Fundamentals of Taxation, 2022 Edition
By Ana Cruz, Michael Deschamps, Frederick Niswander, Debra Prendergast and Dan Schisler
Contents:
Chapter 1
Introduction to Taxation, the Income Tax Formula, and Form 1040 1-1
Tax Rate Structures 1-2
Marginal Tax Rates and Average Tax Rates 1-5
A Simple Income Tax Formula 1-5
The Components of a Basic Form 1040 1-6
Calculation of Income Tax (Form 1040, Line 16) and Health Care Tax 1-13
Tax Payments (Form 1040, Lines 25d, 26, and 32) 1-15
Appendix A: Tax Authority 1-22
Appendix B: IRS Rules for Paid Tax Preparers 1-27
Appendix C: Getting Started with TaxAct 1-28
Chapter 2
Expanded Tax Formula, Form 1040, and Basic Concepts 2-1
The Income Tax Formula and Form 1040 2-2
Filing Status (Form 1040, First Page) 2-11
Dependents (Form 1040, Page 1) 2-13
Standard Deduction (Form 1040, Line 12a) 2-19
Tax Due to IRS 2-20
Interest and Tax Penalties 2-24
Chapter 4
Adjustments for Adjusted Gross Income 4-1
Student Loan Interest (Schedule 1 of Form 1040, Line 21) 4-2
Health Savings Account Deduction (Schedule 1, Line 13) 4-6
Moving Expenses for Members of the Armed Forces (Schedule 1, Line 14) 4-10
Deduction for Half of Self-Employment Tax (Schedule 1, Line 15) 4-12
Self-Employed Health Insurance Deduction (Schedule 1, Line 17) 4-13
Penalty on Early Withdrawal of Savings (Schedule 1, Line 18) 4-14
Alimony Paid (Schedule 1, Line 19a) 4-16
Educator Expenses (Schedule 1, Line 11) 4-18
Chapter 5
Itemized Deductions 5-1
Deductible Medical Expenses (Schedule A, Line 4) 5-3
Deductible State and Local Taxes (Schedule A, Line 7) 5-9
Deductible Interest (Schedule A, Line 10) 5-14
Deductible Gifts to Charity (Schedule A, Line 14) 5-20
Deductible Casualty and Theft Losses (Schedule A, Line 15) 5-25
Other Itemized Deductions (Schedule A, Line 16) 5-30
Chapter 6
Self-Employed Business Income (Line 3 of
Schedule 1 and Schedule C) 6-1
Income for a Schedule C Trade or Business 6-5
Ordinary and Necessary Trade or Business Expenses 6-7
Depreciation 6-8
Transportation and Travel 6-18
Business Use of the Home and Business Bad Debts 6-27
Hobby Loss Rules and Education Expenses 6-33
Self-Employment Tax 6-34
Appendix: General Depreciation System 6-45
Chapter 7
Capital Gains and Other Sales of Property
(Schedule D and Form 4797) 7-1
Terms and Tax Forms 7-2
Classification of Assets 7-4
Sales of Ordinary Assets 7-7
Sales of Capital Assets 7-9
Sales of Business Property 7-20
Tax Issues for Special Types of Sales 7-26
Chapter 8
Rental Property, Royalties, and Income from
Flow-Through Entities (Line 5, Schedule 1, and
Schedule E) 8-1
Rental Property 8-2
Rental of Vacation Homes 8-9
Royalty Income 8-16
Flow-Through Entities 8-17
Chapter 9
Tax Credits (Form 1040, Lines 19, 20, 27 through
29, and 31, Schedule 3, Lines 1 through 14) 9-1
Credit for Child and Dependent Care Expenses (Schedule 3, Line 2 [Form 2441]) 9-2
Credit for the Elderly or the Disabled (Schedule 3, Line 6d [Schedule R]) 9-6
Education Credits (Form 1040, Line 29 and Schedule 3, Line 3 [Form 8863]) 9-7
Foreign Tax Credit (FTC) (Schedule 3, Line 1 [Form 1116]) 9-13
Child Tax Credit (Form 1040, Line 19 and 28) 9-16
Retirement Savings Contributions Credit (Saver’s Credit) (Schedule 3, Line 4 [Form 8880]) 9-18
Adoption Credit (Schedule 3, Line 6c [Form 8839]) 9-19
Earned Income Credit (EIC) (Form 1040, Line 27a) 9-21
Premium Tax Credit (Schedule 2, Line 2, or Schedule 3, Line 9) 9- 27
Appendix A: Earned Income Credit (EIC) Table 9-31
Appendix B: Table 2 for Form 8962 9-41
Chapter 10
Payroll Taxes 10-1
Tax Issues Associated with Payroll and Form 1040 10-1
Federal Income Tax Withholding, Social Security, and Medicare
Taxes on Wages and Tips 10-2
Reporting and Paying Payroll Taxes 10-15
Self-Employment Taxes, Unemployment Taxes, Form 940, Taxes for
Household Employees, and Schedule H 10-22
Employer Payroll Reporting Requirements Including Forms W-2 and W-3 10-31
Supplemental Wage Payments, Backup Withholding, Form W-9,
Estimated Tax Payments, and Form 1040-ES 10-34
Additional Information Regarding Legislation and Payroll 10-38
Appendix: Partial Wage Bracket Method Withholding 10-52
Chapter 11
Retirement and Other Tax-Deferred Plans and Annuities 11-1
Tax-Deferred Plans and Annuities: The Basics 11-1
Employer-Sponsored Retirement Plans 11-3
Individual-Sponsored Retirement Plans 11-9
Tax-Deferred Nonretirement Plans 11-12
Distributions from Tax-Deferred Pension Plans 11-15
Tax Treatment of Annuity Contracts 11-23
Appendix: Life Expectancy Tables 11-27
Chapter 12
Special Property Transactions 12-1
Like-Kind Exchanges 12-2
Involuntary Conversions 12-7
Installment Sales 12-13
Sale of a Personal Residence 12-16
Related-Party Losses and Wash Sales 12-21
Chapter 13
At-Risk/Passive Activity Loss Rules and the
Individual Alternative Minimum Tax 13-1
At-Risk Rules 13-2
Passive Activity Losses 13-9
At-Risk and PAL Rules in Conjunction 13-16
Alternative Minimum Tax (AMT) 13-20
Appendix: Depreciation Tables 13-34
Chapter 14
Partnership Taxation 14-1
Formation of a Partnership 14-1
Partnership Ordinary Income or Loss 14-6
Separately Stated Items 14-13
Basis of the Partnership Interest 14-16
Partnership Distributions 14-18
Disposal or Liquidation of a Partnership Interest 14-20
Chapter 15
Corporate Taxation 15-1
Corporate Formation and Filing Requirements 15-1
Basis 15-9
Taxable Income and Tax Liability 15-10
Transactions with Shareholders 15-15
Schedules L, M-1, and M-3 15-17
Other Corporate Issues 15-18
Subchapter S Corporations 15-21
Appendix A: Amended Tax Returns (Form 1040X) A-1
Appendix B: Comprehensive Problems B-1
Appendix C: Concept Check Answers C
Appendix D: IRS Tax Tables D-1
Appendix E: IRS Tax Forms E-1
Appendix F: 2021 Federal Income Tax Information F-1
Index IND-1