Fundamentals of Taxation, 2022 Edition PDF by Ana Cruz, Michael Deschamps, Frederick Niswander, Debra Prendergast and Dan Schisler

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Fundamentals of Taxation, 2022 Edition

By Ana Cruz, Michael Deschamps, Frederick Niswander, Debra Prendergast and Dan Schisler

Fundamentals of Taxation, 2022 Edition

Contents:

Chapter 1

Introduction to Taxation, the Income Tax Formula, and Form 1040 1-1

Tax Rate Structures 1-2

Marginal Tax Rates and Average Tax Rates 1-5

A Simple Income Tax Formula 1-5

The Components of a Basic Form 1040 1-6

Calculation of Income Tax (Form 1040, Line 16) and Health Care Tax 1-13

Tax Payments (Form 1040, Lines 25d, 26, and 32) 1-15

Appendix A: Tax Authority 1-22

Appendix B: IRS Rules for Paid Tax Preparers 1-27

Appendix C: Getting Started with TaxAct 1-28

Chapter 2

Expanded Tax Formula, Form 1040, and Basic Concepts 2-1

The Income Tax Formula and Form 1040 2-2

Filing Status (Form 1040, First Page) 2-11

Dependents (Form 1040, Page 1) 2-13

Standard Deduction (Form 1040, Line 12a) 2-19

Tax Due to IRS 2-20

Interest and Tax Penalties 2-24

Chapter 4

Adjustments for Adjusted Gross Income 4-1

Student Loan Interest (Schedule 1 of Form 1040, Line 21) 4-2

Health Savings Account Deduction (Schedule 1, Line 13) 4-6

Moving Expenses for Members of the Armed Forces (Schedule 1, Line 14) 4-10

Deduction for Half of Self-Employment Tax (Schedule 1, Line 15) 4-12

Self-Employed Health Insurance Deduction (Schedule 1, Line 17) 4-13

Penalty on Early Withdrawal of Savings (Schedule 1, Line 18) 4-14

Alimony Paid (Schedule 1, Line 19a) 4-16

Educator Expenses (Schedule 1, Line 11) 4-18

Chapter 5

Itemized Deductions 5-1

Deductible Medical Expenses (Schedule A, Line 4) 5-3

Deductible State and Local Taxes (Schedule A, Line 7) 5-9

Deductible Interest (Schedule A, Line 10) 5-14

Deductible Gifts to Charity (Schedule A, Line 14) 5-20

Deductible Casualty and Theft Losses (Schedule A, Line 15) 5-25

Other Itemized Deductions (Schedule A, Line 16) 5-30

Chapter 6

Self-Employed Business Income (Line 3 of

Schedule 1 and Schedule C) 6-1

Income for a Schedule C Trade or Business 6-5

Ordinary and Necessary Trade or Business Expenses 6-7

Depreciation 6-8

Transportation and Travel 6-18

Business Use of the Home and Business Bad Debts 6-27

Hobby Loss Rules and Education Expenses 6-33

Self-Employment Tax 6-34

Appendix: General Depreciation System 6-45

Chapter 7

Capital Gains and Other Sales of Property

(Schedule D and Form 4797) 7-1

Terms and Tax Forms 7-2

Classification of Assets 7-4

Sales of Ordinary Assets 7-7

Sales of Capital Assets 7-9

Sales of Business Property 7-20

Tax Issues for Special Types of Sales 7-26

Chapter 8

Rental Property, Royalties, and Income from

Flow-Through Entities (Line 5, Schedule 1, and

Schedule E) 8-1

Rental Property 8-2

Rental of Vacation Homes 8-9

Royalty Income 8-16

Flow-Through Entities 8-17

Chapter 9

Tax Credits (Form 1040, Lines 19, 20, 27 through

29, and 31, Schedule 3, Lines 1 through 14) 9-1

Credit for Child and Dependent Care Expenses (Schedule 3, Line 2 [Form 2441]) 9-2

Credit for the Elderly or the Disabled (Schedule 3, Line 6d [Schedule R]) 9-6

Education Credits (Form 1040, Line 29 and Schedule 3, Line 3 [Form 8863]) 9-7

Foreign Tax Credit (FTC) (Schedule 3, Line 1 [Form 1116]) 9-13

Child Tax Credit (Form 1040, Line 19 and 28) 9-16

Retirement Savings Contributions Credit (Saver’s Credit) (Schedule 3, Line 4 [Form 8880]) 9-18

Adoption Credit (Schedule 3, Line 6c [Form 8839]) 9-19

Earned Income Credit (EIC) (Form 1040, Line 27a) 9-21

Premium Tax Credit (Schedule 2, Line 2, or Schedule 3, Line 9) 9- 27

Appendix A: Earned Income Credit (EIC) Table 9-31

Appendix B: Table 2 for Form 8962 9-41

Chapter 10

Payroll Taxes 10-1

Tax Issues Associated with Payroll and Form 1040 10-1

Federal Income Tax Withholding, Social Security, and Medicare

Taxes on Wages and Tips 10-2

Reporting and Paying Payroll Taxes 10-15

Self-Employment Taxes, Unemployment Taxes, Form 940, Taxes for

Household Employees, and Schedule H 10-22

Employer Payroll Reporting Requirements Including Forms W-2 and W-3 10-31

Supplemental Wage Payments, Backup Withholding, Form W-9,

Estimated Tax Payments, and Form 1040-ES 10-34

Additional Information Regarding Legislation and Payroll 10-38

Appendix: Partial Wage Bracket Method Withholding 10-52

Chapter 11

Retirement and Other Tax-Deferred Plans and Annuities 11-1

Tax-Deferred Plans and Annuities: The Basics 11-1

Employer-Sponsored Retirement Plans 11-3

Individual-Sponsored Retirement Plans 11-9

Tax-Deferred Nonretirement Plans 11-12

Distributions from Tax-Deferred Pension Plans 11-15

Tax Treatment of Annuity Contracts 11-23

Appendix: Life Expectancy Tables 11-27

Chapter 12

Special Property Transactions 12-1

Like-Kind Exchanges 12-2

Involuntary Conversions 12-7

Installment Sales 12-13

Sale of a Personal Residence 12-16

Related-Party Losses and Wash Sales 12-21

Chapter 13

At-Risk/Passive Activity Loss Rules and the

Individual Alternative Minimum Tax 13-1

At-Risk Rules 13-2

Passive Activity Losses 13-9

At-Risk and PAL Rules in Conjunction 13-16

Alternative Minimum Tax (AMT) 13-20

Appendix: Depreciation Tables 13-34

Chapter 14

Partnership Taxation 14-1

Formation of a Partnership 14-1

Partnership Ordinary Income or Loss 14-6

Separately Stated Items 14-13

Basis of the Partnership Interest 14-16

Partnership Distributions 14-18

Disposal or Liquidation of a Partnership Interest 14-20

Chapter 15

Corporate Taxation 15-1

Corporate Formation and Filing Requirements 15-1

Basis 15-9

Taxable Income and Tax Liability 15-10

Transactions with Shareholders 15-15

Schedules L, M-1, and M-3 15-17

Other Corporate Issues 15-18

Subchapter S Corporations 15-21

Appendix A: Amended Tax Returns (Form 1040X) A-1

Appendix B: Comprehensive Problems B-1

Appendix C: Concept Check Answers C

Appendix D: IRS Tax Tables D-1

Appendix E: IRS Tax Forms E-1

Appendix F: 2021 Federal Income Tax Information F-1

Index IND-1

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