Sep 22, 2020  
2016-2017 Catalog 
2016-2017 Catalog [PAST CATALOG]

BPA 262 - Tax Accounting

3 credit hours - Three hours weekly; one term.
Study federal income tax law as it applies to individuals and to many aspects of businesses. Learn to research and apply the law, not primarily by preparing income tax forms, but by analyzing situations and solving problems.

Prerequisite(s): BPA 202  or permission of department chair.

Course Outcomes
Upon successful completion of this course, students will be able to:

  • Work with the primary sources of tax law
    • Distinguish between the statutory, administrative and judicial sources of tax law and their relative authority.
    • Using a search engine, locate specified information in the Internal Revenue Code
    • Communicate answers to questions of tax law and its application to a specified set of facts
  • Explain basic concepts of federal income tax and tax planning
    • Define tax terminology including types of taxes, tax characteristics, and the taxation environment.
    • Identify and explain the three major variables in tax planning.
    • Identify, explain, and provide examples of tax theories that underlie federal income taxation.
    • Describe in general terms the taxation of capital gains and losses to individuals
  • Identify and explain the major elements of the individual federal income tax.
    • Explain the formula for calculating individual income tax.
    • Distinguish between deductions for and from adjusted gross income
    • Determine the standard deduction for individuals
    • Determine the number of personal and dependency exemptions that can be claimed on an individual’s tax return.
    • Explain the basic elements of the “kiddie tax” and the child credit
    • Determine which individuals must file a tax return.
    • Determine the appropriate filing status for an individual.
  • Identify what must be included in the determination of gross income.
    • Explain the concept of gross income and its statutory definition, comparing it with taxable and accounting income.
    • Explain in what year income is to be included in gross income, using the cash, accrual, and hybrid methods.
    • Determine who must claim gross income received for personal services, from property, received by an agent, and from pass-through entities and fiduciaries.
    • Explain the treatment of transfers related to the cessation of a marriage.
    • Calculate gross income recognized from annuities, prizes and awards, group term life insurance, unemployment compensation, and social security benefits.
  • Describe the treatment of items that are excluded from gross income
    • Explain the benefit of excluding items from gross income versus treating them as deductible.
    • Describe the tax treatment of typical deferred compensation and individual retirement arrangements and their tax benefit to employees and employers
    • Define gifts and inheritances and explain the sections of the Internal Revenue Code and case law that govern their treatment.
    • Determine when employee death benefits can be excluded from gross income.
    • Explain the general rule for tax treatment of life insurance proceeds and exceptions to the general rule.
    • Determine the tax treatment of scholarships and qualified tuition reduction plans.
    • Determine the tax treatment of compensation for injuries and sickness, including damage awards, worker’s compensation, and accident, health, and long-term care insurance benefits.
    • Determine the tax treatment of employer-sponsored accident and health plans
    • Determine the tax treatment of employer-sponsored accident and health plans
    • Determine the tax treatment of employee fringe benefits.
    • Explain the exclusion of foreign earned income and calculate the available exclusion.
    • Explain exclusion provisions related to tax-exempt bonds, stock dividends, U. S. savings bonds, and qualified tuition programs.
    • Explain exceptions to the treatment of discharge of indebtedness as taxable income.
    • Explain the tax benefit rule.
  • Describe the general rules regarding the treatment of deductions and losses.
    • Explain the significant provision of code sections 162 (expenses from a trade or business) and 212 (expenses related to the production of income).
    • Distinguish the timing of deductions under the cash method versus the accrual method.
    • Identify major deduction disallowance provisions
    • Calculate allowable deductions for hobby losses and vacation home rentals.
  • Describe the major provisions for deductions related to business expenses and losses.
    • Distinguish between business and nonbusiness bad debts, losses related to worthless securities, and those related to small business corporation stock, and their tax treatment.
    • Identify what losses of individuals provide tax deductions
    • For casualty and theft gains and losses, determine the amount of loss, calculate the amount and timing of the available deductions, and show how they are recorded.
    • Describe three approaches to treating research and experimental expenses.
    • Describe the treatment of a net operating loss.
    • Explain the cost recovery provisions of the tax code, including MACRS, ACRS, section 179, and limitations relating to listed property and automobiles
  • Describe the major provisions for deductions related to employee- and self-employment-related expenses
    • Distinguish employees from independent contractors, and describe the tax advantages and disadvantages of each.
    • Explain the tax treatment of the major categories of employee expenses: transportation, travel, moving, education, meals and entertainment, and contributions to retirement accounts.
    • Explain the advantages of employee expenses being reimbursed under an accountable plan, and calculate the deductions available with partial reimbursement.
  • Describe the major provisions for deductions of personal expenses.
    • Explain and calculate available deductions for medical expenses.
    • Explain and calculate available deductions for taxes
    • Explain and calculate available deductions for interest.
    • Explain and calculate available deductions for charitable contributions.
  • Describe the limitations relating to passive activity losses
    • Discuss the reasons for the implementation of at-risk and passive loss limits.
    • Determine at-risk amount.
    • Explain classification of income as active, portfolio, and passive.
    • Describe treatment of passive losses, treatment of real estate activities, and dispositions of passive activities
  • Describe the major provisions relating to tax credits.
    • Distinguish between refundable and nonrefundable credits.
    • Describe certain business-related tax credits.
    • Describe certain individual tax credits.
Core Competencies
Core 1 Communication Core 2 Technology Fluency Core 3 Information Literacy Core 5 Self Management Core 7 Quantitative Reasoning Core 8 Social and Civic Responsibility Core 10 Innovative and Critical Thinking