PORTFOLIO

Income Tax Liability: Concepts and Calculation (Portfolio 507)

Tax Management Portfolio, Income Tax Liability: Concepts and Calculation, No. 507-3rd, serves three primary functions for the practitioner. First, the portfolio explores the scope and fundamental concepts of tax liability. Topics presented include the regular, alternative minimum, and other taxes for individuals, corporations, estates and trusts; filing status for individuals; excise-type income taxes; and the determination of taxes due and refunds.

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DESCRIPTION

Tax Management Portfolio, Income Tax Liability: Concepts and Calculation, No. 507-3rd, serves three primary functions for the practitioner. First, the portfolio explores the scope and fundamental concepts of tax liability. Topics presented include the regular, alternative minimum, and other taxes for individuals, corporations, estates and trusts; filing status for individuals; excise-type income taxes; and the determination of taxes due and refunds.

Second, the portfolio explains the rules of the numerous specific provisions subsumed in the broad categories referred to above (for example, the rate schedules, maximum capital gains rates, and changes in tax rates).
Third, the practitioner can use the portfolio as a tool for identifying Tax Management portfolios that provide an in-depth treatment of specific topics discussed herein. Cross references to applicable portfolios appear in each section of this portfolio. For additional relevant Tax Management Portfolios, check the Portfolio Classification Guides.


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AUTHORS

JAMES EDWARD MAULE
James Edward Maule, B.S., University of Pennsylvania (1973); J.D., Villanova University (1976); LL.M. (Taxation), George Washington University (1979); Lecturer, Villanova University Graduate Tax Program and Tax Forum CLE Programs; Lecturer, Philadelphia Tax Conference; Lecturer, Philadelphia Bar Association Tax Section; former Lecturer, ALI-ABA; former Lecturer, Tax Management, Inc. & Continuing Legal Education Satellite Network; former Lecturer, Pennsylvania Bar Institute; former Lecturer, The Dickinson School of Law CLE Programs; member, American Bar Association, Section of Taxation, Committee on Formation of Tax Policy; member, American Bar Association, Section of Taxation, Committee on S Corporations (Consultant and former Chair, Subcommittee on Subchapter S and State Law; former Chair, Subcommittee on Comparison of Partnerships and S Corporations; former member, Task Force on Legislative Recommendation No. 86-1); member, American Bar Association, Section of Taxation, Committee on Teaching Taxation (former Chair, Subcommittee on Manuscripts and Unpublished Teaching Materials); member, American Bar Association, Section of Taxation, Tax Practice Management Committee; former member, American Bar Association, Section of Taxation, Committee on Tax Structure and Simplification (former Chair and Reporter, Phaseout Tax Elimination Project); former member, American Bar Association Tax Section Task Force on Pass-Through Entities; member, Philadelphia Bar Association Tax Section; author and owner, TaxJEM Inc., publisher of computer assisted legal instruction programs; owner and publisher, JEMBook Publishing Co.; co-owner, StarJEM LLC; developer, TaxCruncherPro, income tax planning software; author of numerous books, monographs, and book chapters; contributor to various tax and legal periodicals.

TABLE OF CONTENTS

Detailed Analysis

I. Introduction

A. Overview

1. The Nature of Income Tax Rates

2. The Concept of Income Tax Liability

3. The Scope of Income Tax Liability

4. The Application of Income Tax Liability Computations

B. Historical Background

1. Introduction

2. Early Federal Income Tax Statutes

a. The First Civil War Income Tax Act

b. The Second Civil War Income Tax Act

c. The Third Civil War Income Tax Act

d. The Reconstruction Era Income Tax Act

e. The Income Tax of 1894

f. The Corporate Excise Tax of 1909

3. Passage of the Sixteenth Amendment

4. Post-Sixteenth Amendment Income Tax Acts

a. Revenue Act of 1913

b. Revenue Act of 1916

c. Revenue Act of 1917

d. Revenue Act of 1918

e. Revenue Act of 1921

f. Revenue Act of 1924

g. Subsequent Statutory Development

(1) Pre-Codification

(2) Internal Revenue Code of 1939

(3) Internal Revenue Code of 1954

(4) Internal Revenue Code of 1986

II. Individual Income Tax Liability

A. The Regular Tax

1. Tax Rates

a. Rate Schedules

(1) In General

(2) Exceptions

(3) Taxable Income

(4) Citizenship and Residency Status

(5) Computation by IRS

(a) In General

(b) Eligible Individuals

(c) Effect of Election

(6) Rebate Accelerating 10% Bracket for 2001

(7) Recovery Rebate for Individuals for 2008

b. Tax Tables

(1) In General

(2) Individuals Who Must Use Tax Tables

c. Inflation Adjustments

(1) In General

(2) Principles Underlying Inflation Adjustments

(3) Cost-of-Living Adjustment

d. Nonresident Aliens

(1) In General

(2) Income from Sources Within the United States

(3) Residents of U.S. Possessions

(4) Expatriated Nonresident Aliens

(a) Pre-June 4, 2004, Rules

(b) June 4, 2004-June 17, 2008, Rules

(c) Post-June 16, 2008, Rules

(5) Rate Doubling

(6) Compensating Adjustments

(a) More Burdensome Taxes Imposed by Foreign Country

(b) Discriminatory Taxes Imposed by Foreign Country

(7) Treaty Obligations

e. Bankrupt Estates

2. Unearned Income of Children

a. In General

b. Applicable Children

c. Applicable Parent

d. Computation of Applicable Child's Tax

(1) In General

(2) Net Unearned Income

(3) Child's Share of Allocable Parental Tax

(a) Allocable Parental Tax

(b) Child's Share

e. Election

3. Maximum Capital Gains Rate

a. In General

b. Net Capital Gain

c. Tax Liability Computation for Net Capital Gain

(1) Tax Amounts

(2) Adjusted Net Capital Gain

(a) In General

(b) 28% Gain

(c) Unrecaptured § 1250 Gain

(d) Qualified Dividend Income

(3) Impact of § 1231 Recapture Income

d. Treatment of Pass-Through Entity Gain

e. Election to Recognize Unrealized Capital Gain

4. Special Computation for Restoration of Claim of Right Amounts

a. In General

b. Requirements To Be Met

c. Transactions Excluded from § 1341

d. Application of § 1341

(1) In General

(2) § 1341(a)(4)

(3) § 1341(a)(5)

(a) In General

(b) Repayment in Excess of Income Amount

(c) Decrease in Tax Not Limited by Tax Liability

(d) Adjustments to Tax Liability for Previous Year

(e) Alternative Minimum Tax

e. Special Rules

(1) Inclusions in More Than One Previous Year

(2) Net Operating Losses Arising in Year of Repayment

(3) Net Operating Loss Arising in Previous Year of Inclusion

5. Accumulation Distribution Taxes

a. In General

b. Disqualified Trusts

c. Accumulation Distributions

d. Computation

(1) In General

(2) Partial Tax

(a) In General

(b) Adjustment for Wealth Transfer Taxes

(c) Special Rules

(3) Interest Charge for Foreign Trusts

6. Advance Earned Income Credit Payments

7. Recapture of Investment Tax Credit

a. In General

b. Early Disposition Recapture Amounts

c. Progress Expenditure Cessation Recapture Amounts

d. Exceptions

e. Consequences

f. At-Risk Reduction Recapture

8. Recapture of Low-Income Housing Credit

a. In General

b. Low-Income Housing Recapture Amount

(1) In General

(2) Accelerated Portion of Credit

c. Limitations

d. Individuals in Partnerships

9. Recapture of New Markets Tax Credit

a. In General

b. New Markets Recapture Amount

10. Recapture of Employer-Provided Child Care Credit

a. In General

b. Employer-Provided Child Care Recapture Amount

11. Recapture of Qualified Plug-In Electric Drive Low-Speed Vehicle, Motorcycle, and Three-Wheeled Vehicle Credit

a. In General

b. Qualified Plug-In Electric Drive Low-Speed Vehicle, Motorcycle, and Three-Wheeled Vehicle Recapture Amount

12. Recapture of Education Credits

a. In General

b. Education Credits Recapture Amount

13. Additional Taxes on Certain Distributions from Annuities and Retirement Plans

a. Tax on Excessive Benefits

b. Tax on Premature Distributions Under Annuity Contracts

c. Tax on Early Distributions from Qualified Retirement Plans

d. Tax on Early Distributions Under Modified Endowment Contracts

14. Additional Tax on Certain Archer Medical Savings Account Distributions

15. Tax on Certain Distributions from Coverdell Education Savings Accounts and Qualified Tuition Programs

16. Tax on Disposal of Federally Subsidized Residence

a. In General

b. Federally Subsidized Residence Recapture Amount

(1) In General

(2) Federally Subsidized Amount

(3) Holding Period Percentage

(4) Income Percentage

c. Federally Subsidized Indebtedness

d. Exceptions

e. Reporting Requirement

17. Tax on Disqualified Transfer of Residual REMIC Interest

a. In General

b. Disqualified REMIC Transfer Tax

c. Disqualified Organization

d. Exceptions

18. Tax on Certain Deferred Tax Liabilities Arising from Installment Sales

a. Dealer Installment Sales

b. Nondealer Installment Sales

19. Tax Liability Exception for Casualties

a. Members of Armed Forces Killed in Action

b. Federal Employees Killed Under Hostile Circumstances

c. Tax Liability Exception for Astronauts and Victims of Terrorist Attacks

20. Recapture of Alternative Motor Vehicle Credit

21. Recapture of Credit for Installation of Alternative Fueling Stations

22. Additional Tax on Certain Medicare Advantage MSA Distributions

23. Additional Tax on Certain Health Savings Account Distributions

24. Additional Tax With Respect to Certain Deferred Compensation Under Nonqualified Plans

25. Additional Taxes With Respect to Failure to Maintain High Deductible Health Plan Coverage

26. Tax on Recapture of Deduction of Contributions of Fractional Interests in Tangible Personal Property

27. Recapture of First-Time Home-Buyer Credit

B. Filing Status

1. In General

2. Married Filing Jointly

a. In General

(1) Scope and Computations

(2) Liability

(a) Joint and Several

(b) Innocent Spouse Relief

(i) In General

(ii) Full Relief

(iii) Allocable Relief

(iv) Equitable Relief

b. Election to File Joint Returns

(1) In General

(2) Intention to Make Joint Return

(a) In General

(b) Authorization Given to Other Spouse

(c) Lack of Signature and Authorization

(d) Ratification

(e) Refusal to Sign

(f) Inconsistencies

(g) Accidental Filing of Separate Returns

(3) Limitations

(a) Nonresident Aliens

(b) Different Taxable Years

(c) Decedent Spouses

(4) Joint Return After Filing Separate Returns

(5) Joint Return with Spouse in Missing Status

(6) Failure to File Return

(a) No Correction Before Notice of Deficiency Mailed

(b) After Notice of Deficiency Mailed

(c) After Tax Court Petition Filed

(7) Determination of Marital Status

(a) In General

(b) Separation and Divorce

c. Surviving Spouses

(1) In General

(2) Limitations

(3) Deceased Spouse in Missing Status

3. Head of Household

a. In General

b. Unmarried

c. Not a Surviving Spouse

d. Maintenance of Household

(1) In General

(2) Household for Qualified Dependent

(3) Household for Parent

(4) Household

e. Furnishing More Than One-Half of Cost of Household

f. Citizen or Resident

4. Unmarried

a. In General

b. Not Married

c. Exception for Annulment

d. Exception for Certain Spouses Living Apart

(1) In General

(2) Married

(3) No Joint Return

(4) Maintenance of Household

(5) Furnishing More Than One-Half of Cost of Household

(6) Absence of Spouse

5. Married Filing Separate Return

C. The Alternative Minimum Tax

1. In General

2. Computation

a. In General

b. Exemption Amount

c. Computation of MACGT

d. Regular Tax

3. AMTI

a. In General

b. AMT Adjustments for Individuals

(1) In General

(2) Depreciation

(3) Mining Exploration and Development Costs

(4) Income from Certain Long-Term Contracts

(5) Net Operating Loss Deduction

(6) Certified Pollution Control Facility Amortization

(7) Alcohol Fuels Credit Gross Income Inclusion

(8) Itemized Deductions

(9) Circulation Expenditures

(10) Research and Experimental Expenditures

(11) Incentive Stock Options

c. Adjusted Basis for AMT Purposes

d. Items of Tax Preference

(1) In General

(2) Depletion

(3) Specified Private Activity Bond Interest

(4) Accelerated Depreciation and Amortization on Property Placed in Service Before 1987

(5) Partial Exclusion for Gain from Qualified Small Business Stock

4. Other Limitations

a. Disallowance of Farm Losses

b. Disallowance of Passive Activity Losses

D. Self-Employment Taxes

1. In General

2. Self-Employment Income

3. Net Earnings from Self-Employment

a. In General

b. Exceptions

(1) Net Rental Income

(2) Dividends

(3) Certain Gains and Losses

(4) Net Operating Losses

(5) Community Property Income

(6) Residents of Puerto Rico

(7) Personal and Dependency Exemption Deduction

(8) Ministers and Members of Religious Orders

(9) Possessions Income Exclusion

(10) Qualified Partnership Retirement Payments

(11) Foreign Earned Income and Housing Cost Amount Exclusion

(12) Deduction for Self-Employment Tax

(13) Limited Partners’ Distributive Shares

(14) Church Employees

(15) Income of Indians

(16) Domestic Production Activities Income

(17) Family Business Tax Simplification

c. De Minimis Rules

4. Trade or Business

a. In General

b. Exceptions

(1) Public Officials

(2) Employees

(3) Employee Representatives

(4) Ministers and Members of Religious Orders

(5) Christian Science Practitioner

(6) Members of Certain Religious Faiths

III. Corporate Income Tax Liability

A. The Regular Tax

1. Regular Tax Rates

a. Regular Rate Schedules

(1) In General

(2) Phaseout of Lower Brackets

(3) Denial of Lower Brackets

(a) S Corporations

(i) Built-In Gains

(ii) Excess Net Passive Income

(b) Qualified Personal Service Corporations

(c) Corporations Formed to Obtain Benefit of Lower Rates

(d) Nonqualified Capital Construction Fund Withdrawals

(e) REMICs

(4) Bracket Sharing for Controlled Corporate Groups

(5) Limited Application of Tax Rate Schedule

(a) Exempt Organization Unrelated Business Income Tax

(b) Political Organizations

b. Foreign Corporations

(1) In General

(2) Income from Sources Within the United States

(3) Branch Profits Tax

(4) Rate Doubling

(5) Compensating Adjustments

(a) More Burdensome Taxes Imposed by Foreign Country

(b) Discriminatory Taxes Imposed by Foreign Country

(6) Treaty Obligations

c. Life Insurance Companies

d. Other Insurance Companies

(1) In General

(2) Alternative Computation

(a) In General

(b) Taxable Investment Income

e. Mutual Savings Banks Conducting Life Insurance Business

f. Regulated Investment Companies

g. Real Estate Investment Trusts

h. Homeowners Associations

i. Corporate Tax on Qualifying Shipping Activities Income

2. Alternative Rate on Net Capital Gains

a. In General

b. Eligible Corporation

c. Net Capital Gain

3. Special Computation for Restoration of Claim of Right Amounts

4. Accumulated Earnings Tax

a. In General

b. Subject Corporation

(1) In General

(2) Avoiding Income Tax

(3) Reasonable Needs of the Business

c. Accumulated Taxable Income

(1) In General

(2) Adjusted Taxable Income

(a) In General

(b) Taxes

(c) Charitable Contributions

(d) Dividends Received

(e) Net Operating Losses

(f) Net Capital Losses

(g) Net Capital Gains

(h) Capital Loss Carryovers

(3) Dividends Paid Deduction

(a) In General

(b) Liquidating Distributions

(c) Real Estate Investment Trusts

(d) Affiliated Groups

(e) Consent Dividends

(i) In General

(ii) Consent Stock

(iii) Exceptions

(4) Accumulated Earnings Credit

5. Personal Holding Company Tax

a. In General

b. Subject Corporation

c. Undistributed Personal Holding Company Income

(1) In General

(2) Adjusted Taxable Income

(a) In General

(b) Taxes

(c) Charitable Contributions

(d) Dividends Received

(e) Net Operating Losses

(f) Net Capital Gains

(g) Property Expenses and Depreciation

(3) Dividends Paid Deduction

(a) In General

(b) Liquidating Distributions

(c) Real Estate Investment Trusts

(d) Affiliated Groups

(e) Consent Dividends

(i) In General

(ii) Consent Stock

(iii) Exceptions

(4) Dividend Carryover

(5) Deduction for Deficiency Dividends

(a) In General

(b) Deficiency Dividend

(c) Determination

(d) Procedure

d. Effect on Dividends Paid Deduction

6. Recapture of Investment Tax Credit

7. Recapture of Low-Income Housing Credit

8. Recapture of New Markets Tax Credit

9. Recapture of Employer-Provided Child Care Credit

10. Recapture of Qualified Plug-In Electric Drive Low-Speed Vehicle, Motorcycle, and Three-Wheeled Vehicle Credit

11. Tax on Disqualified Transfer of Residual REMIC Interest

12. Tax on Certain Deferred Tax Liabilities Arising from Installment Sales

13. Recapture of Alternative Motor Vehicle Credit

14. Recapture of Credit for Installation of Alternative Fueling Stations

B. The Alternative Minimum Tax

1. In General

2. Computation

a. In General

b. Regular Tax

c. Exemption Amount

d. Small Corporation Exemption

3. AMTI

a. In General

b. AMT Adjustments for Corporations

(1) In General

(2) Depreciation

(3) Mining Exploration and Development Costs

(4) Income from Certain Long-Term Contracts

(5) Net Operating Loss Deduction

(6) Certified Pollution Control Facility Amortization

(7) Alcohol Fuels Credit Gross Income Inclusion

(8) Current Earnings Adjustment

(9) Merchant Marine Capital Construction Fund Deductions

(10) Blue Cross, Blue Shield, and Similar Organizations Special Deduction

c. Adjusted Basis for AMT Purposes

d. Items of Tax Preference

(1) In General

(2) Depletion

(3) Intangible Drilling Costs

(4) Specified Private Activity Bond Interest

(5) Accelerated Depreciation and Amortization on Property Placed in Service Before 1987

4. Other Limitations

a. Disallowance of Farm Losses

b. Disallowance of Passive Activity Losses

IV. Estates and Trusts

A. The Regular Tax

1. Tax Rates

a. Rate Schedules

(1) In General

(2) Exceptions

(3) Taxable Income

(4) Limited Application of Tax Rate Schedule

(a) Exempt Trust Unrelated Business Income Tax

(b) Political Organizations

b. Inflation Adjustments

c. Foreign Estates and Trusts

(1) In General

(2) Income from Sources Within the United States

(3) Rate Doubling

(4) Compensating Adjustments

(a) More Burdensome Taxes Imposed by Foreign Country

(b) Discriminatory Taxes Imposed by Foreign Country

(5) Treaty Obligations

d. Bankrupt's Estates

2. Maximum Capital Gains Rate

3. Special Computation for Restoration of Claim of Right Amounts

4. Accumulation Distribution Taxes

5. Recapture of Investment Tax Credit

6. Recapture of Low-Income Housing Credit

7. Recapture of New Markets Tax Credit

8. Recapture of Employer-Provided Child Care Credit

9. Recapture of Qualified Plug-In Electric Drive Low-Speed Vehicle, Motorcycle, and Three-Wheeled Vehicle Credit

10. Tax on Disqualified Transfer of Residual REMIC Interest

11. Tax on Certain Deferred Tax Liabilities Arising from Installment Sales

12. Recapture of Alternative Motor Vehicle Credit

13. Recapture of Credit for Installation of Alternative Fueling Stations

B. The Alternative Minimum Tax

1. In General

2. Computation

a. In General

b. Exemption Amount

c. Computation of MACGT

d. Regular Tax

3. AMTI

a. In General

b. AMT Adjustments for Estates and Trusts

(1) In General

(2) Depreciation

(3) Mining Exploration and Development Costs

(4) Income from Certain Long-Term Contracts

(5) Net Operating Loss Deduction

(6) Certified Pollution Control Facility Amortization

(7) Alcohol Fuels Credit Gross Income Inclusion

(8) Certain Deductions

(9) Circulation Expenditures

(10) Research and Experimental Expenditures

(11) Incentive Stock Options

c. Adjusted Basis for AMT Purposes

d. Items of Tax Preference

(1) In General

(2) Depletion

(3) Specified Private Activity Bond Interest

(4) Accelerated Depreciation and Amortization on Property Placed in Service Before 1987

(5) Partial Exclusion for Gain from Qualified Small Business Stock

4. Other Limitations

a. Disallowance of Farm Losses

b. Disallowance of Passive Activity Losses

V. Rate Changes

A. In General

B. Prorated Computations

1. In General

2. Multiple Rate Changes

3. Impact on Other Income Taxes

4. Joint Returns with Respect to Decedent Spouses

5. Variations in Taxable Year and Method

C. Rate Changes

1. In General

2. Repeal of Tax

3. Imposition of New Tax

D. Effective Date of Rate Change

E. References to Highest Rates

VI. Nontaxable Organizations

A. In General

B. Partnerships

VII. Excise-Type Income Taxes

A. Legislative Influencing

1. Excess Lobbying Expenditures Tax

a. In General

b. Excess Lobbying Expenditures

c. Influencing Legislation

2. Disqualifying Lobbying Expenditures Tax

a. In General

b. Disqualifying Lobbying Expenditures

c. Disqualified Lobbying Organization

B. Private Foundations

1. Investment Income Excise Tax

a. In General

b. Computation of Tax

c. Net Investment Income

d. Exception

e. Reduction

2. Self-Dealing Excise Tax

a. In General

b. Imposition and Computation of Taxes

c. Self-Dealing

d. Taxable Period

e. Self-Dealing Amount

f. Disqualified Person

3. Undistributed Income Excise Tax

a. In General

b. Imposition and Computation of Taxes

c. Undistributed Income

d. Exceptions

e. Taxable Period

4. Excess Business Holdings Excise Tax

a. In General

b. Imposition and Computation of Taxes

c. Excess Business Holdings

d. Taxable Period

e. Disqualified Person

5. Jeopardy Investment Excise Tax

a. In General

b. Imposition and Computation of Tax

c. Jeopardy Investment

d. Taxable Period

6. Taxable Expenditure Excise Tax

a. In General

b. Imposition and Computation of Tax

c. Taxable Expenditure

d. Taxable Period

C. Black Lung Benefit Trusts

1. Self-Dealing Excise Tax

a. In General

b. Imposition and Computation of Taxes

c. Self-Dealing

d. Taxable Period

e. Self-Dealing Amount

f. Disqualified Person

2. Taxable Expenditure Excise Tax

a. In General

b. Imposition and Computation of Tax

c. Taxable Expenditure

d. Correction

e. Taxable Period

3. Excess Contributions Excise Tax

a. In General

b. Imposition and Computation of Tax

c. Excess Contribution

d. Treatment of Excess Contribution Withdrawals

D. Public Charity Excise Taxes

1. Political Expenditures

a. In General

b. Imposition and Computation of Tax

c. Public Charity

d. Manager

e. Political Expenditure

f. Correction

g. Taxable Period

2. Excess Benefit Transactions

a. In General

b. Imposition and Computation of Tax

c. Excess Benefit Transaction

d. Excess Benefit

e. Applicable Tax-Exempt Organization

f. Disqualified Person

g. Organization Manager

h. Taxable Period

i. Correction

E. Qualified Deferred Compensation Plans

1. Minimum Funding Failure Excise Tax

a. In General

b. Imposition and Computation of Tax

c. Correction

d. Taxable Period

e. Failures Relating to Multiemployer Plans in Endangered or Critical Status

(1) In General

(2) Imposition and Computation of Tax

2. Nondeductible Contribution Excise Tax

a. In General

b. Imposition and Computation of Tax

c. Qualified Employer Plan

d. Nondeductible Contributions

3. Excess Tax-Favored Account and Annuity Contribution Excise Tax

a. In General

b. Imposition and Computation of Tax

c. TFAA

d. Excess TFAA Contributions

(1) Individual Retirement Accounts and Annuities

(2) Custodial Accounts Treated as Annuity Contracts

(3) Archer MSAs

(4) Coverdell Education Savings Accounts

(5) Roth IRAs

(6) Health Savings Accounts

4. Excess Accumulation Excise Tax

a. In General

b. Imposition and Computation of Tax

c. Excess Accumulation

d. Qualified Retirement or Deferred Compensation Plan

5. Prohibited Transaction Excise Tax

a. In General

b. Imposition and Computation of Tax

c. Prohibited Transactions

d. Qualified Retirement Plan

e. Taxable Period

f. Prohibited Transaction Amount

g. Disqualified Person

6. Disqualified Funded Welfare Benefit Excise Tax

a. In General

b. Imposition and Computation of Tax

c. Disqualified Benefit

7. Excess Fringe Benefits Excise Tax

a. In General

b. Imposition and Computation of Tax

c. Applicable Employers

d. Excess Fringe Benefits

8. Disqualified Securities Disposition Excise Tax

a. In General

b. Imposition and Computation of Tax

(1) Imposition

(2) Computation

c. Exceptions

9. Excess Contributions Excise Tax

a. In General

b. Imposition and Computation of Tax

c. Qualified Retirement Plan

d. Exception

10. Prohibited Allocations Excise Tax

a. In General

b. Imposition and Computation of Tax

c. Prohibited Allocation

11. Asset Reversion Excise Tax

a. In General

b. Imposition and Computation

(1) In General

(2) Increased Tax Rate

(a) In General

(b) Qualified Replacement Plan

(c) Qualified Benefit Increases

(d) Qualified Participant

c. Employer Reversion

(1) In General

(2) Distribution Exceptions

(3) ESOP Exception

(a) In General

(b) Allocation Requirements

d. Qualified Plan

12. Benefit Accrual Reduction Notification Failure Excise Tax

a. In General

b. Imposition and Computation of Tax

c. Notification Requirements

F. Qualified Investment Entities

1. Undistributed REIT Income Excise Tax

a. In General

b. Imposition and Computation of Tax

c. Required Distribution

d. Distributed Amount

e. Determination of Income Amounts

2. Undistributed Regulated Investment Company Income Excise Tax

a. In General

b. Imposition and Computation of Tax

c. Exceptions

d. Required Distribution

e. Distributed Amount

f. Determination of Income Amounts

3. Prohibited REMIC Transactions Excise Tax

a. In General

b. Imposition and Computation of Tax

c. Prohibited REMIC Transactions

d. Net Income from Prohibited REMIC Transaction

e. Qualified Liquidation

G. Other Excise Taxes

1. Golden Parachute

a. In General

b. Imposition and Computation of Tax

c. Excess Parachute Payment

(1) In General

(2) Parachute Payment

(a) Contingent Compensation

(i) In General

(ii) Presumptions

(iii) Exceptions

(b) Violative Agreements

(3) Exceptions

(a) Small Business and Similar Corporations

(i) In General

(ii) Shareholder Approval Requirements

(b) Qualified Plan Payments

(4) Base Amount

(5) Base Period

(6) Base Amount Allocated to Parachute Payment

(7) Disqualified Individual

d. Payments

e. Affiliated Groups

2. Nonconforming Health Plan Contributions Excise Tax

a. In General

b. Imposition and Computation of Tax

c. Nonconforming Group Health Plan

(1) In General

(2) Regular Group Health Plan

(3) Large Group Health Plan

3. Group Health Plan Continuation Coverage Failure Excise Tax

a. In General

b. Imposition and Computation of Tax

(1) Imposition

(2) Computation

(a) In General

(b) Reasonable Diligence Exception

(c) Exception for Certain Failures Corrected Within Thirty Days

(d) Maximum Daily Tax Limitation

(e) Unintentional Failure Limitation

(f) Waiver by IRS

c. Exceptions

d. Noncompliance Period

e. Continuation Coverage

(1) In General

(2) Type of Benefit Condition

(3) Period of Coverage Condition

(4) Premium Payment Condition

(a) In General

(b) Applicable Premium

(5) Insurability Condition

(6) Conversion Option Condition

f. Qualified Beneficiary

g. Qualifying Event

h. Election

i. Notices

(1) Continuation Coverage Rights

(2) Qualifying Event Occurrence

(3) Election Rights

j. Covered Employee

4. Long-Term Care Insurance Contract Failure Excise Tax

a. In General

b. Imposition and Computation of Tax

c. Long-Term Care Insurance Contract Responsibility Failure

d. Long-Term Care Insurance Contract Disclosure Failure

5. Group Health Plan Requirement Failure Excise Tax

a. In General

b. Imposition and Computation of Tax

(1) In General

(2) Limitations: Undiscovered and Corrected Failures

(3) Overall Limitation: Unintentional Failures

(4) Waiver

(5) Noncompliance Period

c. Small Employer Plan Exception

d. Correction

6. Archer MSA Comparable Contribution Failure Excise Tax

a. In General

b. Computation

c. Comparable Contribution Requirement

7. Greenmail Excise Tax

a. In General

b. Imposition and Computation of Tax

c. Greenmail

8. Structured Settlement Payment Rights Factoring Excise Tax

a. In General

b. Imposition and Computation of Tax

c. Structured Settlement Factoring Transaction

d. Factoring Discount

e. Effective Date

9. Health Savings Account Comparable Contribution Failure Excise Tax

a. In General

b. Computation

c. Comparable Contribution Requirement

10. Excise Tax on Certain Tax-Exempt Entities Entering into Prohibited Tax Shelter Transactions

a. In General

b. Disclosure Requirements and Penalties

c. Penalties for Becoming Party to Prohibited Tax Shelter Transaction

(1) Tax-Exempt Entity Level Tax for Certain Tax-Exempt Entities

(2) Tax-Exempt Entity Manager Level Tax

VIII. The Determination of Taxes Due and Refunds

A. Introduction

1. In General

2. Rounding

a. In General

b. Computation of Whole Dollars

c. Inapplicability to Computation of Amount Shown on Form

d. Election Not to Use Rounding

B. Additional Income Taxes Due

1. Computation

a. In General

b. Rounding

c. Abatements

(1) In General

(2) General Abatement Principles

(3) Tax Balances Not Worth Collecting

2. Payment

a. In General

b. Exception for Taxes Computed by IRS

c. Extensions of Time in Which to Pay

(1) In General

(2) Undue Hardship

(3) Application

d. Manner of Payment

(1) In General

(2) Requirements

(3) Unpaid Checks and Other Payments

(4) Time Payment Deemed Made

(5) Payment in Foreign Currency

(a) In General

(b) Nonconvertible Foreign Currency

(c) Tax Attributable to Nonconvertible Foreign Currency

(d) Filing Requirements

(e) Manner of Paying

3. Receipts

C. Refunds

1. Computation

2. Overpayments

a. In General

b. Payments After Expiration of Statute of Limitations

c. Nonresident Aliens

3. Offsets

a. In General

b. Other Federal Tax Liabilities

c. Past-Due Support

(1) In General

(2) Qualified Past-Due Support

d. Past-Due, Legally Enforceable Federal Agency Debts

(1) In General

(2) Federal Agency

(3) Past-Due, Legally Enforceable Debt

(4) OASDI Overpayments

e. Past-Due, Legally Enforceable State Income Tax Obligations

(1) In General

(2) Past-Due, Legally Enforceable Obligations

f. Unemployment Compensation Debts Resulting from Fraud

g. Review of Offsets

h. Injured Spouse Claims

4. Payment of Refund

a. In General

b. Determination of Payee

(1) In General

(2) Agreed Transfers of Overpayments

(3) Spouses

(a) Joint Return Overpayments

(b) Separate Returns

(4) Insolvent Members of Affiliated Groups

(5) Dissolved Foreign Sales Corporations

c. Limitations on Payment of Refunds

(1) Thirty-Day Refund Reports

(2) Avoidance of State Escheat Laws

d. Payment in Foreign Currency

5. Application to Following Year's Estimated Tax


WORKING PAPERS

Working Papers

Table of Worksheets

Worksheet 1 Individual Tax Rate Schedules

Worksheet 2 [Reserved]

Worksheet 3 Self–Employment Tax Bases and Rates

Worksheet 4 Corporate Income Tax Rates

Worksheet 5 Estate and Trust Income Tax Rate Schedules

Worksheet 6 [Reserved]

Worksheet 7 Financial Management Service Debt-Collection and Offset Regulations 31 CFR § § 285.1, 285.2, 285.3, 285.8

Worksheet 8 Notice 2007–35, 2007-15 I.R.B. 940, Common Mistakes on Tax Returns

Bibliography

OFFICIAL

Statutes:

United States Code:

Internal Revenue Code:

Public Laws:

Regulations:

Legislative History:

Treasury Rulings and Procedures:

Cases:

UNOFFICIAL

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