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Preface xiii

Ethics, Professional Responsibilities, and Federal Tax Procedures 1

Treasury Department Circular 230 1

Liability as a Tax Preparer 3

Regulation of Accountants 5

Accountants’ Liability 6

Tax Preparer Penalties 9

Taxpayer Penalties 11

Sources of Tax Authority and Research 13

Tax Practice and Procedure 14

Compliance Responsibilities 15

Contracts 17

Contracts: Offer and Acceptance 17

Contracts: Consideration 20

Writing and Records 21

Contracts: Defenses to Formation 23

Contracts: Discharge of Performance 26

Issues of Passage of Title and Risk Loss 29

Formulas for Damage 32

Sales 35

Agency 38

Types of Agency Relationships and Creation 38

Duties of Agents and Principals 39

Terminating Agent’s Authority 40

Liability of Agents and Principals 41

Debtor-Credit Relationships 43

Suretyship: Introduction, Creation, and Types 43

Rights of Sureties 44

Defenses of Sureties 45

Cosureties 46

Article 9 UCC Secured Transactions 47

Collateral 47

Security Agreement 48

Attachment and Perfection 49

Priorities in Security Interests 51

Rights of Secured Parties and Debtors 53

Bankruptcy and Insolvency 54

Voluntary Filing—Chapter 7 54

Involuntary Filing—Chapter 7 55

Business Reorganizations—Chapter 11 56

Repayment Plans—Chapter 13 58

Alternatives to Bankruptcy 59

Powers of Bankruptcy Trustee 60

Distribution of Debtor’s Estate 62

Denial of Discharge 66

Federal Securities Regulation 67

Civil Liability Provisions: Sec. 11 of 1933 Securities Act 67

Civil Liability Provisions: Sec. 10(b) of 1934 Securities Exchange Act 71

Civil Liability Provisions: Sec. 18(a) of 1934 Securities Exchange Act 75

Criminal Securities Law Provisions 79

Employment Tax 80

Federal Insurance Contributions Act (FICA) 80

Federal Unemployment Tax Act (FUTA) 81

Selection and Formation of a Business Entity 83

Partnership Characteristics 83

Limited Liability Arrangements 90

Corporations 93

Promoters 96

Directors and Officers 97

Property Transactions 101

Realized Gain or Loss 101

Taxation of Gains and Losses 103

Related-Taxpayer Transactions 104

Special Transactions 105

Sec. 1245 Depreciation Recapture 107

Federal Taxation of Individuals 108

Individual Income Tax 108

Gross Income 110

Interest 112

Taxation of Income from Business Entities 115

Personal and Dependency Exemptions 135

Filing Status 137

Personal Tax Credits 140

Child Tax Credit 144

Accounting Method 146

Depreciation 147

Federal Gift Tax and Trusts 151

Property Received by Inheritance or Gift 154

Trusts 156

Computing Taxable Income of Trusts 159

Corporate Taxation 161

Corporate Income Tax 161

Computing Corporate Income Tax 163

Supplemental Tax Schedules 169

Accumulated Earnings Tax 171

Affiliated Corporation Transactions 172

Nonliquidating Distributions to Shareholders 173

Corporate Complete Liquidation 175

Corporate Reorganizations 176

Section 1244 Stock 177

S Corporations 178

Foreign Tax Credit 186

Family and Medical Leave Credit 186

Partnership Taxation 187

Formation of Partnerships 187

Taxation of Partnerships 191

Distributions 193

Sale of Partnership Interest 195

Termination 196

Index 197

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