D. Dale Bandy is Professor Emeritus in the School of Accounting at the University of Central Florida. He received a B. S. from the University of Tulsa. an M. B. A. from the University of Arkansas. and a Ph. D. from the University of Texas at Austin. He helped to set up the Maestro of Science in Taxation plans at the University of Central Florida and California State University. Fullerton. where he antecedently taught. In 1985. he was selected by the California Society of Certified Public Accountants as the Accounting Educator of the twelvemonth. Professor Bandy has published 8 books and more than 30 articles in accounting and revenue enhancement. His articles have appeared in the Journal of Taxation. the Journal of Accountancy. Progresss in Taxation. the Tax Adviser. The CPA Journal. Management Accounting. and a figure of other diaries. N. Allen Ford is the Larry D. Homer/KPMG Peat Marwick Distinguished Teaching Professor of Professional Accounting at the University of Kansas.
He received an undergraduate grade from Centenary College in Shreveport. Louisiana. and both the M. B. A. and Ph. D. in Business from the University of Arkansas. He has published over 40 articles related to revenue enhancement. fiscal accounting. and accounting instruction in diaries such as The Accounting Review. The Journal of the American Taxation Association. and The Journal of Taxation. He served as president of the American Taxation Association in 1979–80. Professor Ford has received legion instruction awards at the college and university degrees.
In 1993. he received the Byron T. Shutz Award for Distinguished Teaching in Economics and Business. In 1996 he received the Ray M. Sommerfeld Outstanding Tax Educator Award. which is jointly sponsored by the American Taxation Association and Ernst & A ; Young and in 1998 he received the Kansas Society of CPAs Outstanding Education Award. Robert L. Gardner is the Robert J. Smith Professor of Accounting in the School of Accountancy at Brigham Young University ( BYU ) . He received a B. S. and M. B. A. from the University of Utah and a Ph. D. from the University of Texas at Austin. He has authored or coauthored two books and over 25 articles in diaries such as The Tax Advisor. Journal of Corporate Taxation. Journal of Real Estate Taxation. Journal of Accounting Education. Journal of Taxation of S Corporations. and the International Tax Journal.
Professor Gardner has received several instruction awards. In 2001. he received the Outstanding Faculty Award in the Marriott School of Management at BYU. He has served on the Board of Trustees of the American Taxation Association and served as President of the ATA in 1999–2000. Richard J. Joseph is the Provost of Hult International Business School in Cambridge. Massachusetts. He is a current member of the Hult Accounting Faculty and a former member of the revenue enhancement module of The University of Texas at Austin.
A alumnus magna cum laude of Harvard College ( B. A. ) . Oxford University ( M. Litt. ) . and The University of Texas at Austin School of Law ( J. D. ) . he has taught single. corporate. international. province and local revenue enhancement. revenue enhancement research methods. and the basicss of fiscal and managerial accounting. Before shiping on his academic calling. Provost Joseph worked as an investing banker and securities bargainer on Wall Street and as a amalgamations and acquisitions attorney in Texas. He is co-editor of the Oxford Handbook on Mergers and Acquisitions and has written legion commentaries in the Financial Times. The Christian Science Monitor. Tax Notes. and Tax Notes International. His book. The Origins of the American Income Tax. explores the original purpose. principle. and consequence of the early American income revenue enhancement. LeAnn Luna is an Associate Professor of Accounting at the University of Tennessee. She is a C. P. A. and holds an undergraduate grade from Southern Methodist University. a M. T. from the University of Denver College of Law. and a Ph. D. from the University of Tennessee.
She has taught introductory revenue enhancement. corporate and partnership revenue enhancement. revenue enhancement research. and professional criterions. Professor Luna besides holds a joint assignment with the Center for Business and Economic Research at the University of Tennessee. where she interacts often with province policymakers on a assortment of policy related issues. She has published articles in the National Tax Journal. The Journal of the American Taxation Association. Tax Adviser. State Tax Notes. and a figure of other diaries. twelve
About the Writers ¡ Persons xiii
Timothy J. Rupert is a Professor and the Golemme Administrative Chair in the College of Business Administration at Northeastern University. He received his B. S. in Accounting and his Maestro of Tax from the University of Akron. He besides earned his Ph. D. from Penn State University. Professor Rupert’s research has been published in such diaries as The Journal of the American Taxation Association. Behavioral Research in Accounting. Progresss in Taxation. Applied Cognitive Psychology. Progresss in Accounting Education and Journal of Accounting Education.
He is presently the co-editor of Progresss in Accounting Education. In 2010. he received the Outstanding Educator Award from the Massachusetts Society of CPAs. He has besides received the University’s Excellence in Teaching Award and the College of Business Administration’s Best Teacher of the Year award multiple times. He is active in the American Accounting Association and the American Taxation Association ( ATA ) and has served as the frailty president and secretary of the ATA. Charlene Henderson is a member of the module in the Adkerson School of Accountancy at Mississippi State University.
She earned her undergraduate and alumnus grades in accounting at Mississippi State University. After working in public and private accounting. she completed the doctorial plan at Arizona State University. Her instruction and research involvements include both revenue enhancement and fiscal accounting.
Her research has appeared in several diaries. including Journal of the American Taxation Association. Journal of Accounting Auditing and Finance. and Journal of Business Finance and Accounting. Michael S. Schadewald. Ph. D. . CPA. is on the module of the University of WisconsinMilwaukee where he teaches alumnus and undergraduate classs in concern revenue enhancement. A alumnus of the University of Minnesota. Professor Schadewald is a co-author of several books on multistate and international revenue enhancement and has published more than 40 articles in academic and professional diaries. including The Accounting Review. Journal of Accounting Research. Contemporary Accounting Research. The Journal of the American Taxation Association. CPA Journal. Journal of Taxation. and The Tax Adviser. Professor Schadewald besides has served on the column boards of The Journal of the American Taxation Association. Journal of State Taxation. International Tax Journal. The International Journal of Accounting. Issues in Accounting Education. and Journal of Accounting Education.
PR E F A C E
Why is the Pope/Anderson series the best pick for you and your pupils? The Pope/Anderson 2013 Series in Federal Taxation is appropriate for usage in any first class in federal revenue enhancement. and comes in a pick of three volumes: Federal Taxation 2013: Persons Federal Tax 2013: Corporations. Partnerships. Estates & A ; Trusts ( the comrade book to Persons ) Federal Taxation 2013: Comprehensive ( includes 29 chapters ; 14 chapters from Persons and 15 chapters from Corporations ) ** For a customized edition of any of the chapters for these texts. reach your Pearson representative and they can make a usage text for you. • The Corporations. Partnerships. Estates & A ; Trusts and Comprehensive volumes contain three comprehensive revenue enhancement return jobs whose informations alteration with each edition. thereby maintaining the jobs fresh.
Problem C:3-66 contains the comprehensive corporate revenue enhancement return. Problem C:9-58 contains the comprehensive partnership revenue enhancement return. and Problem C:11-64 contains the comprehensive S corporation revenue enhancement return. which is based on the same facts as Problem C:9-58 so that pupils can compare the returns for these two entities. • The Corporations. Partnerships. Estates & A ; Trusts and Comprehensive volumes contain subdivisions called Financial Statement Implications. which discuss the deductions of Accounting Standards Codification ( ASC ) 740. The chief treatment of accounting for income revenue enhancements appears in Chapter C:3. The fiscal statement deductions of other minutess appear in Chapters C:5. C:7. C:8. and C:16 ( Corporations volume merely ) . We want to emphasize that all entities are covered in the Individuals volume although the intervention is frequently briefer than in the Corporations and Comprehensive volumes. The Individuals volume. therefore. is appropriate for colleges and universities that require merely one semester of revenue enhancement every bit good as those that require more than one semester of revenue enhancement. Further. this volume adapts the suggestions of the Model Tax Curriculum as promulgated by the American Institute of Certified Public Accountants.
What’s New to this Edition?
Persons • Complete integrating of the new Torahs contained in the Temporary Payroll Tax Cut Continuation Act of 2011. • Complete updating of all important tribunal instances and IRS opinions and processs during 2011. • Discussion of the extension of many itemized tax write-offs through 2011 or 2012. • Discussion of all sundown commissariats applicable after December 31. 2011 and December 31. 2012. • All revenue enhancement rates agendas have been updated to reflect the rates and rising prices accommodations for 2012. • Thorough alteration and update of all prep inquiries and jobs. • Whenever new updates become available. they will be accessible via MyAccountingLab. Corporations • The comprehensive corporate revenue enhancement return. Problem C:3-66. has all new Numberss for the 2011 signifiers.
• The comprehensive partnership revenue enhancement return. Problem C:9-58. has all new Numberss for the 2011 signifiers. • The comprehensive S corporation revenue enhancement return. Problem C:11-64. has all new Numberss for the 2011 signifiers. • Changes impacting 2012 revenue enhancement jurisprudence. including rising prices accommodations. have been incorporated into the text where appropriate. • All revenue enhancement rate agendas have been updated to reflect the rates and rising prices accommodations for 2012. • Whenever new updates become available. they will be accessible via MyAccountingLab.
Preface ¡ Individuals xv
MyAccountingLab® is web-based. tutorial and assessment package for accounting that non merely gives pupils more “I Get It” minutes. but gives teachers the flexibleness to do engineering an built-in portion of their class. It besides is an first-class auxiliary resource for pupils. To register. travel to http: //pearsonmylabandmastering. com.
MyAccountingLab provides teachers with a rich and flexible set of class stuffs. along with course-management tools that make it easy to present all or a part of your class online. • Powerful Homework and Test Manager Create. import. and manage online prep and media assignments. quizzes. and trials. Create assignments from on-line inquiries straight correlated to this and other text editions. Homework inquiries include “Help Me Solve This” guided solutions to assist pupils understand and maestro constructs. You can take from a broad scope of assignment options. including clip bounds.
proctoring. and maximal figure of efforts allowed. In add-on. you can make your ain questions—or transcript and edit ours—to custom-make your students’ larning way. • Comprehensive Gradebook Tracking MyAccountingLab’s online gradebook automatically tracks your students’ consequences on trials. prep. and tutorials and gives you control over pull offing consequences and ciphering classs.
All MyAccountingLab classs can be exported to a spreadsheet plan. such as Microsoft® Excel. The MyAccountingLab Gradebook provides a figure of pupil informations positions and gives you the flexibleness to burden assignments. select which attempts to include when ciphering tonss. and omit or delete consequences for single assignments. • Department-Wide Solutions Get aid pull offing multiple subdivisions and working with Teaching Assistants utilizing MyAccountingLab Coordinator Courses. After your MyAccountingLab class is set up. it can be copied to make subdivisions or “member classs. ” Changes to the Coordinator Course flow down to all members. so changes merely necessitate to be made one time. We will add the most current revenue enhancement information to MyAccountingLab as it becomes available.
MyAccountingLab provides pupils with a individualized synergistic acquisition environment. where they can larn at their ain gait and mensurate their advancement. • Interactive Tutorial Exercises MyAccountingLab’s prep and pattern inquiries are correlated to the text edition. and “similar to” versions regenerate algorithmically to give pupils limitless chance for pattern and command.
Questions offer helpful feedback when pupils enter wrong replies. and they include “Help Me Solve This” guided solutions every bit good as other larning AIDSs for excess aid when pupils need it. • Study Plan for Self-Paced Learning MyAccountingLab’s survey program helps pupils supervise their ain advancement. allowing them see at a glimpse precisely which subjects they need to pattern. MyAccountingLab generates a individualized survey program for each pupil based on his or her trial consequences. and the survey program links straight to interactive. tutorial exercisings for subjects the pupil hasn’t yet mastered. Students can renew these exercisings with new values for limitless pattern. and the exercisings include guided solutions and multimedia acquisition AIDSs to give pupils the excess aid they need.
See a guided circuit of MyAccountingLab at hypertext transfer protocol: //www. myaccountinglab. com/support/tours.
sixteen Individuals ¡ Preface
Strong Pedagogical Aids
• Appropriate blend of proficient content of the revenue enhancement jurisprudence with a high degree of readability for pupils. • Focused on enabling pupils to use revenue enhancement rules within the chapter to real-life state of affairss.
What Would You Make in This Situation? Unique to the Pope/Anderson series. these boxes topographic point pupils in a decision-making function. The boxes include many current contentions that are as yet unresolved or are presently being considered by the tribunals. These boxes make extended usage of Ethical Material as they represent picks that may set the practician at odds with the client. Stop & A ; Think These “speed bumps” encourage pupils to hesitate and use what they have merely learned. Solutions for each issue are provided in the box. Ethical Point These remarks provide the ethical deductions of stuff discussed in the adjoining text. Use what they have merely learned. Tax Strategy Tip These remarks suggest revenue enhancement planning thoughts related to stuff in the adjoining text.
Materials for the teacher may be accessed at the Instructor’s Resource Center ( IRC ) online. located at World Wide Web. pearsonhighered. com/phtax or within the Instructor Resource subdivision of MyAccountingLab. You may reach your Pearson representative for aid with the enrollment procedure. • TaxACT 2011 Software: Available on Cadmium to be packaged with Persons and Comprehensive Texts: This user-friendly revenue enhancement readying plan includes more than 80 revenue enhancement signifiers. agendas. and worksheets. TaxACT calculates returns and alerts the user to possible mistakes or entries.
• Instructor’s Resource Manual: Contains sample course of study. teacher lineations. and information sing job countries for pupils. It besides contains solutions to the revenue enhancement form/tax return readying jobs. In add-on to being available electronically on the IRC online. it besides is available in hardcopy. • Solutions Manual: Contains solutions to discussion inquiries. jobs. and comprehensive and revenue enhancement scheme jobs. It besides contains all solutions to the instance survey jobs. research jobs. and “What Would You Do in This Situation? ” boxes. In add-on to being available electronically on the IRC online. it is besides available in hardcopy. • Test Item File: Offers a wealth of true/false. multiple-choice. and calculating jobs. A computerized plan is available to adoptive parents. • PowerPoint Slides: Include over 300 full-color electronic transparences available for Persons and Corporations.
Adoptive parents will detect that John L. Kramer’s name does non look on the 2013 edition as he has officially retired from the text edition. Jack was one of the laminitiss and original editors of the Prentice-Hall Federal Taxation series. and the current editors and writers wish to thank him for his outstanding parts over the old ages to this text edition and to revenue enhancement instruction in general. Our policy is to supply one-year editions and to fix seasonably updated addendums when major revenue enhancement alterations occur. We are most appreciative of the suggestions made by outside referees because these extended reappraisal processs have been valuable to the writers and editors during the alteration procedure. We besides are thankful to the assorted alumnus helpers. doctorial pupils. and co-workers who have reviewed the text and auxiliary stuffs and checkered solutions to keep a high degree of proficient truth.
In peculiar. we would wish to admit the undermentioned co-workers who assisted in the readying of auxiliary stuffs for this text: Ann Burstein Cohen SUNY at Buffalo Caroline Strobel University of South Carolina Craig J. Langstraat University of Memphis Kate Demarest Carroll Community College Richard Newmark University of Northern Colorado In add-on. we want to thank Myron S. Scholes. Mark A. Wolfson. Merle Erickson. Edward L. Maydew. and Terry Shevlin for leting us to utilize the theoretical account discussed in their text. Taxes and Business Strategy: A Planning Approach. as the footing for stuff in Chapter I:18. Please direct any remarks to Kenneth E. Anderson or Thomas R. Pope.
Tax Rate SCHEDULES
Single [ §1 ( degree Celsius ) ] : If nonexempt income is: The revenue enhancement is: Not over $ 8. 700. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 % of nonexempt income. Over $ 8. 700 but non over $ 35. 350. . . . . . . . . . . . . . . . . $ 870. 00. plus 15 % of the surplus over $ 8. 700. Over $ 35. 350 but non over $ 85. 650. . . . . . . . . . . . . . . . $ 4. 867. 50. plus 25 % of the surplus over $ 35. 350. Over $ 85. 650 but non over $ 178. 650. . . . . . . . . . . . . . . $ 17. 442. 50. plus 28 % of the surplus over $ 85. 650. Over $ 178. 650 but non over $ 388. 350. . . . . . . . . . . . . . $ 43. 482. 50. plus 33 % of the surplus over $ 178. 650. Over $ 388. 350. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 112. 683. 50. plus 35 % of the surplus over $ 388. 350. Head of Household [ §1 ( B ) ] : If nonexempt income is: The revenue enhancement is: Not over $ 12. 400. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 % of nonexempt income. Over $ 12. 400 but non over $ 47. 350. . . . . . . . . . . . . . . . $ 1. 240. 00. plus 15 % of the surplus over $ 12. 400. Over $ 47. 350 but non over $ 122. 300. . . . . . . . . . . . . . . $ 6. 482. 50. plus 25 % of the surplus over $ 47. 350. Over $ 122. 300 but non over $ 198. 050. . . . . . . . . . . . . . $ 25. 220. 00. plus 28 % of the surplus over $ 122. 300. Over $ 198. 050 but non over $ 388. 350. . . . . . . . . . . . . . $ 46. 430. 00. plus 33 % of the surplus over $ 198. 050. Over $ 388. 350. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 109. 229. 00. plus 35 % of the surplus over $ 388. 350. Married. Filing Joint and Surviving Spouse [ §1 ( a ) ] : If nonexempt income is: The revenue enhancement is: Not over $ 17. 400. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 % of nonexempt income. Over $ 17. 400 but non over $ 70. 700. . . . . . . . . . . . . . . . $ 1. 740. 00. plus 15 % of the surplus over $ 17. 400. Over $ 70. 700 but non over $ 142. 700. . . . . . . . . . . . . . . $ 9. 735. 00. plus 25 % of the surplus over $ 70. 700. Over $ 142. 700 but non over $ 217. 450. . . . . . . . . . . . . .
$ 27. 735. 00. plus 28 % of the surplus over $ 142. 700. Over $ 217. 450 but non over $ 388. 350. . . . . . . . . . . . . . $ 48. 665. 00. plus 33 % of the surplus over $ 217. 450. Over $ 388. 350. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 105. 062. 00. plus 35 % of the surplus over $ 388. 350. Married. Filing Separate [ §1 ( vitamin D ) ] : If nonexempt income is: The revenue enhancement is: Not over $ 8. 700. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 % of nonexempt
income. Over $ 8. 700 but non over $ 35. 350. . . . . . . . . . . . . . . . . $ 870. 00. plus 15 % of the surplus over $ 8. 700. Over $ 35. 350 but non over $ 71. 350. . . . . . . . . . . . . . . . $ 4. 867. 50. plus 25 % of the surplus over $ 35. 350. Over $ 71. 350 but non over $ 108. 725. . . . . . . . . . . . . . . $ 13. 867. 50. plus 28 % of the surplus over $ 71. 350. Over $ 108. 725 but non over $ 194. 175. . . . . . . . . . . . . . $ 24. 332. 50. plus 33 % of the surplus over $ 108. 725. Over $ 194. 175. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 52. 531. 00. plus 35 % of the surplus over $ 194. 175.