Income Tax Fundamentals 2010 Gerald E. Whittenburg & Martha Altus-Buller Student’s Copy 2010 Cengage Learning.

Slides:



Advertisements
Similar presentations
Chapter 11 Corporate Income Tax 2012 Cengage Learning Income Tax Fundamentals 2012 Gerald E. Whittenburg Martha Altus-Buller.
Advertisements

Chapter 11 Corporate Income Tax 2013 Cengage Learning Income Tax Fundamentals 2013 Student Slides Gerald E. Whittenburg Martha Altus-Buller Steven Gill.
Chapter 2 Corporations: Introduction, Operating Rules,
Chapter 2: Corporate Formations and Capital Structure
Chapter 8 Capital Gains and Losses 2013 Cengage Learning Income Tax Fundamentals 2013 Student Slides Gerald E. Whittenburg Martha Altus-Buller Steven Gill.
Income Tax Fundamentals 2010 Gerald E. Whittenburg & Martha Altus-Buller Student’s Copy 2010 Cengage Learning.
Income Tax Fundamentals 2009 Gerald E. Whittenburg & Martha Altus-Buller Student’s Copy 2009 Cengage Learning.
Individual Income Taxes C20-1 Chapter 20 Corporations and Partnerships Copyright ©2009 Cengage Learning Individual Income Taxes.
Chapter 2 Corporations: Introduction and Operating Rules Corporations: Introduction and Operating Rules Copyright ©2008 South-Western/Thomson Learning.
Agenda 4/26 BA 128A Questions from lecture Hand in project
Agenda 5/3 BA 128A-1 Questions from lecture Review Chapter 9,10,11,12 Assignment C9-27,35 Additional C10-29,11-47, 12-32,50.
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner.
Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Chapter 8 Capital Gains and Losses Income Tax Fundamentals 2011 Gerald E. Whittenburg & Martha Altus-Buller Student’s Copy 2011 Cengage Learning.
Chapter 8 Capital Gains and Losses 2014 Cengage Learning Income Tax Fundamentals 2014 Student Slides Gerald E. Whittenburg Martha Altus-Buller Steven Gill.
Sole Proprietorships, Partnerships, LLCs, and S Corporations
2011 Cengage Learning Chapter 3 Business Expenses & Retirement Plans Income Tax Fundamentals 2011 edition Gerald E. Whittenburg Martha Altus-Buller Student.
Comprehensive Volume C15-1 Chapter 15 Alternative Minimum Tax Copyright ©2010 Cengage Learning Comprehensive Volume.
CHAPTER 6 Credits & Special Taxes 2011 Cengage Learning Income Tax Fundamentals 2011 Gerald E. Whittenburg Martha Altus-Buller Student’s Copy.
© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
2010 Cengage Learning Chapter 3 Business Income & Expenses Part I Income Tax Fundamentals 2010 edition Gerald E. Whittenburg Martha Altus-Buller Student.
9-1 Non-Corporate Forms of Business  Sole Proprietorship  Partnership  LLC  S corporation.
Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 2000 Principles of Taxation Chapter 9 Sole Proprietorships, Partnerships, and S Corporations.
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Income Tax Fundamentals 2010 Gerald E. Whittenburg & Martha Altus-Buller 2010 Cengage Learning.
S Corporation Chapter 46 Tools & Techniques of Estate Planning Copyright 2011, The National Underwriter Company1 An “S” Corporation is a corporation that.
Corporations: Introduction and Operating Rules
Chapter 10 Partnership Taxation Income Tax Fundamentals 2014 Student Slides Gerald E. Whittenburg Martha Altus-Buller Steven Gill 2014 Cengage Learning.
McGraw-Hill/Irwin Copyright (c) 2002 by the McGraw-Hill Companies Inc Principles of Taxation: Advanced Strategies Chapter 6 Chapter 6 Income and Allocation.
1 Chapter 11: S Corporations. 2 S CORPORATIONS (1 of 2) n Should an S election be made? n S corporation requirements n S corporation election n Termination.
©2003 South-Western College Publishing, Cincinnati, Ohio Chapter 11 Corporate Income Tax.
©The McGraw-Hill Companies, Inc. 2008McGraw-Hill/Irwin Chapter 15 Corporate Taxation “Corporations don’t pay taxes, they collect them.” -- Paul H. O’Neill.
10-1 Taxation of Regular (C) Corporations Distinguishing tax feature relative to other business entities: double taxation  Corporate income is taxed at.
© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 Click to edit Master text styles  Second level  Third level  Fourth level  Fifth level  Click to edit Master text styles  Second level  Third.
Income Tax Fundamentals 2009 Gerald E. Whittenburg Martha Altus-Buller Student’s Copy Chapter 10 Partnership Taxation Cengage Learning.
Corporate Liquidating Distributions
BA128A Agenda 4/19 Questions from lecture Project Review C3 Assignment - C3-38,51,58 Additional - C3-40,43,45.
Slide C3-1 Assignments For Next Class: Read Chapter 3, pages 38 – 41 (review previously read pages 1-24) Problems: C3-58, C3-59, and C3-61.
Chapter 3 Business Expenses & Retirement Plans Income Tax Fundamentals 2009 edition Gerald E. Whittenburg Martha Altus-Buller Student Copy 2009 Cengage.
Chapter 13 Choice of Business Entity: General Tax and Nontax Factors Formation © 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned,
©2007 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Chapter.
©2007 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Chapter.
McGraw-Hill Education Copyright © 2015 by the McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized.
©2007 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Chapter.
Chapter 16 Corporate Operations © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for.
Chapter 4 4 Corporate Nonliquidating Distributions.
Chapter 16 Corporations. Learning Objectives Determine the types of entities that can be classified as a corporation for federal income tax purposes Calculate.
©2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Chapter.
©2007 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. Chapter.
McGraw-Hill© 2005 The McGraw-Hill Companies, Inc. All rights reserved.
© 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license.
Chapter 2 2 Corporate Formations and Capital Structure (Day 3)
Chapter 14 Choice of Business Entity: Operations and Distributions © 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated,
CHAPTER 11 The Basic Federal Income Tax Structure Chapter 11: Tax Structure 1.
2-1 ©2008 Prentice Hall, Inc ©2008 Prentice Hall, Inc. CORPORATE FORMATIONS & CAPITAL STRUCTURE (1 of 2)  Organization forms available  Check-the-box.
© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Copyright ©2010 Cengage Learning
Chapter 17 Partnerships and S Corporations. Learning Objectives Determine the tax implications of a partnership formation Apply the operating rules for.
Chapter 11 Corporate Income Tax
Chapter 22 S corporations.
Individual Income Taxes Copyright ©2010 Cengage Learning
Chapter 11 Corporate Income Tax Income Tax Fundamentals 2008
Principles of Taxation
Corporate Formations and Operations
Chapter 8: Consolidated Tax Returns
Chapter 8: Consolidated Tax Returns
Income Tax Fundamentals 2017 Student Slides
Presentation transcript:

Income Tax Fundamentals 2010 Gerald E. Whittenburg & Martha Altus-Buller Student’s Copy 2010 Cengage Learning

 Corporate rates are progressive °Marginal rates are from 15% to 39%, depending on taxable income °There are eight brackets °There are a number of ‘tax bubbles’ - occurs when tax rate schedules recaptures savings from prior brackets  For corporations with large income (more than $18.33 million) the rate is a flat 35%  Qualified personal service corps taxed at flat 35% ◦ Architects, CPAs, consultants, etc Cengage Learning

 A corporation can choose from two alternative tax treatments on capital gains ◦ Taxed at ordinary rates or ◦ Elect to pay an alternative tax (35%) on net long-term capital gain (LTCG)  Essentially equivalent to maximum regular corporate tax (no tax benefit to LTCG)  Bottom line: there is no difference in tax on ordinary vs. capital income 2010 Cengage Learning

 Corporations are allowed a deduction for a % of the dividends received from other corporations ◦ Attempt to alleviate triple taxation  Dividends received deduction is allowed based upon ownership 2010 Cengage Learning Percentage Ownership Dividends Received % Deduction < 20% 70% 20% or more, less than 80% 80% > 80% 100% Deductions limited by % and other items

 Examples of organizational expenditures ◦ Legal/accounting services incidental to organization ◦ Incorporation fees  Organizational expenditures are capitalized and then amortized over 180 months  However, can make election to deduct up to $5,000 of organization costs in year corporation begins business ◦ $5,000 amount is reduced $1 for each $1 that organizational expenses exceed $50, Cengage Learning

 Schedule M-1 of Form 1120 reconciles book to tax income ◦ Computed before NOLs and special deductions  Amounts added to book income ◦ Federal tax expense ◦ Capital losses ◦ Income recorded on tax return but not on books ◦ Expenses recorded on books but not on tax return  Amounts deducted from book income ◦ Income recorded on books but not on tax return ◦ Expenses recorded on tax return but not on books See chapter for other items included on Schedule M Cengage Learning

 Certain corporations may elect to be taxed in a manner similar to partnerships  Qualified small business corporation may elect S Corporation status if several criteria apply ◦ Operates as a domestic corporation ◦ Has 100 or fewer shareholders  Shareholders may not be corporations or partnerships ◦ Has only one class of stock ◦ Has only shareholders that are U.S. citizens or resident aliens 2010 Cengage Learning

 Must report all elements of income and expense separately on Form 1120S  Then each shareholder reports his/her share of these items of corporate income/expense on personal return ◦ K-1 takes total shareholder income/expenses and allocates each item to each shareholder based upon his/her ownership percentage 2010 Cengage Learning

 Each shareholder of an S Corp may also report his/her respective share of loss ◦ Cannot take a loss in excess of adjusted basis in stock ◦ If loss exceeds adjusted basis in stock plus loans, shareholder can carry it forward  If shareholder entered/departed S Corp midyear, must allocate losses on a daily basis 2010 Cengage Learning

 A shareholder’s initial basis in his/her stock is calculated as follows Basis of property transferred Less Boot received Plus Gain recognized Less Liabilities transferred Basis in stock  The corporation has a carry-over basis in the property contributed equal to the basis in the hands of the shareholder, increased by any gain recognized by shareholder on the transfer 2010 Cengage Learning Note: generally assumption of shareholder liabilities that are attached to property are not considered boot received.