Wiley CPAexcel Exam Review July 2020 Study Guide Regulation

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About the Authors ix

About the Regulation Professors xi

Welcome to Regulation xiii

Ethics, Professional Responsibilities, and Federal Tax Procedures 1

Ethics and Responsibilities in Tax Practice 2

Regulations Governing Practice before the IRS 2

Internal Revenue Code and Regulations Related to Tax Return Preparers 7

Licensing and Disciplinary Systems 12

Federal Tax Practice and Procedures 15

Substantiation and Disclosure of Tax Positions 15

Taxpayer Penalties 18

Sources of Tax Authority and Research 23

Tax Practice and Procedure 28

Compliance Responsibilities 32

Legal Duties and Responsibilities 37

Common Law Duties and Liabilities to Clients and Third Parties 37

Privileged Communications, Confidentiality, and Privacy Acts 46

Business Law 51

Contracts 52

Introduction and Classification 52

Applicable Laws 52

Types of Contracts 55

Formation 59

Offer and Acceptance 59

Consideration 67

Writing and Records: The Statute of Frauds 73

Defenses to Formation 79

Performance 85

Defining Performance and Breach 85

Discharge of Performance 91

Passage of Title and Risk of Loss 95

Remedies 102

Types of Remedies 102

Formulas for Damages 105

Third-Party Rights 110

Agency 115

Types of Agency Relationships and Creation 115

Duties of Agents and Principals 119

Contract Liability of Agents and Principals 125

Tort Liability of Agents and Principals 128

Debtor-Creditor Relationships 133

Rights, Duties, and Liabilities of Debtors, Creditors, Sureties, and Guarantors 133

Suretyship—Introduction, Creation, and Types 133

Suretyship—Rights of Parties 137

Article 9 UCC Secured Transactions 142

Introduction and Creation of Security Interests 142

Perfection of Security Interests 146

Priorities in Security Interests 151

Rights of Secured Parties and Debtors 155

Bankruptcy and Insolvency 158

Prebankruptcy Options, and Introduction to and Declaration of Bankruptcy 158

Bankruptcy Process 167

Distribution of Debtor’s Estate 172

Discharge and Reaffirmation Agreements 176

Government Regulation of Business 179

Federal Securities Regulation 179

Federal Securities Regulation: Defining a “Security” 179

The Registration Process 181

Exempt Transactions and Securities 184

Liability Provisions—1933 Act 194

Purposes, Requirements, and Provisions of the 1934 Act 200

Criminal Liability 208

Other Federal Laws and Regulation 210

Employment Tax 210

Affordable Care Act 216

Worker Classification Laws and Regulations 223

Business Structure 230

Selection and Formation of Business Entity and Related Operation and Termination 230

Selection of a Business Entity 230

Formation 236

Operations: Nonfinancial Factors 238

Financial Structure 241

Termination 247

Rights and Duties 250

Authority of Owners and Managers 255

Federal Taxation of Property Transactions 259

Introduction to Tax Review 260

Recent Developments in Tax Law 268

Property Transactions 270

Sales and Dispositions of Assets 270

Capital Gains and Losses 274

Section 1231 Assets 283

Section 1231 Assets—Cost Recovery 290

Like-Kind Exchanges and Involuntary Conversions 301

Other Nonrecognition Transactions 307

Federal Taxation of Individuals 313

Income 314

Gross Income—General Concepts and Interest 314

Gross Income—Other Inclusions 320

Gross Income—Exclusions 323

Taxation of Income from Business Entities 326

Accounting Methods and Periods—Individuals 334

Taxation of Employee Benefits 341

Taxation of Retirement Plans 348

Deductions 354

Deductions—Basic Principles 354

Deductions for AGI 356

Itemized Deductions—Medical, Taxes, Interest 359

Itemized Deductions—Other 364

Business Expenses 370

Deductions—Losses and Bad Debts 373

Limitations on Business Deductions 376

Individual Tax Issues 382

Tax Dependents 382

Filing Status 385

Alternative Minimum Tax and Other Taxes 389

Tax Planning Strategies for Individuals 394

Tax Credits 399

Personal Tax Credits 399

Estate and Gift Taxation 407

Federal Gift Tax 407

Federal Estate Tax 414

Federal Taxation of Entities 423

Corporate Taxation 424

Formation of a Corporation 424

Corporate Income 429

Accounting Methods and Periods—Corporations 433

Special Corporate Deductions 436

Penalty Taxes 441

Taxation of Related Corporations 445

Distributions from a Corporation 448

Corporate Redemptions and Liquidations 452

Corporate Reorganizations 458

Multijurisdictional Tax Issues 464

State and Local Taxation 464

Taxation of Foreign Income 469

Tax-Exempt Entities 477

Tax-Exempt Organizations 477

Partnership Taxation 481

Formation and Basis 481

Flow-Through of Income and Losses 488

Transactions with Partners 492

Partnership Distributions 495

Sales and Terminations 500

S Corporation Taxation 504

Eligibility, Election, Termination 504

Income and Basis 507

Distributions and Special Taxes 512

Fiduciary Taxation 515

Income Taxation of Fiduciaries 515

Tax Credits 521

Business Tax Credits 521

Other Tax Issues 525

Tax Planning Strategies for Business Entities 525

Business Entity Choice 527

Index 531