Instructor – Howard Godfrey Professor of Accounting-UNC Charlotte Click speaker for voice.

Finding Tax Law in the CodeSlides are not numbered – If you print six slides per page, read left to right, then down to next line of slides. C11-Chp-01-Form 1040-Sound-PP-2010-File-1Introduction and Background Info.

This PowerPoint presentation is divided into multiple files, because adding sound causes the file size to be much bigger. This is File 1. Slides with sound show a yellow picture of a speaker. You can click on that speaker and hear some explanation from instructor.

Instructor – Howard Godfrey Professor of Accounting-UNC Charlotte Click speaker for voice.

Please review the following two documents before viewing this presentation. • Handout C11-Chp-01-3-Tax Problem and Return Preparation. • Form 1040 and Schedule A.Available for download at www.IRS.gov • Also have your Code book.

The purpose of this presentation is to illustrate the use of the Internal Revenue Code as the source of tax law for the entry you make on every lineon Form 1040, & all other tax forms.

Instructor comment. For some, these exercises may not seem worthwhile. Trust me:if you understand the structure of the tax law, you will find it easier to learn corporate tax law.

Instructor comment. Please read (at least part of) every Code section identified here. If you understand the meaning –good. If not-don’t worry about it – you will understand later.

Instructor comment. Also an excellent CPA Review exercise. You are allowed to use the Internal Revenue Code on the CPA Exam.

The following slide shows the income information for our taxpayer. Her name is Pam. Take a look at the next slide. We will now cover how the code is organized and then later we consider the next slide again.

Let’s begin thinking about the overall organization of the Code. It has about 10,000 sections, but we are concerned about maybe a 200 or so – I have not counted. Except for next slide, don’t worry about memorizing these groups of code sections – we will use the important ones until you know them.

Consider first 300 or so sections. These ranges are approximate. 1-60(actually 59)taxes, credits, taxes. 61-160 (actually 153) income 161-260(act. 248) deductions 261-300(act. 291) deductions limited or disallowed. Memorize these “approx” ranges. Many of these sections apply to all entities.

Now lets think about Tax Entities 300’s(Subchapter C) Corporations – mainly transactions affecting owner equity. 700’s Partnerships. (Subchapter K) 1361+ S corporations. 401+ Retirement plans (401(k)) etc, stock options. 501+ Non-profit organizations. 641+ Trusts and estates.

Now for some other groups. 441+ Accounting methods 531+ Corporate penalty taxes 800’s Ins. Companies, Mutual funds, etc. (not imp. for us) 900’s Foreign income, etc. 1000’s Gain or loss on sale of assets, basis 1200’s capital gains and losses

Self-employment tax – 1401 Consolidated returns 1501 Estate tax- 2001+ Gift tax- 2501+ Filing of return required- 6012, 6031, 6037 Filing Returns- 6072 Statute of Limitations – 6501, 6511 Interest on late payment- 6601, 6611 Penalty - late filing, Pmt- 6651. Est. Tx- 6654 Penalty-bad research: T/P, CPA- 6662, 6694 Definitions – check box- 7701. Regs. -7805

We must comply with the tax law when entering information on every line on the return. What law?

Now, please move to File 2 of this series that covers income topics

End of File 1

Instructor – Howard Godfrey Professor of Accounting-UNC Charlotte Click speaker for voice.