1. AC256: Federal Taxation Term 1103A Seminar: Unit 2 August 14, 2011 Emil Koren, CPA, MBA

2. Welcome Introduction Chapter 1 History Tax Rates Tax Structure Tax Entities Tax Law Chapter 2 Taxable Income Standard Deduction Exemptions Credits Filing Status Problems Problem 1:2-29 Problem 1:2-30 Problem 1:2-32 Questions

3. Introduction Welcome to Unit 2 of AC256 We will look at a summary of Chapters 1 and 2 We will work certain problems

4. Chapter 1 History 16 th amendment Tax Rates Progressive tax Rate Tax Structure Equity Certainty Convenience Economy Simplicity

5. Chapter 1 Tax Entities Individuals C Corporations Partnerships S Corporations Tax Law Internal Revenue Code Treasury Regulations IRS Rulings Judicial Rulings

6. Chapter 2 Taxable Income Calculations Income Minus: Exclusions = Gross Income Minus: Deductions for adjusted gross income =Adjusted Gross Income Minus: Deductions and Exemptions =Taxable Income Times: tax Rate =Gross Tax Minus: Credits and prepayments =Net tax payable or refund

7. Chapter 2 Standard Deduction 5,700 single or married filling separate 11,400 Marred filling joint or qualifying widow(er) 8,400 hear of household Other exemptions can apply or Itemized Deduction See Schedule A

8. Chapter 2 Exemptions 3,650 per exemption Yourself Spouse Qualifying Dependent Can not take if claimed by another Filing Status Single Married filling Joint Married filling Separate Head of Household Qualifying Widow(er)

9. Chapter 2 Credits as deductions Credit for child and dependant care Educational credits Child tax credits Credits as payments Earned Income Credit

10. Problem 1:2-29 LaneWaynes Taxable Income5,700102,700 Tax Due (refund)(930)(1,462)

11. Problem 1:2-30 Self Supporting – Taxable Income -0- Dependant of Parents – Taxable Income 1,300

12. Problem 1:2-32 Joint return – Gross Tax 40 Separate Return – Ruth Gross tax879 – Hal Gross tax 15 Parents additional tax 1,022

13. Questions ?