BPA 264 - Advanced Tax Accounting 3 credit hours - Three hours weekly; one term.
Study federal tax law for corporations, partnerships, estates and trusts as it impacts the entity and its owners. Examine concepts, then apply those concepts though the completion of situational problems, not through the preparation of tax forms.
Prerequisite(s): BPA 262 .
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 key elements of federal tax administration and related professional responsibilities.
- Identify the steps in the assessment and appeal process and collection procedures.
- Determine interest amounts on over- or underpayment of taxes.
- Calculate the amounts of the following taxpayer penalties and identify situations in which they will be assessed: failure to file, failure to pay, accuracy-related civil fraud, criminal violations, failure to pay estimated taxes.
- Explain requirements for estimated tax payments for individuals and corporations.
- Determine the statute of limitations as it relates to federal tax returns and refund claims
- Describe professional responsibilities for tax practice as presented in Circular 230 and AICPA Standards for Tax Services.
- Calculate preparer penalties that may be assessed by the IRS.
- Explain the major provisions of the alternative minimum tax and which taxpayers are most likely to be affected by it.
- Explain briefly the purpose of the alternative minimum tax and its history.
- Outline and apply the basic AMT formula, including calculating tentative minimum tax, AMT, AMTI, and rates for corporations and individuals.
- Identify AMT adjustments and preferences.
- Explain the law related to AMT adjustments for depreciation, itemized deductions, the standard deduction, personal and dependency exemptions, and accumulated current earnings, and calculate the amount of each.
- Calculate the exemption amounts for individuals and corporations.
- Explain the purpose and operation of the AMT credit, and calculate its amount in a simple case.
- Describe the small-corporation exemption and apply these rules to a given set of facts.
- Determine requirements for taxpayers relating to accounting methods.
- Distinguish the cash receipts and disbursements, accrual, and hybrid methods: which taxpayers may elect the cash method, tests for timing of income and deductions, and the tax effect of one method versus another.
- Determine situations in which the installment method is available.
- Calculate taxable gain using the installment method, including consideration of depreciation recapture, imputed interest, and related-party limitations.
- Define the two methods of accounting for long-term contracts available under the IRC and their availability.
- Calculate income and deductions under the percentage-of-completion method and interest under the lookback provision.
- Determine gain or loss realized and recognized in property transactions and the basis of acquired property.
- Distinguish the concepts of realization and recognition of gains and losses.
- Determine the basis and subsequent adjustments to basis and the beginning of the holding period for property acquired by purchase, distribution from a business entity, as a gift, from a decedent, or converted from personal use.
- Calculate the amount realized, gain or loss realized, and gain or loss recognized for property acquired by purchase, distribution from a business entity, as a gift, from a decedent, or converted from personal use.
- Identify qualified property and calculate the amount realized, gain or loss realized, and gain or loss recognized in the following nontaxable exchanges: like-kind exchanges (IRC section 1031), involuntary conversions (IRC section 1033), and sale of a principal residence (IRC section 121).
- Explain loss disallowance provisions relating to related-party transactions, wash sales, and personal-use property.
- Classify gains or losses and calculate the amount of tax assessed in property transactions.
- Explain and apply the definition of capital assets under the Internal Revenue Code, as well as exceptions to the general rule for securities dealers and section 1237 disposals of subdivided real property.
- Distinguish between long-term and short-term holding periods
- Explain the tax treatment of nonbusiness bad debts, worthless securities, and section 1244 stock.
- Explain the tax treatment of capital gains and losses for corporate and noncorporate taxpayers.
- Calculate the tax cost or benefit of transactions involving capital assets for corporate and noncorporate taxpayers.
- Define and identify section 1231 assets.
- Explain the tax treatment of transactions involving section 1231 assets, including recapture provisions under the 5-year lookback rule, section 1245, section 1250, and section 291.
- Explain the tax treatment of unrecaptured section 1250 gain.
- Explain and work with the provisions of the Internal Revenue Code as they relate to corporate formations, investments, operations, distributions, redemptions, liquidations, and reorganizations.
- Distinguish the tax treatment of partnerships, subchapter S corporations, and subchapter C corporations.
- Reconcile book to taxable income and demonstrate how that reconciliation is presented on Form 1120 Schedule M-1.
- Reconcile unappropriated retained earnings per books at the beginning and end of the year and demonstrate how that reconciliation is presented on Form 1120 Schedule M-2.
- Calculate corporate taxable income and the amount of tax on that income.
- Explain differences between individual and corporate taxation related to organizational expenditures, charitable contributions deductions, dividends-received deductions, and losses (including passive losses of a closely held corporation.)
- Identify controlled and affiliated groups and the tax benefits and costs that affect these groups.
- Identify transfers to a controlled corporation, and calculate gain or loss recognized by the transferor shareholder and transferee corporation, the shareholder’s basis in stock received, and the corporation’s basis in assets and liabilities received.
- Explain thin capitalization and identify situations in which debt might be recharacterized as equity.
- Calculate current and accumulated earnings and profits, determine the tax treatment of corporate distributions of cash, property, or stock, and the effect the distributions have on earnings and profits.
- Explain when distributions will be treated as stock redemptions, and the tax effect of these distributions.
- Explain when a complete corporate liquation occurs, and determine the gain or loss realized and recognized and the basis of property in the hands of the shareholders both under the general rule and in situations involving the liquidation of a controlled subsidiary.
- Determine when a corporate reorganization (as defined in the Internal Revenue Code) occurs, the requirements for a tax-free reorganization, the amount of gain that shareholders must recognize, and the treatment of tax characteristics in corporate reorganizations.
- Explain provisions specific to S corporations, including requirements to make the election, shareholder’s basis calculations and loss limitations, and built-in gains tax
- Explain and work with the provisions of the Internal Revenue Code as they relate to partnership formations, contributions, operations, distributions, and sale or exchange of a partnership interest.
- Determine, for both the partnership and the partner, gain or loss recognized and the basis of contributed property upon contributions of property to a partnership
- Calculate and characterize partnership income and losses, adjustments from book income to arrive at partnership ordinary income, and record these calculations on Form 1065 and schedules K and K-1
- Explain the treatment of partnership allocations, requirements of special allocations, and treatment of guaranteed payments and fringe benefits
- Determine a partner’s original basis in a partnership interest, and calculate changes due to operations and the effects of liabilities
- Explain the rules relating to transactions with controlled partnerships, including related party loss limits and the character of gain
- Explain rules related partnership elections, including taxable year and when the election of cash method is available
- Determine when a partnership must terminate
- Calculate and characterize gain or loss on the sale or exchange of a partnership interest
- Determine the effect on both the partnership and the partner of pro rata distributions, including gain or loss recognition and the basis of distributed assets
- Explain in general terms the effect of hot assets on non-pro rata distributions
- Explain optional adjustments to the basis of partnership property in both distributions of partnership property and the sale or exchange of a partnership interest
- Explain the major provisions of the federal unified transfer tax system.
- Explain the gift tax formula and define its elements, and calculate its amount.
- Explain the estate tax formula and define its elements, and calculate its amount.
- Explain the cumulative nature of the unified transfer tax system and its connection to the generation-skipping tax.
- Explain the major provisions of the taxation of trust and estate income.
- Explain the administrative provisions of estate and trust income taxes, including filing requirements, taxable year, tax rates, the application of the alternative minimum tax, and estimated payments.
- Classify trusts as simple or complex, and describe the treatment of their beneficiaries
- Compute estate or trust taxable income.
- Identify conditions in which a trust will be classified as a grantor trust.
- Describe the tax treatment of the termination of an estate or trust.
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