Four hour credit. No prerequisites.
Federal Income Tax (FIT) presents an overview of the federal income tax. The aim of the course is to present the fundamental principles underlying the federal income tax and to convey the style and flavor of tax thinking. As a survey, FIT will touch on all the major issues, such as what is gross income, what expenditures are deductible, what is the appropriate taxable unit, what is the function of "basis," and what is the appropriate timing of income and deductions. Specific topics that will be covered in reasonable depth include: employee fringe benefits, business deductions (e.g., travel, entertainment, and education), hobby losses, personal deductions (e.g., medical expenses and charitable contributions), the exclusions for gifts, bequests, life insurance proceeds, and recoveries for personal injuries, income attribution, the taxation of the family (including divorce taxation), the tax treatment of loans, capital expenditures, methods of capital recovery (e.g., installment and carve-out sales and depreciation methods), capital gains and losses, tax-free exchanges and rollovers, the tax treatment of inventories, tax accounting (e.g., the cash and accrual methods), employee benefits, leasing and licensing transactions, tax shelters, the at- risk rules, the "tax benefit" rule, the passive loss rules, original issue discount and imputed interest, and the alternative minimum tax.
Professor Johnson emphasizes the impact of tax on pretax return. "Internal rate of return" is the universal yardstick to measure investments, and clients need to know how tax effects internal rate of return.
Given the rapid evolution of tax law, many issues will be approached from a policy perspective. Some emphasis will be given to using the Internal Revenue Code and Regulations. Depending on the instructor, other approaches may be employed, such as the relation of tax to accounting, economics, and finance, the planning of transactions, and the practice of tax law. Prior background in accounting, economics, math, or finance is not needed or expected.
Johnson, Calvin H.