02 Jan We began this class

Dq1

Does the Tax Code Need Fixing?

Here’s the perennial question: Should the current federal income tax system be reformed? In answering this question, consider and discuss a number of factors, such as (1) whether the current system is fair to all taxpayers; (2) whether the system is too complex; (3) whether the system is too expensive to administer; and (4) whether the current system is effective at raising revenue while not impacting business, personal, and financial decisions or operations adversely. These are the same general factors that courts and Congress tend to consider. What do you think and why?

Dq2

Progressive Taxation: Good or Evil?

We’ve all heard talk show hosts rail about this many times: It’s unfair that the rich pay more in taxes than the poor or the middle class. Is it? If not, why not? If so, why? In answering this question, apply some of the theories and concepts that you’ve encountered so far in the course, and don’t be shy about researching this question on the Internet!

Week 2 discussion

Dq1

At-risk Rules and At-risk Limitations

Before the passage of the 1986 Act, Congress attempted to impose restrictions on the abuses associated with the at-risk provisions of 1976 as set out in Code Section 465. In summary, the at-risk rules disallowed losses in excess of the investment. Discuss the at-risk limitations relating to individuals and closely held corporations.

Dq2

So You Want to Own and Rent Real Estate?

Admit it. You’ve watched that late-night infomercial describing how you can become a multimillionaire virtually overnight by leveraging your good looks and sparkling personality (and little else…) to invest in real estate. All joking aside, investing in real estate does present some opportunity for the creation of wealth, much like any other investment does. Taxation of rental real estate, however, does present some unique rules, and these rules can have a dramatic impact on the investor’s realized gain or loss from the real-estate rental activity. Let’s begin outlining the tax consequences by describing the various capacities in which an individual can own and rent real estate. Asked differently, are there distinctions in the tax law that depend on the manner in which the property is held or used, such as between those who rent real estate as a full-time business and those who merely rent a vacation home? What are the rules that we follow in telling one type of rental property or rental ownership from another?

Week 3 discussion

Dq1

Basis: What Is It and Why Do We Care?

The notion of basis is crucially important in determining the tax consequences that result from virtually any property-based transactions, whether it is the sale of $100 of stock, or a $10,000,000,000 merger of two multinational corporations. It’s important, then, to answer one key question: What exactly is basis? How is it used in calculating the gain or loss that results from the sale of capital property? What is the rationale or justification for considering basis in calculating the amount of gain or loss?

Dq2

You Decide: Tax Capital Gains

The question of whether capital gains should be subject to the federal income tax has long been a subject of debate. Today, however, the issue has become less abstract and theoretical, because many congresspeople (and pundits and commentators, etc.) are openly advocating substantial reductions in or outright abolition of all such taxes. Scour the Internet for commentary on this issue, and consider the arguments in light of what you know about capital gains taxes. Is the capital gains tax a good tax? Why or why not? In making your decision (and explaining your answer), make sure that you consider some of the fundamental requirements of a good tax that we explored in Week 1, such as fairness, efficacy in raising funds, and relative ease of administration. Include links to and summaries of the articles that you’ve reviewed and found particularly influential so that we can all comment on this issue!

Week 4 discussion

Dq1

Employee or Proprietor: Who Cares?

For most of us, work is work. We put in the same amount of effort whether we work as employees for a company or we are self-employed. (That point is arguable, of course, but just agree with me for the sake of argument). While the work itself may be created equal, however, the tax consequences arising from them are not. Self-employed individuals may be entitled to a greater range of deductions, but they also might very well be responsible for paying additional taxes. Furthermore, we know employees can receive a lot of valuable perks from their employers, and that these perks present specific tax consequences as well. In light of this news, it makes sense to start with the fundamental question: How do we tell whether someone is an employee or whether he or she is self-employed for purposes of the Code?

Dq2

Family-Based Deductions

This week, we’re reviewing some of the most common federal income tax deductions for individuals. Many of them could perhaps be classified as family-based deductions, or enacted deductions that target those who might have children or other types of family obligations to fulfill. Is there an underlying theme or purpose to most of these deductions? If so, what is it? Do the deductions that Congress has enacted advance this purpose? Is this something that Congress should be doing at all? Provide an example of two such deductions, and supplement your argument with outside resources discussing the pros, cons, and impacts of these deductions. There are a lot of available choices!

Week 5 discussion

Dq1

Corporate Formation and the Tax Agent

As you’ve undoubtedly learned by now, you often have to focus on the details in tax law, and the rules surrounding corporate formation are no exception to this rule. We know that a corporation is generally seen as a separate taxable entity from its shareholders. As a result, corporate formations, which involve transfers of property between the shareholders and the corporation, would generally be taxable to both the corporation and the shareholders. It’s no surprise that this result would often discourage corporate formation. Congress remedied this particular problem by enacting Section 351, and your text details how this provision generally operates. Did Congress craft a provision that allows corporations and their shareholders to avoid taxation on these transactions permanently, or did it have something else in mind? Support your answer!

Dq2

Taxation of Corporate Dividends

Relatively recent revisions to the Code have modified the tax treatment of dividends. Put your Internet research skills to use and tell me about these changes and their consequences. In particular, tell me (1) what dividends are, as defined by the Code; (2) what the recent changes effectively do (and how it was different from the prior approach to the taxation of dividends); and (3) what the changes sought to achieve (in other words, why was the change made?).

Week 6 discussion

Dq1

S Corporations: Can Just Anyone Join?

In enacting Subchapter S of the Code, Congress decided to give a certain group of corporations a break from the burden of double taxation. Given this fact, there must be limitations on the corporations that can select S corporation status! Provide an example of one such limitation, including the text of the Code section that provides the limitation. (We might as well get a look at a verbatim Code section or two during the course of this class!)

Dq2

Separately Stated Income?

By now, you’re probably of the opinion that the distinction between separately stated and nonseparately stated income is one of the most confusing concepts that you’ve encountered this week. For Congress to come up with something this confusing, you know there must have been a good reason (or at least we’d like to think so!). Think about the concept for a moment. What is the broad tax policy behind separating these two categories of income? What is Congress trying to achieve? What problems does it prevent? What problems does it cause?

Week 7 discussion

Dq1

Take Your Partner… or Not

As we’ve learned this week, choosing a partnership as a tax entity has consequences, and those consequences often are different than those that arise from choosing the corporate form. Many of these consequences can be quite dramatic, particularly if the business goes sour or if catastrophic, unforeseen circumstances arise—and many of them don’t have a thing to do with taxes. What are some of the more significant nontax consequences of choosing the partnership form? Which ones do you think are the most important, and why?

Dq2

Does the Tax Code Need to Be Fixed?

We began this class with this question. After learning as much over the last 7 weeks as we have about the federal income tax system, it also seems an appropriate place to end it. Have your thoughts on the matter changed? Why or why not? By now, you should at least be able to discuss your agreement and/or concerns in much more detail, given your impressive knowledge on the subject. Don’t forget to consider the types of factors that we stressed at the beginning of the course and that we have been revisiting every week since that point in time!

Attachments
PROJECT_ONE_WEEK-3_SHORT-VERSION_2016.doc (1766 KB) Raw Preview for PROJECT_ONE_WEEK-3_SHORT-VERSION_2016.doc
PROJECT_TWO_WEEK-7_SHORT-VERSION_2016.doc (4373.5 KB) Raw Preview for PROJECT_TWO_WEEK-7_SHORT-VERSION_2016.doc