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					               FEDERAL PERSONAL INCOME TAX – FALL 2012
                            LAW 647-001

                               Professor Benjamin Leff

                                     SYLLABUS

Required Texts:

     Casebook (“CB”): Michael J. Graetz and Deborah Schenk, FEDERAL INCOME
      TAXATION: PRINCIPLES AND POLICIES (Foundation Press 6th Edition).

     Code and Regulations: Steven A. Bank and Kirk J. Stark, SELECTED SECTIONS:
      FEDERAL INCOME TAX CODE AND REGULATIONS (Foundation Press 2011-12, but a
      prior version will work).

     Also, the entire tax code is available online at various sites, including
      http://www4.cornell.edu/uscode/26; the regulations are available at
      http://www.gpoaccess.gov/cfr/retrieve.html (Treasury Regulations are Title 26).

Recommended Text: Marvin A. Chirelstein and Lawrence Zelenak, FEDERAL INCOME
     TAXATION (Foundation Press 12th, but a prior version will work).

Classroom attendance/participation policy: Class meets Monday and Wednesday
       between 11:00 and 12:50 PM in room _____. I urge all students to come to class
       regularly having done the reading. Class attendance and participation are
       mandatory. If a student’s grade on the final exam is on the borderline between
       two grades, excellent attendance and preparation may result in an upward
       adjustment.

Exam: The exam will be a three-hour, in-class, open book, closed internet, exam. The
      exam will be held on_____________________________.

Office Hours: Wednesdays 2:00 to 4:00 (or feel free to drop by or email for an
       appointment). Office: 404. Email: bleff@wcl.american.edu.

Assignments Tentative: This syllabus is subject to change. Please note changes
      announced in class or posted on the course website.


Holidays: WCL has cancelled classes on 9/3 and 9/26. In addition, I have cancelled class
      on Monday, 9/17, because of Rosh Hashana. We will have to find an acceptable
      time to make up that one missed class.




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    I.    INTRODUCTION TO FEDERAL INCOME TAXATION

            1. Overview of class; overview of federal income taxation
                  CB 1-4, 12-27 (introduction, current taxes, terminology);
                  CB 71-74, 78-80, 85-88 (notes on administering the tax code)

    II.   GROSS INCOME

            2. Compensation for services
                 CB 28-41 (intro to income tax policy)
                 CB 96-102 (Old Colony Trust Co. v. Comm’r, U.S. 1929).
                 CB 130-133 (barter income v. imputed income).
                 IRC §61

            3. Special Cases (Gifts, Prizes and Awards, Scholarships)
                  CB 133-139 (Comm’r v. Duberstein, US 1960; notes (A), (B));
                  IRC §§ 102(a), 102(c)
                  CB 142(H)-143; IRC §74(a)
                  CB 144(C); IRC §117(a)-(c)(1)

            4. Fringe Benefits – Common law and §119
                  CB 103-104 (“introductory note on fringe benefits”);
                  CB 120-129 (U.S. v. Gotcher, 5th Cir. 1968, and notes);
                  IRC §119
                  Handout: Problem 1 Gifts
                  Handout: Comm’r v. Kowalski, 434 U.S. 77 (1977).

            5. Fringe Benefits II -- §132
                  CB 111-118, stop before (C).
                  Handout: Obama’s Mother-in-law
                  IRC §§132(a) through (e).
                  Skim Treas. Regs. §§1.132-2, 1.132-6.

            6. Constitutional Issues
                  Handout: Constitution Art. I, §§2, cl. 3; §9, cl. 4; 16th Amendment
                  Handout: Nat’l Fed. of Indep. Bus. V. Sebelius, 567 U.S. __ (2012)
                  Handout: The Health Insurance Mandate, Tax Notes Today (2010)

            7. Recovery of Capital and Basis
                  CB 145-151 (Notes on capital recovery and basis)
                  Handout: Problem 2 (Basis and Gain)
                  Handout: Garber v. United States, 5th Cir. 1979
                  IRC §§ 1001(a), 1012.

            8. Realization
                  CB 154-166 (Note on realization; Cesarini v. U.S., N.D. Oh 1969;
                  Haverly v. U.S., 7th Cir. 1975; Eisner v. Macomber, US 1920)

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             9. Illegal income, Discharge of Indebtedness
                    Handout: Review of Realization
                    CB 179-187 (Collins v. Comm’r, 2d Cir. 1993)
                    CB 187-194 (Zarin v. Comm’r, TC 1989)
                    Handout: TBA

    III.   DEDUCTIONS

             10. Profit-Seeking Expenditures
                    CB 228-237 (Welch v. Helvering, US 1933; Gilliam v. Comm’r,
                    TC 1986);
                    CB 237-245 through (B)(Exacto Springs v. Comm’r, 7th Cir. 1999)
                    Handout: Menard v. Comm’r, No. 08-2125 (7th Cir. 2009)
                    IRC §§62(a)(1), 162(a), 162(m)

             11. Expenses Contrary to Public Policy
                    CB 246-251 through (F) (Comm’r v. Tellier, US 1966);
                    Handout: Tank Truck Rentals v. Comm’r, US 1958
                    Handout: Treas. Reg. §§ 1.162-1(a); 1.162-21(b)
                    IRC §162(f)

             12. The Business/Personal Borderline: Lobbying, Clothes, Travel
                    Introduction: CB 252-254 (“lobbying”);
                    CB 258-266 stop before (C) (Pevsner v. Comm’r, 5th Cir. 1980)
                    CB 268-270 (to top of page)(“ travel expenses”);
                    CB 271-280 (through (F)) (Hantsis . Comm’r, 1st Cir. 1981)
                    IRC §§162(e); 162(a)(2); 262

             13. Tax Crimes and Controversy
                    Guest Lecturer – [Reading TBA]

             14. The Business/Personal Borderline: Meals, Home Office,
                 Gambling, Hobbies
                    CB 281-289 (Moss v. Comm’r, TC 1983; Section 274(n))
                    CB 289-293 (stop before (D)); IRC §280A(a) and (c)(1).
                    IRC §274(a), (k), (n)
                    CB 376-383 (Plunkett v. Comm’r, TC 1984)
                    IRC §183

             15. Personal Deductions: Personal Interest, Taxes,
                    CB 255-256 (employee business expenses) IRC §§212, 67
                    Handout: Hamper (TC 2011)(misc. itemized deductions)
                    CB 421-423 (§§62(a)(skim), 63(a) and (b))
                    CB 352-354, (home mortgage interest) IRC §§163(h);
                    CB 431-433 stop before “Foreign tax credit” (taxes) §164

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             16. Personal Deductions: Casualty Losses, Medical Expenses,
                 Charitable Contributions
                    CB 383-388 (casualty losses) IRC §§165(c)(3); 165(h)
                    CB 455-463 (medical expenses) IRC §213(a),(b),(d)(1),(d)(9)
                    CB 435-443 (charitable contributions) IRC §170(a)(1), (c)(2)
                    Handout: TBA
                    [Midterm Evaluations]

    IV.   THE BUSINESS/CAPITAL EXPENDITURE BORDERLINE

             17. Introduction to Capital Expenditures:
                     CB 294-296(Tax Impact of the Capitalization Requirement);
                     CB 301-306 (through A) (Note on the Distinction Between
                     Deductible Expenses and Capital Expenditures; Woodward v.
                     Comm’r, US 1970);

             18. Capital Recovery – Depreciation:
                    CB 336-339; in 343-347, read (C)(D)(E)(H).
                    Handout: Broz v. Comm’r, 137 TC No. 3 (2011)
                    IRC §167(a), 168 (just skim)

    V.    POTENTIAL ABUSE

             19. Economic Substance Doctrine:
                    CB 350-352; 360-364 (Knetch v. US, US 1960, and notes)
                    CB 166-171 (Cottage Savings through (B));
                    CB 388-392 (through (D)) (Fender v. US, 5th Cir. 1978)
                    IRC §§267(a)(1) and (b)(2); 1091(a)

             20. Corporate Tax Shelters:
                    CB 790-815
                    IRC §7701(o)
                    Handout: IRS Notice 2010-62

    VI.   CAPITAL GAINS AND LOSSES

             21. Introduction: History and Rationale: CB 536-551
                 IRC §§1(h)(1), 1001, 1012, 1211(b), 1212(b), 1221(a)(1)
                 What is a Capital Asset I: CB 551-565

             22. What is a Capital Asset II: CB 571-584

             23. Nonrecognition of Gain or Loss: CB 644-646
                 Handout: Klein, Bankman, Shaviro at 224-231
                 Handout: Cal. Fed. Life Ins. v. Comm’r, 680 F.2d 85 (9th Cir. 1982)
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                 IRC §§ 1031, 121, Treas. Reg. 1.1031(a)-1(b), (c)

    VII.   FAMILIES AND THE TAX CODE

              24. Marriage: CB 464-474
                  Handout: CCA 201021050 (California Domestic Partners)
                  Handout: Gill v. OPM, 682 F.3d 1 (1st Cir. 2012)
                  IRC §§1(a)-(d), 2(b)

              25. Divorce and Innocent Spouse
                  CB 476-484
                  Handout: Banach v. Commissioner
                  Handout: Porter v. Comm’r, 132 T.C. No. 11 (2009)
                  §§71, 1041, 7703(a)(1)

              26. Assignment of Income/ Alternative Minimum Tax (AMT):
                  CB 489-496
                  CB 776-789

              27. Low-Income Taxpayers: CB 424-428
                  Handout: IRS Publication 596 (Earned Income Credit)(just skim!)
                  Handout: Shaviro, Effective Marginal Tax Rates
                  Handout: CBO Effective Tax Rates
                  Handout: Taxing Families Data Sheet
                  IRC §§32, 151, 24

    VIII. TAX LAWYER ETHICS

              28. Tax Lawyer Ethics: CB 816-818; 823-838
                  Handout: Tax Shelter Registration Memo




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