Survey of Income Tax Slides © Steven J. Willis 2008 All Rights Reserved 1 S URVEY OF I NCOME T AX S LIDES (W ITHOUT N ARRATION ) T OP 100 T AX T ERMS T

© Steven J. Willis 2008 All Rights Reserved 1

Survey of Income Tax Slides

SURVEY OF INCOME TAX SLIDES(WITHOUT NARRATION)

TOP 100 TAX TERMS

TOP 100 TAX CASES

ON-LINE TAX AUTHORITIES

BRIEF HISTORY

TOP 40 TAX DOCTRINES

OFFICIAL TAX AUTHORITIES

CODE STRUCTURE

TOP 100 SECTIONS

TAX LL.M. PROGRAMS

COURT SYSTEM

TAX ETHICS

10 SUGGESTED READINGS

INTRODUCTION TO TAX SCHOOL

© Steven J. Willis 2008 All Rights Reserved



Most, if not all, tax matters involve five issues:



IssuesIssues




WhetherWhether

IssuesIssues




WhetherWhether

WhenWhen

IssuesIssues




WhetherWhether

WhenWhen

WhoWhoIssuesIssues




WhetherWhether

WhenWhen

WhoWho

How MuchHow Much

IssuesIssues




WhetherWhether

WhenWhen

WhoWho

How MuchHow Much

CharacterCharacter

IssuesIssues




WhetherWhether

WhenWhen

WhoWho

How MuchHow Much

CharacterCharacter

IssuesIssuesEach issue

applies both to income and

deductions.



WhetherWhether

WhenWhen

WhoWho

How MuchHow Much

CharacterCharacter



deductions.

income

income

income

income

income



WhetherWhether

WhenWhen

WhoWho

How MuchHow Much

CharacterCharacter



deductions.

income

income

income

income

income



WhetherWhether

WhenWhen

WhoWho

How MuchHow Much

CharacterCharacter



deductions.

deduction

income

deduction

income

deduction

income

deduction

income

deduction

income



WhetherWhether

WhenWhen

WhoWho

How MuchHow Much

CharacterCharacter

IssuesIssues

Whether a particular transaction or event is sufficient to produce

income or a deduction.



WhetherWhether

WhenWhen

WhoWho

How MuchHow Much

CharacterCharacter

IssuesIssues

When (which year) is the income to be reported or the

deduction taken?



WhetherWhether

WhenWhen

WhoWho

How MuchHow Much

CharacterCharacter

IssuesIssues Who’s income or deduction is it?



WhetherWhether

WhenWhen

WhoWho

How MuchHow Much

CharacterCharacter

IssuesIssues

How much income or deduction is

involved?



WhetherWhether

WhenWhen

WhoWho

How MuchHow Much

CharacterCharacter

IssuesIssues

What is the character of the

income or deduction?



WhetherWhether

WhenWhen

WhoWho

How MuchHow Much

CharacterCharacter

IssuesIssuesEach issue has

sub-issues.

deduction

income

deduction

income

deduction

income

deduction

income

deduction

income



WhetherWhether

WhenWhen

WhoWho

How MuchHow Much

CharacterCharacter

IssuesIssues

deduction

income

deduction

income

deduction

income

deduction

income

deduction

income



WhetherWhether deduction

income




income

RecognizedRecognized




income


Not Recognized

Not Recognized




income


Not Recognized

Not Recognized

ExcludedExcluded




income


Not Recognized

Not Recognized

ExcludedExcluded




income


Not Recognized

Not Recognized

AllowedAllowed

ExcludedExcluded




income


Not Recognized

Not Recognized

AllowedAllowed

DisallowedDisallowed

ExcludedExcluded




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

Each issue has sub-issues.




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 61§ 61




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 61§ 61

§ 1001(c)§ 1001(c)




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 61§ 61

§ 1001(c)§ 1001(c)

You should know these code sections.The

following slides briefly discuss them.

Each section is on the Top 100 List.







income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 61§ 61

§ 1001(c)§ 1001(c)




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 61§ 61

§ 1001(c)§ 1001(c)

“Gross income means all income

from whatever source derived.”






income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 61§ 61

§ 1001(c)§ 1001(c)

See, Eisner v. Macomber, 252 U.S. 189

(1920) and Glenshaw Glass, 348 U.S. 426

(1955) for the meaning of this phrase.











income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 61§ 61

§ 1001(c)§ 1001(c)

These cases are on the

top 100 list.

These cases are on the

top 100 list.














income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 61§ 61

§ 1001(c)§ 1001(c)




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 61§ 61

§ 1001(c)§ 1001(c)

“The entire amount of the

gain or loss . . . on the sale or exchange of

property shall be recognized.”

“The entire amount of the

gain or loss . . . on the sale or exchange of

property shall be recognized.”




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 351§ 351




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 351§ 351

§ 721§ 721




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 1031§ 1031

§ 351§ 351

§ 721§ 721




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 1031§ 1031

§ 1033§ 1033

§ 351§ 351

§ 721§ 721




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 1031§ 1031

§ 1033§ 1033

§ 1041§ 1041

§ 351§ 351

§ 721§ 721




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 1031§ 1031

§ 1033§ 1033

§ 1041§ 1041

§ 351§ 351

§ 721§ 721










income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 1031§ 1031

§ 1033§ 1033

§ 1041§ 1041

§ 351§ 351

§ 721§ 721

“No gain or loss shall be recognized if property is

transferred to a corporation . . . solely in

exchange for stock in such corporation and

immediately after the exchange such person or persons are in control.”

“No gain or loss shall be recognized if property is

transferred to a corporation . . . solely in

exchange for stock in such corporation and

immediately after the exchange such person or persons are in control.”




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 1031§ 1031

§ 1033§ 1033

§ 1041§ 1041

§ 351§ 351

§ 721§ 721

“No gain or loss shall be recognized to a partnership or to any of its partners in

the case of a contribution of property to the partnership in exchange for an interest

in the partnership.”

“No gain or loss shall be recognized to a partnership or to any of its partners in

the case of a contribution of property to the partnership in exchange for an interest

in the partnership.”




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 1031§ 1031

§ 1033§ 1033

§ 1041§ 1041

§ 351§ 351

§ 721§ 721

“No gain or loss shall be recognized on the exchange

of property held for productive use in a trade or

business or for investment if such property is exchanged

solely for property of like kind which is to be held

either for productive use in a trade or business or for

investment.”

“No gain or loss shall be recognized on the exchange

of property held for productive use in a trade or

business or for investment if such property is exchanged

solely for property of like kind which is to be held

either for productive use in a trade or business or for

investment.”




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 1031§ 1031

§ 1033§ 1033

§ 1041§ 1041

§ 351§ 351

§ 721§ 721

This section provides for non-recognition of gain on the involuntary conversion of property

into similar use property.

This section provides for non-recognition of gain on the involuntary conversion of property

into similar use property.




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 1031§ 1031

§ 1033§ 1033

§ 1041§ 1041

§ 351§ 351

§ 721§ 721

This section provides for non-recognition of

gain or loss on the transfer of property between spouses or incident to divorce.

This section provides for non-recognition of

gain or loss on the transfer of property between spouses or incident to divorce.




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 71(c)§ 71(c)




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 71(c)§ 71(c)

§ 102§ 102




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 103§ 103

§ 71(c)§ 71(c)

§ 102§ 102




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 103§ 103

§ 71(c)§ 71(c)

§ 102§ 102

§ 104§ 104




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 103§ 103

§ 71(c)§ 71(c)

§ 102§ 102

§ 104§ 104

§ 106§ 106




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 103§ 103

§ 71(c)§ 71(c)

§ 102§ 102

§ 104§ 104

§ 106§ 106

§ 108§ 108




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 103§ 103

§ 71(c)§ 71(c)

§ 102§ 102

§ 104§ 104

§ 106§ 106

§ 115§ 115

§ 108§ 108




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 103§ 103

§ 71(c)§ 71(c)

§ 102§ 102

§ 104§ 104

§ 106§ 106

§ 117§ 117

§ 115§ 115

§ 108§ 108




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 103§ 103

§ 71(c)§ 71(c)

§ 102§ 102

§ 104§ 104

§ 106§ 106

§ 117§ 117

§ 121§ 121

§ 115§ 115

§ 108§ 108




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 103§ 103

§ 71(c)§ 71(c)

§ 102§ 102

§ 104§ 104

§ 106§ 106

§ 117§ 117

§ 121§ 121

§ 115§ 115

§ 108§ 108

§ 125§ 125




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 103§ 103

§ 71(c)§ 71(c)

§ 102§ 102

§ 104§ 104

§ 106§ 106

§ 117§ 117

§ 121§ 121

§ 115§ 115

§ 108§ 108

§ 125§ 125










income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 103§ 103

§ 71(c)§ 71(c)

§ 102§ 102

§ 104§ 104

§ 106§ 106

§ 117§ 117

§ 121§ 121

§ 115§ 115

§ 108§ 108

§ 125§ 125

Excludes child support receipts and alimony (in

some cases).

Excludes child support receipts and alimony (in

some cases).




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 103§ 103

§ 71(c)§ 71(c)

§ 102§ 102

§ 104§ 104

§ 106§ 106

§ 117§ 117

§ 121§ 121

§ 115§ 115

§ 108§ 108

§ 125§ 125

Excludes gifts and inheritance.

Excludes gifts and inheritance.




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 103§ 103

§ 71(c)§ 71(c)

§ 102§ 102

§ 104§ 104

§ 106§ 106

§ 117§ 117

§ 121§ 121

§ 115§ 115

§ 108§ 108

§ 125§ 125

Excludes interest on state and local bonds.Excludes interest on

state and local bonds.




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 103§ 103

§ 71(c)§ 71(c)

§ 102§ 102

§ 104§ 104

§ 106§ 106

§ 117§ 117

§ 121§ 121

§ 115§ 115

§ 108§ 108

§ 125§ 125

Excludes personal physical injury awards

Excludes personal physical injury awards




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 103§ 103

§ 71(c)§ 71(c)

§ 102§ 102

§ 104§ 104

§ 106§ 106

§ 117§ 117

§ 121§ 121

§ 115§ 115

§ 108§ 108

§ 125§ 125

Excludes employer provided health

insurance.

Excludes employer provided health

insurance.




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 103§ 103

§ 71(c)§ 71(c)

§ 102§ 102

§ 104§ 104

§ 106§ 106

§ 117§ 117

§ 121§ 121

§ 115§ 115

§ 108§ 108

§ 125§ 125

Excludes income from some discharges of

indebtedness.


indebtedness.




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 103§ 103

§ 71(c)§ 71(c)

§ 102§ 102

§ 104§ 104

§ 106§ 106

§ 117§ 117

§ 121§ 121

§ 115§ 115

§ 108§ 108

§ 125§ 125

Excludes income of state and local governments.

Excludes income of state and local governments.




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 103§ 103

§ 71(c)§ 71(c)

§ 102§ 102

§ 104§ 104

§ 106§ 106

§ 117§ 117

§ 121§ 121

§ 115§ 115

§ 108§ 108

§ 125§ 125

Excludes qualified scholarships.

Excludes qualified scholarships.




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 103§ 103

§ 71(c)§ 71(c)

§ 102§ 102

§ 104§ 104

§ 106§ 106

§ 117§ 117

§ 121§ 121

§ 115§ 115

§ 108§ 108

§ 125§ 125

Excludes gain on the sale of a principal

residence (with limitations).

Excludes gain on the sale of a principal

residence (with limitations).




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 103§ 103

§ 71(c)§ 71(c)

§ 102§ 102

§ 104§ 104

§ 106§ 106

§ 117§ 117

§ 121§ 121

§ 115§ 115

§ 108§ 108

§ 125§ 125

Excludes service income contributed to

flexible employee benefit plans [cafeteria

plans].

Excludes service income contributed to

flexible employee benefit plans [cafeteria

plans].




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 151§ 151




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 151§ 151

§ 162§ 162




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 163§ 163

§ 151§ 151

§ 162§ 162




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 163§ 163

§ 151§ 151

§ 162§ 162

§ 164§ 164




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 163§ 163

§ 151§ 151

§ 162§ 162

§ 164§ 164

§ 167§ 167




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 163§ 163

§ 151§ 151

§ 162§ 162

§ 164§ 164

§ 167§ 167

§ 170§ 170




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 163§ 163

§ 151§ 151

§ 162§ 162

§ 164§ 164

§ 167§ 167

§ 179§ 179

§ 170§ 170




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 163§ 163

§ 151§ 151

§ 162§ 162

§ 164§ 164

§ 167§ 167

§ 179§ 179

§ 170§ 170

§ 195§ 195




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 163§ 163

§ 151§ 151

§ 162§ 162

§ 164§ 164

§ 167§ 167

§ 179§ 179

§ 170§ 170

§ 195§ 195

§ 197§ 197




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 163§ 163

§ 151§ 151

§ 162§ 162

§ 164§ 164

§ 167§ 167

§ 179§ 179

§ 170§ 170

§ 195§ 195

§ 197§ 197

§ 212§ 212




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 163§ 163

§ 151§ 151

§ 162§ 162

§ 164§ 164

§ 167§ 167

§ 179§ 179

§ 170§ 170

§ 195§ 195

§ 197§ 197

§ 212§ 212

§ 215§ 215




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 163§ 163

§ 151§ 151

§ 162§ 162

§ 164§ 164

§ 167§ 167

§ 179§ 179

§ 170§ 170

§ 195§ 195

§ 197§ 197

§ 212§ 212

§ 215§ 215

§ 217§ 217




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 163§ 163

§ 151§ 151

§ 162§ 162

§ 164§ 164

§ 167§ 167

§ 179§ 179

§ 170§ 170

§ 195§ 195

§ 197§ 197

§ 212§ 212

§ 215§ 215

§ 217§ 217

§ 219§ 219




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 163§ 163

§ 151§ 151

§ 162§ 162

§ 164§ 164

§ 167§ 167

§ 179§ 179

§ 170§ 170

§ 195§ 195

§ 197§ 197

§ 212§ 212

§ 215§ 215

§ 217§ 217

§ 219§ 219










income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 163§ 163

§ 151§ 151

§ 162§ 162

§ 164§ 164

§ 167§ 167

§ 179§ 179

§ 170§ 170

§ 195§ 195

§ 197§ 197

§ 212§ 212

§ 215§ 215

§ 217§ 217

§ 219§ 219

Allows deductions for dependants and

personal exemptions.

Allows deductions for dependants and

personal exemptions.




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 163§ 163

§ 151§ 151

§ 162§ 162

§ 164§ 164

§ 167§ 167

§ 179§ 179

§ 170§ 170

§ 195§ 195

§ 197§ 197

§ 212§ 212

§ 215§ 215

§ 217§ 217

§ 219§ 219

Allows deductions for ordinary and necessary

business expenses.

Allows deductions for ordinary and necessary

business expenses.




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 163§ 163

§ 151§ 151

§ 162§ 162

§ 164§ 164

§ 167§ 167

§ 179§ 179

§ 170§ 170

§ 195§ 195

§ 197§ 197

§ 212§ 212

§ 215§ 215

§ 217§ 217

§ 219§ 219

Allows deductions for interest (with limitations).

Allows deductions for interest (with limitations).




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 163§ 163

§ 151§ 151

§ 162§ 162

§ 164§ 164

§ 167§ 167

§ 179§ 179

§ 170§ 170

§ 195§ 195

§ 197§ 197

§ 212§ 212

§ 215§ 215

§ 217§ 217

§ 219§ 219

Allows deductions for some state and local

taxes.

Allows deductions for some state and local

taxes.




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 163§ 163

§ 151§ 151

§ 162§ 162

§ 164§ 164

§ 167§ 167

§ 179§ 179

§ 170§ 170

§ 195§ 195

§ 197§ 197

§ 212§ 212

§ 215§ 215

§ 217§ 217

§ 219§ 219

Allows deductions for depreciation on property

used in a trade or business or for the

production of income .

Allows deductions for depreciation on property

used in a trade or business or for the

production of income .




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 163§ 163

§ 151§ 151

§ 162§ 162

§ 164§ 164

§ 167§ 167

§ 179§ 179

§ 170§ 170

§ 195§ 195

§ 197§ 197

§ 212§ 212

§ 215§ 215

§ 217§ 217

§ 219§ 219

Allows deductions for charitable contributions

(with significant limitations).

Allows deductions for charitable contributions

(with significant limitations).




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 163§ 163

§ 151§ 151

§ 162§ 162

§ 164§ 164

§ 167§ 167

§ 179§ 179

§ 170§ 170

§ 195§ 195

§ 197§ 197

§ 212§ 212

§ 215§ 215

§ 217§ 217

§ 219§ 219

Allows election of an expense to deduct

rather than capitalize certain tangible

business property.

Allows election of an expense to deduct

rather than capitalize certain tangible

business property.




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 163§ 163

§ 151§ 151

§ 162§ 162

§ 164§ 164

§ 167§ 167

§ 179§ 179

§ 170§ 170

§ 195§ 195

§ 197§ 197

§ 212§ 212

§ 215§ 215

§ 217§ 217

§ 219§ 219

Allows amortization of “active business” start-up expenditures over a

60-month period..

Allows amortization of “active business” start-up expenditures over a

60-month period..




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 163§ 163

§ 151§ 151

§ 162§ 162

§ 164§ 164

§ 167§ 167

§ 179§ 179

§ 170§ 170

§ 195§ 195

§ 197§ 197

§ 212§ 212

§ 215§ 215

§ 217§ 217

§ 219§ 219

Allows amortization of goodwill and certain

other intangibles over a 15-year period.

Allows amortization of goodwill and certain

other intangibles over a 15-year period.




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 163§ 163

§ 151§ 151

§ 162§ 162

§ 164§ 164

§ 167§ 167

§ 179§ 179

§ 170§ 170

§ 195§ 195

§ 197§ 197

§ 212§ 212

§ 215§ 215

§ 217§ 217

§ 219§ 219

Allows deductions for production of income expenses and for tax

advice.

Allows deductions for production of income expenses and for tax

advice.




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 163§ 163

§ 151§ 151

§ 162§ 162

§ 164§ 164

§ 167§ 167

§ 179§ 179

§ 170§ 170

§ 195§ 195

§ 197§ 197

§ 212§ 212

§ 215§ 215

§ 217§ 217

§ 219§ 219

Allows deductions for alimony payments (with

limitations).

Allows deductions for alimony payments (with

limitations).




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 163§ 163

§ 151§ 151

§ 162§ 162

§ 164§ 164

§ 167§ 167

§ 179§ 179

§ 170§ 170

§ 195§ 195

§ 197§ 197

§ 212§ 212

§ 215§ 215

§ 217§ 217

§ 219§ 219

Allows deductions for job-related moving

expenses (with distance limitations).

Allows deductions for job-related moving

expenses (with distance limitations).




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 163§ 163

§ 151§ 151

§ 162§ 162

§ 164§ 164

§ 167§ 167

§ 179§ 179

§ 170§ 170

§ 195§ 195

§ 197§ 197

§ 212§ 212

§ 215§ 215

§ 217§ 217

§ 219§ 219

Allows deductions for contributions to certain

retirement accounts.

Allows deductions for contributions to certain

retirement accounts.




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 262§ 262




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 265§ 265

§ 262§ 262




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 265§ 265

§ 262§ 262

§ 267§ 267




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 265§ 265

§ 262§ 262

§ 267§ 267

§ 274§ 274




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 265§ 265

§ 262§ 262

§ 267§ 267

§ 274§ 274

§ 280A§ 280A




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 265§ 265

§ 262§ 262

§ 267§ 267

§ 274§ 274

§ 280A§ 280A

§ 183§ 183




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 265§ 265

§ 262§ 262

§ 267§ 267

§ 274§ 274

§ 280A§ 280A







§ 183§ 183




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 265§ 265

§ 262§ 262

§ 267§ 267

§ 274§ 274

§ 280A§ 280A

Disallows deductions for personal expenses.Disallows deductions

for personal expenses.

§ 183§ 183




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 265§ 265

§ 262§ 262

§ 267§ 267

§ 274§ 274

§ 280A§ 280A

Disallows deductions for interest and

expenses related to tax exempt income.

Disallows deductions for interest and

expenses related to tax exempt income.

§ 183§ 183




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 265§ 265

§ 262§ 262

§ 267§ 267

§ 274§ 274

§ 280A§ 280A

Disallows deductions for losses and expenses in

transactions between related persons.

Disallows deductions for losses and expenses in

transactions between related persons.

§ 183§ 183




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 265§ 265

§ 262§ 262

§ 267§ 267

§ 274§ 274

§ 280A§ 280A

Disallows deductions for certain

entertainment expenses.

Disallows deductions for certain

entertainment expenses.

§ 183§ 183




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 265§ 265

§ 262§ 262

§ 267§ 267

§ 274§ 274

§ 280A§ 280A

Disallows deductions for expenses in

connection with the business use of a

dwelling unit.

Disallows deductions for expenses in

connection with the business use of a

dwelling unit.

§ 183§ 183




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 265§ 265

§ 262§ 262

§ 267§ 267

§ 274§ 274

§ 280A§ 280A

Disallows deductions for expenses in connection with

activities not engaged in for profit.

Disallows deductions for expenses in connection with

activities not engaged in for profit.

§ 183§ 183




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 263§ 263




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 263§ 263

§ 280F§ 280F




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 263§ 263

§ 280F§ 280F

§ 465§ 465




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 263§ 263

§ 280F§ 280F

§ 465§ 465

§ 469§ 469




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 263§ 263

§ 280F§ 280F

§ 465§ 465

§ 469§ 469










income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 263§ 263

§ 280F§ 280F

§ 465§ 465

§ 469§ 469

Requires capitalization of various expenditures that improve property.

A result of “capitalization” is that

recovery of the costs is deferred.

Requires capitalization of various expenditures that improve property.

A result of “capitalization” is that

recovery of the costs is deferred.




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 263§ 263

§ 280F§ 280F

§ 465§ 465

§ 469§ 469

Limits (and thus defers) depreciation deductions for luxury automobiles

and other listed property.

Limits (and thus defers) depreciation deductions for luxury automobiles

and other listed property.




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 263§ 263

§ 280F§ 280F

§ 465§ 465

§ 469§ 469

Limits deductions from non “at risk” activities

to the amount of income from such

activities. Any excess deductions are deferred until the taxpayer has is

at risk.

Limits deductions from non “at risk” activities

to the amount of income from such

activities. Any excess deductions are deferred until the taxpayer has is

at risk.




income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 263§ 263

§ 280F§ 280F

§ 465§ 465

§ 469§ 469

Limits deductions from passive activities to the amount of income from

such activities. Any excess deductions are

deferred until the taxpayer has passive

income.

Limits deductions from passive activities to the amount of income from

such activities. Any excess deductions are

deferred until the taxpayer has passive

income.



WhetherWhether

WhenWhen

WhoWho

How MuchHow Much

CharacterCharacter

IssuesIssues

deduction

income

deduction

income

deduction

income

deduction

income

deduction

income



WhetherWhether

WhenWhen

WhoWho

How MuchHow Much

CharacterCharacter

IssuesIssues

deductiondeduction

incomeincome

deduction

income

deductiondeduction

incomeincome

deductiondeduction

incomeincome

deductiondeduction

incomeincome



WhenWhen deduction

income



WhenWhen deduction

income

Cash MethodCash Method



WhenWhen deduction

income


Accrual MethodAccrual Method



WhenWhen deduction

income



Other MethodsOther Methods



WhenWhen deduction

income




InventoryInventory



WhenWhen deduction

income




InventoryInventory

InstallmentInstallment



WhenWhen deduction

income




InventoryInventory


Percentage CompletionPercentage Completion



WhenWhen deduction

income




InventoryInventory



HybridHybrid



WhenWhen deduction

income




InventoryInventory



HybridHybrid

453453



WhenWhen deduction

income




InventoryInventory



HybridHybrid

453453

You should know this code section, which is

on the Top 100 List.





WhenWhen deduction

income




InventoryInventory



HybridHybrid

453453





It provides for the installment method of accounting. Unless taxpayers elect otherwise, gain

on property sold on the installment method is reported

as the funds are received.

It provides for the installment method of accounting. Unless taxpayers elect otherwise, gain

on property sold on the installment method is reported

as the funds are received.



WhenWhen deduction

income




The essence of the cash method of income involves

receipt.



WhenWhen deduction

income





receipt.

receiptreceipt



WhenWhen deduction

income





receipt.

receiptreceipt

The essence of the cash method of

deductions involves receipt.




WhenWhen deduction

income





receipt.

receiptreceipt

The essence of the cash method of

deductions involves payment.

Cash MethodCash Method paymentpayment



WhenWhen deduction

income




The Cash Method of Accounting for

income involves the study of four

doctrines.



WhenWhen deduction

income




Actual receiptActual receiptThe Cash Method of

Accounting for income involves the

study of four doctrines.



WhenWhen deduction

income




Actual receiptActual receipt

constructive receipt




doctrines.



WhenWhen deduction

income







Receipt of a cash

equivalent

Receipt of a cash

equivalent



doctrines.



WhenWhen deduction

income







Receipt of a cash

equivalent

Receipt of a cash

equivalent

Receipt of an economic

benefit


benefit



doctrines.



WhenWhen deduction

income







Receipt of a cash

equivalent

Receipt of a cash

equivalent


benefit


benefit



doctrines.

Cash Method taxpayers who wish to defer recognition of income

must avoid application of these doctrines.



WhenWhen deduction

income







Receipt of a cash

equivalent

Receipt of a cash

equivalent


benefit


benefit



doctrines.

Cash Method taxpayers who wish to defer recognition of income

must avoid application of these doctrines.

A course in tax school will cover how and when this

is possible.



WhenWhen deduction

income




receiptreceiptThe essence of the accrual method of income involves the “earlier of”

test.


receipt.




WhenWhen deduction

income





Earlier ofEarlier of


test.


receipt.



WhenWhen deduction

income






paymentpayment



test.

The essence of the accrual method of

deductions involves the “later

of” test.Other MethodsOther Methods



WhenWhen deduction

income






paymentpayment

Later ofLater of



test.

The essence of the accrual method of

deductions involves the “later

of” test.Other MethodsOther Methods



WhenWhen deduction

income






paymentpayment

Later ofLater of


receiptreceipt


The “earlier of” test requires

inclusion at the earliest of three

events.



WhenWhen deduction

income






paymentpayment

Later ofLater of


receiptreceipt




events.

duedue



WhenWhen deduction

income






paymentpayment

Later ofLater of


receiptreceipt




events.

duedue

paidpaid



WhenWhen deduction

income






paymentpayment

Later ofLater of


receiptreceipt




events.

duedue

paidpaid

earnedearned



WhenWhen deduction

income






paymentpayment

Later ofLater of


receiptreceipt




events.

duedue

paidpaid

earnedearned

This test arises from a trilogy of Supreme Court

decisions which culminated in the case of Schlude v. Comm’r, 372

U.S. 128 (1963).



U.S. 128 (1963).



WhenWhen deduction

income






paymentpayment

Later ofLater of


receiptreceipt




events.

duedue

paidpaid

earnedearned



U.S. 128 (1963).



U.S. 128 (1963). This case is on the Top 100 list.This case is on the Top 100 list.



WhenWhen deduction

income






paymentpayment

Later ofLater of


receiptreceipt




events.

duedue

paidpaid

earnedearned

The “later of” test defers deductions until the latest of

two events.



WhenWhen deduction

income






paymentpayment

Later ofLater of


receiptreceipt




events.

duedue

paidpaid

earnedearned


two events.

All eventsAll events



WhenWhen deduction

income






paymentpayment

Later ofLater of


receiptreceipt




events.

duedue

paidpaid

earnedearned


two events.


Economic performance




WhenWhen deduction

income






paymentpayment

Later ofLater of


receiptreceipt




events.

duedue

paidpaid

earnedearned


two events.




This test arises from section 461(h).




WhenWhen deduction

income






paymentpayment

Later ofLater of


receiptreceipt




events.

duedue

paidpaid

earnedearned


two events.












WhetherWhether

WhenWhen

WhoWho

How MuchHow Much

CharacterCharacter

IssuesIssues

deduction

income

deduction

income

deduction

income

deduction

income

deduction

income



WhetherWhether

WhenWhen

WhoWho

How MuchHow Much

CharacterCharacter

IssuesIssues

deduction

income

deduction

income

deduction

income

deduction

income

deduction

income



WhoWho deduction

income



WhoWho deduction

income

Assignment of Income DoctrineAssignment of

Income Doctrine



WhoWho deduction

income


Income Doctrine

This doctrine applies both to

income and deductions.



WhoWho deduction

income


Income Doctrine

Code SectionsCode Sections



WhoWho deduction

income


Income Doctrine


These sections apply both to income and deductions.



WhoWho deduction

income


Income Doctrine


The Doctrine covers evolved from six

seminal cases, which are on the Top 100 List.





WhoWho deduction

income


Income Doctrine






Each case and the Doctrine is covered more thoroughly through the

Top Topics list.

Each case and the Doctrine is covered more thoroughly through the

Top Topics list.



WhoWho deduction

income


Income Doctrine


Lucas v. Earl, 281 U.S. 111 (1930)

Lucas v. Earl, 281 U.S. 111 (1930)



WhoWho deduction

income


Income Doctrine


Lucas v. Earl, 281 U.S. 111 (1930)

Lucas v. Earl, 281 U.S. 111 (1930)The person who

performs services is taxed on the income

from the services.

The person who performs services is taxed on the income

from the services.



WhoWho deduction

income


Income Doctrine


Lucas v. Earl, 281 U.S. 111 (1930)

Lucas v. Earl, 281 U.S. 111 (1930)

Poe v. Seaborn, 282 U.S. 101 (1930)

Poe v. Seaborn, 282 U.S. 101 (1930)



WhoWho deduction

income


Income Doctrine


Lucas v. Earl, 281 U.S. 111 (1930)

Lucas v. Earl, 281 U.S. 111 (1930)

Poe v. Seaborn, 282 U.S. 101 (1930)

Poe v. Seaborn, 282 U.S. 101 (1930)

The person who performs services is taxed on the

income from the services; however, in a community

property state, spouses may assign income by operation

of law.

The person who performs services is taxed on the

income from the services; however, in a community

property state, spouses may assign income by operation

of law.



WhoWho deduction

income


Income Doctrine


Lucas v. Earl, 281 U.S. 111 (1930)

Lucas v. Earl, 281 U.S. 111 (1930)

Poe v. Seaborn, 282 U.S. 101 (1930)

Poe v. Seaborn, 282 U.S. 101 (1930)

Blair v. Comm’r, 300 U.S. 5 (1937)

Blair v. Comm’r, 300 U.S. 5 (1937)



WhoWho deduction

income


Income Doctrine


Lucas v. Earl, 281 U.S. 111 (1930)

Lucas v. Earl, 281 U.S. 111 (1930)

Poe v. Seaborn, 282 U.S. 101 (1930)

Poe v. Seaborn, 282 U.S. 101 (1930)

Blair v. Comm’r, 300 U.S. 5 (1937)

Blair v. Comm’r, 300 U.S. 5 (1937)

A transfer of an entire interest in property –

including an income stream – is a successful assignment

of income.

A transfer of an entire interest in property –

including an income stream – is a successful assignment

of income.



WhoWho deduction

income


Income Doctrine


Lucas v. Earl, 281 U.S. 111 (1930)

Lucas v. Earl, 281 U.S. 111 (1930)

Poe v. Seaborn, 282 U.S. 101 (1930)

Poe v. Seaborn, 282 U.S. 101 (1930)

Blair v. Comm’r, 300 U.S. 5 (1937)

Blair v. Comm’r, 300 U.S. 5 (1937)

Helvering v. Horst, 311 U.S. 112 (1940)




WhoWho deduction

income


Income Doctrine


Lucas v. Earl, 281 U.S. 111 (1930)

Lucas v. Earl, 281 U.S. 111 (1930)

Poe v. Seaborn, 282 U.S. 101 (1930)

Poe v. Seaborn, 282 U.S. 101 (1930)

Blair v. Comm’r, 300 U.S. 5 (1937)

Blair v. Comm’r, 300 U.S. 5 (1937)



The person who owns property is taxed on the income from the

property.

The person who owns property is taxed on the income from the

property.



WhoWho deduction

income


Income Doctrine


Lucas v. Earl, 281 U.S. 111 (1930)

Lucas v. Earl, 281 U.S. 111 (1930)

Poe v. Seaborn, 282 U.S. 101 (1930)

Poe v. Seaborn, 282 U.S. 101 (1930)

Blair v. Comm’r, 300 U.S. 5 (1937)

Blair v. Comm’r, 300 U.S. 5 (1937)

Helvering v. Eubank, 311 U.S. 122 (1940)






WhoWho deduction

income


Income Doctrine


Lucas v. Earl, 281 U.S. 111 (1930)

Lucas v. Earl, 281 U.S. 111 (1930)

Poe v. Seaborn, 282 U.S. 101 (1930)

Poe v. Seaborn, 282 U.S. 101 (1930)

Blair v. Comm’r, 300 U.S. 5 (1937)

Blair v. Comm’r, 300 U.S. 5 (1937)





This case helps distinguish property from services: in this

case, a stream of income was from

services.

This case helps distinguish property from services: in this

case, a stream of income was from

services.



WhoWho deduction

income


Income Doctrine


Lucas v. Earl, 281 U.S. 111 (1930)

Lucas v. Earl, 281 U.S. 111 (1930)

Poe v. Seaborn, 282 U.S. 101 (1930)

Poe v. Seaborn, 282 U.S. 101 (1930)

Blair v. Comm’r, 300 U.S. 5 (1937)

Blair v. Comm’r, 300 U.S. 5 (1937)



Harrison v. Schaffner, 312 U.S. 579 (1941)






WhoWho deduction

income


Income Doctrine


Lucas v. Earl, 281 U.S. 111 (1930)

Lucas v. Earl, 281 U.S. 111 (1930)

Poe v. Seaborn, 282 U.S. 101 (1930)

Poe v. Seaborn, 282 U.S. 101 (1930)

Blair v. Comm’r, 300 U.S. 5 (1937)

Blair v. Comm’r, 300 U.S. 5 (1937)







This case refined the Blair rules involving

permissible assignments of a part of a stream of income.

This case refined the Blair rules involving

permissible assignments of a part of a stream of income.



WhoWho deduction

income


Income Doctrine


Lucas v. Earl, 281 U.S. 111 (1930)

Lucas v. Earl, 281 U.S. 111 (1930)

Poe v. Seaborn, 282 U.S. 101 (1930)

Poe v. Seaborn, 282 U.S. 101 (1930)

Blair v. Comm’r, 300 U.S. 5 (1937)

Blair v. Comm’r, 300 U.S. 5 (1937)







The Who issue involves many code sections. Four examples are on

the Top 100 List.

The Who issue involves many code sections. Four examples are on

the Top 100 List.



WhoWho deduction

income


Income Doctrine


482482

Lucas v. Earl, 281 U.S. 111 (1930)

Lucas v. Earl, 281 U.S. 111 (1930)

Poe v. Seaborn, 282 U.S. 101 (1930)

Poe v. Seaborn, 282 U.S. 101 (1930)

Blair v. Comm’r, 300 U.S. 5 (1937)

Blair v. Comm’r, 300 U.S. 5 (1937)









WhoWho deduction

income


Income Doctrine


482482

Lucas v. Earl, 281 U.S. 111 (1930)

Lucas v. Earl, 281 U.S. 111 (1930)

Poe v. Seaborn, 282 U.S. 101 (1930)

Poe v. Seaborn, 282 U.S. 101 (1930)

Blair v. Comm’r, 300 U.S. 5 (1937)

Blair v. Comm’r, 300 U.S. 5 (1937)







This section allows the government to re-

allocate income and deductions, credits,

and allowances among commonly controlled

businesses.

This section allows the government to re-

allocate income and deductions, credits,

and allowances among commonly controlled

businesses.



WhoWho deduction

income


Income Doctrine


482482

704(b)704(b)

Lucas v. Earl, 281 U.S. 111 (1930)

Lucas v. Earl, 281 U.S. 111 (1930)

Poe v. Seaborn, 282 U.S. 101 (1930)

Poe v. Seaborn, 282 U.S. 101 (1930)

Blair v. Comm’r, 300 U.S. 5 (1937)

Blair v. Comm’r, 300 U.S. 5 (1937)









WhoWho deduction

income


Income Doctrine


482482

704(b)704(b)

Lucas v. Earl, 281 U.S. 111 (1930)

Lucas v. Earl, 281 U.S. 111 (1930)

Poe v. Seaborn, 282 U.S. 101 (1930)

Poe v. Seaborn, 282 U.S. 101 (1930)

Blair v. Comm’r, 300 U.S. 5 (1937)

Blair v. Comm’r, 300 U.S. 5 (1937)







This section allows partnerships to specially allocate income, gains, deductions, losses, and credits among partners

(with significant limitations and restrictions).

This section allows partnerships to specially allocate income, gains, deductions, losses, and credits among partners

(with significant limitations and restrictions).



WhoWho deduction

income


Income Doctrine


10411041

482482

704(b)704(b)

Lucas v. Earl, 281 U.S. 111 (1930)

Lucas v. Earl, 281 U.S. 111 (1930)

Poe v. Seaborn, 282 U.S. 101 (1930)

Poe v. Seaborn, 282 U.S. 101 (1930)

Blair v. Comm’r, 300 U.S. 5 (1937)

Blair v. Comm’r, 300 U.S. 5 (1937)









WhoWho deduction

income


Income Doctrine


10411041

482482

704(b)704(b)

Lucas v. Earl, 281 U.S. 111 (1930)

Lucas v. Earl, 281 U.S. 111 (1930)

Poe v. Seaborn, 282 U.S. 101 (1930)

Poe v. Seaborn, 282 U.S. 101 (1930)

Blair v. Comm’r, 300 U.S. 5 (1937)

Blair v. Comm’r, 300 U.S. 5 (1937)







This section provides for the tax-free transfer of

property between spouses (including

incident to divorce). Because the property’s basis transfers, gains

and losses can be effectively assigned.

This section provides for the tax-free transfer of

property between spouses (including

incident to divorce). Because the property’s basis transfers, gains

and losses can be effectively assigned.



WhoWho deduction

income


Income Doctrine


10411041

482482

78727872

704(b)704(b)

Lucas v. Earl, 281 U.S. 111 (1930)

Lucas v. Earl, 281 U.S. 111 (1930)

Poe v. Seaborn, 282 U.S. 101 (1930)

Poe v. Seaborn, 282 U.S. 101 (1930)

Blair v. Comm’r, 300 U.S. 5 (1937)

Blair v. Comm’r, 300 U.S. 5 (1937)









WhoWho deduction

income


Income Doctrine


10411041

482482

78727872

704(b)704(b)

Lucas v. Earl, 281 U.S. 111 (1930)

Lucas v. Earl, 281 U.S. 111 (1930)

Poe v. Seaborn, 282 U.S. 101 (1930)

Poe v. Seaborn, 282 U.S. 101 (1930)

Blair v. Comm’r, 300 U.S. 5 (1937)

Blair v. Comm’r, 300 U.S. 5 (1937)







This section imputes interest on below market

loans. Essentially, it prevents the assignment

of interest income through the lending of

money.

This section imputes interest on below market

loans. Essentially, it prevents the assignment

of interest income through the lending of

money.



WhetherWhether

WhenWhen

WhoWho

How MuchHow Much

CharacterCharacter

IssuesIssues

deduction

income

deduction

income

deduction

income

deduction

income

deduction

income



WhetherWhether

WhenWhen

WhoWho

How MuchHow Much

CharacterCharacter

IssuesIssues

deduction

income

deduction

income

deduction

income

deduction

income

deduction

income



How MuchHow Much deduction

income




income

Amount RealizedAmount Realized




income

BasisBasis





income

BasisBasis


These concepts apply both to gain and loss or income

and deductions.




income

BasisBasis


The fundamental formula for gain or loss is:

Amount realized minus basis = gain (loss)






income

BasisBasis






For example:

If

Amount realized = $1,000

Basis = 700

Gain (income) = $ 300




income

BasisBasis






For example:

If


Basis = 700





income

BasisBasis






For example:

If


Basis = 700





income

BasisBasis






For example:

If


Basis = 1,800

loss (deduction) = $ 800




income

BasisBasis






For example:

If


Basis = 1,800





income

BasisBasis






For example:

If


Basis = 1,800





income

BasisBasis


Amount Realized equals the amount of money plus the fair

market value of property received in a

taxable event.



taxable event.




income

BasisBasis




taxable event.



taxable event.




income

BasisBasis




taxable event.



taxable event.




income

BasisBasis




taxable event.



taxable event.

Fair market value is generally the amount a

willing buyer would pay to a willing seller in an arm’s length transaction – with

neither under a compulsion to buy or to sell.







income

BasisBasis




taxable event.



taxable event.







Reginald Turner, 13 T.C.M.462 (CCH) (1954) found that fair market value could have an

element to it unique to the taxpayer.






income

BasisBasis




taxable event.



taxable event.











This case is on the Top 100 list.This case is on the Top 100 list.




income

BasisBasis


10011001



taxable event.



taxable event.

This is a paraphrase of section 1001 (which strictly

applies to property dispositions).




income

BasisBasis


10011001

Basis is an accounting measure of a

taxpayer’s tax cost in property.

Basis is an accounting measure of a

taxpayer’s tax cost in property.




income

BasisBasis


10011001

Seven fundamental code sections describe and define basis. You should be familiar with

these.


Seven fundamental code sections describe and define basis. You should be familiar with

these.





income

BasisBasis


10011001

10111011




income

BasisBasis


10011001

10111011

Section 1011 is mostly a cross

reference to other basis provisions.

Section 1011 is mostly a cross

reference to other basis provisions.




income

BasisBasis


10011001

10111011

10121012




income

BasisBasis


10011001

10111011

10121012

Section 1012 provides that

“cost” is a taxpayer’s initial

basis.



basis.




income

BasisBasis


10011001

10111011

10121012



basis.



basis.

The Philadelphia Park Amusement Co. v. United States, 126 F.Supp. 184

(Cl. Ct. 1954), decision provides interesting gloss on the meaning of “cost.” Essentially,it provides that

cost = the amount received (not paid) in a taxable exchange.







income

BasisBasis


10011001

10111011

10121012



basis.



basis.










income

BasisBasis


10011001

10111011

10121012



basis.



basis.










income

BasisBasis


10011001

10111011

10121012



basis.



basis.






cost = the amount received (not paid) in a taxable exchange.This case is on

the Top 100 list.This case is on the Top 100 list.




income

BasisBasis


10011001

10111011

10121012

10141014




income

BasisBasis


10011001

10111011

10121012

10141014Section 1014 provides

that a taxpayer’s basis in property received from a

decedent equals the property’s fair market

value on the date of death (or up to six months later).

Section 1014 provides that a taxpayer’s basis in property received from a

decedent equals the property’s fair market

value on the date of death (or up to six months later).




income

BasisBasis


10011001

10111011

10121012

10141014

10151015




income

BasisBasis


10011001

10111011

10121012

10141014

10151015Section 1015 provides

that a taxpayer’s basis in property received by gift equals the basis of the

donor.

Section 1015 provides that a taxpayer’s basis in property received by gift equals the basis of the

donor.




income

BasisBasis


10011001

10111011

10121012

10141014

10151015

10161016




income

BasisBasis


10011001

10111011

10121012

10141014

10151015

10161016

Section 1016 provides that a taxpayer’s basis

adjusts upward or downward over time.

Section 1016 provides that a taxpayer’s basis

adjusts upward or downward over time.




income

BasisBasis


10011001

10111011

10121012

10141014

10151015

10161016

10171017




income

BasisBasis


10011001

10111011

10121012

10141014

10151015

10161016

10171017

Section 1017 provides that a taxpayer’s basis may drop as a result of

“discharge of indebtedness” income excluded under section

108.



108.




income

BasisBasis


10011001

10111011

10121012

10141014

10151015

10161016

10171017



108.



108.

Section 108, which excludes some income from the discharge of debt, causes the taxpayer to lose various

“tax attributes” as a result.

These may include basis, a net operating loss carryover, a capital loss carryover, or various credits.







income

BasisBasis


10011001

10111011

10121012

10141014

10151015

10161016

10171017



108.



108.










income

BasisBasis


10011001

10111011

10121012

10141014

10151015

10161016

10171017



108.



108.







Be careful about the order in which tax attributes are

reduced under 108(b).















Recall:

We discussed section 108 in relation to the Whether issue:

Recall:














© Steven J. Willis 2006 68

Introduction to Tax Issues


income


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 103§ 103

§ 71(c)§ 71(c)

§ 102§ 102

§ 104§ 104

§ 106§ 106

§ 117§ 117

§ 121§ 121

§ 115§ 115

§ 108§ 108

§ 125§ 125


indebtedness.


indebtedness.

Recall:


Recall:














© Steven J. Willis 2006 68

Introduction to Tax IssuesIntroduction to Tax Issues

WhetherWhether deductiondeduction

incomeincome


Not Recognized

Not Recognized

AllowedAllowed


ExcludedExcluded

DeferredDeferred

§ 103§ 103

§ 71(c)§ 71(c)

§ 102§ 102

§ 104§ 104

§ 106§ 106

§ 117§ 117

§ 121§ 121

§ 115§ 115

§ 108§ 108

§ 125§ 125


indebtedness.


indebtedness.

Recall:


Recall:


The tax price of this exclusion is

the loss of attributes, which

include the possible section

1017 basis reduction.

The tax price of this exclusion is

the loss of attributes, which

include the possible section

1017 basis reduction.




income

BasisBasis


10011001

10111011

10121012

10141014

10151015

10161016

10171017



108.



108.




income

BasisBasis


10011001

10111011

10121012

10141014

10151015

10161016

10171017



108.



108.

“Discharge of indebtedness” is on the Top Topics list.

“Discharge of indebtedness” is on the Top Topics list.




income

BasisBasis


10011001

10111011

10121012

10141014

10151015

10161016

10171017

Section 1017 provides that a taxpayer’s basis or

other “tax attributes” drop as a result of


108.

Section 1017 provides that a taxpayer’s basis or

other “tax attributes” drop as a result of


108.

Section 108 is one of the Top

100 Code Sections.

Section 108 is one of the Top

100 Code Sections.




income

BasisBasis


10011001

10111011

10121012

10141014

10151015

10161016

10171017

10411041




income

BasisBasis


10011001

10111011

10121012

10141014

10151015

10161016

10171017

10411041

Section 1041 provides that a taxpayer’s basis in property received from a spouse (or former spouse incident to

divorce) equals the transferor’s basis (even if it is

purchased for a greater or lesser amount).

Section 1041 provides that a taxpayer’s basis in property received from a spouse (or former spouse incident to

divorce) equals the transferor’s basis (even if it is

purchased for a greater or lesser amount).




income

BasisBasis


LimitationsLimitationsIn addition to issues

involving amount realized and basis,

many deductions are subject to limitations.




income

BasisBasis


LimitationsLimitations

The following slides have examples of

deduction Limitations with which you should

be familiar.

Some are on the Top 100 List.

The following slides have examples of

deduction Limitations with which you should

be familiar.

Some are on the Top 100 List.




income

BasisBasis



6363




income

BasisBasis



6363

Section 63 defines taxable income. It limits a taxpayer to the greater of the

itemized deductions or standard deduction.

Section 63 defines taxable income. It limits a taxpayer to the greater of the

itemized deductions or standard deduction.




income

BasisBasis



6363

6767




income

BasisBasis



6363

6767

Section 67 provides a 2% floor on excess itemized deductions: amounts below the

floor are not deductible.

Section 67 provides a 2% floor on excess itemized deductions: amounts below the

floor are not deductible.




income

BasisBasis



6363

6767

6868




income

BasisBasis



6363

6767

6868

Section 68 limits or “phases out” some itemized deductions

for higher income taxpayers.

Section 68 limits or “phases out” some itemized deductions

for higher income taxpayers.




income

BasisBasis



6363

6767

6868

213213




income

BasisBasis



6363

6767

6868

213213Section 213 limits medical deductions to the amounts in excess of 7.5% of

adjusted gross income.

Section 213 limits medical deductions to the amounts in excess of 7.5% of

adjusted gross income.




income

BasisBasis



6363

6767

6868

213213

221221




income

BasisBasis



6363

6767

6868

213213

221221

Section 221 limits the deductibility of

interest on education loans.


interest on education loans.




income

BasisBasis



6363

6767

6868

213213

221221

222222




income

BasisBasis



6363

6767

6868

213213

221221

222222


qualified tuition and related expenses.


qualified tuition and related expenses.



WhetherWhether

WhenWhen

WhoWho

How MuchHow Much

CharacterCharacter

IssuesIssues

deduction

income

deduction

income

deduction

income

deduction

income

deduction

income



WhetherWhether

WhenWhen

WhoWho

How MuchHow Much

CharacterCharacter

IssuesIssues

deduction

income

deduction

income

deduction

income

deduction

income

deduction

income



CharacterCharacter deduction

income




income

OrdinaryOrdinary




income

OrdinaryOrdinary

CapitalCapital




income

OrdinaryOrdinary

CapitalCapital

6464

Sections 64 and 65 very generally define ordinary income and ordinary deductions.

Essentially, ordinary income and deductions are simply income and deductions taxed at regular rates under section 1.

They are the default character – but with many subcategories, as we shall see later.

6565




income

OrdinaryOrdinary

CapitalCapital

6464




6565




income

OrdinaryOrdinary

CapitalCapital

6464




6565




income

OrdinaryOrdinary

CapitalCapital

6464




6565




income

OrdinaryOrdinary

CapitalCapital

Section 1(h) subjects some capital gains to lower tax rates than those to which ordinary income is subject.

Other sections, as we shall see limit the deductibility of capital losses.

1(h)1(h)

6464

6565




income

OrdinaryOrdinary

CapitalCapital

Section 1(h) subjects some capital gains to lower tax rates than those to which ordinary income is subject.

Other sections, as we shall see limit the deductibility of capital losses.

1(h)1(h)

6464

6565




income

OrdinaryOrdinary

CapitalCapital

These are the two basic characters

of income and deductions, gains

and losses.




income

OrdinaryOrdinary

CapitalCapital

These are the two basic characters

of income and deductions, gains

and losses.

Each, as we shall see, divides into several

sub-categories.




income

OrdinaryOrdinary

CapitalCapital

A third fundamental

character fits in between ordinary

and capital.




income

OrdinaryOrdinary

CapitalCapital

12311231

A third fundamental


and capital.




income

OrdinaryOrdinary

CapitalCapital

12311231

A third fundamental


and capital.

Section 1231 gains and losses are sometimes Ordinary and

sometimes Capital.




income

OrdinaryOrdinary

CapitalCapital

12311231

A third fundamental


and capital.


sometimes Capital.




income

OrdinaryOrdinary

CapitalCapital

12311231

A third fundamental


and capital.


sometimes Capital.

Section 1231 applies, in general, to depreciable

trade or business property.






income

OrdinaryOrdinary

CapitalCapital

12311231

A third fundamental


and capital.


sometimes Capital.





Section 1231 is on the Top 100 Sections List.

1231 Property is also a Top Topic.

Section 1231 is on the Top 100 Sections List.

1231 Property is also a Top Topic.




income

OrdinaryOrdinary

CapitalCapital

Ordinary Income and Deductions fall into many categories.




income

OrdinaryOrdinary

CapitalCapital

PassivePassive




income

OrdinaryOrdinary

CapitalCapital

PassivePassive 469469




income

OrdinaryOrdinary

CapitalCapital


Section 469 defines passive activities. It generally limits passive deductions to the

amount of income from passive activities.






income

OrdinaryOrdinary

CapitalCapital






A course in tax school will cover this complicated

section.




income

OrdinaryOrdinary

CapitalCapital

PassivePassive

InvestmentInvestment




income

OrdinaryOrdinary

CapitalCapital

PassivePassive

InvestmentInvestment 163(d)163(d)




income

OrdinaryOrdinary

CapitalCapital

PassivePassive


Section 163(d) defines investment income. It generally

limits investment interest deductions to the amount of net

investment income.



investment income.




income

OrdinaryOrdinary

CapitalCapital

PassivePassive




investment income.



investment income.

A course in tax school will cover this complicated

section.




income

OrdinaryOrdinary

CapitalCapital

PassivePassive


WageringWagering




income

OrdinaryOrdinary

CapitalCapital

PassivePassive


WageringWagering 165(d)165(d)




income

OrdinaryOrdinary

CapitalCapital

PassivePassive


WageringWagering 165(d)165(d)

Section 165(d) limits wagering losses to the amount of

wagering winnings.

Section 165(d) limits wagering losses to the amount of

wagering winnings.




income

OrdinaryOrdinary

CapitalCapital

PassivePassive


WageringWagering

Most “ordinary” income is just that: ordinary . . . it is not classified in a sub-

category.

Most “ordinary” income is just that: ordinary . . . it is not classified in a sub-

category.




income

OrdinaryOrdinary

CapitalCapital

PassivePassive


WageringWagering

Short TermShort Term




income

OrdinaryOrdinary

CapitalCapital

PassivePassive


WageringWagering


Per section 1222, short term gains and losses result from the

sale or exchange of capital assets held for one year or less.

Per section 1222, short term gains and losses result from the

sale or exchange of capital assets held for one year or less.




income

OrdinaryOrdinary

CapitalCapital

PassivePassive


WageringWagering


Long TermLong Term




income

OrdinaryOrdinary

CapitalCapital

PassivePassive


WageringWagering


Long TermLong Term

Per section 1222, long term gains and losses result from the

sale or exchange of capital assets held for more than one

year.

Per section 1222, long term gains and losses result from the

sale or exchange of capital assets held for more than one

year.




income

OrdinaryOrdinary

CapitalCapital

PassivePassive


WageringWagering


Long TermLong Term

CollectiblesCollectibles




income

OrdinaryOrdinary

CapitalCapital

PassivePassive


WageringWagering


Long TermLong Term

CollectiblesCollectiblesPer sections 1(h)(6) and 408(m), collectibles gains and losses

result from the sale or exchange of “collectibles” held for more

than one year.

Per sections 1(h)(6) and 408(m), collectibles gains and losses

result from the sale or exchange of “collectibles” held for more

than one year.




income

OrdinaryOrdinary

CapitalCapital

PassivePassive


WageringWagering

Many important code sections affect

Capital Gains and Losses.




income

OrdinaryOrdinary

CapitalCapital

PassivePassive


WageringWagering

Many important code sections affect

Capital Gains and Losses.










income

OrdinaryOrdinary

CapitalCapital

PassivePassive


WageringWagering

12211221




income

OrdinaryOrdinary

CapitalCapital

PassivePassive


WageringWagering

Section 1221 defines a capital asset as all property other than 8

listed types of property.



12211221




income

OrdinaryOrdinary

CapitalCapital

PassivePassive


WageringWagering





12211221

The Corn Products Refining Co. v. Comm'r, 350 U.S. 46 (1955) and

Arkansas Best v. Comm'r, 485 U.S. 212 (1988) cases discussed

whether this list is exclusive or illustrative.







income

OrdinaryOrdinary

CapitalCapital

PassivePassive


WageringWagering





12211221










income

OrdinaryOrdinary

CapitalCapital

PassivePassive


WageringWagering





12211221







These cases are on the top

100 list.

These cases are on the top

100 list.




income

OrdinaryOrdinary

CapitalCapital

PassivePassive


WageringWagering





12211221




income

OrdinaryOrdinary

CapitalCapital

PassivePassive


WageringWagering





12211221

The definition of property for tax purposes is not entirely

clear.

It does not, according to many cases, include ordinary

income streams or rights.


clear.






income

OrdinaryOrdinary

CapitalCapital

PassivePassive


WageringWagering





12211221


clear.




clear.






income

OrdinaryOrdinary

CapitalCapital

PassivePassive


WageringWagering





12211221


clear.




clear.



The case of Comm’r v. P.G. Lake Inc., 356 U.S. 260 (1958) refined the acceleration of

income doctrine. A taxpayer who separates and sells or exchanges the

income element of property rights separate from the underlying property accelerates income as ordinary into the current year.







income

OrdinaryOrdinary

CapitalCapital

PassivePassive


WageringWagering





12211221


clear.




clear.









This case is on the top

100 list.

This case is on the top

100 list.




income

OrdinaryOrdinary

CapitalCapital

PassivePassive


WageringWagering

12211221

12221222




income

OrdinaryOrdinary

CapitalCapital

PassivePassive


WageringWagering

Section 1222 defines long and short term

gains.


gains.

12211221

12221222




income

OrdinaryOrdinary

CapitalCapital

PassivePassive


WageringWagering


gains.


gains.

12211221

12221222

The critical factors are:

1. long-term gains and losses result from capital assets held more than one year; and

2. Capital gains and losses result from the sale or exchange of capital assets.







income

OrdinaryOrdinary

CapitalCapital

PassivePassive


WageringWagering


gains.


gains.

12211221

12221222










income

OrdinaryOrdinary

CapitalCapital

PassivePassive


WageringWagering


gains.


gains.

12211221

12221222










income

OrdinaryOrdinary

CapitalCapital

PassivePassive


WageringWagering

12211221

12221222

12231223




income

OrdinaryOrdinary

CapitalCapital

PassivePassive


WageringWagering

Section 1223 defines the holding period of

capital assets.


capital assets.

12211221

12221222

12231223




income

OrdinaryOrdinary

CapitalCapital

PassivePassive


WageringWagering


capital assets.


capital assets.

12211221

12221222

12231223

Some critical examples are:

1. Per 1223(1), property includes the holding period of other property transferred in a tax-free exchange; and

2. Per 1223(2), property includes the holding period of the donor of the property.

3. Per 1223(11), property received from a decedent with a section 1015 stepped-up basis is automatically long-term.








income

OrdinaryOrdinary

CapitalCapital

PassivePassive


WageringWagering


capital assets.


capital assets.

12211221

12221222

12231223












income

OrdinaryOrdinary

CapitalCapital

PassivePassive


WageringWagering


capital assets.


capital assets.

12211221

12221222

12231223












income

OrdinaryOrdinary

CapitalCapital

PassivePassive


WageringWagering

12111211

12211221

12221222

12231223




income

OrdinaryOrdinary

CapitalCapital

PassivePassive


WageringWagering


capital losses to the extent of capital

gains plus $3000.


capital losses to the extent of capital

gains plus $3000.

12111211

12211221

12221222

12231223




income

OrdinaryOrdinary

CapitalCapital

PassivePassive


WageringWagering

12111211

12121212

12211221

12221222

12231223




income

OrdinaryOrdinary

CapitalCapital

PassivePassive


WageringWagering

Section 1212 provides for capital

loss carryovers.

Section 1212 provides for capital

loss carryovers.

12111211

12121212

12211221

12221222

12231223




income

OrdinaryOrdinary

CapitalCapital

PassivePassive


WageringWagering

12111211

12121212

12211221

12221222

12231223

12351235




income

OrdinaryOrdinary

CapitalCapital

PassivePassive


WageringWagering

Section 1235 provides for long-term capital gain

treatment on many transfers of an

interest in a patent.

Section 1235 provides for long-term capital gain

treatment on many transfers of an

interest in a patent.

12111211

12121212

12211221

12221222

12231223

12351235




income

OrdinaryOrdinary

CapitalCapital

PassivePassive


WageringWagering

12111211

12121212

12211221

12221222

12231223

12351235

12371237




income

OrdinaryOrdinary

CapitalCapital

PassivePassive


WageringWagering

Section 1237 provides a limited

safe-harbor resulting in capital gain

treatment for some property subdivided

for sale.

Section 1237 provides a limited

safe-harbor resulting in capital gain

treatment for some property subdivided

for sale.

12111211

12121212

12211221

12221222

12231223

12351235

12371237




income

OrdinaryOrdinary

CapitalCapital

PassivePassive


WageringWagering

12111211

12121212

12211221

12221222

12231223

12351235

12371237

12391239




income

OrdinaryOrdinary

CapitalCapital

PassivePassive


WageringWagering

Section 1239 forces ordinary treatment for gain on the sale

of depreciable property between related taxpayers.

Section 1239 forces ordinary treatment for gain on the sale

of depreciable property between related taxpayers.

12111211

12121212

12211221

12221222

12231223

12351235

12371237

12391239




income

OrdinaryOrdinary

CapitalCapital

PassivePassive


WageringWagering

12111211

12121212

12211221

12221222

12231223

12351235

12371237

12391239

12441244




income

OrdinaryOrdinary

CapitalCapital

PassivePassive


WageringWagering

Section 1244 provides for ordinary

loss treatment on the sale of some small business

stock.

Section 1244 provides for ordinary

loss treatment on the sale of some small business

stock.

12111211

12121212

12211221

12221222

12231223

12351235

12371237

12391239

12441244




income

OrdinaryOrdinary

CapitalCapital

PassivePassive


WageringWagering

12111211

12121212

12211221

12221222

12231223

12351235

12371237

12391239

12441244

12711271




income

OrdinaryOrdinary

CapitalCapital

PassivePassive


WageringWagering

Section 1271 imputes sale or

exchange treatment for the collection or retirement of some

obligations.

Section 1271 imputes sale or

exchange treatment for the collection or retirement of some

obligations.

12111211

12121212

12211221

12221222

12231223

12351235

12371237

12391239

12441244

12711271

Documents

Survey of Income Tax Slides © Steven J. Willis 2008 All Rights Reserved 1 S URVEY OF I NCOME T AX S LIDES (W ITHOUT N ARRATION ) T OP 100 T AX T ERMS T