Course Number:
AC330
Course Title: Taxation
STUDENT LEARNING OUTCOMES
General
This course
mainly focuses on the taxation of business entities in the United States and in
the Federated States of Micronesia. It also covers individual taxation in the
two countries- individuals as proprietors, shareholders, or partners in business
entities; as employees; or property owners. Generally, the course is expected
to:
1) introduce
students to a wide range of tax concepts and types of tax payers.
2) provide
students with a knowledge of the interrelationship and differences between
financial accounting and tax accounting.
3)
give
the student a better understanding of the country's revenue system.
4) create
an appreciation of the role of taxation in the development of FSM.
5) expose
the student to professional standards and ethics.
Specific
Students will be able to:
Unit 1:
Introduction of Taxation
1.
Explain
the components of a tax.
2.
Identify the
various taxes affecting business enterprises.
3.
Relate some of
the history of the Federal income tax.
4.
Recall the
basic tax formula for individual an taxable business entities.
5.
Explain the
relationship between entities and their owners.
6.
Apply a
simplified model of tax planning.
7.
Identify the
economic, social, equity and political consideration that underline the tax
system.
8.
Describe the
role played by the IRS and the courts in the evolution of the Federal tax
system.
Unit 2:
The Tax Law
1.
Identify the
statutory, administrative, and judicial sources of the tax law and the purpose
of each source.
2.
Locate the tax
law and explain the tax research process.
3.
Communicate
the results of the tax process in a client letter and a tax file memorandum.
4.
Have an
awareness of computer-assisted tax research.
Unit 3:
Gross Income
1.
Explain the
concepts of gross income and realization and distinguish between the economic,
accounting and tax concepts of gross
income.
2.
Appropriately
apply the cash, accrual and hybrid methods of accounting.
3.
Identify who
should pay the tax on an item of income.
4.
Apply the
internal Revenue Code provisions on loans made at below-market interest rates.
5.
Determine the
extent to which receipts can be excluded under the tax benefit rule.
6.
Identify items
that can be excluded from gross income under Statutory Authority (IRS code)
provisions.
7.
Describe the
circumstances under which income must be reported from the discharge of
indebtedness.
8.
Describe the
tax consequences of property transactions.
Unit 4:
Business Deductions
1.
Explain the
meaning and application of the ordinary, necessary and reasonableness
requirements for the deduction of business
expenses.
2.
Describe the
cash and accrual methods of accounting for business deductions.
3.
Apply a
variety of Internal Revenue Code deduction disallowance provisions.
4.
Explain the
limitations applicable to the charitable contribution deduction for
corporations.
5.
Recognize and
apply the alternative tax treatments for research and experimental expenditures.
6.
Determine the
amount of cost recovery under MACRS, and apply the 179 expensing election and
the deduction limitations on listed
property and automobiles when making the MACRS calculations.
7.
Identify
intangible assets that are eligible for amortization and calculate the amount of
the deduction.
8.
Determine the
amount of depletion expense.
Unit 5:
Losses and Loss Limitations
1.
Determine the
amount, classification and timing of the bad debt deduction.
2.
Explain the
tax treatment of worthless securities including 1224 stock.
3.
Identify a
casualty and determine the amount, classification and timing of casualty and
deft losses.
4.
Assess the
impact of the net operating loss carry back and carryover provisions.
5.
Discuss tax
shelters and the reasons for at-risk and passive loss limitations.
6.
Describe how
the at-risk limitation and the passive loss rules limit deductions for losses
and identify tax payers subject to these
restrictions.
7.
Discuss and
apply the definitions of activity, material participation and rental activity
under the passive loss rules.
8.
Discuss the
relationship between at-risk and passive activity limitations.
Unit 6:
Accounting Periods and Methods
1.
Explain the
relevance of the accounting period concept, the different types of accounting
periods and the limitations in their use.
2.
Outline the
procedure for changing accounting methods.
3.
Determine when
the installment method of accounting can be used and apply the related
calculation techniques.
4.
Apply the
alternative methods of accounting for long-term contracts (the completed
contract method and the percentage of
completion method).
Unit 7:
Corporations: Organization, Capital Structure, and Operating Rules
1.
Identify the
tax consequences of incorporating and transferring assets to controlled
corporations.
2.
Outline the
special rules that apply when a corporation assumes a shareholder's liability.
3.
Describe the
tax aspects of the capital structure of a corporation.
4.
Explain the
tax differences between debt ad equity corporations.
5.
Identify the
tax regulations unique to corporations.
6.
Compute the
corporate income tax.
7.
Explain the
tax rules unique to multiple corporations.
8.
Describe the
reporting process for corporations.
Unit 8:
Corporations: Earnings & Profits and Dividend Distributions
1.
Explain the
role that earnings and profits play in determining the tax treatment of
distributions.
2.
Compute a
corporation's earnings and profits.
3.
Apply the
rules for allocating earnings and profits to distributions.
4.
Explain the
tax impact of property dividends on the recipient shareholder and the
corporation making the distribution.
5.
Describe the
nature and treatment of constructive dividends.
6.
Distinguish
between taxable treatment of stock redemptions.
7.
Discuss the
tax treatment of stock redemptions.
Unit 9:
Partnership and Limited Liabilities Entities
1.
Discuss
governing principles and theories of partnership taxation.
2.
Describe the
tax effects of forming a partnership with cash and property contributions.
3.
Examine the
tax treatment of expenditure of a newly formed partnership and identify
elections available to the partnership.
4.
Calculate
partnership taxable income and describe how partnership items affect a partner's
income tax return.
5.
Determine a
partner's basis in the partnership's interest.
6.
Describe the
limitations in deducting partnership losses.
7.
Describe the
application of partnership tax law provisions to limited liability companies
(LLC) and limited liability partnerships (LLPs).
Unit
10: Comparative Forms of Doing Business
1.
Identify the
principal legal and tax forms for conducting a business.
2.
Identify
techniques for avoiding double taxation, including the S corporation.
3.
Describe and
apply the conduit and entity concepts as they affect operations, capital
changes, and distributions.
4.
Analyze the
effects of the disposition of a business on the owners and the entity for each
of the forms for conducting a business.
Unit
11: Taxation of Individuals
1.
Apply the
components of the Federal income tax formula for individuals.
2.
Apply the
rules for arriving at personal and dependency exemptions.
3.
Determine the
tax liability of individuals using the proper methods.
4.
Identify
specific inclusions and exclusions applicable to individuals.
5.
Outline filing
requirements and proper filing status.
6.
Determine an
individual's allowable itemized deductions and credits.
Unit
12: Individuals as Employees and Proprietors
1.
Distinguish
between employee and self-employed status.
2.
Identify the
exclusions from income available to employees who receive fringe benefits.
3.
Apply the
rules for computing deductible expenses of employees.
4.
Differentiate
between accountable and non-accountable employee plans.
5.
State the tax
provisions applicable to proprietors.
6.
Distinguish
between business and hobby activities and apply the rules limiting the deduction
of hobby losses.
Unit
13: FSM Taxation
1.
Explain the
need for a sound internal revenue system in FSM.
2.
Identify
taxable income.
3.
Accurately
compute FSM individual and business taxes.
4.
Demonstrate an
in-debth understanding of the country's revenue system.
5.
Describe the
role of taxation in the country's development.