 Contents
1. Corporation Defined
2. C Corporations—Special Types
3. C Corporations—Tax Years
4. C Corporations—Accounting Methods
5. C Corporations—Tax Formula
6. C Corporations—Comparison with Individual Taxpayers
7. Income Items Requiring Special Treatment
8. Exclusions Requiring Special Treatment
9. Deductions Requiring Special Treatment—Organizational
Expenditures
10. Dividends Received Deduction—Example 1
11. Dividends Received Deduction—Example 2
12. Deductions Requiring Special Treatment—Charitable Contributions
13. Charitable Contributions—Example
14. Deductions Requiring Special Treatment
15. Deductions Requiring Special Treatment—Bond and Stock
Redemptions at a Premium
16. Deductions Requiring Special Treatment—Compensation and
Educational Reimbursement
Chapter 16, Exhibit Contents A CCH Federal Taxation Basic Principles2 of 92
3. Chapter 16 Contents
17. Educational Expenses
18. Rules For Net Operating Losses (NOLs)
19. Net Operating Losses (NOLs)—Example
20. Capital Gains and Losses
21. Depreciation Expense
22. Code Sec. 291 Depreciation for Corporations—Example
23. Reconciling Book and Taxable Income
24. Corporate Tax Rates
25. Corporate Tax Credits
26. Template for Computing the Foreign Tax Credit/Deduction
27. Foreign Tax Credits—Example
28. Formation of Corporations—Overview of Code Sec. 351
29. Code Sec. 351 Contribution of Part Property/Part Services—
Example
30. Code Sec. 351 Contributions—Tax Effect on Shareholders
Chapter 16, Exhibit Contents B CCH Federal Taxation Basic Principles3 of 92
4. Chapter 16 Contents
30. Code Sec. 351 Contributions—Tax Effect on Shareholders
31. Code Sec. 351 Contributions—Tax Effect on Corporations
32. Code Sec. 351 Contributions—Example 1
33. Code Sec. 351 Contributions—Example 2
34. Nonstock Distributions—Effect on Shareholder of C Corporation
Chapter 16, Exhibit Contents C CCH Federal Taxation Basic Principles4 of 92
5. Corporation Defined
Definition of Corporation. Either an organization incorporated
under state law, or an unincorporated association that has
“checked the box” for corporate tax treatment on Form 8832
(Entity Classification Election). Code Sec. 7701; Reg.
§301.7701-1 to 3.
Chapter 16, Exhibit 1a CCH Federal Taxation Basic Principles5 of 92
6. Corporation Defined
Two Classifications of Corporate Entities.
C corporations. Taxpaying entities. (This results in what is
known as a double tax effect. The corporation computes tax on
the net income. When a corporation distributes its income, the
corporation’s shareholders report dividend income on their
own tax returns.)
S corporations. Not subject to regular corporate income tax.
They are treated in a manner similar to partnerships, i.e., as
pass-through entities, in that net profit or loss flows through to
the owners to be reported on their separate returns.
Chapter 16, Exhibit 1b CCH Federal Taxation Basic Principles6 of 92
7. C Corporations—Special Types
Professional association [PA]. An association of
professionals (e.g., accountants, doctors, lawyers)
treated as a C corporation for tax purposes if it has:
a. Organized under a state’s Professional
Association Act; AND
b. “Checked the box” on Form 8832 for
corporate tax treatment. [One individual may
be a professional association.]
Chapter 16, Exhibit 2a CCH Federal Taxation Basic Principles7 of 92
8. C Corporations—Special Types
Personal Service Corporation [PSC]. C corporation
whose shareholder-employee(s) owns over 10% of
the stock and provides personal services (e.g., acting,
entertainment, medical, legal, consulting, or other
services performed through their personal efforts).
Generally, a PSC must use a calendar tax year. Code
Sec. 441(i). PSCs are subject to a flat 35% tax rate.
Chapter 16, Exhibit 2b CCH Federal Taxation Basic Principles8 of 92
9. C Corporations—Special Types
Personal Holding Company [PHC]. A nonexempt,
closely held corporation, with a significant portion of
its income that is passive in nature (e.g., from
dividends or interest). PHCs are subject to a 15%
penalty tax on excess personal holding company
income in addition to the regular corporate income tax.
Chapter 16, Exhibit 2c CCH Federal Taxation Basic Principles9 of 92
10. C Corporations—Special Types
Q: When is a corporation deemed to be “closely held”?
A: When more than 50% of the value of the outstanding
stock was owned by five or fewer individuals during
the second half of the year.
Q: When is passive income deemed to be “significant”?
A: When passive income is 60% or more of “adjusted
ordinary gross income” [AOGI]. AOGI is gross
income less capital gains and Code Sec. 1231 gains,
less adjustments such as certain expenses connected
with rental and royalty income.
Chapter 16, Exhibit 2d CCH Federal Taxation Basic Principles10 of 92
11. C Corporations—Tax Years
Every newly organized corporation other than a
personal service corporation (PSC) has the unrestricted
right to select its annual tax year, regardless of the tax
years employed by its shareholders.
PSCs generally must use a calendar year-end. However,
they may use a fiscal year-end under the same
conditions as listed for S corporations.
Chapter 16, Exhibit 3 CCH Federal Taxation Basic Principles11 of 92
12. C Corporations—Accounting Methods
Most corporations must use the accrual method.
The cash method MAY be used by C corporations that
have average annual gross receipts of $5 million or less
in the three preceding years, or by PSCs.
Chapter 16, Exhibit 4 CCH Federal Taxation Basic Principles12 of 92
13. C Corporations— Tax Formula
Ord. and Cap. Income “From Whatever Source Derived”
– Exclusions
– Cost of Goods Sold
= Gross Income
– Deductions
= Taxable Income (Loss)
x Tax Rate
= Gross Regular Tax Liability
– Credits (If Any)
= Net Regular Tax Liability
+ Alt. Minimum Tax (If Any)
+ FICA Taxes
+ Accumulated Earnings Tax (If Any)
+ Personal Holding Co. Tax (If Any)
= Net Tax Due or Refundable
Chapter 16, Exhibit 5a CCH Federal Taxation Basic Principles13 of 92
14. C Corporations—Tax Formula
AGI, standard deductions, personal exemptions, at-
risk rules, and passive activity loss rules do not
pertain to regular C corporations.
Chapter 16, Exhibit 5b CCH Federal Taxation Basic Principles14 of 92
15. C Corporations—Comparison with Individual Taxpayers
Income
Similar Treatment Different Treatment
Most items of gross income receive the Bond Redemptions – Discounts.
same tax treatment. Sinking fund income.
Cost of goods sold (actually, part of gross
income) are similar.
Exclusions
Similar Tax Treatment Different Treatment
Most exclusions receive the same tax Capital contributions.
treatment. Gain/loss on sale of treasury stock
Chapter 16, Exhibit 6a CCH Federal Taxation Basic Principles15 of 92
16. C Corporations—Comparison with Individual Taxpayers
Expenses
Similar Tax Treatment Different Treatment
Travel, Meals and Entertainment Organizational Expenditures
Insurance Premiums Dividend Received Deduction
Research and Experimental Charitable Contribution
Fines (not deductible) Interest Expense
Bad Debts Amortization of Original Issue
Worthless Securities Bond Redemptions-Premiums
Casualty Losses (same as individuals’ business use Stock Redemptions (not deductible)
casualty losses) Compensation
Taxes Educational Expenses
Depreciation (except Sec. 1250 recapture) Net Operating Losses
Amortization Capital Gains and Losses
Depletion
Political Contributions & Lobbying
Business Investigation Expense
Business Start Up Expense
Chapter 16, Exhibit 6b CCH Federal Taxation Basic Principles16 of 92
17. Income Items Requiring Special Treatment
Bond Repurchases.
A corporation’s income INCLUDES the original issue price of its
own bonds being repurchased,
MINUS (i) The repurchase price,
MINUS (ii) Any premium already recognized on the original
issuance.
PLUS (iii) Any discounts previously deducted.
Sinking Fund Income.
Interest or other income from property in a sinking fund
established to satisfy an obligation IS INCLUDED, even if in the
hands of a trustee (since both funded and nonforfeitable).
Chapter 16, Exhibit 7 CCH Federal Taxation Basic Principles17 of 92
18. Exclusions Requiring Special Treatment
Treasury Stock.
No gain or loss is recognized by a corporation on the sale or
exchange of its own stock.
Chapter 16, Exhibit 8a CCH Federal Taxation Basic Principles18 of 92
19. Exclusions Requiring Special Treatment
Capital Contributions.
Gifts from nonshareholders are excluded.
Noncash gifts. If a gift is property other than money, the
corporation carries it with a zero basis.
Cash gifts. When cash is contributed, reduce the basis of
corporate property in the following order:
(i) Property acquired within 1 year after the
contribution;
(ii) Then depreciable property in proportion to relative
bases;
(iii) Then, if there is a remaining balance, NON-
depreciable property acquired over 1 year after the
contribution.
Chapter 16, Exhibit 8b CCH Federal Taxation Basic Principles19 of 92
20. Exclusions Requiring Special Treatment
Pro rata contributions from shareholders are excluded.
Whether voluntary or by assessment, shareholder contributions are
excluded from corporate income. The corporation carries the
property at the same basis as had been reported by the contributing
shareholder. That shareholder gets no deduction, but does get an
increase in stock basis, equal to the basis in the property
contributed.
Chapter 16, Exhibit 8c CCH Federal Taxation Basic Principles20 of 92
21. Deductions Requiring Special Treatment—
Organizational Expenditures
Amortizable expenditures.
Organizational expenses qualify for amortization if:
(a) = Incurred incidental to formation of the corporation (e.g.,
legal fees for drafting the charter, state incorporation
fees, expenses for temporary directors and
organizational meeting costs), and
(b) = Incurred before the end of the tax year in which the
corporation commences business.
Amortization period must be over 180 months, starting with the
month that the corporation commences business.
Chapter 16, Exhibit 9a CCH Federal Taxation Basic Principles21 of 92
22. Deductions Requiring Special Treatment—
Organizational Expenditures
Nonamortizable expenditures. Organizational expenses DO
NOT qualify for amortization if related to the transfer of assets
to the corporation or the issuance and sale of stock (e.g.,
printing stock certificates, professional fees for issuing stock and
broker’s commission on the sales of stock.) They are written off
when the corporation completely liquidates.
Chapter 16, Exhibit 9b CCH Federal Taxation Basic Principles22 of 92
23. Dividends Received Deduction—Example 1
Dividends received from other corporations are included by both corporate and individual
shareholders, but deductible only by corporate shareholders within limits explained below.
Dividends Received Deduction (DRD)
% Ownership Tentative* DRD: Tentative* DRD Limit:
(Value and Voting) * (Subject to limit if DRD * (Does not apply if DRD
would NOT create an NOL) would create an NOL)
≥ <
--- 20% 70% div. received 70% ATI
20% 80% 80% div. received 80% ATI
80% & affiliated --- 100% div. received 100% ATI
ATI = Revenue - COGS - Operating expenses + Other income
(Another way to arrive at ATI is to start with taxable income and purge out three possible deductions:
ATI = TI + (1) Actual DRD + (2) NOL carryover + (3) Capital loss carryover).
“Affiliated” means owning ≥ 80% of both voting power and value of stock.
Chapter 16, Exhibit 10a CCH Federal Taxation Basic Principles23 of 92
24. Dividends Received Deduction—Example 1
FACTS:
C Corp. has the following income and expenses:
Operating Revenue 800,000
COGS (300,000)
Operating expenses (520,000)
Other income (dividends received from
a 25%-owned corp.) 100,000
Chapter 16, Exhibit 10b CCH Federal Taxation Basic Principles24 of 92
25. Dividends Received Deduction—Example 1
Note: The relevant DRD % is 80% since C Corp. owned ≥20% and < 80% of stock.
(a) Compute ATI (i.e., (a) = Rev. - COGS - ATI = $80,000
taxable income before Oper. exp. + Other inc. [= 800,000 - 300,000 - 520,000 + 100,000]
special deductions)
(b) Determine tentative (b) = 70% or 80% or Tentative DRD Limit = $64,000
DRD limit 100% x ATI [= 80% ATI = 80% x 80,000]
(c) Compute tentative (c) = 70% or 80% or Tentative DRD = $80,000
DRD 100% x Div. Rec’d [= 80% x $100,000]
(d) Determine actual (d) Actual DRD = $64,000
DRD If (a) - (c) ≥ 0, then (d) = $80,000 ATI - $80,000 tentative DRD is ≥ 0;
therefore, DRD = the lesser of:
the lesser of (b) or (c)
$64,000 tentative DRD limit, or $80,000 tentative
If (a) - (c) < 0, then (d) =
DRD
(c)
(e) Compute TI (e) = (a) - (d) TI =$16,000 [= ATI - DRD = 80,000 - 64,000]
(f) Compute tax (f) = (e) x appropriate tax Tax = $2,400
rates [From tax tables: 15% x $16,000 = $2,400]
Chapter 16, Exhibit 10c CCH Federal Taxation Basic Principles25 of 92
26. Dividends Received Deduction—Example 2
FACTS:
Same as Example 1 except operating expenses are $520,001, not $520,000.
SOLUTION:
ATI = $79,999 [= 800,000 - 300,000 - 520,001 + 100,000]
Tentative DRD Limit = $63,999 [= 80% ATI = 80% x 79,999 = 63,999]
Tentative DRD = $80,000 [= 80% x $100,000]
Actual DRD = $80,000 [Same as tentative DRD, since $79,999 ATI -
$80,000 Tentative DRD is < 0.]
TI = $(1), an NOL [= ATI - DRD = 79,999 - 80,000]
Tax = $0
Chapter 16, Exhibit 11a CCH Federal Taxation Basic Principles26 of 92
27. Dividends Received Deduction—Example 2
Note that in Example 1, the tentative DRD limit
applies since the DRD does not create an NOL. In
Example 2, where operating expenses are $520,001
instead of $520,000, the tax results are much more
favorable. An additional $1 of operating expenses
saves $2,400 of taxes!
Chapter 16, Exhibit 11b CCH Federal Taxation Basic Principles27 of 92
28. Deductions Requiring Special Treatment—
Charitable Contributions
Charitable contributions. As with individuals, corporate
charitable contributions are deductible if made to qualified
organizations. [i.e., Code Sec. 501(c) organizations]. Also, as
with individuals, corporate contributions in excess of deductions
are carried forward 5 years. No carrybacks are allowed for
corporations or individuals. The following DIFFERENCES
distinguish corporate tax treatment from individual tax treatment.
Chapter 16, Exhibit 12a CCH Federal Taxation Basic Principles28 of 92
29. Deductions Requiring Special Treatment—
Charitable Contributions
10% ATI limitation. Deductions are limited to 10% ATI. What is
ATI?
ATI for Charitable Deduction Computations.
= TI (i.e., after all deductions)
Addback:
+ DRD
+ NOL carryback
+ Capital loss carryback
+ Charitable deductions
Another way to compute ATI:
= Rev. - COGS - Operating expenses + Other income
Chapter 16, Exhibit 12b CCH Federal Taxation Basic Principles29 of 92
30. Deductions Requiring Special Treatment—
Charitable Contributions
2 1/2 Month Rule. If a charitable contribution is board-approved
in the current year and paid within 2 1/2 months of the subsequent
year, then a deduction is allowed in the current year. Not so for
individuals.
Inventory. Generally, as with individuals, corporations may
deduct only the basis of inventory contributed. However,
corporations may deduct 50 percent of market value if the
inventory is donated solely for care of infants, the ill, or the
needy.
Chapter 16, Exhibit 12c CCH Federal Taxation Basic Principles30 of 92
31. Charitable Contributions—Example
FACTS:
C Corp.’s taxable income BEFORE the charitable deduction
was $410,000.
C Corp. contributed $40,000 to a qualified charitable
organization.
Included in the $410,000 is a $20,000 DRD.
C Corp. also has a $5,000 carryover contribution from a prior
year (not part of the $410,000).
QUESTION:
How much is the charitable deduction?
Chapter 16, Exhibit 13a CCH Federal Taxation Basic Principles31 of 92
32. Charitable Contributions—Example
SOLUTION: $43,000
1. ATI = $430,000 [410,000 + 20,000]
2. 10% ATI Limitation = $43,000
[10% x 430,000 = 43,000]
3. Contribution = $45,000
[40,000 current year + 5,000 carryover]
4. Deduction = $43,000 [ Lesser of 2. or 3. above]
Chapter 16, Exhibit 13b CCH Federal Taxation Basic Principles32 of 92
33. Deductions Requiring Special Treatment
Interest Expense. Interest expense on a corporation’s
own debt is fully deductible, even if in connection
with the repurchase of its own stock. Recall that
individuals’ investment interest deductions are
limited to net investment income. Not so with
corporations.
Chapter 16, Exhibit 14a CCH Federal Taxation Basic Principles33 of 92
34. Deductions Requiring Special Treatment
Original Issue Discounts. OID is deductible as interest
expense.
(1) Pre-7/1/82 issue bonds. Discount may be
amortized using the straight-line method over
the life of the bonds.
(2) Post-6/30/82 issue bonds. For bonds issued on
or after 7/1/82, discounts from face value must
be amortized using the effective yield method.
Chapter 16, Exhibit 14b CCH Federal Taxation Basic Principles34 of 92
35. Deductions Requiring Special Treatment
Example on OID, Post-6/30/82 Bonds (Effective Yield Method)
Facts:
3/1/x1: A corporation hired an investment banking firm to underwrite and sell 5-
year, $10,000 bonds.
6/15/x1: The bonds were printed when the market yielded 10% on five-year bonds of
comparable risk. Accordingly, the investment banking firm set the coupon rate at
10%.
6/15/x1 - 6/30/x1: The market yield on comparable five-year bonds rose to 12%.
6/30/x1: Five-year, $10,000, 10% bonds were issued to the public. Since the market
then yielded 12%, the bonds had to be discounted to $9,250 to be saleable.
Question: How much OID is deductible on one $10,000 bond in 20x1 and 20x2?
Solution: 20x1: $55.00; 20x2: $120.10 (i.e., $120.10 = $58.30 + $61.80)
Chapter 16, Exhibit 14c CCH Federal Taxation Basic Principles35 of 92
36. Deductions Requiring Special Treatment
Solution
(a) (b) = (a) x 12% (c) = (d) = (e) = (a) + (d)
10m x 10% (b) – (c)
Year AIP, x 12% yield Less: Interest AIP,
Beg Payment End. Bal. *
Bal. * Deduction
20x1 9,250 555.00 500 55.00 9,305
(2nd half) [9,250 x (12% x 1/2)] [1,000 x 1/2] 9,250 + 55 = 9,305
20x2 9,305 558.30 500 58.30 9,363
(1st half) [9,305 x (12% x 1/2)] 9,305 + 58.30 = 9,363
20x2 9,363 561.80 500 61.80 9,425
(2nd half) [9,363 x (12% x 1/2)] 9,363 + 61.80 = 9,425
* AIP = Adjusted Issue Price, the original issue price increased by the OID deduction.
Chapter 16, Exhibit 14d CCH Federal Taxation Basic Principles36 of 92
37. Deductions Requiring Special Treatment—
Bond and Stock Redemptions at a Premium
Repurchasing Bonds at a Premium. A corporation that
repurchases its bonds may deduct as interest expense
the excess of the repurchase price over the adjusted
issue price.
Repurchasing Stock at a Premium. Amounts paid to
repurchase stock are not deductible. Both acquiring and
target corporations may capitalize legal fees, invest
banker fees and other cost associated with a takeover.
Chapter 16, Exhibit 15a CCH Federal Taxation Basic Principles37 of 92
38. Deductions Requiring Special Treatment—
Bond and Stock Redemptions at a Premium
Example on Repurchasing Original Issue Bonds at a Premium
FACTS:
ABC Corporation buys back one $10,000 bond on 1/1/x1 at a
repurchase price of $9,800.
The adjusted issue price (AIP) on the bond is $9,425 as of
1/1/x1.
QUESTION:
How much of the payment premium is deductible in the year 20x1 as interest
expense?
SOLUTION:
$375 (i.e., $9,800 payment, less $9,425 AIP balance)
Chapter 16, Exhibit 15b CCH Federal Taxation Basic Principles38 of 92
39. Deductions Requiring Special Treatment—
Compensation and Educational Reimbursement
Compensation. Four independent rules:
(1) Unreasonable compensation to a shareholder is generally treated
as a dividend, to the extent of earnings and profits.
(2) Informal short-term arrangements. Payments made by March
15 of the succeeding year may be accrued and expensed in the
current year if related to services incurred in the current year.
Chapter 16, Exhibit 16a CCH Federal Taxation Basic Principles39 of 92
40. Deductions Requiring Special Treatment—
Compensation and Educational Reimbursement
(3) Executive Compensation Limitations. Deductible compensation
for the top five executives of publicly traded companies is
limited to $1,000,000 for each executive unless performance
based.
(4) Restricted Stock. Compensation to an employee in the form of
stock is deductible when the employee reports the amount as
ordinary income. Employees must include the market value of
stock received for services in GI when (i) it is not subject to a
substantial risk of forfeiture, and (ii) its value is ascertainable.
Chapter 16, Exhibit 16b CCH Federal Taxation Basic Principles40 of 92
41. Deductions Requiring Special Treatment—
Compensation and Educational Reimbursement
Example on Restricted Stock Compensation:
FACTS:
20x1: Employee purchases restricted stock (FMV = $1,000) from employer-corporation
for $500.
The stock is forfeitable until the employee serves the employer 6 years.
20x7: After 6 yrs., the restriction is lifted when the FMV = $2,000.
QUESTION:
What is the timing and amount of the employee’s taxable income & the corporate
employer’s deduction?
SOLUTION:
20x1: No TI to employee; no deduction to employer.
20x7: $1,500 ordinary income to employee; $1,500 corporate deduction 1,500
[2,000 - 500]
Chapter 16, Exhibit 16c CCH Federal Taxation Basic Principles41 of 92
42. Educational Expenses
An employer’s expenditures for employee
education are deductible as business expenses.
An individual, in contrast, may deduct only
educational expenses required to maintain or
improve skills in a present position
Chapter 16, Exhibit 17 CCH Federal Taxation Basic Principles42 of 92
43. Rules for Net Operating Losses (NOLs)
Comparison of NOL Rules Between Corporations and Proprietorships
Corporations Proprietorships
Excess business exp. over bus income
Definition of NOL Same general definition as
corporate.
Carryovers 2 years back, 20 years Same as corporate.
[NOLs from tax years forward. [For pre-8/5/97
beginning after 8/5/97.]: NOLs: 3 yrs. back; 15 yrs.
forward.]
If carried backward: Prior taxable income (TI) is Same as corporate.
recomputed, & taxpayer files
for a refund with an amended
return.
If carried forward.: Deduction from gross income in Deduction for AGI in a
a subsequent year. subsequent year.
Election: May elect to forego Same as corporate.
carrybacks.
Chapter 16, Exhibit 18a CCH Federal Taxation Basic Principles43 of 92
44. Rules for Net Operating Losses (NOLs)
Comparison of NOL Rules Between Corporations and Proprietorships
Corporations Proprietorships
Calculation TI (a negative amount) TI (a negative amount)
+ NOL Carryovers + NOL Carryovers
+ Alimony
Deducted
+ IRA contributions
+ Charitable deductions + Nonbus. CLs in XS of nonbus. CGs
= NOL + Std. or itemized deductions, except personal
[Note that DRD is not added casualty. deductions are not added back.
back; also net capital losses are + Personal exemptions
not added back since they aren’t - Interest income
deductible in the first place.] - Dividend income
- Nonbus. CGs in XS of nonbus. CLs
- Other nonbusiness inc.
(except wages are not subtracted.)
= NOL
(Unlike individuals, corporations need not make adjustments to NOL for capital gains or losses. Also,
corporations are permitted the full DRD in computing NOLs.)
Chapter 16, Exhibit 18b CCH Federal Taxation Basic Principles44 of 92
45. Net Operating Losses (NOLs)—Example
FACTS:
Fred Corporation had $100,000 sales and $135,000 expenses, plus a
$(30,000) NOL carryover from 20 years ago.
Fred Corporation also had the following income and expenses:
$1,000 interest income on a savings account;
$70,000 dividends from a 30% - owned corporation;
$1,500 LTCG on the sale of business property;
$(10,000) STCL on the sale of stock;
$ 9,000 LTCG on the sale of a painting held for investment;
$ (6,000) charitable contributions.
QUESTION: Compute Fred Corporation’s NOL.
Chapter 16, Exhibit 19a CCH Federal Taxation Basic Principles45 of 92
46. Net Operating Losses (NOLs)—Example
Taxable Income = $(53,150):
Operating loss (35,000) 100,000 - 135,000 = (35,000)
– NOL carryover (30,000)
+ Interest income 1,000
+ Dividends received 70,000
– DRD (56,000) 80% x 70,000
+ Net LTCG 500 1,500 - 10,000 + 9,000
– Charitable deduction (3,650) 10% ATI where ATI =
The lesser of: (35,000) + 1,000+ 70,000
+500
(1) $6,000; or (2) 10% ATI
= Taxable income (53,150)
Chapter 16, Exhibit 19b CCH Federal Taxation Basic Principles46 of 92
47. Net Operating Losses (NOLs)—Example
NOL = $(19,500):
TI (53,150)
+ NOL carryover 30,000
+ Charitable deduction 3,650
= NOL (19,500)
Chapter 16, Exhibit 19c CCH Federal Taxation Basic Principles47 of 92
48. Capital Gains and Losses
Comparison Between Corporations and Individuals
Corporations Individuals
Determining long/short- Requires netting from a Requires netting among
term capital gains/losses: single “rate basket” several “rate baskets”
Tax on net long-term Ordinary corporate tax rates Ord. ind’l rates, up to
capital gains: 10%/15%/20%/28%
Tax on net short-term Ordinary corporate tax rates Ord. ind’l tax rates, no limit
capital gains:
Net long-short-term capital Not deductible Deductible up to $3m
losses: ($1.5m if married filing
separately.)
Carryovers: 3 yrs. back, 5 yrs. fwd. Carry forward (not back)
(Unlike with NOLs, no indefinitely
election allowed to forgo
carrybacks.)
Chapter 16, Exhibit 20a CCH Federal Taxation Basic Principles48 of 92
49. Capital Gains and Losses
Comparison Between Corporations and Individuals
Corporations Individuals
Character of capital loss Long and short-term capital Long/short-term loss
carryovers: losses carried over as short- carryovers retain their
term character.
Computing NOL: Net capital losses are never Net nonbusiness capital
part of NOL since they are not losses are added back to
deductible. Therefore, no taxable income (TI).
addback to taxable income (Note that they are always ≤
(TI). $3,000);
Net capital gains are not Net nonbusiness capital
subtracted from TI (i.e., capital gains are subtracted from
gains reduce NOLs). TI.
Chapter 16, Exhibit 20b CCH Federal Taxation Basic Principles49 of 92
50. Depreciation Expense
Depreciation Including Code Sec. 179. Generally, the
rules for corporations are identical to the rules for
proprietorships. However, for Code Sec. 1250 assets,
an additional recapture amount is required under
Code Sec. 291.
Chapter 16, Exhibit 21a CCH Federal Taxation Basic Principles50 of 92
51. Depreciation Expense
Code Sec. 291 Exception for Corporations. For
corporations, realized gain must be characterized as
Code Sec. 291 ordinary income (OI) to the extent of
20% of any excess of “pretend” Code Sec. 1245 OI
over Code Sec. 1250 OI.
Chapter 16, Exhibit 21b CCH Federal Taxation Basic Principles51 of 92
52. Code Sec. 291 Depreciation for Corporations—
Example
FACTS:
1/1/x1: ABC Corp. acquired an office building for
$450,000.
1/1/x1 - 12/31/13: The building was depreciated using
15-year straight-line.
1/1/14: The building was sold 13 years later for
$240,000.
QUESTION: Compute Code Sec. 291 OI and Code Sec. 1231 gain.
Chapter 16, Exhibit 22a CCH Federal Taxation Basic Principles52 of 92
53. Code Sec. 291 Depreciation for Corporations—
Example
SOLUTION:
Formula: Description 000’s Computations:
(a) Sales Price 240
Adjusted Basis:
(b) Cost 450
(c) Accumulated 390 (450,000 ÷ 15 years) x 13 yrs,
Depreciation (ignoring mid-month convention)
(d)=(b)-(c) Adjusted Basis 60
(e)=(a)-(d) Realized gain 180
(f)= < of (c) or (e) “Pretend” Sec. 180 < of 390,000 or 180,000
1245 OI
Chapter 16, Exhibit 22b CCH Federal Taxation Basic Principles53 of 92
54. Code Sec. 291 Depreciation for Corporations—
Example
SOLUTION:
Formula: Description 000’s Computations:
(g)= Excess accel OI under Sec. 1250 0 “$0” since ACRS (i.e., accelerated
depr. over S/L depreciation) was not used.
depreciation.
(h) = (f) - (g) Excess “pretend” 180
Sec. 1245 OI
(i) = (h) x 20% Sec. 291 OI 36 180,000 x 20%
(j) = (e) - (i) Sec. 1231 cap. gain 144 180,000 - 36,000
Chapter 16, Exhibit 22c CCH Federal Taxation Basic Principles54 of 92
55. Reconciling Book and Taxable Income
Form 1120. A corporation files its federal return on
Form 1120.
Schedule M-1. Reconciling accounting and tax income
is done on Schedule M-1 of Form 1120. M-1 addresses
differences, both permanent and temporary, between
accounting and tax income. The differences are caused
by using different accounting and tax methods to report
income and expenses. In addition to tax reporting, the
M-1 is also useful for tax planning.
Chapter 16, Exhibit 23a CCH Federal Taxation Basic Principles55 of 92
56. Reconciling Book and Taxable Income
Example on M-1 Reconciling Items
FACTS:
ABC Corp. reports the following results of operations:
Net income per books, after taxes 88,000
Rent received in advance (booked as a liability) 11,000
Federal income taxes 13,750
Tax-exempt interest on Municipal bonds 3,000
Net capital loss (in XS of CGs) 1,250
Premium paid on life insurance for key employees (ABC = 1,000
Beneficiary)
Life ins. proceeds received due to death of key employee 10,000
XS MACRS over S/L depreciation (S/L is used for accounting 5,000
purposes.)
Charitable contribution carryover 7,000
Chapter 16, Exhibit 23b CCH Federal Taxation Basic Principles56 of 92
57. Reconciling Book and Taxable Income
Example on M-1 Reconciling Items:
Prepare an M-1 reconciliation and compute taxable income.
Net income per books 88,000
+ Expenses per books that are not deductible:
Federal income tax expense (not tax deductible) 13,750
XS capital losses over capital gains (not tax deductible) 1,250
Insurance premiums (not deductible since ABC is a beneficiary) 1,000
– Deductible expenses not booked for accounting purposes:
XS MACRS depr. per tax return over S/L depreciation per books (5,000)
Charitable contribution carryover (7,000)
– Income per books not taxable:
Tax-exempt interest on municipal bonds (3,000)
Life insurance proceeds received on death of key employee (10,000)
Taxable income not booked for accounting purposes
+ Future rent received in advance. 11,000
= Taxable income 90,000
Chapter 16, Exhibit 23c CCH Federal Taxation Basic Principles57 of 92
58. Corporate Tax Rates
Computing Regular Income Tax. Corporations are subject to the 4-bracket graduated
tax rate structure below.
Tax Rates on Corporate Taxable Income
At Least: But Not Over: Marginal Tax Rate:
$ 0 $ 50,000 15% (1st bracket)
50,000 75,000 25% (2nd bracket)
75,000 100,000 34% (3rd bracket)
39% (3rd + 5% surc harge )
100,000 335,000
335,000 10,000,000 34% (3rd bracket)
10,000,000 15,000,000 35% (4th bracket)
15,000,000 18,333,333 38% (4th + 3% surcharge)
Over 18,333,333 35% (4th bracket)
Chapter 16, Exhibit 24a CCH Federal Taxation Basic Principles58 of 92
59. Corporate Tax Rates
Surtaxes imputed in the table from the previous slide.
A 5% surtax is charged on TI between $100,000 and
$335,000, which eliminates the “tax savings” on the first
$100,000 of TI.
A 3% surtax is charged on TI between $15,000,000 and
$18,333,333, which recaptures the “tax savings” from
$335,000 to $10,000,000.
Capital gain rates. Same as ordinary rates. No rate breaks as with
individual tax rates.
Capital losses. Not deductible as with individuals, offset only against
capital gains.
Personal Service Corporations. Taxed at a flat rate of 35% on all
taxable income (TI).
Chapter 16, Exhibit 24b CCH Federal Taxation Basic Principles59 of 92
60. Corporate Tax Rates
Controlled group of corporations. Rates are applied to the
aggregate TI of the group as if it were a single corporation. A
controlled group a parent corporation and one or more
subsidiaries in which the parent owns EITHER:
(a) 80% total voting power of Subsidiary, or
(b) 80% total value of Subsidiary’s stock.
Any additional corporation with an 80% connection to any
member of the controlled group becomes part of the controlled
group.
Chapter 16, Exhibit 24c CCH Federal Taxation Basic Principles60 of 92
61. Corporate Tax Credits
General Availability of Credits. Most tax credits available to
individuals are available to corporations. Exceptions include:
• Earned income credit;
• Child and dependent care credit;
• Elderly and disabled credit;
• Hope credit;
• Lifetime Learning credit;
• Adoption credit.
Foreign Tax Credit (FTC) or Deduction (FTD). A U.S. citizen or
resident alien may elect either a credit or a deduction “FOR” AGI,
on taxes paid to other countries or U.S. possessions. The
maximum amount credited or deducted is determined from the
following table.
Chapter 16, Exhibit 25 CCH Federal Taxation Basic Principles61 of 92
62. Template for Computing the Foreign Tax
Credit/Deduction
(a) U.S. income tax before the foreign tax credit or deduction.
(b) Foreign source taxable income (TI).
(c) Worldwide taxable income.
(d) = (a) x [(b) ÷ (c)] Allocation amount.
(e) Foreign taxes actually paid on worldwide TI.
(f) = < (d) or (e) Foreign tax credit or deduction.
FTCs are credited against gross tax liability before all other credits.
• FTDs are deductible from gross income.
• FTC’s usually result in greater tax benefits than FTDs.
• Unused foreign tax credits or deductions are carried back 2 years and then carried
forward 5 years.
• For nonresident aliens, FTC is allowed to reduce U.S. tax on U.S. income but only to
the extent that foreign taxes have been paid on U.S. income.
Chapter 16, Exhibit 26 CCH Federal Taxation Basic Principles62 of 92
63. Foreign Tax Credits—Example
FACTS:
U.S. Corp. has worldwide TI of $500,000, and a tentative U.S. tax liability of $170,000.
From its Chinese operations, U.S. Corp. had $100,000 of TI on which a $45,000 Chinese
tax was paid.
QUESTION:
What is U.S. Corp.’s FTC or FTD?
SOLUTION:
(
U.S. income tax before the FTC or FTD. a
) $170,000
(b) Foreign source TI 100,000
(c) Worldwide taxable income 500,000
(d) = (a) x [(b) ÷ (c)] Allocation amount. 34,000
(e) Foreign taxes actually paid on worldwide TI. 45,000
(f) = < (d) or (e) Foreign tax credit or deduction. 34,000
Chapter 16, Exhibit 27 CCH Federal Taxation Basic Principles63 of 92
64. Formation of Corporations—Overview of
Code Sec. 351
What is the general rule on transferring property to a corporation
in exchange for stock?
Code Sec. 351 requires that no gain or loss is recognized if
property is transferred to a corporation by one or more persons
solely in exchange for stock in the corporation and immediately
after the exchange, such person or persons control the
corporation. This nonrecognition treatment is mandatory, not
elective. Note that Code Sec. 351 protects only the transfer of
property. It does not protect the transfer of services. Also, Code
Sec. 351 applies even after a corporation has been formed.
Chapter 16, Exhibit 28a CCH Federal Taxation Basic Principles64 of 92
65. Formation of Corporations—Overview of
Code Sec. 351
What was Congress thinking when it enacted Code Sec. 351?
There are two reasons for Code Sec. 351. First, as the
stockholders receive only stock, they may not have the
wherewithal to pay taxes. Second, the incorporation of a
going concern is not an economic transaction but rather a
change in legal form only.
Chapter 16, Exhibit 28b CCH Federal Taxation Basic Principles65 of 92
66. Formation of Corporations—Overview of
Code Sec. 351
What is “control”?
Control is ownership by all transferors of property of 80% or
more of BOTH the voting power AND the value of all classes
of stock. Do not include the % ownership of transferors of
services in this determination.
Chapter 16, Exhibit 28c CCH Federal Taxation Basic Principles66 of 92
67. Formation of Corporations—Overview of
Code Sec. 351
What is “property”?
Consistent with Code Sec. 351(d) “property” includes just about
everything except services. (i.e., cash, inventory, receivables,
land, other tangible assets, nonexclusive licenses, and industry
know-how.)
Chapter 16, Exhibit 28d CCH Federal Taxation Basic Principles67 of 92
68. Formation of Corporations—Overview of
Code Sec. 351
Why are “services” NOT “property’?
Under Code Sec. 351(d)(1), services are NOT property to ensure
that a person who provides ONLY services to a corporation (1) will
be taxed immediately (on the FMV of stock received); and (2) will
NOT be included in the 80% control computation.
Chapter 16, Exhibit 28e CCH Federal Taxation Basic Principles68 of 92
69. Formation of Corporations—Overview of
Code Sec. 351
How does Code Sec. 351 apply if a person contributes both
property and services?
The receipt of stock attributable to services will generally be
treated as a separate transaction outside the scope of Code Sec.
351. [However, the stock received in exchange for part property,
part services will ALL be included in the 80% control
computation!]
Chapter 16, Exhibit 28f CCH Federal Taxation Basic Principles69 of 92
70. Code Sec. 351 Contribution of Part
Property/Part Services—Example
FACTS:
A transfers land worth $50,000, and B transfers land worth $15,000 and
contributes services worth $35,000 to X Corp. in exchange for all of the stock of
X.
QUESTION 1: Has the 80% control requirement been met under Code Sec.
351?
SOLUTION 1: Yes, B’s stock attributable to services counts in the “control”
computation—and control by A and B after the exchange is 100%. Since
control immediately after the exchange ≥ 80%, the exchange qualifies as a Code
Sec. 351 exchange.
Chapter 16, Exhibit 29a CCH Federal Taxation Basic Principles70 of 92
71. Code Sec. 351 Contribution of Part
Property/Part Services—Example
FACTS:
A transfers land worth $50,000, and B transfers land worth $15,000 and
contributes services worth $35,000 to X Corp. in exchange for all of the stock
of X.
QUESTION 2: What would be the result if B contributed ONLY services?
SOLUTION 2: Then B’s stock would not count in the control computation, and
control immediately after the exchange would be limited to A’s 50%. Since
50% < 80%, this would not have been a Code Sec. 351 exchange.
Chapter 16, Exhibit 29b CCH Federal Taxation Basic Principles71 of 92
72. Code Sec. 351 Contribution of Part
Property/Part Services—Example
FACTS:
A transfers land worth $50,000, and B transfers land worth $15,000 and
contributes services worth $35,000 to X Corp. in exchange for all of the stock of
X.
QUESTION 3: Can B get Code Sec. 351 tax free treatment for the $35,000
services contributed?
SOLUTION 3: No, services are not property under Code Sec. 351(d)(1).
Therefore, B will recognize $35,000 OI as compensation for his services.
Chapter 16, Exhibit 29c CCH Federal Taxation Basic Principles72 of 92
73. Code Sec. 351 Contributions—
Tax Effect on Shareholders
What is the recognized gain of shareholders in a Code Sec. 351
transfer of property for stock?
Code Sec. 351(b) provides that a shareholder’s recognized gain will
be the smaller of (1) boot received or (2) realized gain. (Students
should not confuse Code Sec. 351 boot with Code Sec. 1031 “net
boot received”—that term applied to like-kind exchanges under
Code Sec. 1031.) Here, boot is money and the FMV of property
other than the common stock of the corporation received in the
exchange. Also, under Code Sec. 358(c), a shareholder liability
assumed by the corporation is boot if it exceeds the AB of all
property contributed by the shareholder. If not, then it’s not boot.
Chapter 16, Exhibit 30a CCH Federal Taxation Basic Principles73 of 92
74. Code Sec. 351 Contributions—
Tax Effect on Shareholders
How is the basis of the stockholder in the stock determined?
Code Sec. 358 provides the following formula (referred to as the
“front-in” approach):
AB in contributed property
– FMV of boot received, including liabilities assumed by
corporation that ARE boot
– Liabilities of shareholder assumed by corporation that are
NOT boot. Code Sec. 358(d)
+ Gain recognized by the shareholder
– Loss recognized by the shareholder
= SHAREHOLDER BASIS OF STOCK.
Chapter 16, Exhibit 30b CCH Federal Taxation Basic Principles74 of 92
75. Code Sec. 351 Contributions—
Tax Effect on Shareholders
How is a shareholder’s holding period in the stock
determined?
The holding period of the property contributed tacks on to the
stock received. If several properties have been contributed, the
stock will have a split holding period!
What is a shareholder’s basis and holding period in the boot
received?
The shareholder’s basis in boot received is generally the
corporation’s basis (not FMV). The holding period of boot
received does not tack on as does stock received. Instead, it
begins on the day AFTER receipt.
Chapter 16, Exhibit 30c CCH Federal Taxation Basic Principles75 of 92
76. Code Sec. 351 Contributions—
Tax Effect on Corporations
What is the corporation’s basis in the assets transferred by
shareholders?
Code Sec. 362 provides that the basis of assets received by a
corporation in a Code Sec. 351 transfer will be (a) + (b), where:
(a) = Shareholder’s basis in contributed property
(b) = Gain recognized by the shareholder, allocated using
relative FMVs.
(a) = (a) + (b) = Corporation’s basis in assets contributed by
S/H.
Chapter 16, Exhibit 31a CCH Federal Taxation Basic Principles76 of 92
77. Code Sec. 351 Contributions—
Tax Effect on Corporations
What is the corporation’s holding period in the assets contributed by
a shareholder?
Same as the holding period of the shareholder.
Does the corporation recognize gain or loss on the exchange of its
stock for property under Code Sec. 351?
No, never.
What about property other than stock transferred by the
corporation?
If a corporation transfers other property to shareholder, then YES, it
generally recognizes gain (but not loss) based on [FMV - AB].
Chapter 16, Exhibit 31b CCH Federal Taxation Basic Principles77 of 92
78. Code Sec. 351 Contributions—Example 1
Facts: On 12/31/x1, Dennis forms a new corporation and receives
100% of the corporation’s stock after contributing the following
property:
Land Building
Holding period Began 3/21/97 Began 8/19/x1
FMV, 12/31/x1 1,000,000 14,000,000
Basis, 12/31/x1 2,000,000 3,000,000
Bldg. mtg.assumed by corporation 6,000,000
Chapter 16, Exhibit 32a CCH Federal Taxation Basic Principles78 of 92
79. Code Sec. 351 Contributions—Example 1
Question:
Compute the following items:
Dennis’ realized gain.
Dennis’ boot received.
Dennis’ recognized gain.
Dennis’ postponed gain.
Dennis’ basis in the stock received.
Dennis’ holding period in the stock received.
The corporation’s basis in the land and building contributed by Dennis.
The corporation’s holding period in the land and building.
Chapter 16, Exhibit 32b CCH Federal Taxation Basic Principles79 of 92
80. Code Sec. 351 Contributions—Example 1
Solution: Formula Computation 000’s
(a) Dennis’ (a) = Amt. Realized Note: Dennis’ stock is not publicly 4
realized gain - Basis of traded. However, its value may be
assumed to be equal to the net value
contributed of assets received by the corporation:
property
FMV of land........................... 1
= Realized gain + FMV of bldg......................+ 14
- Mtg. assumed by corp....... (6)
(Similar to rules for any = Net value of assets .(i.e.,
disposition) Dennis’ amt. realized)........... 9
- Basis of contributed property
(2mm land + 3mm bldg)..... 5
= Dennis’ realized gain.......... 4
Chapter 16, Exhibit 32c CCH Federal Taxation Basic Principles80 of 92
81. Code Sec. 351 Contributions—Example 1
Solution: Formula Computation 000’s
(b) Dennis’ (b) = Excess debt Dennis’ debt relief.................... 6 1
boot relief (i.e., debt relief - Basis of contributed property
received: —AB of assets (2mm land + 3mm bldg)...... (5)
contributed)
= Excess debt relief..........…... 1
+ FMV of other boot
received + FMV of other boot received.. 0
= Dennis’ total boot received.. 1
Chapter 16, Exhibit 32d CCH Federal Taxation Basic Principles81 of 92
82. Code Sec. 351 Contributions—Example 1
Solution: Formula Computation 000’s
(c) Dennis’ (c) = Lesser of (a) or (a) = 4,000,000 1
recognized gain (b) (b) = 1,000,000
(Similar to “like-kind” (c) = 1,000,000 (the lesser
exchange rules) amount)
(d) Dennis’ (d) = (a) - (c) (d) = 4,000,000 – 1,000,000 = 3
postponed gain: 3,000,000
Chapter 16, Exhibit 32e CCH Federal Taxation Basic Principles82 of 92
83. Code Sec. 351 Contributions—Example 1
Solution: Formula Computation 000’s
(e) Dennis’ stock Front-in approach: Back-in approach: 0
Dennis’ basis can be (Here, the stock’s FMV
basis in determined two
ways: Stock basis: must first be “plugged”
the stock Using the Sec. from amount realized):
received: + AB in cont’d
358 formula, i.e., FMV of stock:
property....... 5
the “front-in” Amt realized........ 9
approach (shown - Boot rec’d... (1)
above) - Debt relief.......... (6)
- Debt relief,
Using the
nonboot ....... (5) = Stock FMV........ 3
“back-in” Stock basis:
approach, as was + Gain recog’d.. 1
Stock FMV......... 3
done for like- - Loss recog’d.. 0
kind property -Postponed gain....(3)
= Stock basis ... 0
received = Stock basis......... 0
Chapter 16, Exhibit 32f CCH Federal Taxation Basic Principles83 of 92
84. Code Sec. 351 Contributions—Example 1
Solution: Formula Computation 000’s
(f) Dennis’ (f) = Same as holding period of
holding the contributed property HP of 1/15 share begins
period in the Note 1. Since more than one on 3/21/97;
stock property was contributed for the HP of 14/15 share begins
received: stock, each share will have a on 8/19/x1.
split holding period (HP). (Thus, as of 12/31/x1, 1/15
of each share is deemed to
Note 2. The HP rules for Sec. be long-term, and 14/15
351 stock is similar to HP rules short-term!)
for like-kind assets received
under Sec. 1031.
Chapter 16, Exhibit 32g CCH Federal Taxation Basic Principles84 of 92
85. Code Sec. 351 Contributions—Example 1
F
Solution: Computation 000’s
o
r
m
u
l
a
(g) The The corporation’s Land Bldg.
corporation’s basis in the land Dennis’ asset basis 2,000,000 3,000,000
basis in the and building can + Alloc. of recog. gain:
assets be determined
1 mm x [ 1 ÷ (1 + 14)] 66,667
received: using the Sec. 362 1 mm x [14 ÷ (1 + 14)] 933,333
above.
Corporation’s basis 2,066,667 3,933,333
(h) The (h) = Same as Land Bldg.
corporation’s shareholder’s HP HP beginning date 3/15/97 8/19/x1
holding period
in assets
received: (Same as Dennis’ HP)
Chapter 16, Exhibit 32h CCH Federal Taxation Basic Principles85 of 92
86. Code Sec. 351 Contributions—Example 2
FACTS:
Anu, Ellsworth, and Tebessum decided to pool their efforts and form a corporation.
They made the following contributions to the corporation:
Stockholder Asset FMV AB to S/H # shares issued
Anu Services $ 30,000 $ 0 30
Ellsworth Land 70,000 20,000 60
Tebessum Equipment 10,000 11,000 10
TOTALS $110,000 100
The FMV of the stock is $1,000 per share. Ellsworth’s land is subject to a $10,000
mortgage which the corporation assumed.
Chapter 16, Exhibit 33a CCH Federal Taxation Basic Principles86 of 92
87. Code Sec. 351 Contributions—Example 2
QUESTION 1: Does this transfer of assets qualify for Code Sec.
351 treatment?
SOLUTION 1: No, Anu is not a transferor of property. Only
Ellsworth and Tebessum can be included in the control
computation. Since their combined control is only 70% [(60 +
10) ÷100], the ≥ 80% control requirement has not been met.
What would be the result if Anu had also contributed $1.00?
Chapter 16, Exhibit 33b CCH Federal Taxation Basic Principles87 of 92
88. Code Sec. 351 Contributions—Example 2
QUESTION 2: Assuming the previous transaction did qualify under Code Sec. 351, fill in the
blanks below. (Answers provided.)
SOLUTION 2:
Stockholder Realized G/L Recog. Gain/Loss Basis of stock
(FMV - AB) (< Real gain or boot (AB - debt relief + recog’d
rec’d) gain - recog’d loss)
Anu 30,000 (30m - 0) 30,000 (services 30,000 (0 - 0 + 30m)
income)
Ellsworth 50,000 (70m - 20m) 0 ($0 boot received) 10,000 (20m - 10m + 0)
Tebessum (1,000) (10m - 11m) 0 ($0 boot received) 11,000 (11m -0 + 0)
Basis of the land to the corporation: $20,000. (Ellworth’s AB of $20m + $0 gain recognized by
Ellsworth)
Chapter 16, Exhibit 33c CCH Federal Taxation Basic Principles88 of 92
89. Code Sec. 351 Contributions—Example 2
QUESTION 3: Assuming the previous transaction did NOT qualify under Code Sec.
351, fill in the blanks below. (Answers provided.)
SOLUTION 3:
Stockholder Realized G/L Recog. G/L Basis of stock
(FMV – AB) (FMV – AB) (AB – debt relief + recog’d gain –
recog’d loss)
Anu 30,000 30,000 30,000 (0 - 0 + 30,000)
Ellsworth 50,000 50,000 60,000 (20,000 – 10,000 + 50,000)
Tebessum (1,000) (1,000) 10,000 (11,000 – 0 – 1,000)
Chapter 16, Exhibit 33d CCH Federal Taxation Basic Principles89 of 92
90. Nonstock Distributions—
Effect on Shareholder of C Corporation
What is the amount of “distributions other than stock”?
The amount of distribution other than stock of the corporation is:
(a) - (b), where
(a) = The fair market value of all property received (other
than the common stock of the distributing corporation).
(b) = Liabilities of the distributing corporation, both recourse
and nonrecourse, assumed by the shareholder.
Chapter 16, Exhibit 34a CCH Federal Taxation Basic Principles90 of 92
91. Nonstock Distributions—
Effect on Shareholder of C Corporation
Do shareholders of C corporations recognize income on nonstock
distributions?
Yes, then yes, then no, then yes. That is, when a corporation
distributes property other than its own stock to shareholders, the
tax treatment to shareholders moves in different directions,
according to the following pecking order:
Chapter 16, Exhibit 34b CCH Federal Taxation Basic Principles91 of 92
92. Nonstock Distributions—
Effect on Shareholder of C Corporation
Tier Distributions Other Than Stock, to the Extent Tax Treatment to S/H:
of:
1st Current earnings and profits (E&P) Ordinary income based on FMV
2nd Accumulated E&P Ordinary income based on FMV
3rd S/H’s basis in the stock Nontaxable return of capital
Any balance remaining Capital gain
What is a shareholder’s basis in the non-stock property distributed by the C corporation?
Basis = FMV of the asset. The assumption of a liability does not affect basis.
Chapter 16, Exhibit 34c CCH Federal Taxation Basic Principles92 of 92