South-western Federal Taxation 2018: Corporations, Partnerships, Estates and Trusts

Cover......Page 1
Title Page......Page 2
Copyright Page......Page 3
Preface......Page 4
The South-Western Federal Taxation Series......Page 19
Brief Contents......Page 24
Contents......Page 26
Part 1: Introduction......Page 36
 Chapter 1: Understanding and Working with the Federal Tax Law......Page 37
  The Big Picture: Importance of Tax Research......Page 38
   Economic Considerations......Page 39
   Social Considerations......Page 40
   Equity Considerations......Page 41
   Political Considerations......Page 45
   Influence of the Internal Revenue Service......Page 46
   Influence of the Courts......Page 48
  WORKING WITH THE TAX LAW—TAX SOURCES......Page 50
   Statutory Sources of the Tax Law......Page 51
   Administrative Sources of the Tax Law......Page 54
   Judicial Sources of the Tax Law......Page 57
   Concept Summary: Federal Judicial System......Page 59
   Concept Summary: Judicial Sources......Page 62
   Other Sources of the Tax Law......Page 64
   Commercial Tax Services......Page 65
   Using Electronic (Online) Tax Services......Page 66
   Noncommercial Electronic (Online) Tax Sources......Page 67
   Identifying the Problem......Page 69
   Assessing the Validity of Tax Law Sources......Page 71
   Ethics & Equity: Choosing Cases for Appeal......Page 72
   Arriving at the Solution or at Alternative Solutions......Page 73
   Communicating Tax Research......Page 74
   Components of Tax Planning......Page 75
  TAXATION ON THE CPA EXAMINATION......Page 77
   Regulation Section......Page 78
Part 2: Corporations......Page 88
 Chapter 2: Corporations: Introduction and Operating Rules......Page 89
  The Big Picture: A Half-Baked Idea?......Page 90
   Partnerships......Page 91
   Corporations......Page 92
   Concept Summary: Tax Treatment of Business Forms Compared......Page 95
   Limited Liability Companies......Page 96
   An Overview of Corporate versus Individual Income Tax Treatment......Page 97
   Accounting Periods and Methods......Page 99
   Capital Gains and Losses......Page 100
   Recapture of Depreciation......Page 101
   Passive Activity Losses......Page 102
   Charitable Contributions......Page 103
   Net Operating Losses......Page 105
   Deductions Available Only to Corporations......Page 106
   Ethics & Equity: Pushing the Envelope on Year-End Planning......Page 108
   Concept Summary: Income Taxation of Individuals andCorporations Compared......Page 110
   Alternative Minimum Tax......Page 112
   Tax Liability of Related Corporations......Page 113
   Estimated Tax Payments......Page 114
   Schedule M–1—Reconciliation of Income (Loss) per Bookswith Income per Return......Page 115
   Concept Summary: Conceptual Diagram of Schedule M–1(Form 1120)......Page 116
   Schedule M–2—Analysis of Unappropriated RetainedEarnings per Books......Page 117
   Schedule M–3—Net Income (Loss) Reconciliation forCorporations with Total Assets of $10 Million or More......Page 118
   Form 1120 Illustrated......Page 120
   Corporate versus Noncorporate Forms of Business Organization......Page 128
   Operating the Corporation......Page 129
   Refocus on the Big Picture: Cooked to Perfection......Page 131
 Chapter 3: Corporations: Special Situations......Page 149
  The Big Picture: Dealing with the DPAD and the AMT......Page 150
  DOMESTIC PRODUCTION ACTIVITIES DEDUCTION......Page 151
   Components of the Deduction......Page 152
   Domestic Production Gross Receipts......Page 153
   Adjustments in Arriving at QPAI......Page 156
   Collateral Problems......Page 157
  ALTERNATIVE MINIMUM TAX......Page 159
   Small Corporation Exemption......Page 161
   An Overview of Corporate Adjustments and Preferences......Page 162
   AMT Adjustments......Page 163
   Concept Summary: An Overview of Corporate AMTAdjustments and Preferences......Page 164
   AMT Preferences......Page 169
   Computing Alternative Minimum Taxable Income......Page 171
   Adjusted Current Earnings (ACE)......Page 172
   Concept Summary: How Various Transactions Affect ACEand E & P......Page 174
   Form 4626 Illustrated......Page 175
   Minimum Tax Credit and Form 8827 Illustrated......Page 176
  PENALTY TAXES ON CORPORATE ACCUMULATIONS......Page 179
   Accumulated Earnings Tax (§§ 531–537)......Page 180
   Personal Holding Company Tax (§§ 541–547)......Page 181
   Alternative Minimum Tax......Page 182
   Selected MACRS Cost Recovery Tables......Page 183
   Refocus on the Big Picture: Dealing with the DPAD and the AMT......Page 184
 Chapter 4: Corporations: Organization and Capital Structure......Page 197
  The Big Picture: The Vehicle for Business Growth Is theCorporate Form......Page 198
   Section 351 Rationale and General Rules......Page 199
   Global Tax Issues: Choice of Organizational Form WhenOperating Overseas......Page 200
   Property Defined......Page 202
   Control of the Corporation......Page 203
   Assumption of Liabilities—§ 357......Page 207
   Basis Determination and Related Issues......Page 209
   Concept Summary: Tax Consequences of Liability Assumption......Page 210
   Concept Summary: Tax Consequences to the Shareholders andCorporation: With and Without the Application of § 351(Based on the Facts of Example 22)......Page 212
   Global Tax Issues: Does § 351 Cover the Incorporation ofa Foreign Business?......Page 214
   Capital Contributions......Page 215
   Debt in the Capital Structure......Page 216
   Stock and Security Losses......Page 218
   Business versus Nonbusiness Bad Debts......Page 219
   Section 1244 Stock......Page 220
  GAIN FROM QUALIFIED SMALL BUSINESS STOCK......Page 221
   Working with § 351......Page 222
   Selecting Assets to Transfer......Page 223
   Debt in the Capital Structure......Page 224
   Investor Losses......Page 225
   Refocus on the Big Picture: The Vehicle for BusinessGrowth Is the Corporate Form......Page 226
 Chapter 5: Corporations: Earnings & Profits and Dividend Distributions......Page 239
  The Big Picture: Taxing Corporate Distributions......Page 240
  CORPORATE DISTRIBUTIONS—OVERVIEW......Page 241
   Computation of E & P......Page 242
   Summary of E & P Adjustments......Page 245
   Concept Summary: E & P Adjustments......Page 246
   Allocating E & P to Distributions......Page 247
   Concept Summary: Allocating E & P to Distributions......Page 248
   Rationale for Reduced Tax Rates on Dividends......Page 251
   Qualified Dividends......Page 252
   Property Dividends......Page 253
   Constructive Dividends......Page 255
   Stock Dividends and Stock Rights......Page 258
   Corporate Distributions......Page 260
   Planning for Qualified Dividends......Page 262
   Constructive Dividends......Page 263
   Refocus on the Big Picture: Taxing Corporate Distributions......Page 265
 Chapter 6: Corporations: Redemptions and Liquidations......Page 279
  The Big Picture: Family Corporations and Stock Redemptions......Page 280
  STOCK REDEMPTIONS—IN GENERAL......Page 281
  STOCK REDEMPTIONS—SALE OR EXCHANGETREATMENT......Page 282
   Concept Summary: Tax Consequences of Stock Redemptions toShareholders......Page 283
   Stock Attribution Rules......Page 284
   Not Essentially Equivalent Redemptions......Page 285
   Disproportionate Redemptions......Page 286
   Complete Termination Redemptions......Page 287
   Partial Liquidations......Page 288
   Redemptions to Pay Death Taxes......Page 289
  STOCK REDEMPTIONS—EFFECT ON THE CORPORATION......Page 290
  STOCK REDEMPTIONS—PREFERRED STOCKBAILOUTS......Page 291
   Section 306 Stock......Page 292
   Liquidating and Nonliquidating Distributions Compared......Page 293
   The General Rule......Page 294
   Antistuffing Rules......Page 295
   Concept Summary: Summary of Antistuffing Loss Disallowance Rules......Page 298
   Ethics & Equity: Transferee Liability for Tax Deficiency of LiquidatedCorporation......Page 299
   Minority Shareholder Interests......Page 300
   Basis of Property Received by the Parent Corporation—The General Rule......Page 301
   Basis of Property Received by the Parent Corporation—§ 338 Election......Page 302
   Concept Summary: Summary of Liquidation Rules......Page 303
   Stock Redemptions......Page 304
   Parent-Subsidiary Liquidations......Page 306
   Refocus on the Big Picture: A Family Attribution Waiver Is aValuable Tool in Succession Planning......Page 307
 Chapter 7: Corporations: Reorganizations......Page 321
  The Big Picture: Structuring Acquisitions......Page 322
   Summary of the Different Types of Reorganizations......Page 323
   Concept Summary: Gain and Basis Rules for Nontaxable Exchanges......Page 324
   Concept Summary: Basis to Acquiring Corporation of PropertyReceived......Page 326
   Type A......Page 327
   Type B......Page 329
   Type C......Page 331
   Type D......Page 333
   Type E......Page 335
   Concept Summary: Summary of Type A Through Type DReorganizations: Advantages and Disadvantages......Page 337
   Type G......Page 338
   Continuity of Business Enterprise......Page 339
  TAX ATTRIBUTE CARRYOVERS......Page 340
   Net Operating Loss Carryovers......Page 341
   Earnings and Profits......Page 343
   Other Carryovers......Page 344
   Assessing the Possible Benefits of Restructuring Options......Page 345
   Concept Summary: Comprehensive Summary of CorporateReorganizations......Page 346
   Refocus on the Big Picture: Structuring Acquisitions......Page 348
 Chapter 8: Consolidated Tax Returns......Page 361
  The Big Picture: A Corporation Contemplates a Merger......Page 362
   Motivations to Consolidate......Page 363
   Source and Philosophy of Consolidated Return Rules......Page 364
  ASSESSING CONSOLIDATED RETURN STATUS......Page 365
   Financial Disclosure Insights: GAAP and Tax Treatment ofConsolidations......Page 366
   Concept Summary: The Consolidated Return Election......Page 367
   Affiliated versus Controlled Group......Page 368
   Compliance Requirements......Page 371
  STOCK BASIS OF SUBSIDIARY......Page 375
  COMPUTING CONSOLIDATED TAXABLE INCOME......Page 376
   Computational Procedure......Page 377
   Typical Intercompany Transactions......Page 378
   Global Tax Issues: Consolidated Returns and NOLs......Page 380
   Computation of Group Items......Page 384
   The Matching Rule......Page 386
   Choosing Consolidated Return Partners......Page 388
   Documentation Requirements......Page 389
   Refocus on the Big Picture: Should the Affiliated Group Filea Consolidated Return?......Page 390
 Chapter 9: Taxation of International Transactions......Page 401
  The Big Picture: Going International......Page 402
  OVERVIEW OF INTERNATIONAL TAXATION......Page 404
  Global Tax Issues: Tax Reform Can Make Strange Bedfellows......Page 405
  TAX TREATIES......Page 406
   U.S.-Source Income......Page 407
   Allocation and Apportionment of Deductions......Page 410
   Transfer Pricing......Page 411
   Ethics & Equity: The Costs of Good Tax Planning......Page 412
  FOREIGN CURRENCY TRANSACTIONS......Page 414
   Foreign Taxes......Page 415
   Export Property......Page 416
   Cross-Border Asset Transfers......Page 417
   Tax Havens......Page 418
   Global Tax Issues: Boom in Cross-Border Mergers butNo Inversions......Page 419
   Ethics & Equity: Exporting U.S. Jobs or Improving U.S.Competitiveness?......Page 420
   Concept Summary: Subpart F Income and a CFC......Page 422
   Foreign Tax Credit......Page 424
   Financial Disclosure Insights: Overseas Operations andBook-Tax Differences......Page 428
   Concept Summary: The Foreign Tax Credit......Page 429
   Nonresident Alien Individuals......Page 430
   Foreign Corporations......Page 432
   Expatriation to Avoid U.S. Taxation......Page 433
   The Foreign Tax Credit Limitation and Sourcing Provisions......Page 434
   Transferring Intangible Assets Offshore......Page 436
   Refocus on the Big Picture: Going International......Page 437
Part 3: Flow-Through Entities......Page 450
 Chapter 10: Partnerships: Formation, Operation, and Basis......Page 451
  The Big Picture: Why Use a Partnership, Anyway?......Page 452
   What Is a Partnership?......Page 453
   Key Concepts in Taxation of Partnership Income......Page 455
   Contributions to the Partnership......Page 458
   Exceptions to the General Rule of § 721......Page 459
   Other Issues Related to Contributed Property......Page 461
   Tax Accounting Elections......Page 463
   Initial Costs of a Partnership......Page 464
   Method of Accounting......Page 465
   Taxable Year of the Partnership......Page 466
   Measuring and Reporting Partnership Income......Page 468
   Global Tax Issues: Withholding Requirements fornon-U.S. Partners......Page 475
   Partner Allocations and Reporting......Page 476
   Concept Summary: Tax Reporting of Partnership Items......Page 479
   Partner’s Basis......Page 481
   Partner’s Capital Account......Page 485
   Loss Limitations......Page 486
   Self-Employment and Net Investment Income Tax......Page 488
   Choosing Partnership Taxation......Page 490
   Formation and Operation of a Partnership......Page 491
   Drafting the Partnership Agreement......Page 492
   Refocus on the Big Picture: Why Use a Partnership, Anyway?......Page 493
 Chapter 11: Partnerships: Distributions, Transfer of Interests, and Terminations......Page 511
  The Big Picture: The Life Cycle of a Partnership......Page 512
   Distributions in General......Page 513
   Proportionate Current Distributions......Page 514
   Proportionate Liquidating Distributions......Page 517
   Concept Summary: Proportionate Current Distributions(General Rules)......Page 518
   Property Distributions with Special Tax Treatment......Page 520
   Concept Summary: Proportionate Liquidating DistributionsWhen the Partnership Also Liquidates (General Rules)......Page 521
   Disproportionate Distributions......Page 522
  SECTION 736—LIQUIDATING DISTRIBUTIONS TORETIRING OR DECEASED PARTNERS......Page 523
   Property Payments......Page 524
   Income Payments......Page 525
   Concept Summary: Liquidating Distributions of Cash When thePartnership Continues......Page 527
   General Rules......Page 528
   Effect of Hot Assets......Page 529
   Concept Summary: Sale of a Partnership Interest......Page 531
   Death of a Partner......Page 532
   Gifts......Page 533
  SECTION 754—OPTIONAL ADJUSTMENTS TOPROPERTY BASIS......Page 534
   Adjustment: Sale or Exchange of an Interest......Page 535
   Adjustment: Partnership Distributions......Page 536
  TERMINATION OF A PARTNERSHIP......Page 538
   Family Partnerships......Page 539
   Global Tax Issues: A Partnership Isn’t Always aPartnership—Complications in the Global Arena......Page 540
   Limited Liability Partnerships......Page 541
   Planning Partnership Distributions......Page 542
   Comparing Sales to Liquidations......Page 543
   Other Partnership Issues......Page 544
   Refocus on the Big Picture: The Life Cycle of a Partnership......Page 545
 Chapter 12: S Corporations......Page 561
  The Big Picture: Deductibility of Losses and the Choiceof Business Entity......Page 562
   Concept Summary: Making an S Election......Page 563
   Definition of a Small Business Corporation......Page 564
   Shareholder Consent......Page 567
   Loss of the Election......Page 568
   Computation of Taxable Income......Page 570
   Allocation of Income and Loss......Page 573
   Tax Treatment of Distributions to Shareholders......Page 574
   Concept Summary: Classification Procedures for Distributionsfrom an S Corporation......Page 575
   Tax Treatment of Noncash Property Distributions bythe Corporation......Page 578
   Concept Summary: Consequences of Noncash Distributions......Page 579
   Shareholder’s Basis in S Stock......Page 580
   Treatment of Losses......Page 582
   Tax on Pre-Election Built-In Gain......Page 584
   Other Operational Rules......Page 585
   Making a Proper Election......Page 587
   Planning for the Operation of the Corporation......Page 588
   Refocus on the Big Picture: Using a Flow-Through Entityto Achieve Deductibility of Losses......Page 590
Part 4: Advanced Tax PracticeConsiderations......Page 604
 Chapter 13: Comparative Forms of Doing Business......Page 605
  The Big Picture: Selection of a Tax Entity Form......Page 606
  NONTAX FACTORS......Page 607
   Limited Liability......Page 608
   Overall Effect on Entity and Owners......Page 609
   Alternative Minimum Tax......Page 611
   State Taxation......Page 612
   Favorable Treatment of Certain Fringe Benefits......Page 613
   Minimizing Double Taxation......Page 614
  CONDUIT VERSUS ENTITY TREATMENT......Page 616
   Effect on Recognition at Time of Contribution to the Entity......Page 617
   Effect on Results of Operations......Page 618
   Effect on Recognition at Time of Distribution......Page 619
   Effect of At-Risk Rules......Page 620
   Effect of Special Allocations......Page 621
   Self-Employment Tax......Page 622
   Net Investment Income Tax (NIIT)......Page 623
  DISPOSITION OF A BUSINESS OR AN OWNERSHIPINTEREST......Page 624
   Sole Proprietorship......Page 625
   Partnership and Limited Liability Company......Page 626
   C Corporation......Page 627
   C Corporation......Page 628
  OVERALL COMPARISON OF FORMS OF DOINGBUSINESS......Page 629
  Concept Summary: Tax Attributes of Different Forms of Business(Assume That Partners and Shareholders Are All Individuals)......Page 630
  TAX PLANNING......Page 633
  Refocus on the Big Picture: Selection of a Tax Entity Form......Page 634
 Chapter 14: Taxes on the Financial Statements......Page 649
  The Big Picture: Taxes on the Financial Statements......Page 650
   Different Reporting Entities......Page 651
   Different Taxes......Page 652
   Different Methods......Page 653
   Tax Return Disclosures......Page 654
   Financial Disclosure Insights: Supersized Goodwill......Page 655
   Concept Summary: Income AmountsBook versus Tax......Page 656
   GAAP Principles......Page 657
   Global Tax Issues: Accounting for Income Taxes in InternationalStandards......Page 658
   Financial Disclosure Insights: The Book-Tax Income Gap......Page 659
   Valuation Allowance......Page 661
   Global Tax Issues: Tax Losses and the Deferred Tax Asset......Page 662
   Tax Disclosures in the Financial Statements......Page 663
   Concept Summary: Steps in Determining the BookTax Expense......Page 664
   Special Issues......Page 666
   Financial Disclosure Insights: Corporate Tax Rate Cuts:Be Careful What You Wish For......Page 667
   Concept Summary: Disclosures Under ASC 740-10 (FIN 48)......Page 668
   Summary......Page 670
   Global Tax Issues: Cash Stashed Overseas......Page 671
   Refining the Analysis......Page 672
   Sustaining the Tax Rate......Page 673
   Concept Summary: Benchmarking Analysis......Page 674
   Releasing Valuation Allowances......Page 675
   Reducing Effective Tax Rates with ASC 740-30 (APB 23)......Page 676
   Refocus on the Big Picture: Taxes on the FinancialStatements......Page 677
 Chapter 15: Exempt Entities......Page 689
  The Big Picture: Effect of a For-Profit Business on aTax-Exempt Entity......Page 690
   Serving the Common Good......Page 692
  TAXES ON EXEMPT ENTITIES......Page 694
   Ethics & Equity: For the Good of the People......Page 695
   Feeder Organizations......Page 697
   Tax Consequences of Private Foundation Status......Page 698
   Concept Summary: Exempt Organizations: Classification......Page 700
   Taxes Imposed on Private Foundations......Page 701
  UNRELATED BUSINESS INCOME TAX......Page 702
   Unrelated Trade or Business......Page 703
   Unrelated Business Taxable Income......Page 706
   Concept Summary: Unrelated Business Income Tax......Page 708
   Obtaining Exempt Organization Status......Page 709
   Annual Filing Requirements......Page 710
   Maintaining Exempt Status......Page 711
   Unrelated Business Income Tax......Page 712
   Refocus on the Big Picture: Effect of a For-Profit Businesson a Tax-Exempt Entity......Page 713
 Chapter 16: Multistate Corporate Taxation......Page 725
  The Big Picture: Making a Multistate Location Decision......Page 726
  OVERVIEW OF CORPORATE STATE INCOMETAXATION......Page 727
   State Modifications......Page 728
   Nexus beyond P.L. 86–272......Page 731
  ALLOCATION AND APPORTIONMENT OF INCOME......Page 733
   Apportionable Income......Page 734
   Apportionment Factors: Elements and Planning......Page 736
   Concept Summary: Apportionable Income......Page 737
   The Sales Factor......Page 738
   The Payroll Factor......Page 739
   The Property Factor......Page 741
   Financial Disclosure Insights: State/Local Taxes and theTax Expense......Page 742
  THE UNITARY THEORY......Page 743
   Tax Effects of the Unitary Theory......Page 744
   Global Tax Issues: Water’s Edge Is Not a Day at the Beach......Page 745
   Consolidated and Combined Returns......Page 746
   State Tax Filing Requirements......Page 747
   State and Local Sales and Use Taxes......Page 748
   Other Taxes......Page 750
   Selecting the Optimal State in Which to Operate......Page 752
   Restructuring Corporate Entities......Page 753
   Subjecting the Corporation’s Income to Apportionment......Page 755
   Planning with Apportionment Factors......Page 756
   Sales/Use Tax Compliance......Page 757
   Refocus on the Big Picture: Making a Multistate Location Decision......Page 758
 Chapter 17: Tax Practice and Ethics......Page 771
  The Big Picture: A Tax Adviser’s Dilemma......Page 772
  TAX ADMINISTRATION......Page 773
   Organizational Structure of the IRS......Page 774
   IRS Procedure—Other Issuances......Page 775
   Administrative Powers of the IRS......Page 776
   The Audit Process......Page 777
   Ethics & Equity: Can the IRS Pretend to Be Your Friend?......Page 778
   The Taxpayer Appeal Process......Page 780
   Offers in Compromise and Closing Agreements......Page 781
   Ethics & Equity: Our Taxing System of Self-Assessment......Page 782
   Interest......Page 783
   Taxpayer Penalties......Page 784
   Ethics & Equity: First-Time Tax Violators Can Get Off with Justa Warning......Page 789
   Statute of Limitations......Page 792
   The Tax Professional......Page 793
   Ethics & Equity: Who Cheats and Why?......Page 794
   IRS Rules Governing Tax Practice......Page 795
   Preparer Penalties......Page 796
   AICPA Statements on Standards for Tax Services......Page 798
   Strategies in Seeking an Administrative Ruling......Page 801
   Considerations in Handling an IRS Audit......Page 802
   Statute of Limitations......Page 803
   Penalties......Page 804
   Refocus on the Big Picture: A Tax Adviser’s Dilemma......Page 805
Part 5: Family Tax Planning......Page 818
 Chapter 18: The Federal Gift and Estate Taxes......Page 819
  The Big Picture: An Eventful and Final Year......Page 820
   Nature of the Taxes......Page 821
   Global Tax Issues: U.S. Transfer Taxes and NRAs......Page 822
   Concept Summary: Formula for the Federal Estate Tax......Page 823
   Valuation for Federal Transfer Tax Purposes......Page 824
   Key Property Concepts......Page 825
   General Considerations......Page 826
   Ethics & Equity: It’s the Thought That Counts......Page 827
   Transfers Subject to the Gift Tax......Page 828
   Annual Exclusion......Page 829
   Computing the Federal Gift Tax......Page 830
   Procedural Matters......Page 831
  THE FEDERAL ESTATE TAX......Page 832
   Gross Estate......Page 833
   Taxable Estate......Page 838
   Estate Tax Credits......Page 842
  THE GENERATION-SKIPPING TRANSFER TAX......Page 844
  TAX PLANNING......Page 845
  Refocus on the Big Picture: An Eventful and Final Year......Page 846
 Chapter 19: Family Tax Planning......Page 861
  The Big Picture: Lifetime Giving—the Good and the Bad......Page 862
   Valuation in General......Page 863
   Valuation of Specific Assets......Page 864
   Ethics & Equity: One Way to Handle Loans to Troublesome In-Laws......Page 865
   Real Estate and the Special Use Valuation Method......Page 866
   Valuation Problems with a Closely Held Business......Page 867
   Basis of Property Acquired by Gift......Page 871
   Basis of Property Acquired by Death......Page 872
  GIFT PLANNING......Page 874
   Minimizing Estate Taxes......Page 875
   Income Tax Considerations......Page 876
   Proper Handling of Estate Tax Deductions......Page 878
   Providing Estate Liquidity......Page 881
   Concept Summary: Estate and Gift Tax Planning......Page 883
   Refocus on the Big Picture: Lifetime Giving—The Goodand the Bad......Page 884
 Chapter 20: Income Taxation of Trusts and Estates......Page 893
  The Big Picture: Setting Up a Trust to Protect a Family......Page 894
   What Is a Trust?......Page 895
  NATURE OF TRUST AND ESTATE TAXATION......Page 898
   Tax Rates and Personal Exemption......Page 899
   Alternative Minimum Tax......Page 900
   Entity Accounting Income......Page 901
   Gross Income......Page 904
   Ordinary Deductions......Page 906
   Charitable Contributions......Page 908
   Deduction for Distributions to Beneficiaries......Page 909
   Concept Summary: Uses of the DNI Amount......Page 910
   Tax Credits......Page 912
   Distributions by Estates and Complex Trusts......Page 913
   Character of Income......Page 915
  GRANTOR TRUSTS......Page 916
   Powers Retained by the Grantor......Page 917
   A Trust or an Estate as an Income-Shifting Device......Page 918
   Income Tax Planning for Estates......Page 919
   Deductibility of Fiduciary Expenses......Page 920
   Duties of an Executor......Page 921
   Refocus on the Big Picture: Setting Up a Trust to Protecta Family......Page 922
Appendix A: Tax Rate Schedules and Tables......Page 934
Appendix B: Tax Forms......Page 942
Appendix C: Glossary......Page 982
Appendix D-1: Table of Code Sections Cited......Page 1014
Appendix D-2: Table of Regulations Cited......Page 1023
Appendix D-3: Table of Revenue Procedures and Revenue Rulings Cited......Page 1026
Appendix E: Table of Cases Cited......Page 1028
Appendix F: Present Value and Future Value Tables......Page 1032
Appendix G: Tax Formulas......Page 1036
Index......Page 1041