ACCT 5327

Advanced Income Tax

Fall 2009

INSTRUCTOR:Professor Robert Ricketts

BA 503

742-3180 (office)

OFFICE HOURS:MW 2:00 - 3:30 and by appointment

REQUIREDSmith, Harmelink, Hasselback. CCH Federal Taxation Comprehensive Topics 2009 Edition.

COURSE OBJECTIVES:

The objectives of this course are to conduct an in-depth analysis of the U.S. corporate tax system. Wewill begin the semester with an overview of the income tax framework applicable to corporations, focusing on the analysis and determination of the total tax paid on corporate income, and how tax professionals structure transactions in order to minimize this total tax burden. We will study special rules applicable to compensation of officers and employees and how those rules affect corporate operations. We will then move to an analysis of the tax treatment of affiliated corporations, ranging from the formation of corporate joint ventures to consolidated groups. Our analysis will emphasize the similarities between joint ventures and consolidated groups, ranging from formation to dissolution. We will then move to an analysis of the U.S. tax framework applicable to international operations, discussing how different organizational structures are taxed in the U.S. We will conclude the semester with a comparison of how corporate income is reported to shareholders and to the IRS, reconciling the two sets of results and analyzing the economic and political ramifications of the corporate income tax. By the end of the semester, students will be able to recognize how different forms of organization are useful in different economic circumstances, and how professionals plan transactions to minimize taxes and maximize after-tax economic consequences to the business and its owners.

ASSESSMENT (GRADING):

Grades will be based on four examinations, weekly homework assignments, and grades on three outside projects. Exams will be weighted 80%, homework assignments 10% (collectively) and outside projects 10% (collectively).

CHEATING:

Outside assignments are to be completed solely by the individual or group to whom the

assignment is assigned. Collusion, either between groups or between individuals not part of the same group, will result in all involved receiving a zero for the assignment. Collusion on exams will result in a grade of “F” for the course.

Tentative Schedule

Week / Date / Topic / Assignment
1
2 / 08/27 / Overview – U.S. Taxation of Business Entities
09/01 / Calculating the Corporate Income Tax / Ch 14, pp. 27-41
09/03 / Incentives for U.S. employment—Section 199 / Regs, §1.199
3 / 09/08 / Section 199 (continued)
09/10 / Limitations on Deductibility of Executive Compensation / Code §§162(m), 280G, 409A, 4999
4 / 09/15 / Stock Options and restricted stock plans—consequences for employees and employers (cont) / Ch 24, pp. 91-96
09/17 / Alternative minimum tax treatment of ISOs
Group project 1 due / Guzak, 99 AFTR 2d 2007-1184; IRC §53
5 / 09/22 / EXAM I
09/24 / Reporting income from affiliated corporations—joint ventures & consolidated returns / Ch 14, pp 54-61;Ch 19, pp. 7-8; handout
6 / 09/29 / Accounting for formation of joint venture or controlled subsidiary / Ch 14, pp. 6-22; Ch 19, pp. 9-18, 25-28
10/01 / Acquisition of subsidiary (vs. formation) / Ch 17, pp. 3-4, 11-17, 30-37
7 / 10/06 / Consolidated returns—loss limitations / Regs. §1.382-5, 6
10/08 / Basis in subsidiary stock, joint venture interest / Regs. §1.1502-32
8 / 10/13 / FALL BREAK
10/15 / Distributions—joint ventures v. subsidiaries / Regs. 1.1502-13; Ch 20, pp. 3-16
9 / 10/20 / Dividends vs. stock redemptions / Ch 15
10/22 / EXAM II
10
11 / 10/27 / Introduction—taxation of international operations / Ch 25, pp. 29-43; IRC §367
10/29 / Alleviating double taxation—the foreign tax credit / Ch 25, pp. 62-68
11/03 / Branch v. subsidiary operations
Group project 2 due
12 / 11/05 / Distribution of earnings to parent—E&P and “deemed paid” foreign taxes
11/10 / Transfer pricing
13 / 11/12 / Subpart F—some income cannot be deferred / Ch 25, pp. 54-57
11/17 / Currency translation / Ch 25, pp. 69-71
14 / 11/19 / Tax planning with international operations
11/24 / EXAM III
15 / 11/26 / THANKSGIVING
12/01 / FAS 109—accounting for income taxes under GAAP / FAS 109
16 / 12/03 / FIN 48—the special case of uncertain tax positions / FIN 48
12/08 / FAS 123R—deferred taxes and option compensation
Group project 3 due / FAS 123R
17 / 12/10 / FINAL EXAM