income tax syllabus as of 10/27/16 and … tax-f16.pdfwillis income tax syllabus 10/27/2016 1 income...

WILLIS INCOME TAX SYLLABUS

10/27/2016

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INCOME TAX SYLLABUS (AS OF 10/27/16 AND SUBJECT TO REVISION)

PROF. WILLIS OFFICE: 331 PHONE: 352-273-0680 (TAX OFFICE) OFFICE HOURS: Thursday 12:00 – 3:00 (for TEO) plus Monday to Thursday from 1:00 – 4:00 (all classes) and 9:00 to 10:10 (T/W/Th for JD Income Tax). (I’m in a JD class from 10:00 to Noon on T/W/Th and LL.M. from 3:20 to 5:30 on Thursday). Email: [email protected]; best way to contact is through Canvas.

Please stop by my office: if the door is open, you are welcome (even if someone is in there). Please do not be hindered by the listed office hours: we must post those, but I do not restrict you to those. I want to know you and know how you are progressing.

REQUIRED:• INTERNAL REVENUE CODE AND REGULATIONS (any recent selected version is sufficient).

• INCOME TAX COURSE MATERIALS, available on Canvas. This includes Professor Willis’slides for most chapters. To use these, you must follow the instructions on Canvas. Forthe Fall Semester 2016, they are being revised, so some are dated 2016 and some are severalyears old. I will update them during the semester as much as possible.

• INTRODUCTION TO TAX SCHOOL MATERIALS, available on Canvas. These are a resourceand a review of what I believe a student should know prior to entering an LL.M. (Taxation)program. They exceed what I expect from a student in this course. They are not yetcomplete; however, they are vast. You are not paying for them, so use them as a resource.

• J. Martin Burke & Michael K. Friel, TAXATION ON INDIVIDUAL INCOME (Lexis).

COURSE OBJECTIVES: SEE COURSE OBJECTIVES ON CANVAS. PREPARATION:

• As a student, I preferred to spend about one-third of my study time preparing for class, andtwo-thirds reviewing. I strongly recommend you do the same. If you are under-prepared,for a particular class, please attend anyway.

• At a minimum, you should review:

• All slides for the class.• All code sections for the class.• Work Problems on the Slides or in the Text if Assigned.

• Ideally, you should:

• Read the assigned cases, regulations, and text.

Income Tax Fall 2016

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PARTICIPATION AND ATTENDANCE:

• I enjoy questions and generally will try to answer all of them. Attendance and participation are important. They may affect your grade. We will take attendance (how is yet to be determined).

• Students requesting classroom accommodation must first register with the Office of Disability Resources. The UF Office of Disability Resources will provide documentation to the student who must then provide this documentation to the Law School Office of Student Affairs when requesting accommodation.

STUDENT COURSE EVALUATIONS: • Students are expected to provide feedback on the quality of instruction in this course based

on 10 criteria. These evaluations are conducted online at https://evaluations.ufl.edu. Evaluations are typically open during the last two or three weeks of the semester, but students will be given specific times when they are open. Summary results of these assessments are available to students at https://evaluations.ufl.edu.

EXAM AND EVALUATION: • The Final Examination is open book, which includes anything written (printed or

electronic). You may not work with another person, however. If you copy something from a source, you should cite or link to it.

• Your grade will be based 90% on the final exam and 10% on class participation and quizzes/assignments on Canvas (TBA). I expect most students will receive most points for participation and quizzes based on reasonable participation and attempts. Exceptional participation may result in a half-letter bump in grade.

• The Quizzes are a new tool I’ve used in other courses, but this will be the first time in Income Tax. They will be on Canvas and may be intermittent this semester. The point is to guide you and to inform me regarding whether you are understanding basics. As long as you make a good-faith effort, you will be fine.

• The law school policy on delay in taking exams can be found at: http://www.law.ufl.edu/student-affairs/current-students/academic-policies#12

UF LAW GRADING POLICIES: Grade Points Grade Points Grade Points A (Excellent) 4.0 C+ 2.33 D- 0.67 A- 3.67 C (Satisfactory) 2.00 E (Failure) 0.0 B+ 3.33 C- 1.67 B (Good) 3.00 D+ 1.33 B- 2.67 D (Poor) 1.00

• The law school grading policy is available at: http://www.law.ufl.edu/student-

affairs/current-students/academic-policies#9. The grading policy generally does not apply to LL.M. courses.


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Class One: Before this class, please complete Assignments 1-4 (dealing with Installation). I really want everyone to have completed these by August 19 (which allows for Drop-Add). If you have difficulties, please let me know. Work Quiz 1: Installation (which acknowledges you completed the assignments or at least tried – it will help me identify problems, if any). You will not be able to use my Slides until you complete these. If you have had a course with me before (FINANCE FOR LAWYERS or ACCOUNTING FOR LAWYERS, you should already have completed each of them – unless you have a new computer). Topic 1: Organization and History of the U.S. Tax System. Book: Chapter One pages 4 through 8. Slides: LESSON ONE

INTRODUCTION TO TAX SCHOOL MATERIALS:

• Code Structure • Court System • Official Tax Authorities • Brief History

Code:

• 7806 • glance at section 7701.

U.S. Constitution:

• Article One, Section 8, clause 1 • Article One, Section 9, clause 4 • Article One, Section 7 • 16th Amendment

Cases: Read Golsen and be familiar with the holdings in the others:

• Chevron, U.S.A., Inc. v. National Resources Defense Council, Inc., 467 U.S. 837 (1984). • Mayo Found. for Med. Educ. & Research v. U. S., 562 U.S. 44 (U.S. 2011). • Golsen v. Commissioner, 54 T.C. 742 (1970). • Pollock v. Farmers’ Loan & Trust, 157 U.S. 429 (1895). • Hylton v. U.S., 3 U.S. 171 (1796). • Knowlton v. Moore, 178 U.S. 41 (1900). • Flint v. Stone Tracy Co., 220 U.S. 107 (1911). • Magnano v. Hamilton, 292 U.S. 40 (1934).

Classes Two and Three: Topic 2: Overview of the U.S. Income Tax System Book: none Slides: LESSON TWO Code: none Cases: none


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Topic 3: Computation Book: pages 8-19 Slides: LESSON THREE Form: 1040 Code:

• 61 • 62 • 63 • 1

Classes Four: Topic 4: Whether Taxpayer Has Income Book: pages 21-51; 165 to 184 (glance at this, it is for Class Twelve) Slides: LESSON FOUR

LESSON NINE (this is a detailed look at Discharge of Indebtedness Income and Exclusions. I will defer this to Class Twelve, but you may want to look at it now).

Cases: • Eisner v. Macomber, 252 U.S. 189 (1920) • Old Colony Trust Company v. Commissioner, 279 U.S. 716 (1929) • U.S. v. Kirby Lumber Company, 284 U.S. 1 (1931) • Helvering v. Independent Life Insurance Co., 292 U.S. 371 (1934) • Helvering v. Bruun, 309 U.S. 461 (1940) • Commissioner v. Glenshaw Glass, 348 U.S. 426 (1955) • Cesarini v. U.S., 296 F. Supp. 3 (No. Dist. Ohio, 1969) • McCann v. U.S., 696 F.2d 1386 (Fed. Cir. 1983) • Pellar v. Commissioner, 25 T.C. 299 (1955) (A)

Code: • 61 • 108 • 1001 • Glance at 1017

Class Five: Topic 5: Whether Income Details Book: pages 53 to 73 Slides: LESSON FIVE Cases:

• North American Oil v. Burnet, 286 U.S. 417 (1932). • James v. United States, 366 U.S. 213 (1961). • Commissioner v. Indianapolis Power & Light Co., 493 U.S. 203 (1990).

Code: • Skim 1341 (we may cover it later)

Classes Six and Seven: Topic 6: Basis


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Book: pages 75 to 89; 913 to 936 Slides: LESSON SIX Cases:

• Crane v. Commissioner, 331 U.S. 1 (1947). • Parker v. Delaney, 186 F. 2d 455 (1st Cir. 1950). • Philadelphia Park Amusement Co. v. United States, 126 F. Supp. 184 (Cl. Ct. 1954). • Commissioner v. Tufts, 461 U.S. 300 (1983). • Reginald Turner, 13 T.C.M.462 (CCH) (1954).

Code: • 1001 • 1011 • 1012 • 1014 • 1015 • 1016 • 1041 • Glance at 1031; 1033; 1017

Class Eight: Topic 7: Gifts and Inheritance Book: pages 91 to 112; 185 to 214 Slides: LESSON SEVEN Cases:

• Commissioner v. Duberstein, 363 U.S. 278 (1960). • Goodwin v. United States, 67 F. 3d 149 (8th Cir. 1995). • Wolder v. Commissioner, 493 F.2d 608 (2d Cir. 1974).

Code: • 102 • 1014 • 1015 • 1041

Classes Nine and Ten: We cover four exclusion topics together. We will cover them in the order of the Slides, as opposed to the order in the Book. We must go through this rapidly. Study the Slides and the Examples and my Comments. Topic 8: Personal Injury Awards Book: 185 to 214 Cases: none Slides: LESSON 8 Code:

• 104 • 105 • 106 • Glance at 72 • Glance at 468B


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Topic 8: Scholarship, Prizes Book: pages 133-45 Cases: none Code:

• 74 • 117

Topic 8: Life Insurance and Annuities Book: pages 147-63 Cases: none Code:

• 72 • 101 • Glance at 408

Topic 8: Fringe Benefits Book: 215-246 Cases: Code:

• 119 • 132 • 125 • 127 • 129 • 107 • 120 • 137

Class Eleven: Topic 9: Discharge of Indebtedness Income and Exclusions Book: pages 165 to 184 Slides: LESSON NINE Cases and Ruling:

• U.S. v. Kirby Lumber Company, 284 U.S. 1 (1931) • Rev. Rul. 84-176 • Zarin v. Comm’r, 916 F.2d 110 (3d Cir. 1990)

Code: • 108 • 1017

Class Twelve: Topic 10: Deductions Book: pages 247-284 Slides: LESSON TEN Cases and Ruling:

• Welch v. Helvering, 290 U.S. 111 (1933)


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• Deputy v. du Pont, 308 U.S. 488 (1940) • Interstate Transit Lines v. Comm’r, 319 U.S. 590 (1943) • Higgens v. Comm’r, 312 U.S. 212 (1941) • Comm’r v. Groetzinger, 480 U.S. 23 (1987) • Estate of Rockefeller v. Comm’r, 762 F.2d 764 (2d Cir. 1985) • Rev. Rul. 75-120

Code: • 162 • 212 • 262 • 195 • 62 • Glance at 165

Classes Thirteen and Fourteen: Topic 11: Depreciation Book: pages 321-361 Slides: LESSON ELEVEN-A Depreciation Calculator Cases:

• Simon v. Comm’r, 103 T.C. 247 (1995) • Liddle v. Comm’r, 103 T.C. 285 (1995) • Rev. Proc. 87-56 (Class Life System) • Rev. Rul. 68-232

Code: • 167 (glance) • 168 • 179 • 197 • 1016 • 1245 (glance)

Class Fifteen: Topic 11: Depreciation Recapture Book: pages Slides: LESSON ELEVEN-B Cases:

• none Code:

• 1245 • 1250 • 179(d)(10)

Class Sixteen to Eighteen: Topic 12: Capital Assets, Capital Gains and Losses Section 1231


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Book: pages Slides: LESSON TWELVE Cases:

• Corn Products, 350 U.S. 46 (1955) • Arkansas Best, 485 U.S. 212 (1988) • Malat v. Riddel, 383 U.S. 569 (1966) • International Shoe Machine Corp. v. U.S., 491 F.2d 157 (1st Cir. 1974) • Hollywood Baseball, 423 F.2d 494 (9th Cir. 1970) • Deltide Fishing Tools, 279 F. Supp. 661 (E.D. La. 1968) • Bynum v. Comm’r, 46 T.C. 295 (1966) • Suburban Realty v. U.S., 615 F.2d 171 (5th Cir. 1980) • Biedenharn v. U.S., 526 F.2d 409 (5th Cir. 1976)

Code: • 1221 • 1211-1212 • 1223 • 1231 • 1237

Class Nineteen: Topic 13: Capitalization and Amortization Book: pages 285-320 Slides: LESSON THIRTEEN Cases:

• Comm’r v. Idaho Power, 418 U.S. 1 (1974) • INDOPCO, Inc. v. Comm’r, 503 U.S. 79 (1992) (this is a very famous case, although I do

not find it particularly helpful at teaching anything. Do you?) • Midland Empire v. Comm’r, 14 T.C. 635 (1950) • Mt. Morris Drive-In Theatre Co. v. Comm’r, 25 T.C. 272 (1955) • Williams v. McGowan, 152 F.2d 570 (2nd Cir 1945).

Code: • 263 • 195 • 197 • 1060

Class Twenty: Topic 15: Miscellaneous Deductions and Limitations Book: Chapters 16 to 21 (we will cover quickly) Slides: LESSON FOURTEEN Cases: none Code:

• 163 • 164 • 274 • 217


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• 183 • 280A

Class Twenty-one to twenty-three: Topic 16: Accounting Methods Book: Chapters 28 and 29 LESSONS FIFTEEN AND SIXTEEN CASH METHOD OF ACCOUNTING

• Willis Text: § Chapter 7: Cash Method (we will not cover pages 72-77, which are mostly

mooted by the section 263 regulations)

• Slides: § methods.pdf § cash.pdf

• Cases: This is a ridiculously long list of cases; however, with the exception of Hornung and Davis, they are all vocabulary cases: ones you should know by name. Each is on my list of TOP 100 TAX CASES. Be familiar with the holdings. If you have time, read the edited versions.

§ Kahler v. Comm’r, 18 T.C. 31 (1952) § Hornung v. Comm’r, 47 T.C. 428 (1967) § Beatrice Davis v. Comm’r, 37 T.C.M. (CCH) 42 (1978) § Cowden v. Comm’r, 289 F. 2d 20 (5th Cir. 1961) § Veit v. Comm’r, 8 T.C. 809 (1947) § Martin v. Comm’r, 96 T.C. 814 (1991) § Sproull v. Comm’r, 16 T.C. 244 (1950) § Reed v. Comm’r, 723 F.2d 138 (5th Cir. 1983) § Vander Poel v. Comm’r, 8 T.C. 407 (1947) § Comm’r v. Idaho Power Co., 418 U.S. 1 (1974) § INDOPCO v. Comm’r, 503 U.S. 79 (1992) § Comm’r v. Boylston Market, 131 F.2d 966 (1st Cir. 1942) § Indianapolis Power & Light Co. v. Comm’r, 493 U.S. 203 (1990) § Burgess v. Comm’r, 8 T.C. 47 (1947) § Battlestein v. Comm’r, 631 F.2d 1182 (5th Cir. 1980)

• Code: § 263 (read generally, not for detail) § 446 § 448 § 461(f)

• Regulations: § 1.451-2(a) § 1.263(a)-4 (creation of intangibles) (These are ridiculously long. I will

make a highlighted copy available to you. Do not focus on details).


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§ 1.263(a)-3 (creation of tangibles, effective 9/13/13). (These are ridiculously long. I will make a highlighted copy available to you. Do not focus on details).

• Doctrines: see, TOP 40 TAX DOCTRINES

§ CONSTRUCTIVE RECEIPT DOCTRINE § CASH EQUIVALENCE DOCTRINE § ECONOMIC BENEFIT DOCTRINE § RABBI TRUST DOCTRINE § BURGESS/BATTLESTEIN SCENARIO § IDAHO POWER DOCTRINE

ACCRUAL METHOD OF ACCOUNTING • Willis Text:

§ Chapter 8: Accrual Method

• Articles: I encourage you to read the responses from Professors Geier and Johnson. § It’s Time for Schlude to Go, http://ssrn.com/abstract=285387 § Show Me the Numbers . . . Please, http://ssrn.com/abstract=292464 § Leave Albertson's Alone, http://ssrn.com/abstract=1638487 (week Five) § Albertson's: A Little Less Emotion, Please!,

http://ssrn.com/abstract=1638455 (week Five) • Slides:

§ accrualm.pdf

• Cases and Rulings: see, TOP 100 TAX CASES. Be familiar with the holding. If you have time, read the edited version.

§ Schlude v. Comm’r, 372 U.S. 128 (1963) § Artnell Co. v. Comm’r, 400 F.2d 981 (7th Cir. 1968) § Rev. Proc. 71-21 § Boise Cascade Corp. v. U. S., 530 F.2d 1367 (Ct. Cl. 1976) § Albertson’s v. Comm’r, 42 F.3d 537 (9th Cir. 1994) (week five)

• Code: § 461(h)

• Regulations: § 1.451-5

• Doctrines: see, TOP 40 TAX DOCTRINES

§ SCHLUDE DOCTRINE

In relation to deductions, you need to cover section 461(h). This appears to be very simple. Indeed, applying it to a given set of facts is simple if you are familiar with the regulations. The regulations construe the statute in ways you may not expect. But, more importantly, you need to understand the economic consequences of section 461(h): if you planning a transaction, you may want to modify the facts such that you obtain the desired result, but nevertheless avoid the sometimes detrimental effects of section 461(h). Most students view this as the most difficult part of the course: the section is simple, and getting around the section is simple; however, knowing when to get around the section is not always intuitive. Indeed, much of what we cover may appear counter-intuitive . . . even to students with a finance background.


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I believe the historic cases in Willis Chapter 7 are very important: they will help you understand the situation existing before section 461(h). This perspective will help you understand what the drafters were attempting. They grossly over-reacted, in my opinion. Many students dislike reading with old cases that no longer apply to anything. I find that unfortunate, but not surprising. Class Twenty-four to twenty-six: Topic 17: Exchanges Book: SLIDES: LESSONS SEVENTEEN AND EIGHTEEN CODE: 1031 1033 Class Twenty-seven to twenty-nine: Topic 18: Charitable Contributions Book: SLIDES: LESSON EIGHTEEN (CONTRIBUTIONS) AND NINETEEN (SOLICITATION AND SUBSTANTIATION) CODE: 170 Class Thirty to Thirty-two: Topic 19: Assignment of Income Book: Chapter 34 SLIDES: CASES:

• Services: – Lucas v. Earl, 281 U.S. 111 (1930) – Poe v. Seaborn, 282 U.S. 101 (1930)

• Property: – Blair v. Comm’r, 300 U.S. 5 (1937) – Helvering v. Horst, 311 U.S. 112 (1940) – Helvering v. Eubank, 311 U.S. 122 (1940) – Harrison v. Schaffner, 312 U.S. 579 (1941)

• Loans: – Estate of Stranahan, 472 F.2d 867 (6th Cir. 1973) – Hydrometals, Inc. v. Comm’r, 31 T.C.M. 1260, aff’d per curiam, 485 F.2d 1236 (5th Cir. 1973)

• Trusts: – Helvering v. Clifford, 309 U.S. 331 (1940)

CODE: NONE


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I will revise this syllabus to put in these topics, though I may change the order. Next to them are the amount of time I believe is minimum. It results in our completing all of them. The Book covers each of these. I specialize in the bolded ones at the LL.M. level, so I will provide my LL.M. slides (for your perusal) and I will reduce those slides, as appropriate for a beginning course. I have old slides from about 8-10 years ago we can also use. I have older slides for all these topics, but I’d like to revise as many as I can before I distribute them. All are covered in the INTRODUCTION TO TAX SCHOOL Materials, which you have Please be patient as I try to re-build this course in a 50-minute, 4 credit format. For a long time, it was 60 minutes per hour, 5 credits, and 15 weeks per semester. The Book is excellent on these topics, but I will provide you with more advanced materials, as well.

• topic: related parties: two classes

• topic: TVM 2 classes

• topic: error correction 2 classes


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income tax syllabus as of 10/27/16 and … tax-f16.pdfwillis income tax syllabus 10/27/2016 1 income...

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