Basis: What Is It and Why Do We Care? (graded) The notion of basis is crucially important in determining the tax consequences that result from virtually any propertybased transactions, whether it is the sale of $100 of stock, or a $10,000,000,000 merger of two multinational corporations. It's important, then, to answer one key question: What exactly is basis? How is it used in calculating the gain or loss that results from the sale of capital property? What is the rationale or justification for considering basis in calculating the amount of gain or loss? ACCT429DeVryWeek 3 Discussion 2 You Decide: Tax Capital Gains (graded) The question of whether capital gains should be subject to the federal income tax has long been a subject of debate. Today, however, the issue has become less abstract and theoretical, because many congress people (and pundits and commentators, etc.) are openly advocating substantial reductions in or outright abolition of all such taxes. Scour the Internet for commentary on this issue, and consider the arguments in light of what you know about capital gains taxes. Is the capital gains tax a good tax? Why or why not? In making your decision (and explaining your answer), make sure that you consider some of the fundamental requirements of a good tax that we explored in Week 1, such as fairness, efficacy in raising funds, and relative ease of administration. Include links to and summaries of the articles that you've reviewed and found particularly influential so that we can all comment on this issue! Week 4 discussion ACCT429DeVryWeek 4 Discussion 1 Employee or Proprietor: Who Cares? (graded) For most of us, work is work. We put in the same amount of effort whether we work as employees for a company or we are self-employed. (That point is arguable, of course, but just agree with me for the sake of argument). While the work itself may be created equal, however, the tax consequences arising from them are not. Self-employed individuals may be entitled to a greater range of deductions, but they also might very well be responsible for paying additional taxes. Furthermore, we know employees can receive a lot of valuable perks from their employers, and that these perks present specific tax consequences as well. In light of this news, it makes sense to start with the fundamental question: How do we tell whether someone is an employee or whether he or she is self-employed for purposes of the Code? ACCT429DeVryWeek 4 Discussion 2 Family-Based Deductions (graded) This week, we're reviewing some of the most common federal income tax deductions for individuals. Many of them could perhaps be classified as family-based deductions, or enacted deductions that target those who might have children or other types of family obligations to fulfill. Is there an underlying theme or purpose to most of these deductions? If so, what is it? Do the deductions that Congress has enacted advance this purpose? Is this something that Congress should be doing at all? Provide an example of two such deductions, and supplement your argument with outside resources discussing the pros, cons, and impacts of these deductions. There are a lot of available choices! ACCT429DeVryWeek 5 Discussion 1 Corporate Formation and the Tax Agent (graded) As you’ve undoubtedly learned by now, you often have to focus on the details in tax law, and the rules surrounding corporate formation are no exception to this rule. We know that a corporation is generally seen as a separate taxable entity from its shareholders. As a result, corporate formations, which involve transfers of property between the shareholders and the corporation, would generally be taxable to both the corporation and the shareholders. It’s no surprise that this result would often discourage corporate formation. Congress remedied this particular problem by enacting Section 351, and your text details how this provision generally operates. Did Congress craft a provision that allows corporations and their shareholders to avoid taxation on these transactions permanently, or did it have something else in mind? Support your answer!
ACCT429DeVryWeek 5 Discussion 2 Taxation of Corporate Dividends (graded) Relatively recent revisions to the Code have modified the tax treatment of dividends. Put your Internet research skills to use and tell me about these changes and their consequences. In particular, tell me (1) what dividends are, as defined by the Code; (2) what the recent changes effectively do (and how it was different from the prior approach to the taxation of dividends); and (3) what the changes sought to achieve (in other words, why was the change made?). ACCT429DeVryWeek 6 Discussion 1 S Corporations: Can Just Anyone Join? (graded) In enacting Subchapter S of the Code, Congress decided to give a certain group of corporations a break from the burden of double taxation. Given this fact, there must be limitations on the corporations that can select S corporation status! Provide an example of one such limitation, including the text of the Code section that provides the limitation. (We might as well get a look at a verbatim Code section or two during the course of this class!) ACCT429DeVryWeek 6 Discussion 2 Separately Stated Income? (graded) By now, you're probably of the opinion that the distinction between separately stated and no separately stated income is one of the most confusing concepts that you’ve encountered this week. For Congress to come up with something this confusing, you know there must have been a good reason (or at least we'd like to think so!). Think about the concept for a moment. What is the broad tax policy behind separating these two categories of income? What is Congress trying to achieve? What problems does it prevent? What problems does it cause? ACCT429DeVryWeek 7 Discussion 1 Take Your Partner… or Not (graded) As we've learned this week, choosing a partnership as a tax entity has consequences, and those consequences often are different than those that arise from choosing the corporate form. Many of these consequences can be quite dramatic, particularly if the business goes sour or if catastrophic, unforeseen circumstances arise—and many of them don't have a thing to do with taxes. What are some of the more significant nontax consequences of choosing the partnership form? Which ones do you think are the most important, and why? ACCT429DeVryWeek 7 Discussion 2 Does the Tax Code Need to Be Fixed? (graded) We began this class with this question. After learning as much over the last 7 weeks as we have about the federal income tax system, it also seems an appropriate place to end it. Have your thoughts on the matter changed? Why or why not? By now, you should at least be able to discuss your agreement and/or concerns in much more detail, given your impressive knowledge on the subject. Don't forget to consider the types of factors that we stressed at the beginning of the course and that we have been revisiting every week since that point in time!