Outline_1 - Introduction to Taxation & Federal Tax Law...

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1- 1 OUTLINE ONE Section 2.5 Taxation on the CPA Exam o Regulation section of the exam o Federal tax procedures, accounting and planning (11-15 percent) o Federal taxation of property transactions (12-16 percent) o Federal taxation of individuals (13-19 percent) o Federal taxation of entities (18-24 percent) [Accounting 509] o Business law topics and other topics, 26 – 45 % [Business 320] The disappearing taxpayer o 97% of the federal income tax was received from 50% of the taxpayers o The bottom 50% of taxpayers paid less than 3 percent. o The top 1% paid 40% o 40% did not pay any income tax. Section 2.4 Tax planning o Reduce taxpayer’s total tax bill in context of legitimate business goals of the taxpayer. Don’t let tax considerations to impair the exercise of sound business judgment. o Reduce or defer the tax in the current year Eradicate tax entirely Eliminate the tax in the current year Defer receipt of income Convert ordinary income into capital gains Convert active to passive income Convert passive to active expense Proliferate taxpayers by shifting income to partnerships and corporations or making lifetime gifts to family members Elude double taxation Avoid ordinary income Create, increase or accelerate deductions 1.3 CRITERIA USED IN THE SELECTION OF A TAX BASE Adam Smith and Canons of Taxation . o Equality o Convenience o Certainty o Economy 1.5 MAJOR TYPES OF TAXES PROPERTY TAXES
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o Personalty versus Realty . Realty is land and anything permanently attached to land, and personalty are all assets that are not realty. Personalty that become fixtures, however, is treated as realty. Both realty and personalty can be either business use or
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This note was uploaded on 11/07/2011 for the course ACCT 508 taught by Professor Frankel during the Spring '10 term at S.F. State.

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Outline_1 - Introduction to Taxation & Federal Tax Law...

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