1. Introduction to Federal TaxDiscussion

The first federal income tax was passed in 1861. When was the next one passed and why was it necessary? Why was pay-as-you-go withholding needed in 1943?

2. Determine an Individual’s Taxes Discussion

Discuss whether or not the below listed actions are tax avoidance or tax evasion. Then, discuss the ethical implications of employing each of these in a tax return.

1. Keeping a log of business expenses

2. Ignoring earnings from a lawn mowing business

3. Not reporting interest earned on a savings account

4. Keeping a log of contributions to a charity

5. Not reporting tips

6. Claiming your dependents as tax deductions

3. Gross Income Inclusions - Discussion

George, a wealthy investor, is uncertain whether he should invest in taxable or tax-exempt bonds. What tax and nontax factors should be considered?

George needs assistance understanding the different application of prepaid income under tax law and financial accounting. Explain this difference to George.

4. Gross Income Exclusions - Discussion

Individuals who own homes may take a tax deduction for interest paid. Many individuals believe that this tax law discriminates against individuals who rent. Do you think this deduction is discriminatory? Explain and share your thoughts.

Additionally, gifts and inheritances have been excluded from gross income since 1913. Discuss the tax consequences of gifts made of property and any income produced by the property. What, if any, are the exclusions and taxable income according to Section 102.

5. Property Transactions, Capital Gains, and Losses - Discussion

Vincent pays $20,000 for equipment to use in his trade or business. He pays sales tax of $800 as a result of the purchase. Must the $800 tax be capitalized as part of the purchase price?

Vincent’s friend tells him that capital gains tax is discriminatory in that it is imposed upon individuals who can afford to buy capital assets. Do you agree or disagree? Why? Why not? Be sure to include definitions of capital asset and capital gain in your response.

6. Deductions and Losses - Discussion

What is the distinction between deductions for AGI and deductions from AGI and why should this be important for individuals?

As you review deductions from AGI and for AGI, how should bribes and kickbacks be treated for tax purposes? Are they a deduction and are they allowed? As you may recall, Al Capone’s conviction caused mobsters and other illegal gangsters to rethink their method of keeping detailed records. Why did this rethink occur? How different was this situation of bribes and kickbacks to how multimillion-dollar corporations do business now?