Professor Aprill Fall 2006 Federal Taxation



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Professor Aprill Fall 2006
Federal Taxation

Textbook


Klein, Bankman, and Shaviro, Federal Income Taxation (Aspen Law and Business, 14th Ed. 2003).
Legislative and Administrative Material:

Internal Revenue Code and Regulations: Rose, Selected Federal Taxation: Statutes and Regulations (most recent edition).


Additional Required Material:
Chirelstein, Federal Income Taxation: A Law Student's Guide to the Leading Cases and Concepts (Foundation Press, 10th Ed. 2005). (For your own review, note questions and answers at the end of the chapters.)

Supplemental Handouts (Available from Graphics)


Highly Recommended:
Bankman, Griffith, and Pratt, Federal Income Taxation: Examples and Explanation (Aspen, 4th Ed. 2005) (“E&E”).

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Assignment 1
INTRODUCTION (Skim pp. 1 36 of casebook, noting especially for future reference pages 22-30. Read “Introduction: Terminology, Timing and Rates” of Chirelstein)
Handouts: Suggestions for Approaching Reading Assignments; Basic Computation, Structure of the Internal Revenue Code, Criteria for Tax Rules; Taxation of Lottery Winnings - Issues Raised; Credit vs. Deduction; Calculating After-Tax Income; Average

Rate, Marginal Rate and After-Tax Income.

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Assignment 2 (Be sure to bring Code/Regs)
CHARACTERISTICS OF INCOME
A. Noncash Benefits; (Code § 61(a); Reg. §§ 1.61 1(a) and 1.61 2(d)(1) (Chirelstein Sections 1.01-1.02)(E&E Ch. 2 A and B)

Food and Lodging (Code § 119(a)-(b); Reg. § 1.119 1)

(Textbook pp. 37-48)

Benaglia v. Commissioner


Handouts: Some Characteristics of Income; Section 119; Section 119 Problems.

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Assignment 3 (Be sure to bring Code/Regs)
Other Fringe Benefits (Code § 132) (Textbook pp. 49-62)

Turner v. Commissioner


Handout: Fringe Benefits and Section 132; Putative Tax on Tax Benefits.
B. Imputed Income (Reg. § 1.61 2(d)) (Textbook pp. 63-68); (Chirelstein section 1.03) (E&E Ch. 2(C))

Rev. Rul. 79 24


Handout: Imputed Income - Key Points

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C. Windfalls and Gifts (Chirelstein section 4.03) (E&E Ch. 2(D).

Punitive Damages (Reg. § 1.61 14) (Textbook pp. 70-75)

Commissioner v. Glenshaw Glass Co.

Gift: The Basic Concept (Code § 102 and 274(b)) (Textbook pp. 75-95)

Commissioner v. Duberstein

United States v. Harris

Handouts: The Notion of Gift; Policy Choices for Income Taxation of Gift; Nondeductible Gift v. Deductible Compensation.

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Assignment 5 (Be sure to bring Code/Regs)
Transfer of Unrealized Gain (Code §§ 1011, 1012, 1014(a), 1015(a) and 1016(a)(1) and (2)) (Textbook pp. 95-105) (Chirelstein Section 4.02) (E&E Ch. 2(E)(5).

Taft v. Bowers


Handouts: Problem re Belinda Beggar; Gifts and Basis; Special Rule of Section 1015; More on Section 1015; Irwin v. Gavit.

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Assignment 6
D. Recovery of Capital (Chirelstein sections 2.02-2.03)

(E&E Ch. 2 (E)(1-3).

Sale of Easements (Textbook pp. 105-109)

Inaja Land Co. v. Commissioner

Life Insurance (Code §§ 101(a) and 264(a)) (Skim textbook pp. 109-115)

Annuities and Pensions (Code § 72(a) and (b)) (Textbook pp. 115-19).

Handouts: Introduction to Recovery of Basis; Excerpt from Chirelstein; Annuities and Recovery of Basis; Annuities Problems; Answers to Annuity Problems.

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Assignment 7


  1. Recovery for Personal and Business Injuries

Damages for Personal Injuries in General

(Code § 104(a)) (Textbook pp. 141-43) (Chirelstein sec. 2.04);l E&E Ch. 2(H).

Medical Expenses and Other Recoveries

(Code §§ 106(a) and 213(a)) (Textbook pp. 143-45) (E&E Ch. 2(B)(2).

Handouts: Personal Injury; Operation of Section 213.


F. Transactions Involving Loans and Income from Discharge of Indebtedness

Loan Proceeds Are Not Income (Textbook pp. 145-46)

True Discharge of Indebtedness (Code § 61(a)(12)

(Textbook pp. 146-49) (Chirelstein section 3.02); E&E Ch. 2(H).

United States v. Kirby Lumber Co.

Handouts: Introduction to the Tax Treatment of Loans; Forgiveness of Debt

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Assignment 8 (Be sure to bring Code/Regs)
Misconceived Discharge Theory (Textbook pp. 150, 159-163)

Diedrich v. Commissioner


Handouts: The Rule of Diedrich and its Alternatives; Hamlet/Gertrude/Diedrich; Rule of Reg. Sec. 1.1015-4; General and Special Basis Rules.

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Assignment 9
Transfer of Property Subject to Debt (Textbook pp. 163-80) (Chirelstein sections 13.01-13.05).

Crane v. Commissioner

Commissioner v. Tufts

Nonrecourse Borrowing in Excess of Basis (Textbook pp. 211-13)

Woodsam Associates v. Commissioner
Handouts: Liabilities: Basis and Amount Realized; Recourse v. Non-recourse Debt; Non-recourse Liability: Crane and Tufts; Key Points re Crane and Tufts; Debt Questions and Answers.

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Assignment 10
III. PROBLEMS OF TIMING
A. Gains From Investment in Property (Chirelstein sections 5.01,5.02,) (E&E Ch. 3(A)(1).

Origins (Textbook pp. 193-206)

Eisner v. Macomber

Losses (Code § 1001(a))(Textbook pp. 213-24) (Chirelstein section 5.05)

Cottage Savings Association v. Commissioner

Gain on the Sale of a Home (Code § 121; Textbook pp.190-91)(Chirelstein section 15.02)(E&E 1Ch.2(J).


Handouts: Eisner v. Macomber; Realization vs. Recognition; Realization and the Time Value of Money

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Assignments 11 & 12 (Be sure to bring Code/Regs)
Express Nonrecognition Provisions (Code §§ 1001(c), 1031)

(Textbook pp. 224-27) (Chirelstein section 15.01) (E&E Ch. 3(A)(2).

Rev. Rul. 82-166

Boot and Basis (Textbook pp. 231-33)


Handouts: Introduction to Like-Kind Exchanges; Summary of Section 1031; Boot and Basis under Section 1031; Section 1031 Basis Rules; Realization and Recognition Examples; More on Like-Kind Exchanges; Excerpt from Fall 1989 Exam; 2004 Optional Quiz and Discussion of 2004 Optional Quiz.
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Assignment 13
B. Transfers Incident to Marriage and Divorce

Introduction and Property Settlements

(Code § 1041) (Textbook pp. 301-311) (Chirelstein section 5.04)

(E&E Ch. 3(B).

United States v. Davis

Farid-Es-Sultaneh v. Commissioner


Handout: Excerpt from Fall 1990 Exam

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Assignment 14
C. Constructive Receipt (Chirelstein section 11.01) (E&E Ch. 3(E).

Code §§ 446(a) (c), 451(a); Reg. § 1.451 1 and 2) (Textbook pp. 253-59)

Amend v. Commissioner

Pulsifer v. Commissioner


Handout: The Cash Method of Accounting
D. Deferred Compensation (Textbook pp. 259-73, 277-81)

United States v. Drescher

Minor v. United States

Commissioner v. Olmsted

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Assignment 15 (Be sure to bring Code/Regs)
E. Annual Accounting and Its Consequences (Chirelstein section 10.01-10.02)

(E&E Ch. 2(F).


The Use of Hindsight (Code § 172(a) and (b)(1))

(Textbook pp. 126-31)

Burnet v. Sanford & Brooks Co.
Claim of Right (Code § 1341(a)) (Textbook pp. 131-38)

North American Oil Consolidated v. Burnet

United States v. Lewis

Tax Benefit Doctrine (Code § 111) (Textbook pp. 138-41)(Chirelstein section 10.03)

Alice Phelan Sullivan Corp. v. United States
Handouts: Introduction to Annual Accounting and Its Consequences; Alice Phelan Sullivan Corp; Tax Benefit Rule.

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Assignment 16 (Be sure to bring Code/Regs)
F. Open Transactions, and Installment Sales

(Chirelstein section 14) (E&E Ch. 3(C).

Open Transactions (Code § 453(a), (c), (d) and (j) (Textbook pp. 245-50)

Burnet v. Logan

Installment Method (Textbook pp. 250-53)
Handouts: Installment Method; Installment Sales Problems

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Assignment 17 (Be sure to bring Code/Regs)
G. The Accrual Method (Chirelstein section 12.01-12.02) (E&E Ch. 3(G).

Delay in Receipt of Cash (Code §§ 446, 451(a), 456 and 461(h); Reg. §§ 1.446 1(c)(1) and 1.451-1(a))

(Textbook pp. 322-26)

Georgia School Book Depository v. Commissioner Prepaid Income (Textbook pp. 326-33)

American Automobile Association v. United States
Handouts: Introduction to the Accrual Method; American Automobile Club; Section 461(h); 461(h) - Economic Performance

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Assignment 18 (Be sure to bring Code/Regs)
IV. PERSONAL DEDUCTIONS, EXEMPTIONS, AND CREDITS
A. Introduction (Textbook pp. 339-42, 588-91) (Chirelstein section 7.01-7.06);
B. Casualty Losses (Code § 165(a), (b), (c) and (h) (Textbook pp. 342-55)

(E&E Ch. 4(B).

Dyer v. Commissioner

Chamales v. Commissioner

Blackman v. Commissioner

Handouts: Casualty Losses; Casualty Loss - Property Used for Personal Purposes; More on Casualty Losses; Answers to More on Casualty Losses.


C. Extraordinary Medical Expenses (Code § 213) (Textbook pp.356-66)

(E&E Ch. 4(C).

Taylor v. Commissioner

Henderson v. Commissioner

Ochs v. Commissioner

D. Charitable Contributions (Code § 170(a)(1)(b), (c) and (e)(1); 501(a) and (c)(3)) (Textbook pp. 366-68) (E&E Ch. 4(D).

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Assignment 19 (Be sure to bring Code/Regs)
Interest (Code §§ 163(a), (d)(1), and (h), 221 and 265(a)(2))(Chirelstein section 6.06) (Textbook pp. 384-88) (E&E Ch. 4(E).
Handouts: Treatment of Interest; Excerpt from Examples and Explanations on Personal Interest; Section 221 Handout.
F. Taxes (Code § 164(a)) (Textbook pp. 388-90) (E&E Ch. 4(F).


  1. Personal and Dependency Exemptions (Code §§ 151 and 152) (E&E Ch. 4(A).

(Textbook pp. 390-91)
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Assignment 20 (Be sure to bring Code/Regs)
V. MIXED BUSINESS AND PERSONAL OUTLAYS
A. Controlling the Abuse of Business Deductions

(Code §§ 67, 162(a), 183(skim), 262, 274(a), (d) and (e), 280A) (Chirelstein sections 6.01, 7.05) (Textbook pp. 401-431) (E&E Ch. 6(A)).

Nickerson v. Commissioner

Popov v. Commissioner

Moller v. United States

Whitten v. Commissioner

Henderson v. Commissioner
Handouts: Section 162 vs. 183.

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Assignment 21 (Be sure to bring Code/Regs)
B. Travel and Entertainment (Textbook pp. 431-43) (Chirelstein section 6.02)(E&E Ch. 6(B).

Rudolph v. United States

Moss v. Commissioner
Handout: Business Expenses; Meals and Entertainment Deduction; Limits on Deductions for Meals.
C. Commuting Expenses (Code § 162(a)) (Reg. sec. 1.162 2) (E&E Ch. 6(D).

(Textbook pp. 459-75)

Commissioner v. Flowers

Hantzis v. Commissioner

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Assignment 22 (Be sure to bring Code/Regs)
D. Clothing (Textbook pp. 475-78) (Ch. 6(E)).

Pevsner v. Commissioner

Handouts: Expenses When Away from Home; Business Expense Practice Question


  1. Legal Expenses (Textbook pp. 478-84) (E&E Ch. 6(F)).

United States v. Gilmore
Handout: Origin of the Claim Test
F. Expenses of Education (Code § 25A, §222; Reg. § 1.162 5) (Textbook pp. 484-488) (Chirelstein sections 6.03(d), 7.09) (E&E Ch. 6(G)).
Carroll v. Commissioner
Handouts: Educational Expenses; Educational Expenses Problems; Credits for Higher Education Expenses

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Assignment 23
VI. DEDUCTIONS FOR THE COST OF EARNING INCOME
A. Current Expense vs. Capital Expenses; Repair and Maintenance Expenses (Code § 195; §§ 162(a), 263 and 263A(a) and (b); Reg. § 1.162 4)

(Textbook pp. 491-518; 480-96) (Chirelstein section 6.03(a) –(b)) (E&E Ch. 5(A-C)).

Encyclopaedia Britannica v. Commissioner

Midland Empire Packing Co. v. Commissioner

Norwest Corporation v. Commissioner
Handout: Deductible Repair vs. Capital Improvement; Distinguishing Repair and Rehabilitation; Annie’s Café and Bookstore Problem

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Assignment 24
B. Depreciation, ACRS and Investment Credit

(Code §§ 167(a), 168(a) (c); 197

(Chirelstein section 6.08; 6.09(a); 6.10) (Textbook pp. 544-51)

(E&E Ch. 5(H)).

Handout: Cost Recovery or Depreciation Deductions
C. Ordinary and Necessary (Code § 162(a)) (Chirelstein section 6.04)(Textbook pp. 530-37)(E&E Ch. 5(G).

Gillian v. Commission

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Assignment 25 (Be sure to bring Code/Regs)

VII. CAPITAL GAINS AND LOSSES


A. Background, Statutory Framework and Policy (Code §§ 1(h), 64, 65, 1202(a), 1211, 1221, and 1222)

(Chirelstein section 16)(Textbook pp. 665-71) (E&E Ch. 8(A-C)).


Handout: Capital Gains Preference - Summary of Policy Debate
B. Property Held Primarily for Sale to Customers (Code §§ 1221(1) and 1237) (Chirelstein section 18.01 (Textbook pp. 671-84)

Bielfeldt v. Commissioner

Biedenharn Realty Co. v. United States

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Assignment 26
C. Transactions Related to the Taxpayer's Regular Business (Code § 1231) (Chirelstein section 17.02 )(Textbook pp. 684-95)

Corn Products Refining Co. v. Commissioner Arkansas Best Corp. v. Commissioner


Handout: Business Hedges

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Assignment 27


  1. Splitting of Income

(Textbook pp. 601-10) (Chirelstein section 8.01) (E&E Ch. 7(A).

Lucas v. Earl

Poe v. Seaborn



5/23/17


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