Solution Manual for Essentials of Taxation Individuals and Business Entities, 27th Edition

Essentials of Taxation Individuals and Business Entities, 27th Edition Solution Manual

This product will be delivered within 30 min – 2 hours after payment as been made, we provide 24hr live support if you have any questions.

All the chapters are included.
We provide test banks and solutions only. We do not have the textbook.
We provide digital files only. No shipping address required.
We recommend to download the sample(s) and review it/them before placing your order

Cover Page
Title Page
Copyright Page
General Editors
Contributing Authors
SWFT Series Authors
ProConnect™ Tax
Thomson Reuters Checkpoint™
Preface
Acknowledgments
Special Thanks
The South-Western Federal Taxation Series
About the Editors
Part 1. The World of Taxation
Chapter 1. Introduction to Taxation
1-1. Taxes in Our Lives
1-1a. The Relevance of Taxation to Accounting and Finance Professionals
1-1b. How to Study Taxation
1-1c. Individuals and Taxes
1-2. The Structure of Tax Systems
1-2a. Tax Rates
1-2b. Tax Bases
1-2c. Incidence of Taxation
1-3. Types of Taxes
1-3a. Transaction Taxes
1-3b. Valuation or Wealth Taxes
1-3c. Income Taxes
1-4. Income Taxation of Business Entities
1-4a. Proprietorships
1-4b. C Corporations
1-4c. Partnerships
1-4d. S Corporations
1-4e. Limited Liability Companies and Limited Liability Partnerships
1-4f. Dealings between Individuals and Their Business Entities
1-5. Tax Planning Fundamentals
1-5a. Overview of Tax Planning and Ethics
1-5b. A General Framework for Income Tax Planning
1-5c. Tax Minimization Strategies Related to Income
1-5d. Tax Minimization Strategies Related to Deductions
1-5e. Tax Minimization Strategies Related to Tax Rates
1-5f. Tax Minimization Strategies Related to Tax Credits
1-6. Understanding the Federal Tax Law
1-6a. Revenue Needs
1-6b. Economic Considerations
1-6c. Social Considerations
1-6d. Equity Considerations
1-6e. Political Considerations
1-6f. Compliance Considerations
1-6g. Influence of the Internal Revenue Service
1-6h. Influence of the Courts
1-7. Summary
Suggested Readings
Key Terms
Problems
Research Problems
Chapter 2. Working with the Tax Law
2-1. Tax Law Sources
2-1a. Statutory Sources of the Tax Law
2-1b. Administrative Sources of the Tax Law
2-1c. Judicial Sources of the Tax Law
2-2. Working with the Tax Law—Tax Research
2-2a. Identifying the Problem
2-2b. Refining the Problem
2-2c. Locating the Appropriate Tax Law Sources
2-2d. Assessing Tax Law Sources
2-2e. Arriving at the Solution or at Alternative Solutions
2-2f. Communicating Tax Research
2-2g. Updates
2-2h. Tax Research Best Practices
2-3. Tax Research on the CPA Examination
Suggested Readings
Key Terms
Problems
Research Problems
Chapter 3. Taxes in the Financial Statements
3-1. Accounting for Income Taxes—Basic Principles
3-1a. Book-Tax Differences
3-1b. Generally Accepted Accounting Principles and ASC 740
3-2. Capturing, Measuring, and Recording Tax Expense—The Provision Process
3-2a. Current Tax Expense
3-2b. Deferred Tax Expense
3-2c. The Valuation Allowance
3-3. Tax Disclosures in the Financial Statements
3-3a. Presentation of Amounts Recognized in the Financial Statements
3-3b. The Financial Statement Footnotes
3-3c. The Effective Tax Rate Reconciliation
3-4. Special Issues
3-4a. The Financial Accounting for Tax Uncertainties
3-4b. Effects of Statutory Tax Rate Changes
3-4c. The Corporate Tax Department
3-5. Benchmarking
3-5a. Methods of Analysis
3-5b. Tax Rate Sustainability
3-5c. Uses of Benchmarking Analysis
Suggested Readings
Key Terms
Problems
Research Problems
Becker CPA Review Questions
Part 2. Structure of the Federal Income Tax
Chapter 4. Gross Income
4-1. The Tax Formula
4-1a. Components of the Tax Formula
4-2. Gross Income
4-2a. Concepts of Income
4-2b. Comparing Accounting and Tax Concepts of Income
4-2c. Form of Receipt
4-3. Timing of Income Recognition
4-3a. Taxable Year
4-3b. Accounting Methods
4-3c. Special Rules for Cash Basis Taxpayers
4-3d. Special Rules for Accrual Basis Taxpayers
4-4. General Sources of Income
4-4a. Income from Performing Personal Services
4-4b. Income from Property
4-4c. Income Received by an Agent
4-4d. Report of Foreign Bank and Financial Accounts (FBAR)
4-5. Specific Items of Gross Income
4-5a. Gains and Losses from Property Transactions
4-5b. Interest on Certain State and Local Government Obligations
4-5c. Life Insurance Proceeds
4-5d. Income from Discharge of Indebtedness
4-5e. Tax Benefit Rule
4-5f. Imputed Interest on Below-Market Loans
4-5g. Improvements on Leased Property
Suggested Readings
Key Terms
Computational Exercises
Problems
Research Problems
Becker CPA Review Question
Chapter 5. Business Deductions
5-1. The Deductibility of Business Expenses—Overview
5-1a. Ordinary and Necessary Requirement
5-1b. Reasonableness Requirement
5-2. The Timing of Deduction Recognition
5-2a. The Cash Method
5-2b. The Accrual Method
5-2c. Expenses Accrued to Related Parties
5-2d. Prepaid Expenses—The “12-Month Rule”
5-3. Disallowance Possibilities
5-3a. Expenses Incurred in the Investigation of a Business
5-3b. Public Policy Limitations
5-3c. Political Contributions and Lobbying Activities
5-3d. Expenses Related to Entertainment, Recreation, or Amusement
5-3e. Business Interest Expense
5-3f. Executive Compensation
5-3g. Interest and Other Expenses Related to Tax-Exempt Income
5-3h. Other Disallowance Possibilities
5-4. Research and Experimental Expenditures
5-4a. Expense Method
5-4b. Deferral and Amortization Method
5-5. Issues Related to Other Common Business Deductions
5-5a. Interest Expense
5-5b. Taxes
5-6. Charitable Contributions
5-6a. Deductible Contributions
5-6b. Measuring Noncash Contributions
5-6c. Limitations Imposed on Charitable Contribution Deductions
5-7. Cost Recovery Allowances
5-7a. Overview
5-7b. Cost Recovery—In General
5-7c. The Modified Accelerated Cost Recovery System (MACRS)
5-7d. MACRS for Personal Property
5-7e. MACRS for Real Estate
5-7f. Election to Immediately Expense Certain Depreciable Assets (§ 179)
5-7g. Additional First-Year (Bonus) Depreciation
5-7h. Limitations Related to Automobiles and Other Property Used for Personal Purposes
5-7i. Alternative Depreciation System (ADS)
5-8. Amortization
5-9. Depletion
5-9a. Intangible Drilling and Development Costs (IDCs)
5-9b. Depletion Methods
5-10. Cost Recovery Tables
Suggested Readings
Key Terms
Computational Exercises
Problems
Research Problems
Becker CPA Review Questions
Chapter 6. Losses and Loss Limitations
6-1. Bad Debts
6-1a. Specific Charge-Off Method
6-1b. Business versus Nonbusiness Bad Debts
6-1c. Loans between Related Parties
6-2. Worthless Securities and Small Business Stock Losses
6-2a. Worthless Securities
6-2b. Small Business Stock (§ 1244 Stock) Losses
6-3. Casualty and Theft Losses
6-3a. Definition of Casualties and Thefts
6-3b. Deduction of Casualty and Theft Losses
6-3c. Loss Measurement
6-3d. Casualty and Theft Losses of Individuals
6-4. Net Operating Losses
6-4a. Introduction
6-4b. General NOL Rules
6-5. The Tax Shelter Problem
6-6. At-Risk Limitations
6-7. Passive Activity Loss Limits
6-7a. Classification and Tax Treatment of Passive Activity Income and Loss
6-7b. Taxpayers Subject to the Passive Activity Loss Rules
6-7c. Rules for Determining Passive Activities
6-7d. Material Participation
6-7e. Rental Activities
6-7f. Interaction of At-Risk and Passive Activity Loss Limits
6-7g. Special Passive Activity Rules for Real Estate
6-7h. Disposition of Passive Activities
6-8. Excess Business Losses
6-8a. Definition and Rules
6-8b. Computing the Limit
Suggested Readings
Key Terms
Computational Exercises
Problems
Research Problems
Becker CPA Review Questions
Part 3. Property Transactions
Chapter 7. Property Transactions: Basis, Gain and Loss, and Nontaxable Exchanges
7-1. Determining Gain or Loss
7-1a. Realized Gain or Loss
7-1b. Recognized Gain or Loss
7-2. Basis Considerations
7-2a. Determination of Cost Basis
7-2b. Property Received as a Gift
7-2c. Inherited Property
7-3. Disallowed Losses
7-3a. Personal Use Assets
7-3b. Transactions between Related Parties
7-3c. Wash Sales
7-3d. Property Converted from Personal Use to Business or Income-Producing Use
7-4. Nontaxable Exchanges—General Concepts
7-5. Like-Kind Exchanges—§ 1031
7-5a. Like-Kind Property
7-5b. Exchange Requirement
7-5c. Boot
7-5d. Basis and Holding Period of Property Received
7-6. Involuntary Conversions—§ 1033
7-6a. Involuntary Conversion Defined
7-6b. Replacement Property
7-6c. Time Limitation on Replacement
7-6d. Nonrecognition of Gain
7-7. Installment Method
7-7a. Eligibility
7-7b. Computing Gain Recognition for Payments Received
7-8. Sale of a Principal Residence—§ 121
Suggested Readings
Key Terms
Computational Exercises
Problems
Research Problems
Becker CPA Review Questions
Chapter 8. Property Transactions: Capital Gains and Losses, Section 1231, and Recapture Provisions
8-1. General Scheme of Property Taxation
8-2. Capital Assets
Inventory
8-3. Special Rules
8-3a. Worthless Securities
8-3b. § 1244 Stock
8-3c. Retirement of Corporate Obligations
8-3d. Options
8-3e. Patents
8-3f. Lease Cancellation Payments
8-4. Holding Period
8-4a. General Rules
8-4b. Special Holding Period Rules
8-4c. Short Sales
8-5. Tax Treatment of Capital Gains and Losses of Noncorporate Taxpayers
8-5a. Net Capital Gains
8-5b. Net Capital Losses
8-5c. Capital Gain and Loss Netting Process
8-5d. Small Business Stock
8-6. Tax Treatment of Capital Gains and Losses of Corporate Taxpayers
8-7. Section 1231 Gains and Losses
8-7a. Relationship to Capital Gains and Losses
8-7b. Definition of Section 1231 Assets
8-7c. General Procedure for § 1231 Computation
8-8. Section 1245 Recapture
8-8a. Section 1245 Property
8-8b. Observations on § 1245
8-9. Section 1250 Recapture
8-9a. Unrecaptured § 1250 Gain (Real Estate 25% Gain)
8-9b. Additional § 1250 Recapture for Corporations
8-10. Depreciation Recapture and Nontaxable and Tax Free Transactions
8-10a. Gifts
8-10b. Death
8-10c. Certain Nontaxable Transactions
8-10d. Like-Kind Exchanges and Involuntary Conversions
Suggested Readings
Key Terms
Computational Exercises
Problems
Research Problems
Becker CPA Review Questions
Part 4. Taxation of Individuals
Chapter 9. Individuals as Taxpayers
9-1. The Individual Tax Formula
9-1a. Components of the Tax Formula
9-2. Standard Deduction
9-2a. Basic and Additional Standard Deduction
9-2b. Limitations on the Standard Deduction for Dependents
9-3. Dependents
9-3a. Qualifying Child
9-3b. Qualifying Relative
9-3c. Other Rules for Determining Dependents
9-3d. Comparison of Dependent Categories
9-4. Filing Status and Filing Requirements
9-4a. Filing Status
9-4b. Filing Requirements
9-5. Tax Determination
9-5a. Tax Rate Schedule Method
9-5b. Tax Table Method
9-5c. Computation of Net Taxes Payable or Refund Due
9-5d. Kiddie Tax—Unearned Income of Dependent Children
9-5e. Additional Taxes for Certain Individuals
9-6. Tax Return Filing Procedures
9-6a. Selecting the Proper Form
9-6b. The E-File Approach
9-6c. When and Where to File
9-6d. Modes of Payment
Suggested Readings
Key Terms
Computational Exercises
Problems
Tax Return Problems
Research Problems
Becker CPA Review Questions
Chapter 10. Individuals: Income, Deductions, and Credits
10-1. Overview of Income Provisions Applicable to Individuals
10-2. Specific Inclusions Applicable to Individuals
10-2a. Alimony and Separate Maintenance Payments
10-2b. Prizes and Awards
10-2c. Unemployment Compensation
10-2d. Social Security Benefits
10-3. Specific Exclusions Applicable to Individuals
10-3a. Gifts and Inheritances
10-3b. Scholarships
10-3c. Damages
10-3d. Workers’ Compensation
10-3e. Accident and Health Insurance Benefits
10-3f. Educational Savings Bonds
10-3g. Wrongful Incarceration
10-4. Itemized Deductions
10-4a. Medical Expenses
10-4b. Taxes
10-4c. Interest
10-4d. Charitable Contributions
10-4e. Other Itemized Deductions
10-5. Individual Tax Credits
10-5a. Adoption Expenses Credit
10-5b. Child and Dependent Tax Credits
10-5c. Credit for Child and Dependent Care Expenses
10-5d. Education Tax Credits
10-5e. Earned Income Credit
10-5f. Residential Energy Credits
10-5g. Clean Vehicle Credit
Suggested Readings
Key Terms
Computational Exercises
Problems
Tax Return Problems
Research Problems
Becker CPA Review Questions
Chapter 11. Individuals as Employees and Proprietors
11-1. Employee versus Independent Contractor
11-1a. Factors Considered in Classification
11-2. Exclusions Available to Employees
11-2a. Employer-Sponsored Accident and Health Plans
11-2b. Medical Reimbursement Plans
11-2c. Meals and Lodging Furnished for the Convenience of the Employer
11-2d. Group Term Life Insurance
11-2e. Qualified Tuition Reduction Plans
11-2f. Other Employee Fringe Benefits
11-2g. Cafeteria Plans
11-2h. Flexible Spending Plans
11-2i. General Classes of Excluded Benefits
11-2j. Foreign Earned Income
11-3. Expenses Relating to Time at Work
11-3a. Transportation Expenses
11-3b. Travel Expenses
11-3c. Education Expenses
11-3d. Entertainment and Meal Expenses
11-3e. Other Expenses of Work
11-3f. Classification of Employee Expenses
11-3g. Contributions to Individual Retirement Accounts
11-4. Individuals as Proprietors
11-4a. Accounting Periods and Methods
11-4b. Income and Deductions of a Proprietorship
11-4c. Retirement Plans for Self-Employed Individuals
11-4d. Deduction for Qualified Business Income
11-4e. Estimated Tax Payments
11-5. Hobby Losses
11-5a. General Rules
11-5b. Presumptive Rule of Profit-Seeking
11-5c. Determining the Taxable Amount
Suggested Readings
Key Terms
Computational Exercises
Problems
Tax Return Problems
Research Problems
Becker CPA Review Questions
Part 5. Business Entities
Chapter 12. Corporations: Organization, Capital Structure, and Operating Rules
12-1. An Introduction to Corporate Income Taxation
12-1a. Double Taxation of Corporate Income
12-1b. Comparison of Corporations and Other Forms of Doing Business
12-1c. Nontax Considerations
12-1d. Limited Liability Companies
12-1e. Entity Classification
12-2. Organization of and Transfers to Controlled Corporations
12-2a. Section 351 Rationale and General Rules
12-2b. Property Defined
12-2c. Stock Transferred
12-2d. Control of the Corporation
12-2e. Basis Determination and Other Issues
12-2f. Assumption of Liabilities—§ 357
12-2g. Recapture Considerations
12-3. Capital Structure of a Corporation
12-3a. Capital Contributions
12-3b. Debt in the Capital Structure
12-4. Taxing Corporate Operations
12-4a. Deductions Available Only to Corporations
12-4b. Business Interest Expense Limitation
12-4c. Determining the Corporate Income Tax Liability
12-5. Procedural Matters
12-5a. Filing Requirements for Corporations
12-5b. Estimated Tax Payments
12-5c. Schedule M–1—Reconciliation of Income (Loss) per Books with Income per Return
12-5d. Schedule M–2—Analysis of Unappropriated Retained Earnings per Books
12-5e. Schedule M–3—Net Income (Loss) Reconciliation for Corporations with Total Assets of $10 Million or More
12-5f. Effect of Taxes on Financial Statements
Suggested Readings
Key Terms
Computational Exercises
Problems
Tax Return Problem
Research Problems
Becker CPA Review Questions
Chapter 13. Corporations: Earnings & Profits and Distributions
13-1. Corporate Distributions—Overview
13-2. Earnings and Profits (E & P)
13-2a. Computation of E & P
13-2b. Summary of E & P Adjustments
13-2c. Allocating E & P to Distributions
13-3. Noncash Dividends
13-3a. Noncash Dividends—Effect on the Shareholder
13-3b. Noncash Dividends—Effect on the Corporation
13-4. Constructive Dividends
13-4a. Types of Constructive Dividends
13-4b. Shareholder Treatment of Constructive Dividends
13-5. Stock Dividends
13-6. Stock Redemptions
13-7. Corporate Liquidations
13-7a. The Liquidation Process
13-7b. Liquidating and Nonliquidating Distributions Compared
13-8. Restrictions on Corporate Accumulations
Suggested Readings
Key Terms
Computational Exercises
Problems
Research Problems
Becker CPA Review Questions
Chapter 14. Partnerships and Limited Liability Entities
14-1. Overview of Partnership Taxation
14-1a. Forms of Doing Business—Federal Tax Consequences
14-1b. Definition of a Partnership
14-1c. Partnership Taxation and Reporting
14-1d. Partner’s Ownership Interest in a Partnership
14-2. Formation of a Partnership: Tax Effects
14-2a. Gain or Loss on Contributions to the Partnership
14-2b. Exceptions to Nonrecognition
14-2c. Tax Issues Related to Contributed Property
14-2d. Inside and Outside Bases
14-2e. Tax Accounting Elections
14-2f. Initial Costs of a Partnership
14-3. Operations of the Partnership
14-3a. Schedules K and K–1
14-3b. Partnership Allocations
14-3c. Basis of a Partnership Interest
14-3d. Partner’s Basis, Gain, and Loss
14-3e. Loss Limitations
14-4. Transactions between Partner and Partnership
14-4a. Guaranteed Payments
14-4b. Other Transactions between a Partner and a Partnership
14-4c. Partners as Employees
14-5. Limited Liability Companies
14-5a. Taxation of LLCs
14-5b. Advantages of an LLC
14-5c. Disadvantages of an LLC
14-6. Summary
Suggested Readings
Key Terms
Computational Exercises
Problems
Tax Return Problem
Research Problems
Becker CPA Review Questions
Chapter 15. S Corporations
15-1. An Overview of S Corporations
15-2. Qualifying for S Corporation Status
15-2a. Definition of a Small Business Corporation
15-2b. Making the Election
15-2c. Shareholder Consent
15-2d. Loss of the Election
15-3. Operational Rules
15-3a. Computation of Taxable Income
15-3b. Qualified Business Income Deduction
15-3c. Allocation of Income and Loss
15-3d. Tax Treatment of Distributions to Shareholders
15-3e. Tax Treatment of Noncash Distributions by the Corporation
15-3f. Shareholder’s Basis in S Stock
15-3g. Treatment of Losses
15-3h. Limitation on the Deduction of Excess Business Losses
15-3i. Other Operational Rules
15-4. Entity-Level Taxes
15-4a. Tax on Pre-Election Built-In Gain
15-4b. Passive Investment Income Penalty Tax
15-5. Summary
Suggested Readings
Key Terms
Computational Exercises
Problems
Tax Return Problem
Research Problems
Becker CPA Review Questions
Part 6. Special Business Topics
Chapter 16. Multijurisdictional Taxation
16-1. The Multijurisdictional Taxpayer
16-2. U.S. Taxation of Multinational Transactions
16-2a. Sources of Law
16-2b. Tax Issues
16-3. Crossing State Lines: State and Local Income Taxation in the United States
16-3a. Sources of Law
16-3b. Tax Issues
16-4. Common Challenges
16-4a. Authority to Tax
16-4b. Division of Income
16-4c. Transfer Pricing
16-4d. Tax Havens
16-4e. Interjurisdictional Agreements
Suggested Readings
Key Terms
Computational Exercises
Problems
Research Problems
Becker CPA Review Questions
Chapter 17. Business Tax Credits and the Alternative Minimum Tax
17-1. General Business Tax Credit Overview
17-1a. General Business Credit
17-1b. Treatment of Unused General Business Credits
17-2. Specific Credits in General Business Credit
17-2a. Tax Credit for Rehabilitation Expenditures
17-2b. Work Opportunity Tax Credit
17-2c. Research Activities Credit
17-2d. Low-Income Housing Credit
17-2e. Energy Credits
17-2f. Disabled Access Credit
17-2g. Credit for Small Employer Pension Plan Startup Costs
17-2h. Credit for Employer-Provided Child Care
17-2i. Small Employer Health Insurance Credit
17-2j. Credit for Employer-Provided Family and Medical Leave
17-3. Foreign Tax Credit
17-4. Alternative Minimum Tax (AMT) for Individuals
17-4a. Calculating the AMT: The AMT Formula
17-4b. AMT Adjustments
17-4c. AMT Preferences
17-4d. Illustration of the AMT Computation
17-4e. AMT Credit
17-5. The Corporate AMT
Suggested Readings
Key Terms
Computational Exercises
Problems
Research Problems
Becker CPA Review Questions
Chapter 18. Comparative Forms of Doing Business
18-1. Alternative Organizational Forms in Which Businesses May Be Conducted
18-2. Nontax Factors Affecting the Choice of Organizational Form
18-2a. Limited Liability
18-2b. Other Factors
18-2c. Capital Formation
18-3. The Tax Consequences of Organizational Form Choice
18-3a. The Taxation of Business Operations
18-3b. The Ability to Specially Allocate Income among Owners
18-3c. The Tax Treatment of Capital Contributions
18-3d. The Basis of an Ownership Interest
18-3e. The Application of the At-Risk and Passive Activity Loss Rules
18-3f. The Tax Treatment of Distributions
18-3g. Other Taxes
18-4. Minimizing Double Taxation
18-4a. Making Deductible Distributions
18-4b. Deferring Distributions
18-4c. Making Return-of-Capital Distributions
18-4d. Electing S Corporation Status
18-5. The Tax Consequences of Disposing of a Business
18-5a. Sole Proprietorships
18-5b. Partnerships and Limited Liability Companies
18-5c. C Corporations
18-5d. S Corporations
18-6. The Tax Consequences of Converting to Another Business Form
18-6a. Sole Proprietorship
18-6b. Partnership or LLC
18-6c. C Corporation
18-7. Overall Comparison of Business Forms
Suggested Readings
Key Terms
Computational Exercises
Problems
Research Problems
Appendix A. Tax Formulas, Tax Rate Schedules, and Tables
Appendix B. Tax Forms
Appendix D. Table of Code Sections Cited
Appendix E. Present Value and Future Value Tables
Appendix. Depreciation and the Accelerated Cost Recovery System (ACRS)
Appendix. Affordable Care Act Provisions