Pope_INDCH01 - Chapter 01I 9:15 AM Page 1-1 1 C H A P T AN...

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c c c c c c c c c 1 AN INTRODUCTION TO TAXATION 1-1 LEARNING OBJECTIVES After studying this chapter, you should be able to 1 Discuss the history of taxation in the United States 2 Differentiate between the three types of tax rate structures 3 Describe the various types of taxes 4 Discuss what constitutes a “good” tax structure, the objectives of the federal income tax law, and recent tax reform proposals 5 Describe the tax entities in the federal income tax system 6 Identify the various tax law sources and understand their implications for tax practice 7 Describe the legislative process for the enactment of the tax law 8 Describe the administrative procedures under the tax law 9 Describe the components of a tax practice and understand the importance of computer applications in taxation CHAPTER
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1-2 Individuals Chapter 1 CHAPTER OUTLINE History of Taxation in the United States. ..1-2 Types of Tax Rate Structures. ..1-4 Other Types of Taxes. ..1-7 Criteria for a Tax Structure. ..1-11 Objectives of the Federal Income Tax Law. ..1-14 Entities in the Federal Income Tax System. ..1-16 Tax Law Sources. ..1-24 Enactment of a Tax Law. ..1-24 Administration of the Tax Law and Tax Practice Issues. ..1-26 Components of a Tax Practice. ..1-29 Computer Applications in Tax Practice. ..1-31 Federal income taxes have a significant effect on business, investor, and personal decisions in the United States. Because tax rates can be as high as 35% on corporations and indi- viduals, virtually every transaction is impacted by income taxes. The following examples illustrate the impact of the tax law on various decisions in our society: c Because of the deductibility of mortgage interest and real estate taxes, an individual may decide to purchase a home rather than to continue to rent an apartment. c An investor may decide to delay selling some stock because of the significant taxes that may result from the sale. c A corporation may get a larger tax deduction if it leases property rather than purchas- ing the property. The purpose of this text is to provide an introduction to the study of federal income taxation. However, before discussing the specifics of the U.S. federal income tax law, it is helpful to have a broad conceptual understanding of the taxation process. This chapter provides an overview of the following topics: c Historical developments of the federal tax system c Types of taxes levied and structural considerations c Objectives of the tax law, including a discussion of recent tax reform proposals c Taxpaying entities in the federal income tax system c Tax law sources and the legislative process c Internal Revenue Service (IRS) collection, examination, and appeals processes c The nature of tax practice, including computer applications and tax research KEY POINT In many situations, the use of the tax laws to influence human behavior is deliberate. As will be seen later in this chapter, tax laws are often used to achieve social and economic objectives.
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Pope_INDCH01 - Chapter 01I 9:15 AM Page 1-1 1 C H A P T AN...

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