Accounting 432/732

Spring 2004

R.B.TowerPhone: 758-5735 Office

Kirby 301Email:

Required Text: Swenson, Gupta, Karayan & Neff, State and Local Taxation 2 ed; J Ross Publishing, ISBM # 1-932159-17-7

Reference Texts: Hoffman/Willis, Federal Taxation of Corporations, Partnerships,

EstatesTrusts

Lederman & Mazza, Tax Controversies: Practice & Procedure

Reference texts are available at my office (Kirby 301)

Course Objectives:

  • To introduce dimensions of taxation commonly encountered in tax practice, but not included in the basic tax curriculum..
  • To develop greater familiarity with primary sources and secondary sources or tax information.
  • To compare in greater depth the federal and state income tax attributes of C corporations and partnerships.
  • To improve skills associated with understanding and analyzing new and complex tax issues.

Research Cases: The research cases constitute 95% of your grade. Case assignments are made on a random basis; each case is unique. Due dates are shown on the accompanying assignment sheet.

For each case you should prepare a client file memorandum that summarizes you research. Use the format that is presented in West’s Federal Tax Research 6E, Exhibit 10-6.

  • Provide photocopies of supporting documentation. Your documentation should come from paper sources and should include only relevant information.
  • All of your work except for the photocopies should be typewritten.
  • Do not submit your research results by email.
  • Exam is due at 5:00 pm; late submission may result in grade reduction.

Tax Practice Cases:

We will discuss these cases in class, and they will be a major component of your class participation grade. The Shannon Properties Case is used a several points in the course and you should become familiar with it as soon as possible.

This case uses the Pro Series 2003 professional tax package to introduce to some fundamental federal and state income tax issues involved in operating and then liquidating a multi-state entity, first as a consolidated corporate group and then, in contrast, as a partnership. Feel free to work with other students and with me in completing this case. It is, however, essential that you understand the tax relationships reflected in the returns and in the case solutions.

Grading:

:85-100%A

70-84B

55-69C

Case I (Federal Tax Controversies) 25%

Case II (State and Local Taxation)25

Case III (Taxation of International Transactions)25

Case IV (Partnerships)20

Class Participation05

100%

Assignment Sheet

Spring 2004

Date

/

Topic & Readings

/

Assignment

March 15 /
  • Review Syllabus & Assignment Sheet
  • Discussion of Effects of Tax Controversies on Professional Accounting Practice
/
  • No Assignment

15 /

Federal Tax Controversies

  • Overview of Federal Tax Controversies
/
  • Handout A Problems 1-2,3
  • Review Lecture Notes for Chapter 1

15 /
  • Overview of Federal Tax Controversies
  • Background on Shannon Properties Case
/
  • Problem A 1-5
  • Case 3, Part 1, Trial Balances, Exhibits A & B, Additional Information.
  • Be familiar with basic formula for computing C corporation taxable income

16 /
  • Overview of Federal Tax Controversies
  • Tax Returns & the Examination Process
/
  • Problems A 1-8, 10
  • Problems A 2-2,4,5,6
  • Review SchwarzkopfCooper cases

16 /
  • Access to IRS Information versus Confidentiality of Taxpayer Information
  • Settlement of Tax Disputes
/
  • Review Rice vs. U. S.
  • Problems A 3-1,4,7
  • Problems A 4-2,3(review sample letter in Chapter 4 of Lederman/Mazza text, do not draft a letter)

18 /
  • Restrictions on Assessment of Tax
  • Notice of Deficiency
/
  • Problem A 5-1A [i]
  • Problem A 5-1B [i] a & c
  • Problem A 5-1B ii & 1C
  • Problem A 5-2
  • Problem 7-1

18 /
  • Notice of Deficiency
/
  • Review Anastasato & Portillo cases
  • Problems A 7-2,4

19 /
  • Overpayments, Refund Claims and Refund Litigation
/
  • Problem A 8-2 B
  • Problem A 8-7
  • Problem A 8-1 (A,B,D, E ii)
  • Problem A 8-5

19 /

Reliance on Treasury Regulations and IRS Positions

/
  • Problem A 9-4,5

22 /
  • Civil Tax Penalties
/
  • Review Boyle case
  • Problems A 10-1,2,4

22 /
  • Tax Collection
/
  • Problems A 12-1, 2

22 /

State and Local Taxation

  • Importance of State & Local Tax Planning
  • State and Local Tax Research
/
  • Q 1-1, P 1-2

23 / Case I --
Federal Tax Controversies
23 / Case I --
Federal Tax Controversies
25 /
  • Corporate Income/Franchise Taxes
/
  • P 3-1,2,3

25 /
  • Corporate Income/Franchise Taxes
/
  • P 3-5,8

26 / Shannon Properties—Part 1 /
  • Complete Shannon Properties Case Part 1

26 /
  • Sales and Use Taxes
/
  • Q 4- 1,2,6,9,14,16

29 /
  • Sales and Use Taxes
/
  • Q 4-18,19
  • P4-1
  • Case 4

29 /
  • Property Taxes & Unemployment Taxes
  • Special Tax Incentives
/
  • Q 5-2,5,6,7,8
  • P5-3
  • Q6-1,2,4

29 / Taxation of International Transactions
  • International Tax Jurisdictions—Basic Concepts
  • Outbound and Inbound Transactions
  • Foreign Tax Credit Under § 901
/
  • Handout D, Part A

30 /
  • Excess Credit vs. Excess Limitation
  • Strategies for Eliminating Excess Credits
  • Separate Income Limitations or “Baskets”
  • Form 1118

30 /
  • Dividend Reparations from a Foreign Corporation to a U.S. Parent §902
  • FTCL Basketing Rules §904(d)
  • Sourcing Process
Sourcing Rules (§§ 861,862) 50/50 Method /
  • Handout D, Part B

April 1 /
  • Sourcing Rules—Some Important Exceptions
  • Special Apportionment Rules
  • Taking Advantage of Deferral
/
  • Handout E
  • Handout F, Part A

1 /
  • Operating in High Tax Foreign Countries
  • Foreign Tax Reduction Planning
  • Hybrid Entities
  • Transfer Pricing

2 /
  • §482
  • Transfer Pricing Penalties
  • Discussion of Case 5, Tillman/Woodrow Company
/
  • Handout 3
  • Case 5

2 /
  • U.S. Taxation of Foreign Subsidiaries
  • Subpart F
  • Taxation of U.S. Shareholders under Subpart F
  • Earnings Invested in U.S. Property by CFC’s
/
  • Handout F, Part B

5 /
  • FPHC
  • PFIC
  • Anti-Deferral Provisions of § 367
  • Toll Charges
  • Overview of Inbound Transactions
/
  • Handout G, Part A

5 /
  • U.S. Taxation of Non Business Income
  • Repatriating Profits from Domestic Subsidiaries
  • Taxation of U.S. Real Property Interests
  • Foreign Corporation Engaged in a U.S. trade or Business
  • The Branch Profits Tax
/
  • Handout G, Parts B, C, & D

5 /
  • Case III (due 5 pm)

6 /
Partnership Advanced Topics
  • Partner’s Basis for Partnership Interest
/
  • Handout I

6 /
  • Partner’s Basis for Partnership Interest
/
  • Handout I

8 /
  • Allocation Issues-Substantial Economic Effect

8 /
  • Allocation Issues—Substantial Economic Effect
  • Allocation Issues—Depreciation, and Other Measurement Questions
/
  • Handout H

9 /
  • Discussion of Shannon Properties Case Part 2
/
  • Case 3 (Shannon Properties)

9 /
  • Course Evaluation and Distribution of Case IV (partnership advanced topics); take home due April 12, 2004, at 5:00 pm.