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Accounting 422/522. Income Taxation - Advanced. Introduction to Course. Syllabus Office Hours Phone/fax/e-mail Text/Study Guide/Solutions Manual Tests and Grading Assignment 1 - Like kind exchange Assignment 2 - Comprehensive tax return Graduate students - paper. Topics. Tax ethics
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Accounting 422/522 Income Taxation - Advanced
Introduction to Course • Syllabus • Office Hours • Phone/fax/e-mail • Text/Study Guide/Solutions Manual • Tests and Grading • Assignment 1 - Like kind exchange • Assignment 2 - Comprehensive tax return • Graduate students - paper
Topics • Tax ethics • Property transactions • computation of gain or loss • capital assets/Section 1231 assets • non-recognition transactions • Accounting methods • installment method • OID • US international taxation
Topics • Employee compensation • deferred compensation • stock options • Qualified retirement plans including IRAs • Estate and Gift taxation and estate planning • Entity taxation - formation, operation, distributions and liquidation • C corporations • S corporations • Partnerships and LLCs
How to Succeed in Actg 422/522 • Read the chapters at least once before class • Ask your questions in class • After class do the problems at the end of the chapter and in the study guide - the rules are not clear and need to be seen in the context of a factual problem, only then will the ambiguities be discovered and cleared-up
Tax Ethics • Source of the ethical rules • Circular 230 - a federal regulation • Statements on Responsibilities in Tax Practice - a pronouncement of the American Institute of Certified Public Accountants • Penalties - these are federal statutes found in the Internal Revenue Code
Circular 230 • Rules of Practice before the Dept of Treasury • Director of Practice • Due Diligence • Error on return • Reporting standards - realistic possibility of success if challenged • reasonable basis with disclosure
Penalties • 6694(a) $250 fine for taking unrealistic position without disclosure leading to an understatement of tax • an unrealistic position is one where there is no reasonable possibility of success if the position is challenged • 6694(b) $1,000 fine for willfully taking a position in disregard for the rules or regulations leading to an understatement of tax • These are penalties on the preparer of the return and are in addition to penalties on the taxpayer
Penalties • 6695 • furnish a copy of return to taxpayer - $50 • sign the return as preparer - $50 • furnish identification number on the return - $50 • retain a copy of the return or a list of prepared returns in office - $25,000 • negotiate a check issued by Treasury to taxpayer • exercise diligence in determining taxpayer eligibility for the EIC
Penalties • 6662 - Accuracy related penalty - 20% • for taking a position for which there is not substantial authority • reasonable basis with disclosure • 6662 - Valuation - 20% • 6702 - Frivolous position - $500 • These are taxpayer penalties - ethical rules require a professional inform taxpayer of potential penalty exposure
STRPs • Advisory not mandatory • 1. Reporting standard - reasonable possibility of success if challenged or reasonable basis with disclosure • 2. Need to answer questions on returns? • 3. What is duty to verify client records? • 4. Can a preparer sign a return if it contains some estimated figures
STRPs • 5. Subsequent year consistency with position settled in prior year after administrative proceeding • 6.Knowledge of error on previously filed return • 7. Knowledge of error in administrative proceeding • 8. What is the standard for advise to clients?
