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AC 309 Individual Income Tax
Individual Income Tax
Whiteman AFB, Knob Noster, MO Fall I 2004
Resident Center: Whiteman AFB
Course Number: AC 309
Course Title: Individual Income Tax
Instructor: Ron Castleman
Term Dates: 08/16/03 - 10/10/03
Meeting Times: Tuesdays & Thursdays
17:00 - 19:30
Syllabus — Individual Income Tax
Vision Statement as approved by Park University Board of Trustees
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Mission Statement as approved by Park University Board of Trustees
The mission of Park University, an entrepreneurial institution of learning, is to provide access to academic excellence which will prepare learners to think critically, communicate effectively and engage in lifelong learning while serving a global community.
Park University is committed to meeting the needs of all students that meet the criteria for special assistance. These guidelines are designed to supply directions to students concern-ing the information necessary to accomplish this goal. It is Park University’s policy to comply fully with federal and stae law, including Section 504 of the Rehabilitation Act of 1973 and the American with Disabilities Act of 1990, regarding students with disabilities and, to the extent of any inconsistency between these guidelines and federal and/or state law, the provisions of the law will apply.
I. Course Description
A study of Federal Income Tax law with emphasis on its application to individuals a part of a cooperative effort with the Internal Revenue Service.
II Goals of the Course
The course has been designed to acquaint the student with current income tax laws as they pertain to individuals.
III. Student Performance Objectives
A. To identify different taxes imposed at the Federal, state, and local levels.
B. To recognize the economic, social, equity, and political considerations that justify various aspects of the tax law.
C. To distinguish between statutory, administrative, and judicial sources of the tax law and explain the purpose and limitations of each source.
D. To research tax issues utilizing books and computer sources.
E. To correctly apply the components of the Federal income tax formula.
F. To apply the rules to determine the appropriate filing status to be used to file an individual income tax return.
G. To apply the laws for personal and dependency exemptions.
H. To compute the kiddie tax situations.
I. To explain the filing requirements for individual income tax returns.
J. To explain Forms 1040, Schedule A, Schedule B, Schedule C, Schedule SE, Schedule D, Schedule E, and other schedules commonly used in preparing individual income tax returns.
K. To identify planning opportunities and strategies associated with the various income and deductions relative to individual income tax returns.
L. To explain the concepts of gross income, distinguishing between the economic, accounting, and tax concepts of gross income.
M. Distinguish between the cash and accrual methods of accounting, indicate when a particular method is required, and the related effects on the choice of the taxable year.
N. To identify who should pay the tax on a particular item of income in various situations.
O. To explain according to the tax code the tax treatment of alimony, loans made below the current market rate, annuities, prizes and awards, group term life insurance, unemployment compensation, and Social Security benefits.
P. To explain the extent to which receipts can be excluded from gross income according to the tax benefit rule.
Q. To describe the circumstances under which income must be reported from the discharge of indebtedness.
R. To differentiate between deductions for and from adjusted gross income and when such a distinction can benefit the taxpayer.
S. To explain the deductibility of executive compensation (and applying the term “reasonable compensation”), expenses relative to the investigation of business opportunities, hobby losses, vacation home rentals, payment of the expenses of others, personal expenditures, capital expenditures, related party transactions, and expenses related to tax-exempt income.
T. To explain when casualty and theft losses are deductible.
U. To define net operating losses and explain when they can be carried back or must be carried forward.
V. To compute the amount of cost recovery under ACRS and MACRS, and explain when Section 179 depreciation should be utilized.
W. To explain the tax implications of being classified as an employee verses being considered self-employed status.
X. To determine the deductibility of expenses associated with a move.
Y. To explain the deductibility of travel, meals, transportation, and entertainment expenses associated with job or business.
Z. To distinguish between a business and a hobby for income tax purposes.
AA. To identify employee business expenses other than travel, transportation, meals, and entertainment.
BB. To list the categories of deductions allowed on Schedule A, and to explain what is allowed in each category.
CC. To recognize and explain when certain itemized deductions are limited.
DD. To explain the concept and treatment of passive activities.
EE. To explain the purpose of the AMT (alternative minimum tax).
FF. To define what a tax credit is, and then to explain under which circumstances a credit is better than a deduction.
GG. To identify and explain tax credits available to businesses and those available to individuals only.
HH. To identify issues associated with the recognition of gain as relates to the sale of a personal residence.
II. To read and comprehend written communication.
IV. Course Arrangement
Teaching techniques will include lecture, homework problems, class participation, self-study, and computer applications.. Other sites may be utilized for student learning in addition to the regular classroom.
V. Course Requirements
Students are expected to attempt all homework by the date due. Failure to timely attempt homework will adversely affect the class participation portion of your grade. You are expected to complete any term project in a professionally academic manner. Unexcused tardiness or class absence will adversely affect your class participation score. Your project is discussed on the
VI. Course Text
Hoffman, Smith, Willis, West’s Federal Taxation: Individual Income, West/South-Western College Publishing, 2005 Edition.
VII. Supplemental Resources
Student is expected to use the Internet during this learning process for research. Various applications can be further expanded on the Internet.
VIII. Class Meeting and Examination Schedule
See last page.
IX. Class Policies
Class attendance is expected. Students are expected to spend a minimum of 40 hours classroom and teacher contact time; and, should circumstances require that you miss a class, you are expected to complete the equivalent make-up work. This includes learning what transpired during the missed classes. Such may be accomplished by talking with the instructor, obtaining the notes from a fellow student, having the class taped, etc.
Academic honest is required of everyone within the learning community. Hence, Park University will not tolerate cheating or plagiarism on examinations, term projects, papers, and other course assignments. Students who engage in dishonesty may be given a failing grade, suspended, or even expelled from college.
X. Individual Term Project
The purpose of this project is to bring income taxes alive. Instead of simply preparing an income tax return from information supplied such as a ‘cut and dry’ textbook problem, this project will be as close to reality as possible. You will be assumed to be an income tax preparer in the real world and will be required to act accordingly. This is a method of teaching; and it will require special effort on all of our parts. Not only will you study on your own, but you will also be studying individually with me.
Your grade will be divided into two parts. The first and most significant part will be to obtain adequate information to prepare the income tax return to the best of your ability. You will initially be supplied with certain data. Such data may (or may not) include such actual tax forms as W-2s, Form 1099s, Form 1098, etc. (This helps you understand tax-related tax forms.) The ‘client’ may also provide you a list of certain income and expenses, or perhaps you will be given check stubs and/or actual receipts. You will need to analyze the data supplied to determine if the data is pertinent; or, upon learning something about the client, ask questions concerning possible income or deductions not supplied. As already implied, there is an exceptionally strong possibility that you will need to ‘interview the client’ to obtain additional information in order to do the best job you possibly can. Your interview will possibly include a list of questions tailored to the particular client. For example, Fred Flintstone wanted to claim Dino as a dependent. (He even had a social security number for him.) It would be your job as a hired preparer to let him know that he would not be able to claim Dino as a dependent.
Your instructor (that’s me) will already have prepared a list of questions that you must ask in order to prepare the return. (For example, if you were preparing the return for Sheriff Andy Griffith, you would want to verify whether Aunt Bea could be claimed as a dependent for income tax purposes.)
The interview portion will be the most significant portion of your project grade. You will probably ‘interview’ several different times. Should you ask a question not on the pre-determined list and it be determined to be a reasonable question, you will then receive bonus points. It is possible that the interview portion of your grade will exceed 100%. Expect to research again ... and again ... and again. You should use your textbook, IRS Publication 17, the library, and the internet to seek out tax information, possible deductions, and even limitations.
During the interview your instructor will assume the role of the ‘client’ (last year I was Blanche Deveroux); however, if you suddenly have a question of the teacher about how something may relate, etc., you may interrupt the interview by simply asking to speak to the teacher. At some point you may be given limited guidance. For example, if Aunt Bea wasn’t a dependent, you should ask if Andy considers her as household help, thereby implying that the student needs to study or re-study this particular area..
The second part of the project is actually preparing the income tax return itself. This necessitates determining the forms needed; and, yes, all forms are to be completed correctly for the client to mail to the IRS. No state return(s) will be required. Too, just as in real life, your completed project will differ in results from your classmates. Such results occur due to the information learned during the interview, preparer interpretation of data, etc.
As a footnote, I might add that former students still remember their individual income tax project. Repeatedly, comments relate to how much research they had to do; and, in connection, how much they learned relative to individual taxes.
XI. Grading Policies
Your final grade in the course will be determined using the following
“Special” Quizzes 200
Comprehensive Final 350
Class Participation 50
The minimum grading scale will be according to the following
F Below 60%
You may arrange an appointment to discuss your grade.
Reviewed/Approved by: Beth Hicks 07/13/04
Individual Income Tax
You are to read the chapter carefully. Class time will be spent discussing various aspects of the tax area(s) assigned and reviewing homework.
17 Review Chapters 1, 2, and 3
19 Chapter 3 — 28,29,32,33,34,35,36,38,39,45,46,47,48, — Research 2
24 Chapter 3 — 54 (manually) — Chapter 4 — 27,29,30,34
26 Chapter 4 — 35,38,39,41,44,48,50,51,53,58, 59(1)
31 Chapter 5 — 29,31,32,34,35,37,38,41,42,43,45,48,49,50,56,58,59(1) —Research 1
2 Chapter 6 — 33,35,36,39,41,42,43,46,47,48,49,50,51,54,59,61 — Research 4
7 Chapter 7 — 32,34,44
9 Chapter 9 — 31,32,33,34,35,36,37,38,39,40,42,43,44,45,47,49 Research — 2
14 Open — “Catch-up time’ and project
16 Chapter 10 — 25, 26, 27, 29, 30, 31, 32, 35, 37,42,44
21 Chapter 10 — 45,46 — Research 2, 3
23 Chapter 8 — 26,40,44
28 Chapter 11 — 38,53 — Chapter 12 — to be assigned
30 Chapter 13 — to be assigned
5 Open — Project Due
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