...JAMES V. U.S., 61-1 USTC 9449, 7 AFTR2D 1361, 366 U.S. 213 (USSC, 1961) FACTS: In this particular case, the defendant, Eugene C. James, embezzled money from both his union employer as well as an insurance company and failed to include these funds as gross income for tax purposes. The taxpayer disputed that the embezzled money should not qualify as taxable income as the funds were already required to be returned. James used a previous decision from Commissioner of Internal Revenue v. Wilcox to show that the money was not taxable as he had “no claim of right” to the money because he no longer had possession of it. The court held that all income was to be taxed The court ultimately overturned the Wilcox case and ruled that the money was to be included in gross income because both legal and illegal earnings that are) acquired without the consensual recognition of an obligation to repay, are fully taxable. James was required to face legal penalties of three years in jail for his attempt at evading taxes in addition to the tax penalties of the crime. ISSUE: The issue being litigated in this case is whether embezzled funds should be a part of the embezzler’s gross income regardless of a repayment obligation. HOLDING: The Supreme Court ruled in agreement with the lower court’s decision and held that the defendant’s embezzled earnings were to be included on his tax return as gross income. LEGAL ANALYSIS: This ruling was supported by §61 of the Internal Revenue Code which...
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...Op. Serv. 5315, 2002 Daily Journal D.A.R. 6699, 15 Fla. L. Weekly Fed. S 383 Briefs and Other Related Documents Judges and Attorneys Oral Argument Transcripts with Streaming Media Supreme Court of the United States UNITED STATES, Petitioner, v. FIOR D'ITALIA, INC. No. 01-463. Argued April 22, 2002. Decided June 17, 2002. Restaurant challenged use by the Internal Revenue Services (IRS) of aggregate method to determine, assess, and collect its share of Federal Insurance Contribution Act (FICA) taxes on tips received by its employees. The United States District Court for the Northern District of California, 21 F.Supp.2d 1097, granted summary judgment for restaurant, and IRS appealed. The Court of Appeals for the Ninth Circuit, 242 F.3d 844, affirmed, and certiorari was granted. The Supreme Court, Justice Breyer, held that: (1) the law authorized the IRS to base its assessment upon its aggregate estimate of all the tips that the restaurant's customers paid its employees; (2) such a method is not precluded by negative implication from statutes which authorize the IRS to use methods of estimation for determining income tax liability and which authorize the Secretary of the Treasury to adopt regulations that prescribe mechanisms for employers to adjust FICA tax liability; (3) fact that an aggregate estimate will sometimes include tips that should not count in calculating the FICA tax the employer owes did not render use of...
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...Carlos Tovar Federal Taxation March 6, 2011 Article Brief: “Innocent Spouse Relief: Alternatives After the Lantz Case” Article Brief: “Innocent Spouse Relief: Alternatives After the Lantz Case” The dilemmas described in the Lantz case reflect the high level of ambiguity that a filing spouse experiences when challenging IRC 6015 provisions for an Innocent Spouse Claim. Specifically, the stipulated filing timeframe in sub-section (F) of IRC 6015 – Equitable Relief. In general, there’s major discrepancies between the tax courts’ and IRS’ interpretation as to when the Equitable Relief application should be filed by the innocent spouse according to what’s referenced in sub-section F of the code. Such case brings about uncertainty when tax planners advice their clients on how to better strategize when in this situation, and better yet, avoiding it all together. Although the basic background and scope of code IRC 6015 and its sub-sections are fundamentally important, there are other components that bring about the controversy surrounding the provision. The most relevant is perhaps the fact that although sections 6015(B) and (C) requires requesting relief by filing form 8857 within two years of the initiation of an IRS collection activity with respect to the innocent spouse, section (F) contains no mention of a time limit for filing. Nevertheless, the IRS applies the same two-year limit to the equitable relief under section 6015 (F). Taking these points of controversy...
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...B: Write a brief discussion (suggested length of 1 paragraph) commenting on the need for reconciling book income for a partnership to taxable income for that partnership for tax purposes. The methods used to account for business transactions are held to different guiding principles and regulations for financial (book) accounting and tax accounting. Financial accounting is guided by the Generally Accepted Accounting Principles and uses accrual basis accounting for reconciling book income. For Tax accounting the IRS laws and regulations guide accountants to use a modified accrual or cash basis for reconciling taxable income. Discrepancies occur when using two different guiding principles, thus the need for two separate books. There will be some instances where GAAP considers an expense/interest to be taxable income however that may not be the case for under the IRS guidelines creating a discrepancy in the dollar amount of taxable income. Another example of the importance for reconciling is how bad debt is accounted for, if you are using the GAAP and accounting under the accrual basis and have previous claimed debt as previous income you can now claim a bad debt deduction, in the cash basis you would lose the privilege to claim the bad debt deduction because the amount was never collected and there for never reported as income. This brief description of the differences in financial and tax accounting for income demonstrated the necessity to reconcile book to tax income so that...
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...Question 16-1 Income tax expense is comprised of both the current and the deferred tax consequences of events and transactions already recognized. Specifically, it includes (a) the income tax that is payable currently and (b) the change in the deferred tax liability (or asset). Apparently, in the situation described, temporary differences required a $4.4 million increase in the deferred tax liability, a $4.4 million decrease in the deferred tax asset, or some combination of the two. Question 16-2 Temporary differences between the reported amount of an asset or liability in the financial statements and its tax basis are primarily caused by revenues, expenses, gains, and losses being included in taxable income in a year earlier or later than the year in which they are recognized for financial reporting purpose, although there are other, less common, events that can cause these temporary differences. Some temporary differences create deferred tax liabilities because they result in taxable amounts in some future year(s) when the related assets are recovered or the related liabilities are settled (when the temporary differences reverse). An example is the receivable created when installment sale gross profit is recognized for financial reporting purposes. When this asset is recovered, taxable amounts are produced because the installment sale gross profit is then recognized for tax purposes. Some temporary differences create deferred tax assets because they result...
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...Analytic Analytic Analytic Analytic Analytic Analytic Analytic Exercises (cont.) 16–6 16–7 16–8 16–9 16–10 16–11 16–12 16–13 16–14 16–15 16–16 16–17 16–18 16–19 16–20 16–21 16–22 16–23 16–24 16–25 16–26 16–27 16–28 16–29 16–30 AACSB Tags Reflective thinking Analytic Analytic Analytic Analytic Analytic Communications Analytic Analytic Analytic Analytic, Reflective thinking Analytic Analytic Analytic Analytic Analytic Analytic Reflective thinking Analytic Analytic, Reflective thinking Analytic, Reflective thinking Reflective thinking Analytic Reflective thinking Communications Analytic Analytic Analytic Analytic Analytic Analytic Analytic Diversity, Reflective thinking Reflective thinking Reflective thinking Reflective thinking Brief Exercises 16–1 16–1 16–2 16–3 16–4 16–5 16–6 16–7 16–8 16–9 16–10...
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...In the brief film "McCulloch v. Maryland", We individually viewed the federal case between Marylands' treasurer, John James, and the cashier, James McCulloch. The basics of the case, start with John James, stating that he has found a severe issue. James, indicated to McCulloch that the bank notes that have been issued in the United States in Baltimore have been authenticated, however, it lacks a printed stamp. James goes on to inform McCulloch that this is an offense, and for every offense, there is a fine, he goes on to continue stating he will go through with taking the United States to Court, for refusal to pay state tax. As the case, brought the court, James stated his side, saying the Bank is required to pay a state tax, however, they...
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...Court Case Brief 1 Under US Code Sec 6013 married couples have the option to file a joint or state income tax return. In order to be eligible to file a joint return a couple must be legally married as of the last day of the tax year. There are many advantages and disadvantages to filing a joint income tax return. In the case of Larry and Sue, we know that they do not have enough expenses to itemize their deductions; therefore filing a joint return would be more advantageous. Sue would beable to take advantage of the higher standard deduction for a married couple, which is $12,400 in 2014. If Sue were to file a separate return she could only claim a standard deduction of $6,200. Sue will also save money by splitting the cost of a tax preparer. Filing a joint return could possibly make her eligible for more deductions and tax credits. Not to mention if the couple does owe additional income tax Sue could split the liability with Larry, resulting in a lower payment. The rewards of filing a joint return do not come without risk. When filing a joint return Sue can still be held liable for any fraud Larry might commit. Sue already suspects that Larry is understating his tips. This will cause a gross income which in turn will result in a lower tax liability. If the IRS were to audit the couple and determine that their income was understated they will be held liable for the additional tax and possibly charged penalties and interest. Regardless if Sue was privy to the fraud or not...
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...CHAPTER 4 Income Statement and Related Information ASSIGNMENT CLASSIFICATION TABLE (BY TOPIC) | | |Brief Exercises | | |Concepts for Analysis| |Topics |Questions | |Exercises |Problems | | | 1. |Income measurement concepts. |1, 2, 3, 4, 5, 6, 7,| | | |3, 4, 5, 6, 8 | | | |8, 9, 10, 18, 28, | | | | | | | |31, 32, 33 | | | | | | 2. |Computation of net income from | |1 |1, 2, 7 | | | | |balance sheets and selected | | | | | | | |accounts. | | | | | | | 3. |Single-step income statements; |11, 19, 23, 24 |2, 8 |3, 4, 6, 7, 10, 15, |2, 3, 4, 5 |1, 2, 7 | | |earnings per share...
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...buying a new lake LBJ house in Taxes. Instead of purchasing new house in Taxes and selling the older rentable house in Colorado, Owner A would like to process an exchange process for those two properties. He wants to take a benefit of like-kind exchange, because under Internal Revenue Code (IRC), like-kind exchange can defer gain and loss from the transaction. Therefore, it may save some tax cost. However, those IRC defined this nontaxable like-kind exchange in an extremely narrow range. Conflicts of the recognition of like-kind properties often happen between taxpayer and the Tax Count. Therefore, it may hard for owner A to take this tax advantage of like-kind exchange. This paper will focus on qualification issue of like-kind exchange. It will firstly briefly show the relevant Federal Income Tax code of like-kind exchange and highlight two controversial parts when those codes applying. Additionally, several relevant cases will be analyzed to show how like-kind exchange property is qualified in real world. Those cases also give Owner A some suggestions of house exchange. Finally, based on cases analyze above, a possible exchange plan of Owner A will be explained. General Rule of Like-kind Exchange IRS Code In general, according to§1031(a), no gain of loss shall be recognized on the exchange of property held for productive use in a trade or business or for investment if such property is exchanged solely for property of like kind which is to be held either for productive use...
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... as well as suggested supplemental readings that may provide a broader conceptual context. Cases form the core of many modules but we also include readings from Harvard Business Review, HBS background notes, and other course materials. Click here to add the full list of materials to your library (you must be logged in as a registered user. Not registered? Sign up now.) 1. Overview of suggested content (HBS case unless otherwise noted) Title Author Product Number Publication Year Pages Teaching Note 1. Time Value of Money Introduction Buying Time (HBS online tutorial) Kaplan 104708 2005 -- -- Alternative: Introduction to Accumulated Value, Present Value, and Internal Rate of Return Hammond 173003 1972 10p -- Valuing Capital Investment Projects Kester 298092 1997 5p 204152 Alternative: Tree Value Ruback 201031 2000 3p 202018 Luehrman 207121 2007 6p 209156 Luehrman & Abelli 4212 2010 8p 4213 Piper & DeVolder 4021 2009 32p 4024 Stafford 202027 2001 6p 202029 2. Exercises 3. Net Present Value Stryker Corp.: In-sourcing PCBs Alternative: New Heritage Doll Company (HBP Brief case) 4. Cash Flow Forecasting Expansion and Risk at Hansson Private Label, Inc.: Evaluating Investment in the Goliath Facility (HBP Brief case) Alternative: Ocean Carriers 5....
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...Assessment Exemplar Assessment tasks The table below summarises how the assessment exemplar task is to be marked and also indicates the evidence which should be retained for external moderation. |Suggested task |Suggested evidence to be retained | | | | |Project |All candidate evidence to be retained | |This project-based Graded Unit is in the form of a case | | |study and will be marked out of 100. Assessors will |All checklists to be completed and retained | |aggregate the marks achieved by the candidate for each | | |stage to arrive at an overall mark for the project. | | |Assessors will then assign a grade to the candidate for | | |this Graded Unit assessment based on the following grade | | |boundaries: | | | ...
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...Tobacco Taxation 1 Tobacco taxation is a hot topic and all 50 state governments have enacted taxes on cigarettes, and many have raised their taxes several times. Taxes on cigarettes are a way governments can achieve two social objectives; the first objective is to reduce the number of citizens who smoke. The government issuing the cigarette tax hopes that the rise in the cost of a pack of cigarettes will persuade people to quit smoking. The second objective is to raise government revenue. A cigarette tax, like any other tax, increases the amount of revenue governments can spend on social programs. Where there’s smoke, there’s taxes — especially for New Yorkers. In a 2010 budget move officials say will generate $440 million in revenue, the state legislature passed a bill that gave New York the highest cigarette tax in the country. On July 1, 2011 every pack sold in the state cost an extra $1.60, raising the total state tax to $4.35, pushing the average cost of a pack up to $9.20. For New York City residents, the cost of a pack will now come out to close to $11 — a $2 rise from just over a year ago. The $440 million in revenue will benefit health care programs, AIDS drugs subsidies, tobacco cessation programs and $71.6 million will go to the state cancer research center in Buffalo. Supporters also applaud the health benefits, saying it will reduce the number of smokers by tens of thousands of people. Tobacco consumption is the leading cause of preventable death in many...
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...ways. First, investors and creditors can use the information on the income statement to evaluate the past performance of the enter-prise. Second, the income statement helps users of the financial statements to determine the risk (level of uncertainty) of income—revenues, expenses, gains, and losses—and highlights the relationship among these various components. It should be emphasized that the income statement is used by parties other than investors and creditors. For example, customers can use the income statement to determine a company’s ability to provide needed goods or services, unions examine earnings closely as a basis for salary discussions, and the government uses the income statements of companies as a basis for formulating tax and economic policy. 2. Information on past transactions can be used to identify important trends that, if continued, provide information about future performance. If a reasonable correlation exists between past and future performance, predictions about future earnings and cash flows can be made. For example, a loan analyst can develop a prediction of future performance by estimating the rate of growth of past income over the past several periods and project this into the next period. Additional information about current economic and industry factors can be used to adjust the trend rate based on historical information. 3. Some situations in which changes in value are not recorded in income are: a) Unrealized gains or losses on...
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...or was not chartered in the state of maryland to have to pay a tax.The law did not allow any of the non chartered banks to create banknotes unless the stamped paper was issued by the state. The banks were to pay for the issued paper. If they did not comply with the requirements given the state would penalize the bank.McCulloch the president of the Baltimore branch of the Bank of the United States which was the second bank of the united states,violated the law that was set forth. McCulloch issued banknotes without paying the taxes that were set forth in the Maryland law. As a result Maryland sued McCulloch. The issue being appealed was did the state of Maryland have the right to force the second bank of the united states to have to pay this tax even though the united states constitution was completely silent on the issues revolving or rotating around the banks?Another issue on this matter was although the law applied to all the banks not chartered in Maryland...
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