Black Letter Outline on Federal Income Taxation
Authors:
Hudson, David M. / Lind, Stephen A. / Yamamoto, Kevin M.
Edition:
15th
Copyright Date:
2021
15 chapters
have results for Tax
Chapter II. Deductions and Allowances 93 results (showing 5 best matches)
- Rocky pays $7,000 in state income tax, $4,000 real property taxes on his personal residence, and $5,000 of real property taxes on his business property. Rocky may deduct a total of $15,000 of taxes ($10,000 of the state income tax and real property taxes on his personal residence; $5,000 for the real property taxes on his business).
- During the current year Paula pays $2,000 in ad valorem property taxes imposed by the local school district, $500 for the state property tax imposed on intangible personal property, $1,500 in state sales tax, state income tax of $1,800 and state gasoline taxes of $250. How much of these state and local taxes may Paula deduct?
- any tax
- A deduction is authorized for the following categories of state, local or foreign taxes which are paid or accrued within a taxable year: (1) state, local, and foreign real property taxes; (2) state and local personal property taxes; (3) state, local, and foreign taxes on income, war profits, and excess profits; (4) sales taxes in lieu of deducting state or local income taxes. [ .] State or local taxes are taxes imposed by a State, a possession of the United States, a political subdivision (such as a municipality, a county, or a school district), or Washington, DC. [ .] In addition, other taxes may be deducted if they are incurred in carrying on a trade or business or in activities engaged in for the production of income. [See discussion, II. A. 1. and 2., at pages 89 and 113, ] However, a tax paid in connection with acquiring or disposing of property may not be deducted; instead it is added to the basis of the property acquired, or it reduces the amount realized in the disposition. [
- for certain taxes, even if they are paid or incurred in a business or profit seeking context. [ .] Some of the more important taxes for which no deduction is allowed include Federal income taxes, Federal estate and gift taxes, and the Federal Insurance Contributions Act (FICA or “Social Security”) tax imposed on employees under . The FICA tax imposed on an , and a deduction for this tax is not disallowed by ; thus, an employer may deduct the tax imposed by
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Chapter VI. Computing Tax Liability 95 results (showing 5 best matches)
- The final step in computing a taxpayer’s net tax liability is to subtract from the amount of tax which is otherwise due any tax credits to which the taxpayer is entitled. Tax credits offset tax liability on a dollar-for-dollar basis, while deductions reduce a taxpayer’s tax liability in relation to the marginal rate at which her taxable income is taxed; thus, a tax credit of a certain dollar amount is more advantageous to a taxpayer than a deduction of an equal dollar amount. In addition, because a deduction is relatively more helpful to a taxpayer who is subject to tax at a high marginal rate than to his sister who is subject to tax at a low marginal rate, while a tax credit is equally advantageous to both taxpayers, tax credits are considered to be more equitable and fair in many situations.
- Provisions for tax credits have been collected in Part IV of Subchapter A of the Code, subdivided into seven classifications, and prioritized according to the order in which they may be taken. [IRC §§ 21–53.] One class of tax credits, refundable tax credits, permit a taxpayer whose credits in this class exceed his tax liability (reduced by the amount of nonrefundable tax credits), to receive a refund from the government. The other classes of tax credits contain nonrefundable tax credits; thus a taxpayer may not obtain a refund even if the amount of these credits exceeds his tax liability, but sometimes the excess amount may be able to be carried forward or back to another taxable year under special rules. The classes of nonrefundable tax credits include nonrefundable personal credits, miscellaneous nonrefundable credits, the general business credit, and the credit for minimum tax liability.
- Hogan has a $55,000 regular tax liability and no credits other than $53,000 of general business credit. The amount of credit allowed is $47,500 [$55,000 net income tax less $7,500 (25% of regular tax liability of $55,000 over $25,000)]. Thus, he owes $7,500 ($55,000 regular tax liability less $47,500 allowable credit) of tax and he may carry-over or back his $5,500 remaining general business credit.
- In addition to nonrefundable tax credits, several refundable tax credits are authorized; if the amount of the credit exceeds the taxpayer’s tax liability (after being offset by the nonrefundable credits), the excess amount will be refunded to the taxpayer or credited against his future tax liabilities. Some of the more significant refundable tax credits available to individual taxpayers are discussed in the following paragraphs.
- A taxpayer’s filing status, or classification, determines which tax rate schedule or table must be used in determining his income tax liability. [See .] Although the tax rates are set forth in , the IRS is authorized to prescribe tax tables, based upon the rates, for many taxpayers to use in determining tax liability. [ .] The tax tables make the computation of tax liability easier and less complicated.
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Appendix A. Answers to Review Questions 47 results (showing 5 best matches)
- During the current year Paula pays $2,000 in ad valorem property taxes imposed by the local school district, $500 for the state property tax imposed on intangible personal property, $1,500 in state sales tax, state income tax of $1,800 and state gasoline taxes of $250. How much of these state and local taxes may Paula deduct?
- for the state and local property taxes and income taxes; deductions are not authorized for the state sales tax or for the state gasoline tax. Under Paula could elect to deduct the $1,500 for state sales taxes, but she would have to forgo the $1,800 state income tax deduction so the election would not be made. If Paula elects to itemize deductions, the total amount of deductions for state and local taxes which she may take is $4,300.
- 32,000 = $157,500), and the ordinary tax rates would be applied to the excess. [ .] Under step one, there is a tax liability of $32,089.50. Under the second step the gain on the building’s unrecaptured section 1250 gain of $10,000 is taxed at 25%, or $2,500. Under the third step, the $7,000 collectibles gain is taxed at 28%, or $1,960. The fourth step does not apply. Under the fifth step the gain of $15,000 on the stock is taxed at 15%, or $2,250. The sixth step does not apply since no taxable income above the “maximum 15-percent rate amount” and the adjusted net capital gain was already taxed at 15%. Thus the total tax is $38,799.50 ($32,089.50 + $2,500 + $1,960 + $2,250).
- .] A tentative minimum tax of $12,142 is then computed (26% of the amount by which the AMTI exceeds the $70,300 exemption amount applicable to unmarried taxpayers). The alternative minimum tax is the amount by which the tentative minimum tax exceeds the regular tax for the year, or $11,642. Alternator’s total tax liability for the year is $12,142, the sum of the regular tax of $500 imposed under , plus the alternative minimum tax of $11,642 imposed under
- Alyssa received a tax benefit from deducting the cost of the office supplies last year. Now she is not using one-half of them in the business, so the Tax Benefit Rule requires her to include in gross income this year the amount she deducted for those unused supplies, $200.
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Capsule Summary 54 results (showing 5 best matches)
- authorizes deductions for certain specified state, local and foreign taxes including real property taxes, personal property taxes, income taxes, and in limited circumstances, sales taxes. For taxable years beginning in 2018 through 2025, the deduction for individuals is limited to $10,000 for taxes not directly associated with a taxpayer’s business or investments. A deduction is disallowed for other specified taxes, such as Federal income taxes.
- Individual taxpayers may be subject to an alternative minimum tax depending upon the amount and nature of their income and deductions. . The tax is determined by using the taxpayer’s taxable income, making several adjustments to it, adding some items of tax preference, and reducing the total amount by an exemption amount (which is phased-out for certain high income taxpayers). The net amount is then taxed at flat 26% and 28% rates. The tax applies in addition to the regular tax liability to the extent that the alternative minimum tax liability exceeds the regular tax liability. Many tax credits are not allowed in computing the alternative minimum tax.
- Payment of the income tax by most people is assured by withholding on wages of employees. An employer withholds a portion of each employee’s salary as an advance payment of the employee’s income tax liability. Tax is also collected by provisions requiring taxpayers to make installment payments during the year of their estimated tax liability arising other than from wages.
- Various deductions and allowances may be subtracted from gross income to arrive at taxable income; taxable income is the tax base against which the appropriate rate is applied to arrive at a taxpayer’s tax liability, before application of any tax credits. To qualify for a deduction, the taxpayer must satisfy all the requirements of the deduction provision and the deduction must not be prohibited by another provision.
- Separate penalties are imposed for the failure to file a return, the failure to pay the tax due when the return is filed, or the failure to pay estimated taxes. Interest is charged on any amount of unpaid tax. Penalties may be increased in cases of fraud.
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Chapter I. Gross Income 79 results (showing 5 best matches)
- gift tax
- tax base
- The estate tax authorizes some exceptions to the general rule, and if one of those exceptions has been used in computing the decedent’s estate tax, generally the income tax basis rule follows suit. Similarly, the estate tax law permits special valuation methods to be used for certain qualified real property; if a special valuation method is used in computing the estate tax, that value must be used to determine the income tax basis of the property. [
- If income from the discharge of indebtedness is excluded from gross income under the bankruptcy or insolvency exceptions, various tax attributes of the taxpayer must be reduced by the amount so excluded. [ .] The tax attributes which must be reduced are as follows: (1) net operating losses, (2) certain tax credit carryovers, (3) capital loss carryovers, (4) adjusted basis of property, (5) passive activity loss and credit carryovers, and (6) foreign tax credit carryovers. [ .] As an alternative to the statutory ordering of tax attribute reductions, the taxpayer may elect to any extent to first reduce the basis of
- An income tax imposed on imputed income would be difficult for taxpayers to comply with, and difficult for the IRS to enforce. Thus, imputed income is not included in the concept of income within the U.S. income tax system.
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Appendix C. Glossary 32 results (showing 5 best matches)
- Alternative Minimum Tax:
- Tax Liability:
- Income is generally taxed to the taxpayer who earns it or to the taxpayer who owns property which produces income. The assignment of income doctrine describes the transfer of income and the incidence of taxation from one taxpayer (usually in a relatively high tax rate bracket) to another taxpayer (usually in a relatively low tax rate bracket).
- The amount by which the tax properly due exceeds the sum of the amount of tax shown on a taxpayer’s return plus amounts previously assessed or collected as a deficiency, less any credits, refunds or other payments due the taxpayer; i.e., the amount a taxpayer is deficient in his tax payments.
- “Kiddie Tax:”
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Chapter III. Timing 44 results (showing 5 best matches)
- Assume that Isadora, from the preceding Example, had received the $22,000 bonus in Year One and repaid the $11,000 in Year Two. Assume that her tax liability in Year One on all her income including the bonus was $15,000, but if she had not included $11,000 of the bonus, her tax liability for Year One would have been $11,920, a reduction of $3,080 (assuming a marginal rate of 28% on $11,000). Because Isadora satisfies the requirements of , her Year Two income tax liability is the lesser of: (A) the tax computed on Year Two taxable income taking a deduction for the $11,000 repayment (assume that produces a taxable income of $17,000 and a tax liability of $2,550); or (B) the tax computed on Year Two taxable income without taking a deduction for the repayment (for a taxable income of $28,000 and a tax liability of $5,595), but reducing the tax liability by the amount of the decrease in her Year One tax liability if she had not included the $11,000 bonus in gross income in Year One [for a
- X Corporation, which uses the accrual method of accounting, contests $20 of a $100 asserted real property tax liability, but it pays the entire $100 to the taxing authority in Year One. The contest is settled in Year Two when a court determines that $95 was the correct Year One liability; X Corporation receives a refund of $5 of the property tax. X Corporation may properly deduct $100 in Year One, and it must include $5 in gross income for Year Two (assuming that X Corporation received a tax benefit from taking the $100 deduction in Year One). [Reg. § 1.461–2(a)(4)(ex. 1) ; see discussion of the tax benefit rule, III. C. 2., at page 234,
- Congress has provided for the exclusion from gross income of amounts which are recovered in a taxable year to the extent the amount was deducted in a prior taxable year but did not reduce the amount of the taxpayer’s income tax in the prior year. [ .] A similar rule applies if a tax credit was taken in a prior taxable year and in the current year there is a downward price adjustment, so that the amount of the tax credit should also be lowered, requiring an increase in the current year’s tax liability to the extent the prior credit resulted in a tax benefit. [ ; see discussion of tax credits, VI. F., at page 331,
- In Year One, Jacques elected to itemize his deductions in computing taxable income; his itemized deductions exceeded his standard deduction for Year One by $300. In Year Two, Jacques received a refund of $250 of state income taxes for which a deduction had been taken in Year One. None of the state income tax refund may be excluded from Jacques’ gross income in Year Two. Alternatively, if the amount of state income taxes deducted in Year One and refunded in Year Two was $500, $200 would be excluded from gross income in Year Two because that amount did not reduce his income tax liability for Year One.
- The ability to defer recognition of gain under the installment method represents an economic benefit to the taxpayer. In order to neutralize this effect when the dollar savings amounts are substantial, interest must be paid on the deferred tax liability. [ .] The amount of interest to be paid in the current year is computed by multiplying the applicable percentage of the deferred tax liability on amounts not yet recognized times the underpayment rate. The deferred tax liability is the maximum rate of tax under (or IRC § 11 for corporate taxpayers) times the unrecognized gain component of the obligation. If the unrecognized gain is long-term capital gain, the maximum rate of tax under discharged. The underpayment rate is the rate of interest which would be imposed on other underpayments of income tax liability. [See
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Chapter V. Characterization of Income and Deductions 27 results (showing 5 best matches)
- Capital gains and losses have been provided special treatment for most of the history of the United States income tax laws. When Congress lowered the maximum marginal rate for individuals to 28% in the Tax Reform Act of 1986, however, the preferential treatment which had previously been accorded to long-term capital gains was repealed. Under prior law, a deduction equal to 60% of net long-term capital gains was allowed in computing adjusted gross income; thus, only 40% of net long-term capital gains were taxed. In 1990, Congress increased the maximum marginal rate for individuals to 31%, but when it did so, it reintroduced preferential treatment for capital gains by limiting the tax on net capital gains to a maximum rate of 28%. In 1997, Congress extended the preferential capital gains tax treatment to individuals in the 15% tax bracket and reduced the capital gains tax for individuals taxed at a marginal rate of 28% or greater. Currently, capital gains are taxed at rates ranging...tax
- Capital transactions involving long-term capital gains and losses will be grouped by tax rates. Losses for each long-term tax-rate group will offset gains within the group. If a long-term tax-rate group has a net loss, the loss will first offset net gain for the highest long-term tax-rate group, and then offset the next highest tax-rate group and so on. Similarly, if short-term capital losses exceed short-term capital gains, the excess net short-term capital loss will first offset net gain from the highest long-term tax-rate group and so on.
- Terry (a taxpayer in the 24% tax bracket) had the following results from the sale of capital assets: a $5,000 gain and a $6,000 loss from the sale of stocks held longer than one year, a $2,000 gain on a depreciable building on which more than $2,000 of depreciation was allowed, a $3,000 gain from the sale of a collectible held for more than one year and a $1,000 loss from the sale of a bond held for ten months. The stocks held longer than one year are adjusted net capital gains and losses and subject to the 15% tax rate. Therefore, the $5,000 gain and the $6,000 loss will be in the same tax-rate group, and the $6,000 loss will offset the $5,000 gain for a net loss of $1,000. The $2,000 gain on the building will be taxed at the 25% tax rate. The $3,000 gain from the sale of the collectible held for more than one year will be subject to tax at the 28% rate because it is a collectible gain. The $1,000 net loss from the 15% tax-rate group will offset $1,000 of the $3,000 gain in the 28%
- Assume Kathie, from the above example, has a marginal rate of 32%, then the rates that will be imposed on her net capital gains are as follows: The $24,000 of collectibles gain will be taxed at 28%, the $8,000 of adjusted net capital gain will be taxed at 15% and the $12,000 short-term gain will be taxed at the same rate as ordinary income.
- is very elaborate, and the following explanation is only a general summary of the six step procedure which can be employed to calculate the tax liability of a taxpayer with net capital gains. It is primarily for taxpayers with ordinary income that is taxed at a rate above 24%. First, the taxpayer’s net capital gains are extracted from taxable income and the remaining amount is taxed at the taxpayer’s ordinary rates. Second, a rate of 25% is applied to unrecaptured that the amount does not exceed the “maximum zero rate amount.” Fifth, for taxable years from 2018 through 2025 the adjusted net capital gains are taxed at the 15% rate to the extent that the amount does not exceed “maximum 15-percent rate amount.” Finally, the remaining adjusted net capital gains are taxed at the 20% rate. In any step which would impose a tax at a rate higher than the rate at which the taxpayer’s taxable income is otherwise taxed, the lower of the two rates applies.
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Appendix B. Practice Examinations 17 results (showing 5 best matches)
- Taxpayer had the following capital gains: $15,000 adjusted net capital gain from the sale of stock (taxed at 15%), $10,000 adjusted net capital gain from the sale of real estate (taxed at 15%) and $10,000 of unrecaptured gain also from the sale of real estate (taxed at 25%). The netting of net long-term capital gains and net short-term capital losses resulted in a net capital gain of $30,000. None of the capital gains and losses were in the same tax-rate group and therefore the amount of net gain in each tax-rate group remains unchanged. However, short-term capital losses offset net gain beginning with the highest long-term tax-rate group. Thus, the short-term capital loss reduces the unrecaptured Section 1250 gain to $5,000. The $1,000 of dividends are not involved in the netting process but are taxed as adjusted net capital gain at a 15% rate.
- Taxpayer pays $4,000 interest on her home loan, $700 in state income taxes, $2,000 in state and local real property taxes, and she makes a $6,300 charitable contribution. She also gives $200 to her favorite political party.
- This tax liability of $39,639.50 is then offset by the credit under for the $36,000 tax withheld by her employer, leaving a balance due of $3,639.50.
- .] The $10,000 of unrecaptured Section 1250 gain is taxed at a 25% rate. [ .] Because taxpayer held the property for more than one year, the remaining $10,000 of gain is adjusted net capital gain that will be subject to tax at a lower rate of 15%, rather than the unrecaptured Section 1250 gain tax rate of 25%. [
- Compute the amount of tax Taxpayer (a calendar year, unmarried, cash method taxpayer) must pay when she files her annual return for Year One (any taxable year from 2023 through 2025), assuming no inflation adjustments and using the rates tables starting on page 325, when the following events occur:
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Perspective 17 results (showing 5 best matches)
- Federal income tax law is one of the most complex subjects likely to be encountered in a law school curriculum or by a practicing attorney. Federal income tax law is complex for two basic reasons. First, the ever-changing variety of sources of the law, including administrative pronouncements, judicial interpretations, and legislative enactments, often make it difficult to ascertain what the law is in a particular situation. Second, the Federal income tax is complex because it is superimposed on various transactions and relationships, such as corporate reorganizations or international sales transactions, which are themselves complex and difficult to understand. Federal income tax law is important because tax considerations permeate virtually every other course in a law school curriculum, and virtually every facet of the practice of law as well. Lawyers who are not tax specialists are nonetheless likely to be confronted with Federal income tax problems in a variety of settings,...
- Because of the importance of Federal income tax law, and in acknowledgment of its complexity, the objective of a basic law school tax course (and of this Outline) is to concentrate on the fundamental aspects of the law as it pertains to individuals. In this manner, students are provided with a sturdy skeletal framework which can be fleshed out by other tax courses, such as corporate tax or partnership tax, as desired, or by self-study as the need arises in practice. Entities such as trusts, estates, and corporations often are “taxpayers,” but they receive little attention here because the fundamental rules affecting them are the same fundamental rules applicable to individuals, and because the special rules pertaining to entities as well as nonentities such as partnerships are sufficiently complex that generally separate law school courses are devoted to them. For similar reasons, the tax treatment of foreign persons, or of foreign transactions engaged in by domestic persons, are...
- It is common practice for tax law professors to use hypothetical fact situations or problems, with appropriate dollar amounts, to illustrate and explain various concepts of tax law throughout the course. Because of the frequent use of numbers and computations during the term, many law students who do not have a background in accounting or business become apprehensive about a tax law examination, fearful that they will be called upon to be as adept with calculations on the examination as the professor was during class. In preparing for the examination in tax law, students should keep in mind that this is a a course in accounting, or economics, or math. Therefore, the basic approach in preparing for an examination in tax law is the same as the basic approach in preparing for an examination in any other law school subject:
- Direct taxes must be apportioned among the several states in accordance with their respective populations. [ U.S. Const. art. 1, § 9, cl. 4.] Income subject to tax under the 1894 Act included income derived from renting real property and the Supreme Court held that because a tax on land is a direct tax, a tax imposed on rental income from land is also a direct tax; because the 1894 Act was not properly apportioned, it was unconstitutional. [ was criticized, subsequent Congressional efforts to enact an income tax were stalled by arguments that the Constitution needed an Amendment specifically authorizing the Congress to impose an income tax without it having to be apportioned. The Sixteenth Amendment became effective on February 25, 1913, and the infant form of the modern income tax was born on October 3, 1913.
- The judicial branch also has a role in determining tax law. The Tax Court, the U.S. Court of Federal Claims, the Federal District Courts, the U.S. Courts of Appeal, and, of course, the U.S. Supreme Court all have jurisdiction, in varying circumstances, over tax cases. [See discussion, VII. F., at page 344,
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Chapter IV. Who Is the Proper Taxpayer? 36 results (showing 5 best matches)
- The grantor trust rules were changed significantly by the 1986 Tax Reform Act. Under , as amended, the grantor of a trust is taxed on the trust income if he retains a reversionary interest in income or corpus (or a portion thereof) and the value of the reversionary interest, viewed at the time the grantor creates the trust or transfers property to it, has a value of more than 5% of the value of the trust corpus (or portion of trust corpus). Congress drew the dividing line here for income tax purposes by borrowing from the estate tax. [See .] An exception under the income tax rules provides that the grantor of a trust will not be taxed on trust income if the reversionary interest will take effect only upon the death, before the age of 21, of a beneficiary who is a child, grandchild or other lineal descendant of the grantor. [
- The U.S. income tax is imposed annually and is computed by multiplying an individual taxpayer’s taxable income for the taxable year by an applicable rate; the rate at which the tax is imposed becomes higher as the amount of the tax base (taxable income) increases. [See .] The rate of tax imposed on any one dollar of taxable income, therefore, is determined not only by the proper taxpayer is with respect to the item. The amounts of taxable income taxed in the seven rate brackets may be increased each year to adjust for inflation. [
- Individual persons, and separate entities such as corporations, are generally treated as separate taxpayers. Special treatment is made for the marital unit by allowing them to file a joint return. Some entities, such as partnerships and sometimes estates and trusts, are not themselves subject to the income tax, but are required to furnish the IRS with information concerning their activities. Generally, income is taxed to the taxpayer who earns the income or to the taxpayer who owns property which produces income. The right to receive income (and the liability to pay tax on such income) may not be assigned to another taxpayer. Although each individual is usually treated as an independent taxpayer reporting their own income, taking their own deductions in computing taxable income, and calculating income tax liability with the rates applicable to them, the tax imposed on unearned income of a minor child under the age of 18 may be taxed at the rates applicable to the child’s parent. [
- A corporation is generally treated as a separate taxpayer, distinct from its shareholders and creditors, and its annual taxable income is subject to income tax according to rates specifically applicable to corporations. Income tax is imposed on the taxable income of corporations at a flat rate of 21%. [ .] Income which is taxable to a corporation, however, is usually subject to tax a second time when it is distributed as dividends to its individual shareholders. [See .] Special treatment is provided to the shareholders of a qualifying small business corporation who elect to have the corporation treated as an “S corporation.” An S corporation is generally not subject to income tax itself, but its items of income (and its deductions and credits) flow through to the shareholders and are included in the gross incomes of the shareholders (and are deductible or creditable by the shareholders). [
- A trust is treated under the income tax law as an entity separate and apart from its grantor and its beneficiaries. Income which is attributable to a trust, however, may be taxable to the grantor, to the beneficiaries, or to the trust itself depending on the terms of the trust and application of special rules. [See adjustments), the first $2,550 is taxed at a rate of 10%. Taxable income in excess of $2,550 is taxed at rates which rapidly increase until amounts in excess of $12,500 are taxed at the maximum rate of 37%. [
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Chapter VII. Procedure 23 results (showing 5 best matches)
- The procedural rules governing taxpayers and the IRS are numerous and often complex. This section of the Outline summarizes the more important features of the system for the payment and collection of income taxes through withholding and installment payments of estimated tax, the filing of annual returns, penalties, the procedures for filing a claim for refund if too much tax is paid or for the IRS to assert a deficiency if too little tax is paid, and the administrative and judicial avenues for resolving conflicts between the IRS and taxpayers.
- Separate penalties are imposed for failure to file tax returns, for failure to pay tax due when the return is filed, and for failure to pay estimated taxes. [ .] The penalty for failure to file a return is 5% of the amount required to be shown as tax on the return if the failure is for not more than one month, with an additional 5% penalty for each additional month or fraction thereof that the return is delinquent, not exceeding 25% in the aggregate. [ .] The penalty for failure to pay the tax when it is due is 0.5% of the unpaid amount of tax shown on the return (or required to be shown on the return) if the failure is for not more than one month, with an additional 0.5% for each subsequent month or fraction thereof during which the tax remains unpaid, not exceeding 25% in the aggregate. [ .] If the IRS has issued the taxpayer a notice of levy or a notice and demand for immediate payment of tax, the penalty for failure to pay the tax is increased to 1% per month. [
- Nikki files her Year One tax return and pays the $500 balance of tax due on May 20 of Year Two. The return shows a total tax liability of $5,000, but she is entitled to credit for $4,500 of tax withheld during Year One. The due date for a Year One return and additional tax due is April 15 of Year Two; thus, Nikki’s return and tax payment are late by two months (or fractions thereof). The .] The penalty is 10% (because the return is two months late) of $500 (the $5,000 tax required to be shown on the return less the $4,500 paid by April 15 of Year Two). .] The penalty is 1% (because the payment is two months late) of $500 (the $1,000 tax shown on the return less the $500 payment made by April 15 of Year Two). [
- When a taxpayer disagrees with an administrative determination made by the IRS, he has a choice of three trial forums in which to litigate: the United States Tax Court, the United States Court of Federal Claims, and the United States District Court. The Tax Court has jurisdiction over cases in which the taxpayer refuses to pay an asserted tax deficiency. In order to litigate in the Tax Court, the taxpayer must receive a Notice of Deficiency from the IRS, and within 90 days of the mailing of that Notice, the taxpayer must file a petition with the Tax Court. [ –6213.] The Tax Court has special summary proceedings to deal with cases where the amount in dispute is $50,000 or less. [ .] The principal office of the Tax Court is located in Washington, DC, but the court hears cases in numerous designated offices around the country.
- Payment of the income tax by the vast majority of taxpayers is virtually assured by the requirement that an employer withhold a portion of each employee’s salary as an advance payment of that employee’s Federal income tax liability. [ –3406.] The amount of income taxes withheld is paid by the employer to the U.S. Treasury at regular intervals during the year, and when an employee files his annual income tax return, he is entitled to a refundable tax credit for the amount of income tax withheld with respect to his salary. [ ] In addition to the withholding requirements imposed on employers, other income-payers are required to withhold income taxes in certain situations, such as payers of gambling winnings and interest-paying financial institutions in some situations. [See
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Table of Contents 29 results (showing 5 best matches)
Summary of Contents 5 results
Index 11 results (showing 5 best matches)
- Publication Date: May 13th, 2021
- ISBN: 9781683288107
- Subject: Taxation
- Series: Black Letter Outlines
- Type: Outlines
- Description: Black Letter Outlines are designed to help a law student recognize and understand the basic principles and issues of law covered in a law school course. Black Letter Outlines can be used both as a study aid when preparing for classes and as a review of the subject matter when studying for an examination. Each Black Letter Outline is written by experienced law school professors who are recognized national authorities in their subject area.