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					                            FEDERAL INCOME TAXATION
                                       Fall, 2009
                               Prof. Patricia C. Bradford

         (1) Burke and Friel, Taxation of Individual Income, (8th ed., LexisNexis)
             including the 2009 Supplement available at
         (2) Hudson and Lind, Federal Income Taxation, (10th ed., Thomson West).
         (3) Lathrope, Selected Federal Taxation Statutes and Regulations (2010 edition)

Office: Room 227

E-mail: Students are encouraged to e-mail questions as
they arise. I will give detailed answers to your questions about the assignments for this
course after they are covered in the classroom. Try your best to solve all of the problems
on your own so that we can determine exactly where you need extra help. Do not be
surprised if your class preparation for this course takes three hours per class session,
especially as the semester progresses. This is definitely a class in which you learn by

Telephone: 414-288-5375(o); 262-242-1662 (h)

Office Hours: Thursdays and Fridays 12:00 – 1 p.m.
Also available by appointment Monday, Tuesday, Thursday and Friday – call or e-mail
for an appointment at least one day in advance.

(Please note: Appointments are important so that I can maintain a work schedule. They
are not designed to deter you from seeing me outside of class. I encourage you to see me
whenever you need extra help with this course. Please do not wait until the end of the
semester. Especially toward the middle of the semester, assignments tend to build on
each other and therefore, it is important that you seek help whenever you are confused.)
                          FEDERAL INCOME TAXATION
                                     Fall, 2009
                             Prof. Patricia C. Bradford

CB – Casebook
BL – Black Letter Outline
S – 2009 Supplement to Casebook

Aug. 27   Introduction                                                   Introduction
                                                                         (posted on
                                                                         CB 1-20
                                                                         S 1-2
Sept. 1   Gross Income: Concepts and Limitations                         CB 21-53
           IRC § 61                                                      BL 33-47
           Reg. §§ 1.61, 1.61-2(a)(1), 1.61-2(d)(1), 1.61-2(d)(2)(i),
           1.61-8(a), 1.61-9(a), 1.61-11(a), 1.61-14(a)
          Problems 1-2                                                   CB 21-22
Sept. 3   The Effect of an Obligation to Pay                             CB 55-58
           Reg. §§ 1.61-8(b), 1.61-14(a)                                 middle of
                                                                         CB 60-78
                                                                         BL 279-280
          Problems 1-4                                                   CB 55-56
Sept. 8   Gains Derived from Dealings in Property                        CB 79-92
            Reading and rereading pages 82-90 of the casebook will be
          well worth your time.
           IRC §§ 61(a)(3), 1001(a), (b) and (c), 1011(a), 1012. (Skim   BL 47-50
           IRC § 1016(a)(1), (2).)                                       BL 58-60
           Reg. §§ 1.61-6(a), 1.1001-1(a), 1.1001-2(a)(1),               Adjustments to
                                                                         Basis and
           1.1001- 2(a)(3)                                               Apportionment of
                                                                         BL 63-67
          Problems 1-4                                                   CB 79-80
Sept. 11   Exclusion for Gifts Bequests, and Inheritance                  CB 93-114
            IRC §§102, 1014(a), 1014(b)(1), 1014(b)(6), 1014(e),          BL 74-76
            1015(a), 1015(d)(1)(A) and 1015(d)(6)                         BL 50-54
            Reg. § 1.102-1(a)-(c), Prop. Reg. §1.102-1(f), Reg. §§        Omit Effect of Gift
            1.1001-1(e), 1.1014-2(a)(5), 1.1015-1(a), 1.1015-4
                                                                          BL 55-56
           Problems 1-9                                                   CB 93-94
Sept. 15   Exclusion of Gain from the Sale of a Personal Residence        CB 115-130
            IRC §121 (omit (d)(4) and (5) and (e))                        S 4-5
            Regs. § 1.121-1(a), (b)(1), (2) and (4) Examples 1 and 2,     BL 96-98
           (c)(1), (2), (4); 1.121-2; 1.121-3; 1.121-4(a), (b), (g)
           Problems 1(a)-(b)                                              CB 115-116
           Problem 3 (See Reg. §1.121-4(a).)
           Problem 5 (See Reg. §1.121-1(b)(2).)
Sept. 17   Exclusion for Compensation for Personal Injuries or Sickness   CB 181-194
            IRC §104(a) and (c) and §62(a)(19) and (e)                    Omit B. Accident
                                                                          and Health
            Reg. §§ 1.104-1(a)-(d)                                        Insurance
           For the amount of the medical expense deduction, see Form      S 13-20
           1040, Schedule A, Lines 1-4 available at                       CB 195-201
                     BL 78-82
                                                                          Stop at 3)
                                                                          Recoveries Under
                                                                          Accident or Health

           Problems 1-3                                                   CB 181-182
Sept. 22   Deductions for Business and Profit Seeking Expenses           CB 241-276
            IRC §§ 162(a) and (m), 195, 212 and 262. Skim § 199.         S 22-28
            Reg. §§ 1.162-1(a), 1.162-2(a), 1.162-6, 1.162-7, 1.162-8,   BL 107-116
            1.162-9, 1.212-1(b), (e), (f), (l), (o).                     BL 122 4)
                                                                         BL 125-127:
                                                                         Re: Rentals
                                                                         BL 134 3)
                                                                         BL 135-140
           Top Ten Odd Ball Tax Deductions -

           See Form 1040, Line 12
           Form 1040, Schedule C
           See Form 1040, Line 17
           Form 1040, Schedule E

           Regarding Employee Business Expenses and Section 212
           Investment Expenses, see Form 1040 Line 40
           and Form 1040, Schedule A Lines 20-26

            Problem 1 Consider whether all or part of the salary and/or CB 241-242
           bonus paid to Brennan satisfy the requirements in IRC § 162
           for deductibility. For part (b), consider the follow: When
           compensation beyond a reasonable level is paid, the
           unreasonable portion is not deductible. The excessive portion
           of compensation paid to a shareholder is considered a
           dividend received by the shareholder that the corporation may
           not deduct. (Nondeductible constructive dividends do not
           have to be excessive compensation. They also can include
           excessive rent paid to a shareholder who owns property that
           the corporation leases. Constructive dividends also take the
           form of allowing a shareholder to use property owned by the
           corporation for personal or family reasons, such as for
           entertainment unrelated to the corporation’s business. The
           amount of the constructive dividend is generally the fair rental
           value of the property for the time it was used by the
           shareholder. However, if the corporation has no use to for the
           property and appears to have purchased it primarily for the
           use of a shareholder or his/her relative(s), the IRS may assert
           that the amount of the constructive dividend is the fair market
           value of the property.) If a constructive dividend (such as
           excessive compensation or excessive rent) is paid to a relative
           of a shareholder, then the excessive portion will generally be
           considered a constructive dividend (gross income) to the
           shareholder who is deemed to make a non-deductible gift of
           that amount to the relative who actually received the
           excessive compensation or rent. The gift is excluded from the
           relative’s gross income if the requirements in IRC § 102 are
           met. A similar analysis is used when a relative of a
           shareholder is allowed to use corporate property. The fair
           rental value of the property for the time it was used by the
           relative (or possibly the fair market value of the property) is
           considered a constructive dividend to the shareholder who is
           deemed to make a non-deductible gift to the relative of the
           amount included in the shareholder’s gross income. The gift
           is excluded from the relative’s gross income if the
           requirements in IRC § 102 are met.
             Problem 2 Consider the “ordinary” and “necessary”
             Problem 3 Consider the rules applicable to the application of
           the “Carrying on” requirement to employees. CB p. 261-263
           and 272-273 and BL p. 113 re: Expenses Incurred in
           Obtaining Employment as an Employee. See also BL p. 122
           re: Travel for Business and Personal Reasons.
             Problem 4 See CB p. 273-276; BL 134 re: Uniforms and
           Work Clothing.
             Problem 5 See the indented paragraph at CB p. 261
             Problem 6 Read IRC §§ 212, 265(a)(1) and BL p. 135 re:
Sept. 24   Capital Expenditures                                              CB 277-308
             IRC §§ 263(a), 161, 162(a) [focus on the word “expenses”];      S 29
           Reg. §§ 1.263(a)-1, -2; 1.162-3, -4, -6; 1.263(a)-4(d)(3)         BL 108-111
           [prepaid expenses must be capitalized]; 1.263(a)-4(f)(1) and
           (8) Examples 1, 2 and 6 [12 month rule exception to rules
           regarding capitalization of intangibles such as insurance
           premiums and leases].
             Note: The goal is to get a rough sense of when an
           expenditure is an business or profit seeking “expense” or a
           capital expenditure (which is not currently deductible, but
           may be deducted over time if the expenditure satisfies the
           requirements for the amortization or depreciation deductions
           under IRC §§167, 168 and/or 197). Many times the answer is
           not clear and the quality of the answer is based on the quality
           of the analysis (i.e., application of the possible rules to the
             Problems 1 and 2
           Problem 1 – Special Instructions follow                           CB 277-278
               (a) – See Reg. § 1.162-4
               (b) and (c) - See IRS Publication 535, page 3 at
               (d) Review CB p. 293
               (e) Reg. §§ 1.263(a)-2(a) and 1.263(a)-4(f)(1) and (8)
               Examples 1, 2 and 6
               (f) Reg. § 1.263(a)-4(f)(1) and (8) Example 1
               (g) Reg. § 1.162-3
               (h) Reg. § 1.263(a)-2(c) and CB p. 285 first paragraph
               (i) Read CB p. 294 D.
               (j) Reg. § 1.263(a)-4(c)(1)(vi); Reg. § 1.263(a)-4(e)(4)(i)
               and (ii)(A) and (B); and CB 294-299 [Idaho Power]
           Problem 2 – CB p. 292-293 (expansion costs). For the second
           question, see IRC § 195 (start-up costs).
Sept. 29   Depreciation                                                      S 30
Oct. 1-      Note: The method for computing depreciation deductions          CB 309-350
Oct. 6     depends upon whether the property is intangible personal          S 31-32
           property, tangible personal property or real property. (Of
           course, before calculating the amount of a depreciation
           deduction it is crucial that you first determine that the
           property qualifies for the depreciation deduction.)
            Generally, the term “personal property” refers to items that
           are movable and the term “real property” refers to items
           which are immovable. For example, a mobile home is
           personal property; however, if the wheels are removed and it
           is placed on a permanent foundation, it becomes real property.
           Intangible property generally represents some other type of
           property. For example, shares in a corporation (stock)
           represent a claim to corporate profits and assets. Another
           example, a dollar bill is a claim on the U.S. Treasury. Other
           types of intangibles include customer lists, subscriptions lists,
           goodwill, going concern value, etc. [knowledge based assets].

             IRC § 167(a) and (c)(1), Reg. § 1.167(g)-1
             IRC § 168(a)
            For tangible personal property, IRC §§179 (especially
           subsections (a), (b)(1), (2), (3) and (7), (c), (d)(1)-(3) and
           (10)) [bonus depreciation], 168(k)(1), (2)(A), and (D)(iii)
           [additional first year depreciation], 168(b)(1)(A) [depreciation
           method - accelerated], 168(b)(4) [salvage value treated as
           zero], 168(e)(1) and (3) [classification of property], then
           168(c) [recovery period], and 168(d)(1) [half-year
            For real property, IRC §168(b)(3) [depreciation method –
           straight line], 168(b)(4) [salvage value treated as zero],
           168(e)(2) [classification of real property as “residential rental
           property” or “non-residential real property”], then 168(e)
           [recovery periods – 27.5 years for residential rental property
and 39 years for non-residential real property], and 168(d)(2)
[mid-month convention].

Problem 1 (see IRC § 167 and assigned cases)                     CB 309

Problem 2 (a), (c), (d) and (e)                                  CB 309-310
  For (a), review CB p. 320-321. Use the Table on page 344       as revised in
to compute depreciation deductions. For part (a)(5), read the    the 2009
last sentence of the only full paragraph on page 319. Since      Supplement
the Table assumes that the property is being used for the full   on page 30
year, you must apply the half-year convention in the year of
disposition by reducing the depreciation deduction calculated
using the Table by one-half. (The Table builds in the
convention for the year of acquisition so you do not reduce
the first year’s depreciation deduction by one-half when using
the Table. Also, review CB p. 322 (Relationship Between
Basis and Depreciation)
  For (c), review CB p. 322-324 (Section 179 – Expensing
Tangible Personal Property)

Problem 3 (The $10,000 cost basis for the leasehold interest is CB 310
amortized over the ten year term. (See Reg. §1.162-11(a).)
Thus, the deduction allowed is $1,000 per year. However,
since the lease was entered into on March 30, the deduction
will be only $750 for the first year ($1,000 x ¾ of a year). A
deduction of $250 will be allowed for the 11th year of the
lease for the months of January, February and March.)

Problem 4(a) The answer to Problem 4(a) is “no.” Why? Is         CB 310
real property personal property? Review my note at the
beginning of this assignment.
Problem 4(b) Use Table 6, page 349 to compute the                CB 310
Oct. 8   Deduction for Losses and Bad Debts                                  CB 351-375
          IRC §§ 165(a)-(f), (g)(1), (g)(2), 166                             S 33-37
          Reg. §§ 1.165-1, 1.165-4(a), 1.165-9, 1.166-1(c), (d)(1), (e),     BL 146-149
         1.166-2(a), (b), (c), 1.166-5(b), (d).

         Problem 1 [See IRC § 165(c)(1) and Reg. § 1.165-1(b)]               CB 351
         Problem 2 [See IRC § 165(c)(2) and (g)(1)]                          CB 351
         Problem 3 [Compare IRC § 165(a) and (c); Review my                  CB 351
         comments regarding constructive dividends that accompany
         the assignment for Sept. 18 above.]
         Problem 4(a) [See Reg. §§ 1.167(g)-1 (depreciation) and             CB 352
         1.165-9(a) (loss deduction)
         Problem 4(b) [See Reg. §§ 1.167(g)-1 and 1.165-9(b) and (c)         CB 352
         and IRC §§ 1001(a), 1012 and 1016. Review CB p. 357]
         Problem 5 [See IRC §§ 1014 (basis of inherited property) and        CB 352
         165(c). Review the second paragraph on p. 357 of the
         Problem 6 [See IRC § 166(d)(1) and Reg. §§ 1.166-1(c) and           CB 352
         1.166-2(b). For the second question, see Reg. § 1.166-1(e).]
         Problem 7 [With respect to the loan and whether it was a            CB 352
         business or non-business bad debt, see the Generes case. With
         respect to whether the adjusted basis of the stock is deductible
         as a loss, see IRC §§165(c)(2) and (g). Compare Reg. §
         1.165-1(b). Later you will learn that since corporate stock
         held for investment is a capital asset and IRC § 165(g)(1)
         states that the loss resulting from worthlessness is treated as a
         loss from a sale or exchange, the loss will be a capital loss. If
         the stock has been held for more than 1 year (using the last
         day of the taxable year in which the stock became worthless
         as the date of disposition), then the loss will be a long-term
         capital loss.]

         Limitations on Deductions (covered more extensively in
         more advanced tax classes)
                  Losses on sales and exchanges of property between
         related parties (such as certain relatives or a shareholder and a
         controlled corporation) are not deductible. (IRC § 267)
                 Expenses relating to the production of tax-exempt
         income are not deductible. (IRC § 265(a)(1)) Review
         problem 6 on page 242 of the casebook.
                  Losses on sales or other dispositions of stock or
         securities are disallowed if the taxpayer has acquired
         “substantially identical stock or securities” (or has entered
         into a contract or option to acquire) substantially identical
         stock or securities within the period beginning 30 days before
         the date of the sale and ending 30 days after the sale of the
         stock or security at issue. (These types of sales are called
          “wash sales.”) (IRC § 1091.)
                 Hobby Losses (IRC § 183) Read the brief discussion
          that can be downloaded at

          It contains a useful client letter explaining the hobby loss
Oct. 13   Interest Deduction                                               CB 511-521
              IRC §§ 163(a), (d), (h), 461(h)                              Stop after
                                                                           footnote 6
          “Rent to Get Richer”                                             BL 180-185


          See Form 1040 Line 40
          See Form 1040, Schedule A Lines 10-14

          Problems 1(a) See IRC §§ 163(a) and 163(h)(2)(A); cf. IRC §      CB 511-512
          Problem 1(b) See IRC § 163(h)(1) and (2).
          Problem 1(d) See IRC §§ 163(a), 163(h)(2)(A) and 461(g)
          Problem 1(e) Review CB p. 518-520
          Problem 2(a) Review CB p. 516 (last paragraph) – 517 and
          CB p. 520-521
          Problem 2(b)-(c) Review CB p. 516 (last paragraph) – 517

          Deduction for Taxes                                              CB 529-535
             IRC § 164(a), (b)(1), (2) and (5),(c), (d)(1), (f) and 275.   S 41
             Reg. § 1.164-1(a), 1.164-2(a) and (g), 1.164-3(a) and (b),    BL 185-187
             1.164-4(a) and (b)(1)
          See Form 1040 Line 40
          pdf/f1040.pdf                                                    CB 529
          See Form 1040, Schedule A Lines 5-14

             Problem 1(a)-(b) See IRC §§ 164(a)(3) and 164(b)(5)
             Problem 1(c) See the flush language following IRC §
          164(a)(5) especially the second sentence. See also IRC § 162
             Problem 1(d) See Reg. § 1.164-2(f); cf. IRC §§ 162 and
            Problem 1(e) See IRC § 275(a)(1)(A) and Reg. § 1.164-2(a).
          Compare IRC § 164(f) allowing one-half of self-employment
          taxes (e.g., social security taxes paid by a self-employed
          individual) to be deducted from gross income when
          computing adjusted gross income. This deduction is not an
          itemized deduction and therefore, a self-employed person can
          claim the deduction for one-half of self-employment taxes
          even if he or she takes the standard deduction instead of
          electing to itemize his or her deductions. See Form 1040,
          Line 27
           Problem 1(f) See IRC § 275(a)(1)(C); Reg. § 1.164-2(a)
           Problem 1(g) See IRC § 164(c)(1); Reg. § 1.164-4
           Problem 1(h) See flush language following IRC § 164(a)(5);
          cf. IRC §§ 162 and 212
           Problem 1(i) See the last paragraph on CB p. 533
           Problem 2 Review CB p. 532-533
           Problem 3 Review CB p. 534-535
Oct. 15   Capital Gains and Losses
              Introduction                                                    BL 347
              Historical Overview                                             CB 737-745
                 Preferential Treatment for Long Term Capital Gain
                    IRC § 1222 - Note the words “capital asset,” “sale or
          exchange” and the requirement that the asset be held for more
          than 1 year for the gain or loss to be classified as “long-term”.   CB 745-746
                 Limitation on the Deduction of Capital Losses
                    IRC § 1211(b)
                 Justification for Preferential Capital Gain Treatment        CB 746-747

            Definition of a Capital Asset                                     BL 357-364
              IRC § 1221(a)                                                   CB 759-764

                 Problem I.A. 1(a)-(j)                                        CB 737
                  For (a), see IRC § 1221(a)(1)
                  For (b), see IRC § 1221(a)(2)
                  For (c) and (d), see IRC §§ 1221(a)(2) and 167
                  For (e) and (f), see IRC § 1221(a)(4)
                  For (g), cf. IRC §§ 1221(a)(2) and 167
                  For (h), see IRC § 1221(a)(3)
                  For (i) and (j), review IRC § 1221(a)(1)-(8). If none
          of these subsections apply, then IRC § 1221(a) states that the
          property is a capital asset.
                Problem I.A. 2 CB p. 761-762 and read the Bynum case          CB 737-738
          on page 771
                Problem I.A.3 Read BL p. 363 [Income Property] and            CB 738
          the Hort case on page 782]                                          CB 713

           The “Sale or Exchange” Requirement                                 CB 767-769
                Review IRC § 1222                                             BL 364-366
                                                                              Stop at 4)
           Holding Period                                                     BL 368-371
               IRC § 1223 (Note § 1223(2) [tacking of donor’s holding
          period for gifts] and § 1223(9) [more than one year holding
          period for property acquired from a decedent and sold within
          one year of the decedent’s death]

           Current Law
             Treatment of Capital Gains                                     CB 747-759
                IRC §§ 1222 and 1(h)
             Qualified Dividend Income
                IRC § 1(h)(11) and (h)(3)

                   Problems I.B.1, 3-4 Read BL 348-352                      CB 738
                   Problem I.B.5 Read BL 352-353 through 1) Losses          CB 738-739
          to the Extent of Gains and BL p. 353 Netting Long-Term
          Capital Gains Against Long-Term Capital Losses. (Note the
          sentence regarding excess net short-term capital losses that is
          just before the example on page 354.
                   Problem I.B.6 Read BL 355 Capital Loss Carryovers        CB 739
Oct. 20   Miscellaneous Capital Gain/Loss Issues
                  Problem I.C.1(a) and (b) [See discussion on page 764-     CB 739
          767 and read the Arkansas Best case on page 777]

             The Arrowsmith Rule – Characterization of Certain Gains        BL 372-373
          or Losses Dependent on Prior Tax Treatment of Related
          Gains or Losses

             Problem I.C.2                                                  CB 739

             Special Sale or Exchange Rules                                 BL 364-366

              Problem I.C.3 [See IRC § 165(g)(1)]                           CB 739
              Problem I.C.4 [Review CB pages 767-769]                       CB 739
Oct. 22   Note: When completing this assignment you should first
          download the document entitled “Quasi-Capital Assets –
          Mechanics of Sec. 1231” at


          Review (and annotate) this document as you are reading the
          assignment and when determining the answers to the

          Quasi-Capital Assets: Section 1231                                CB 795-804
            IRC §§ 1221(a)(2), 1231                                         BL 376-379
            Reg. § 1.1231-1(d)

             Problem 1(a), (b), (c) and (d). [Omit (e).]                    CB 795
             Problem 2
             Problem 3
Oct. 27   Recapture of Depreciation
            Overview                                                       CB 805-807
                                                                           BL 380-381
             Section 1245 Recapture (Personal Property)                    CB 808-809
                IRC §§1245(a)(1), (2), (3)(A), 1245(b)(1), (2), 1245(c),   BL 381-384
                1245(d), 179(d)(10)
                Reg. §§ 1.1245-1(a)(1), 1.1245-1(d), 1.1245-2(a)(1),
                1.1245-2(a)(3), (4), (7), 1.1245-3(b), 1.1245-4(a)(1),
                1.1245-4(b)(1), 1.1245-6(a), 1.179-1(e).

             Problems 1 and 3                                              CB 805
          Problem 1: Before completing this problem, review pages
          322-324 (especially the example on page 324). When
          computing the ACRS depreciation deductions use Table 1 on
          page 344 of the casebook. Do not forget to apply the half
          year convention in the year of disposition.

          Problem 3: Review Reg. § 1.179-1(e)(1), (2), (3) and (5)

          Section 1250 Recapture (Real Property)                           CB 809-810
                IRC §§ 1250(a)(1)(A), 1250(a)(1)(B)(v), 1250(b)(1),
                1250(b)(3), 1250(b)(5), 1250(c), 1250(d)(1), (2),
             Unrecaptured Section 1250 Gain                                CB 810-811
                IRC § 1(h)(1)(D) and (h)(6)

             Problem 4                                                     CB 777

          Section 1239 Ordinary Income                                     CB 812
          Other Recapture Provisions                                       CB 812
Oct. 29   Accounting Methods
           Download and read the document entitled “Methods of
          Accounting” available at


          Installment Sales                                                 CB 985
           Download and use the document entitled “Summary of               CB 987-988
          Installment Method Computations” to complete this                 Part A only
          assignment. It is available at                                    CB 989-993
            BL 266-268
          ent.aspx?postingID=4407019&courseID=82515                         (top)
                                                                            BL 269
                                                                            (middle) -
             IRC §§ 453(a), (b), (c), (d), (f)(7)

                 Problems 1, 6, 7 and 8                                     CB 985
Nov. 3     Non-Recognition of Gain and Loss – Like Kind Exchanges           CB 919-936
             IRC §§ 1031(a)-(d), (f)                                        S 62-66
           There are three documents to download for this assignment.       BL 282-290
          They are: (1) General Rules for Taxable and Like-Kind
          Exchanges available at

          (2) Like Kind Exchanges Flow Chart available at

          ent.aspx?postingID=4407037&courseID=82515 and
          (3) Starker or Three-Way Exchanges available at


             Problems 1(a), (c), (c)(i), (c)(ii), (d), (e) and 2            CB 919-920
Nov. 5    Non-Recognition of Gain - Involuntary Conversions                 CB 959-969
             IRC §§ 1033(a)(1), (a)(2)(A), (a)(2)(B), (a)(2)(E)(ii),
             1033(b)(1), (b)(2), 1033(g)(1), (g)(2), (g)(4), (h), (i)(1),
              (i)(2)(c), (i)(3)
             Download and review the document entitled “General
          Rules for Involuntary Conversions” as you complete this
          assignment. It is available at


             Problem 1(a)-(b)(i) and (ii)                                   CB 959
Nov. 10   Discharge of Indebtedness Income                                 CB 163-179
             IRC §§ 61(a)(12), 102(a), 108(a), (b)(1)-(2), (c),            S 7-12
             (d)(1)-(3), (d)(9), (e)(1), (2), (4), (5), 1017(a), (b)(1),   BL 84-89
             1017(b)(2), (b)(3)(A) and (B).
             Reg. §§ 1.61-12(a), 1.108-2(a), (b)
             Download and review the document entitled “Steps for
          Determining the Taxation of Discharges of Indebtedness” as
          you complete this assignment. It is available at


             Problems 1-3                                                  CB 163-164
Nov. 12   Nonrecourse Debt: Basis and Amount Realized Revisited            CB 885-919
             IRC §§ 1012, 7701(g)                                          S 61
             Reg. §§ 1.1001-2(a), (b), (c) Examples 1, 2, 7 and 8
          Problems 1 – 4 and 6. [Make sure answer to problem 3 is          CB 885-886
          consistent with answer to problem 2.]
Nov. 17   Limitations on Tax Shelters                                      CB 1067-
             See IRC § 465 – At Risk Rules                                 1072
             See IRC § 469 – Passive Loss Rules                            CB 1075-
          This material will be discussed very generally and you should
          read the chapter so that you are aware of these important
          limitations. Both sections are covered in depth in Taxation of
          Partnerships and S Corporations; however, it is important to
          be generally aware of these limitations for your own
          investment decisions as well as to understand the manner in
          which certain purchases are financed.

          Sale of a Business                                               CB 1005-
                                                                           CB 1008-
                                                                           CB 1018-

          Problem 1 (Pay special attention to subpart (a). This is an      CB 1005-
          excellent way to review many rules we learned regarding          1006
          characterization of gain and the applicable tax rates.)
Nov. 19-   Tax Consequences of Divorce                                  CB 859-875
Nov. 24      IRC §§ 61(a)(8), 71, 151(c)(1) and (3), 152(a) and (e),    S 60
             215, 1041, 212                                             CB 878-883
             Reg. § 1.71-1(b)(1)-(3), 1.71-1T, Q&A 1-10, 13-18, 22;     BL 334-341
             1.215-1T, 1.152-4, 1.1041-1T, Q&A 1-12, 1.212-1(l);

              Download and use the document entitled “Computing
           Alimony Recapture” to answer Problem 3. It is available at

              Problems 1, 2, 3 (see handout), 4, 5 and 6.

                                                                        CB 859-861
Dec. 1-3                    Finish Syllabus or Review
Dec. 10    Final Examination 8:30 – 12:00 noon

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Description: Federal Income Taxation document sample