Income Tax Fundamentals, 38th Edition
By Gerald E. Whittenburg and Steven L. Gill
By Gerald E. Whittenburg and Steven L. Gill
Table of contents
Chapter 1 The Individual Income Tax Return
LO 1.1 history and objectives of the Tax System 1-2
LO 1.2 Reporting and Taxable Entities 1-3
LO 1.3 The Tax Formula for Individuals 1-6
LO 1.4 Who Must File 1-8
LO 1.5 Filing Status and Tax Computation 1-11
LO 1.6 Qualifying Dependents 1-14
LO 1.7 The Standard Deduction 1-21
LO 1.8 A Brief Overview of Capital Gains and Losses 1-22
LO 1.9 T ax and the Internet 1-25
LO 1.10 Electronic Filing (E-Filing) 1-27
Questions and Problems 1-30
chapter 2 Gross Income and Exclusions
LO 2.1 T he Nature of Gross Income 2-2
LO 2.2 Salaries and Wages 2-4
LO 2.3 Accident and Health Insurance 2-7
LO 2.4 Meals and Lodging 2-7
LO 2.5 Employee Fringe Benefits 2-8
LO 2.6 Prizes and Awards 2-12
LO 2.7 Annuities 2-13
LO 2.8 Life Insurance 2-17
LO 2.9 Interest and Dividend Income 2-18
LO 2.10 Municipal Bond Interest 2-25
LO 2.11 Gifts And Inheritances 2-26
LO 2.12 Scholarships 2-27
LO 2.13 A limony 2-27
LO 2.14 E ducational Incentives 2-30
LO 2.15 U nemployment Compensation 2-33
LO 2.16 S ocial Security Benefits 2-34
LO 2.17 Community Property 2-38
Questions and Problems 2-42
chapter 3 Business Income and Expenses
LO 3.1 S chedule C 3-2
LO 3.2 Inventories 3-7
LO 3.3 Transportation 3-11
LO 3.4 T ravel Expenses 3-14
LO 3.5 M eals and Entertainment 3-16
LO 3.6 E ducational Expenses 3-17
LO 3.7 D ues, Subscriptions, and Publications 3-20
LO 3.8 S pecial Clothing and Uniforms 3-20
LO 3.9 Business Gifts 3-21
LO 3.10 Bad Debts 3-22
LO 3.11 O ffice in the Home 3-24
LO 3.12 H obby Losses 3-27
Questions and Problems 3-31
chapter 4 Additional Income and the Qualified Business
Income Deduction
LO 4.1 What Is a Capital Asset? 4-2
LO 4.2 H olding Period 4-3
LO 4.3 Calculation of Gain or Loss 4-3
LO 4.4 N et Capital Gains 4-8
LO 4.5 N et Capital Losses 4-10
LO 4.6 S ale of a Personal Residence 4-19
LO 4.7 Rental Income and Expenses 4-22
LO 4.8 Passive Loss Limitations 4-25
LO 4.9 N et Operating Losses 4-29
LO 4.10 Qualified Business Income (QBI) Deduction 4-34
Questions and Problems 4-46
chapter 5 Deductions For and From AGI
LO 5.1 H ealth Savings Accounts 5-2
LO 5.2 S elf-Employed Health Insurance Deduction 5-7
LO 5.3 Individual Retirement Accounts 5-8
LO 5.4 S mall Business and Self-Employed Retirement Plans 5-13
LO 5.5 O ther for AGI Deductions 5-16
LO 5.6 M edical Expenses 5-18
LO 5.7 Taxes 5-21
LO 5.8 Interest 5-28
LO 5.9 Charitable Contributions 5-32
LO 5.10 O ther Itemized Deductions 5-37
Questions and Problems 5-46
chapter 6 Accounting Periods and Other Taxes
LO 6.1 A ccounting Periods 6-2
LO 6.2 A ccounting Methods 6-3
LO 6.3 Related Parties (Section 267) 6-5
LO 6.4 U nearned Income of Minor Children
and Certain Students 6-8
LO 6.5 T he Individual Alternative Minimum Tax (AMT) 6-14
LO 6.6 S elf-Employment Tax 6-19
LO 6.7 T he Nanny Tax 6-23
LO 6.8 S pecial Taxes for High-Income Taxpayers 6-24
Questions and Problems 6-36
chapter 7 Tax Credits
LO 7.1 Child Tax Credit 7-2
LO 7.2 E arned Income Credit 7-5
LO 7.3 Child and Dependent Care Credit 7-17
LO 7.4 T he Affordable Care Act 7-21
LO 7.5 E ducation Tax Credits 7-27
LO 7.6 Foreign Exclusion and Tax Credit 7-34
LO 7.7 A doption Expenses 7-36
LO 7.8 E nergy Credits 7-38
LO 7.9 L ow-Income Retirement Plan Contribution Credit 7-41
Questions and Problems 7-47
chapter 8 Depreciation and Sale of Business Property
LO 8.1 Depreciation 8-2
LO 8.2 M odified Accelerated Cost Recovery System
(MACRS) and Bonus Depreciation 8-3
LO 8.3 E lection to Expense (Section 179) 8-10
LO 8.4 L isted Property 8-14
LO 8.5 L imitation on Depreciation of Luxury Automobiles 8-15
LO 8.6 Intangibles 8-17
LO 8.7 S ection 1231 Gains and Losses 8-18
LO 8.8 D epreciation Recapture 8-20
LO 8.9 Business Casualty Gains and Losses 8-25
LO 8.10 Installment Sales 8-27
LO 8.11 L ike-Kind Exchanges 8-30
LO 8.12 Involuntary Conversions 8-32
Questions and Problems 8-36
chapter 9 Payroll, Estimated Payments,
and Retirement Plans
LO 9.1 Withholding Methods 9-2
LO 9.2 E stimated Payments 9-11
LO 9.3 T he FICA Tax 9-12
LO 9.4 Federal Tax Deposit System 9-14
LO 9.5 E mployer Reporting Requirements 9-19
LO 9.6 T he FUTA Tax 9-22
LO 9.7 Qualified Retirement Plans 9-25
LO 9.8 Rollovers 9-26
Questions and Problems 9-29
chapter 10 Partnership Taxation
LO 10.1 N ature of Partnership Taxation 10-2
LO 10.2 Partnership Formation 10-3
LO 10.3 Partnership Income Reporting 10-5
LO 10.4 Current Distributions and Guaranteed
Payments 10-15
LO 10.5 T ax Years 10-16
LO 10.6 T ransactions Between Partners and the Partnership 10-16
LO 10.7 Qualified Business Income Deduction for Partners 10-17
LO 10.8 T he At-Risk Rule 10-19
LO 10.9 L imited Liability Companies 10-20
Questions and Problems 10-23
chapter 11 The Corporate Income Tax
LO 11.1 Corporate Tax Rates 11-2
LO 11.2 Corporate Gains and Losses 11-2
LO 11.3 S pecial Deductions and Limitations 11-4
LO 11.4 S chedule M-1 11-6
LO 11.5 Filing Requirements and Estimated Tax 11-7
LO 11.6 S Corporations 11-15
LO 11.7 Corporate Formation 11-17
LO 11.8 Corporate Accumulations 11-27
LO 11.9 T he Corporate Alternative Minimum Tax 11-28
Questions and Problems 11-31
chapter 12 Tax Administration and Tax Planning
LO 12.1 The Internal Revenue Service 12-2
LO 12.2 T he Audit Process 12-6
LO 12.3 Interest and Penalties 12-11
LO 12.4 S tatute of Limitations 12-15
LO 12.5 Preparers, Proof, and Privilege 12-16
LO 12.6 T he Taxpayer Bill of Rights 12-19
LO 12.7 Tax Planning 12-22
Questions and Problems 12-27
Appendices
Appendix A T ax Rate Schedules and Tax Table A -1
A ppendix B E arned Income Credit Table B-1
A ppendix C Withholding Tables C-1
A ppendix D A dditional Comprehensive
T ax Return Problems D -1
A ppendix E S olutions to Self-Study Problems E -1
Glossary of Tax Terms G-1
Index I-1
L ist of Forms L -1
L ist of Schedules L -2
L ist of Worksheets L-2
LO 1.1 history and objectives of the Tax System 1-2
LO 1.2 Reporting and Taxable Entities 1-3
LO 1.3 The Tax Formula for Individuals 1-6
LO 1.4 Who Must File 1-8
LO 1.5 Filing Status and Tax Computation 1-11
LO 1.6 Qualifying Dependents 1-14
LO 1.7 The Standard Deduction 1-21
LO 1.8 A Brief Overview of Capital Gains and Losses 1-22
LO 1.9 T ax and the Internet 1-25
LO 1.10 Electronic Filing (E-Filing) 1-27
Questions and Problems 1-30
chapter 2 Gross Income and Exclusions
LO 2.1 T he Nature of Gross Income 2-2
LO 2.2 Salaries and Wages 2-4
LO 2.3 Accident and Health Insurance 2-7
LO 2.4 Meals and Lodging 2-7
LO 2.5 Employee Fringe Benefits 2-8
LO 2.6 Prizes and Awards 2-12
LO 2.7 Annuities 2-13
LO 2.8 Life Insurance 2-17
LO 2.9 Interest and Dividend Income 2-18
LO 2.10 Municipal Bond Interest 2-25
LO 2.11 Gifts And Inheritances 2-26
LO 2.12 Scholarships 2-27
LO 2.13 A limony 2-27
LO 2.14 E ducational Incentives 2-30
LO 2.15 U nemployment Compensation 2-33
LO 2.16 S ocial Security Benefits 2-34
LO 2.17 Community Property 2-38
Questions and Problems 2-42
chapter 3 Business Income and Expenses
LO 3.1 S chedule C 3-2
LO 3.2 Inventories 3-7
LO 3.3 Transportation 3-11
LO 3.4 T ravel Expenses 3-14
LO 3.5 M eals and Entertainment 3-16
LO 3.6 E ducational Expenses 3-17
LO 3.7 D ues, Subscriptions, and Publications 3-20
LO 3.8 S pecial Clothing and Uniforms 3-20
LO 3.9 Business Gifts 3-21
LO 3.10 Bad Debts 3-22
LO 3.11 O ffice in the Home 3-24
LO 3.12 H obby Losses 3-27
Questions and Problems 3-31
chapter 4 Additional Income and the Qualified Business
Income Deduction
LO 4.1 What Is a Capital Asset? 4-2
LO 4.2 H olding Period 4-3
LO 4.3 Calculation of Gain or Loss 4-3
LO 4.4 N et Capital Gains 4-8
LO 4.5 N et Capital Losses 4-10
LO 4.6 S ale of a Personal Residence 4-19
LO 4.7 Rental Income and Expenses 4-22
LO 4.8 Passive Loss Limitations 4-25
LO 4.9 N et Operating Losses 4-29
LO 4.10 Qualified Business Income (QBI) Deduction 4-34
Questions and Problems 4-46
chapter 5 Deductions For and From AGI
LO 5.1 H ealth Savings Accounts 5-2
LO 5.2 S elf-Employed Health Insurance Deduction 5-7
LO 5.3 Individual Retirement Accounts 5-8
LO 5.4 S mall Business and Self-Employed Retirement Plans 5-13
LO 5.5 O ther for AGI Deductions 5-16
LO 5.6 M edical Expenses 5-18
LO 5.7 Taxes 5-21
LO 5.8 Interest 5-28
LO 5.9 Charitable Contributions 5-32
LO 5.10 O ther Itemized Deductions 5-37
Questions and Problems 5-46
chapter 6 Accounting Periods and Other Taxes
LO 6.1 A ccounting Periods 6-2
LO 6.2 A ccounting Methods 6-3
LO 6.3 Related Parties (Section 267) 6-5
LO 6.4 U nearned Income of Minor Children
and Certain Students 6-8
LO 6.5 T he Individual Alternative Minimum Tax (AMT) 6-14
LO 6.6 S elf-Employment Tax 6-19
LO 6.7 T he Nanny Tax 6-23
LO 6.8 S pecial Taxes for High-Income Taxpayers 6-24
Questions and Problems 6-36
chapter 7 Tax Credits
LO 7.1 Child Tax Credit 7-2
LO 7.2 E arned Income Credit 7-5
LO 7.3 Child and Dependent Care Credit 7-17
LO 7.4 T he Affordable Care Act 7-21
LO 7.5 E ducation Tax Credits 7-27
LO 7.6 Foreign Exclusion and Tax Credit 7-34
LO 7.7 A doption Expenses 7-36
LO 7.8 E nergy Credits 7-38
LO 7.9 L ow-Income Retirement Plan Contribution Credit 7-41
Questions and Problems 7-47
chapter 8 Depreciation and Sale of Business Property
LO 8.1 Depreciation 8-2
LO 8.2 M odified Accelerated Cost Recovery System
(MACRS) and Bonus Depreciation 8-3
LO 8.3 E lection to Expense (Section 179) 8-10
LO 8.4 L isted Property 8-14
LO 8.5 L imitation on Depreciation of Luxury Automobiles 8-15
LO 8.6 Intangibles 8-17
LO 8.7 S ection 1231 Gains and Losses 8-18
LO 8.8 D epreciation Recapture 8-20
LO 8.9 Business Casualty Gains and Losses 8-25
LO 8.10 Installment Sales 8-27
LO 8.11 L ike-Kind Exchanges 8-30
LO 8.12 Involuntary Conversions 8-32
Questions and Problems 8-36
chapter 9 Payroll, Estimated Payments,
and Retirement Plans
LO 9.1 Withholding Methods 9-2
LO 9.2 E stimated Payments 9-11
LO 9.3 T he FICA Tax 9-12
LO 9.4 Federal Tax Deposit System 9-14
LO 9.5 E mployer Reporting Requirements 9-19
LO 9.6 T he FUTA Tax 9-22
LO 9.7 Qualified Retirement Plans 9-25
LO 9.8 Rollovers 9-26
Questions and Problems 9-29
chapter 10 Partnership Taxation
LO 10.1 N ature of Partnership Taxation 10-2
LO 10.2 Partnership Formation 10-3
LO 10.3 Partnership Income Reporting 10-5
LO 10.4 Current Distributions and Guaranteed
Payments 10-15
LO 10.5 T ax Years 10-16
LO 10.6 T ransactions Between Partners and the Partnership 10-16
LO 10.7 Qualified Business Income Deduction for Partners 10-17
LO 10.8 T he At-Risk Rule 10-19
LO 10.9 L imited Liability Companies 10-20
Questions and Problems 10-23
chapter 11 The Corporate Income Tax
LO 11.1 Corporate Tax Rates 11-2
LO 11.2 Corporate Gains and Losses 11-2
LO 11.3 S pecial Deductions and Limitations 11-4
LO 11.4 S chedule M-1 11-6
LO 11.5 Filing Requirements and Estimated Tax 11-7
LO 11.6 S Corporations 11-15
LO 11.7 Corporate Formation 11-17
LO 11.8 Corporate Accumulations 11-27
LO 11.9 T he Corporate Alternative Minimum Tax 11-28
Questions and Problems 11-31
chapter 12 Tax Administration and Tax Planning
LO 12.1 The Internal Revenue Service 12-2
LO 12.2 T he Audit Process 12-6
LO 12.3 Interest and Penalties 12-11
LO 12.4 S tatute of Limitations 12-15
LO 12.5 Preparers, Proof, and Privilege 12-16
LO 12.6 T he Taxpayer Bill of Rights 12-19
LO 12.7 Tax Planning 12-22
Questions and Problems 12-27
Appendices
Appendix A T ax Rate Schedules and Tax Table A -1
A ppendix B E arned Income Credit Table B-1
A ppendix C Withholding Tables C-1
A ppendix D A dditional Comprehensive
T ax Return Problems D -1
A ppendix E S olutions to Self-Study Problems E -1
Glossary of Tax Terms G-1
Index I-1
L ist of Forms L -1
L ist of Schedules L -2
L ist of Worksheets L-2