Full Download PDF of (Original PDF) Income Tax Fundamentals 2018 36th Edition All Chapter

(Original PDF) Income Tax
Fundamentals 2018 36th Edition

Go to download the full and correct content document:
https://ebooksecure.com/product/original-pdf-income-tax-fundamentals-2018-36th-edi
tion/
More products digital (pdf, epub, mobi) instant
download maybe you interests ...
(eBook PDF) Income Tax Fundamentals 2019 37th Edition
http://ebooksecure.com/product/ebook-pdf-income-tax-
fundamentals-2019-37th-edition/
Income Tax Fundamentals 2020 38th Edition Gerald E.

Whittenburg - eBook PDF
https://ebooksecure.com/download/income-tax-
fundamentals-2020-ebook-pdf/
(eBook PDF) Tax Questions and Answers 2018
http://ebooksecure.com/product/ebook-pdf-tax-questions-and-
answers-2018/
(eBook PDF) Canadian Income Taxation, 2018 - 2019 by

William Buckwold
http://ebooksecure.com/product/ebook-pdf-canadian-income-
taxation-2018-2019-by-william-buckwold/
(eBook PDF) Canadian Income Taxation 2017-2018 by

William Buckwold
http://ebooksecure.com/product/ebook-pdf-canadian-income-
taxation-2017-2018-by-william-buckwold/
(eBook PDF) Canadian Tax Principles 2018-2019 Edition

by Clarence Byrd
http://ebooksecure.com/product/ebook-pdf-canadian-tax-
principles-2018-2019-edition-by-clarence-byrd/
(eBook PDF) Core Tax Legislation and Study Guide 2018

21th Edition
http://ebooksecure.com/product/ebook-pdf-core-tax-legislation-
and-study-guide-2018-21th-edition/
Copyright 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-202
Income Tax Fundamentals
Evolves Each Year
to Benefit You
New to This Edition
Updated for additional changes under the Affordable Care Act
The Affordable Care Act, or “Obamacare,” introduced a new layer of complexity for a large number of taxpayers. We have con-
tinued to refine our approach to instruction on this challenging area of the tax law. We have attempted to simplify the compu-
tation of the individual shared responsibility to allow a better understanding of the concept.
Updated for energy credits and other expiring provisions

A number of common energy credits have expired and have been removed from the textbook. Given the history and expected sunset of
bonus depreciation, the depreciation discussion now covers additional bonus depreciation thoroughly.
Introduction of additional real-life source documents

The number of source documents used to support the tax return problems has been increased. New and different sources such as
accounting records, additional Form W-2s, and 1099s are used to provide students the opportunity to recreate the tax preparation
process as simulations. Documents such as trial balances, asset roll-forwards, and other similar documents replace simple lists of infor-
mation. Information not always relevant to the problem is included to encourage students to use analytical and critical thinking skills
to deal with less structured problems.
Cost of Living Changes and Extensions Expired and Made Permanent

The entire textbook and thousands of ancillary problems and examples were updated to reflect the annual cost of living increases
required by the tax law. The textbook and problems also reflect the changes made through any minor changes in tax law during the
year. All forms and schedules are 2017 draft forms and schedules issued by the IRS, unless otherwise noted.
Updated Cumulative Software Problem

The cumulative software problems included as Group 5 questions at the end of Chapters 1-8 have been updated to include
more source documents (Form W-2s, 1099s, etc.) and include extraneous information to encourage students to think more criti-
cally about the relevance of certain items when preparing tax returns.
A Complete Learning System—CengageNOWv2

CengageNOWv2 for Taxation takes students from motivation to mastery. It elevates think-
ing by providing superior content designed with the entire student workflow in mind.
Students learn more efficiently with the variety of engaging assessments and learning
tools. For instructors, CengageNOWv2 provides ultimate control and customization and a
clear view into student performance that allows for the opportunity to tailor the learning
experience to improve outcomes.
Motivation
Many instructors find that students come to class unmotivated and unprepared. To help with engagement and preparedness,
CengageNOWv2 for Whittenburg offers the following feature:
Self-Study Questions based on the information presented in the textbook help students prepare for class lectures or review prior to an
exam. Self-Study Questions provide ample practice for the students as they read the chapters, while providing them with valuable feed-
back and checks along the way, as the solutions are provided conveniently in Appendix E of the textbook.
Application
Students need to learn problem-solving skills in order to complete taxation problems on their own. However, as students try to work
through homework problems, sometimes they become stuck and need guidance. To help reinforce concepts and keep students on
the right track, CengageNOWv2 for Whittenburg offers the following:
● End-of-chapter homework: Group 1 and 2 problems
● Algorithmic versions of end-of-chapter homework are available for at least 10-15 problems per chapter.
iv
Copyright 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
●
Detailed feedback for each homework question. Homework questions include enhanced, immediate feedback so students can learn
as they go. Levels of feedback include an option for “check my work” prior to submission of an assignment. Then, after submitting
an assignment, students receive even more extensive feedback explaining why their answers were incorrect. Instructors can decide
how much feedback their students receive and when, including providing the full solution, if they wish.
● Built-in Test Bank for online assessment.
For students who need additional support, CengageNOWv2’s Adaptive Study Plan is complete with quizzes, an eBook, and more.
●
It is designed to help give students additional support and prepare them for the exam.
Mastery
Finally, students need to make the leap from memorizing concepts to actual critical thinking. They need to be able to connect multiple
topics and master the material. To help students grasp the big picture of taxation, tax return preparation, and achieve the end goal of mas-
tery, CengageNOWv2 for Whittenburg offers the following:
Comprehensive Problems allow students to complete the problems by entering the relevant information on tax forms and schedules.
Cengage Learning Testing Powered by Cognero®

Cognero® is a flexible, online system that allows instructors to:
● author, edit, and manage test bank content from multiple Cengage Learning solutions
● create multiple test versions in an instant
● deliver tests from your LMS, your classroom or wherever you want
Cognero® possesses the features necessary to make assessment fast, efficient and effective:
●
Simplicity at every step. A desktop-inspired interface features drop-down menus and familiar, intuitive tools.
● F ull-featured test generator. Choose from 15 question types (including true/false, multiple choice, and essay). Multi-language
support, an equation editor, and unlimited metadata help ensure your tests are complete and compliant.
● Cross-compatible capability. Import and export content into other systems.
CL Testing Powered by Cognero® is accessible through the instructor companion site, www.cengage.com/login.
Key Terms
Key Terms with page references are located at the end of all of the chapters and reinforce the important tax terms introduced in
each chapter.
Key Points
Following the Key Terms is a brief summary of the learning objective highlights for each chapter to allow students to focus
quickly on the main points of each chapter.
eliable Instructor Resources Are Convenient

Solutions Manual
R The manual contains detailed solutions to the end-of-chapter problems in the textbook, Chapter Outlines and Suggested Minimum
Assignments, and the Additional Comprehensive Problems that are located in Appendix D (ISBN 13: 9781337389716).
Comprehensive Instructor Companion Website

This password-protected site contains instructor resources: the Solutions Manual, Chapter Outlines and Suggested Minimum
Assignments, the Test Bank, Cognero® testing tools, Solutions to the Cumulative Tax Return Problems, Intuit ProConnect Online
software solutions and instructions, PowerPoints, and more: www.cengage.com/login
As We Go to Press
To access tax law information after the publication of this textbook, please visit www.cengagebrain.com. At the CengageBrain home
page, input the ISBN of your textbook (from the back cover of your book). This will take you to the product page where free companion
resources can be found.
1- 6 Pe rso na
l an d De pe nd
en cy Ex em pt io ns
exemption do 1-15
es not claim the
dependent if Ire exemption. He
ne does not cla nce, Darlene
im him. ♦ can claim Bill
In the case of as a
exemption for divorced or leg
a child belongs ally sepa rated parents
out of the year. to the parent wi with children,
The exemption th whom the ch the dependen
signs IRS Form can be shifted ild lived for mor cy
8332, and the to the noncusto e than 6 month
Figure 1.4 illus fo rm is attached to dial pa rent if the custodi s
trates the inte the noncustodial al parent
Step-by-Step Format
above. raction of the parent’s tax re
qualifying child turn.
dependency te
sts described
1-6d Quali
Relative fying
A person who
Builds Student Confidence

is not a qualify
test is met. A ing child can be
child of a taxp a qualifying re
still qualify as ayer lative if the fo
a dependent un who does not meet the tests llowing five-pa
rt
der the qualify to be a qualify
1. Relationshi in g relative tests de ing child can
p or Member scribed below.
The individua of Household
The practical, step-by-step Test Fundamentals 2018
The list of qu format
l must either in be aIncome
relative ofTax the taxpayer or
alifying relative a member of
Edition builds fromgrsimple andchildren,to complex
siblin gs, aunts andtopics.
s is broad andThe authors
includes parent are the household.
adopted childre un cle s by s, grandparen
bl oo ts, children,
careful to lead students dependent isdown
n. Fo ste
a more distant
a chpath
r ildren mof ay alsunderstanding
o qualify in certa
d, ne ph ews anrather d nieces, “in than-laws,” and
(w re lat ive in cir cu m sta
overwhelming them ww.withirs.gov).excessive
For example, codetail
, additio and
usins are not co
nal inmultiple
formation is avInternal nces. If the pote
ailable at the IR ntial
In addition to nsidered relative S website
Revenue Codemreferences. ember of the
the relatives lis
ted, any perso
s for this purp
ose.
household for n who lived in
considered a the entire year the taxpayer’s
member of th meets the relat ho me as a
between the ta e household ionship test. A
xpayer and th if at any time person is not
e dependent wa during the ye
ar the relations
● Helpful examples ExAmPLE
Scott provides
s in violation
of local law. hip
all of the supp
within each chapter him for the en
tire tax year. He
or t fo r an unrelated
family friend wh
state. The fami also supports o lives with
provide realistic ly friend can qu
alify as Scott’s
a cousin who
lives in anothe
not. The family de pe r
scenarios for students fri end meets the nd ent, but the co
the cousin is no member of the usin can-
t considered a household tes
relative, he co t. Even though
to consider. met the memb
er of the hous
ehold part of
uld have been
a dependent if
2. Gross Inco the tes t. ♦ he
me Test
The individua
l cannot have
($4,050 in 2017 gross income
). equal to or ab
3. Support Te ove the exem
st ption amount
The dependen
t must receive
of taxpayers (se over half of hi
● The short sections within each chapter 4. Joint Retu
offer e mnumerous
ultiple suppor examples,
t agreement be
s or her supp supported
ort from the ta by the
rn Test low). xpayer or a grou
“Self-Study Problems” throughout. The de The pendentQSelf-Study ut inoct fil
k Problems encourage students to p
5. Citizenship m us e T a x
a joint retu R e f e r
answer a series of short questions inTh a xfill-in-the-blank
Test or multiple-choice
rn un e
less it is n onc ly e 2 im0format.7 fund of taThe
1a re
The deepeTand Fo rm ula
ent mus for Ind ivi du als to cla
Gross Incom
t meet the citize xes.
solutions to the Self-Study Problems
– Deduction
Ex
= Ad
e
are
s for Adjusted provided
Gross Income
at the ns end of
hip test discus So the
cia l Se cu textbook,
rit Me dic are
sed aby,
offering
& Se lf- Em plo
Am
jus
PL
ted Gr
E
oss IncA taxpayer ha
om e ov e. ym en t Ta xe s
immediate solutions to students – Greater of
– ExemptionstoItemizhelp build
ed Deduction
amount wh
sconfidence.
s or the Sta a 26-year-old
son wiEm th plo
Social Security
Medicare
= Taxable Inc ndard Deduc
o receives mo tion gr yer
oss income les 6.20% Total
ploR
E yee 1 s than the ex1.4
ome
re than halfEm t
x Tax Rate
= Gross Tax
Liability
fails the test to
be a qualifyin C h a p hi s su pp or t fro m his parents. 1.45%(a)
6.2 0%
em5% pt io n 7.65%
– Tax Credit be a de g child Se ba lf-Employed
se d Th e so n 7.65%
= Tax Due or
s and Pre payments pe ndent based on on
Wage Base for his age, but .40
12 %
the qualify ial Security andpasses the test to 15.30%
Refund 2.90%(a)
Figure 1.5 illus ing relativSoc e rules Self-Employme
trates the quali Wage Base for . ♦ nt Tax $127,200
A taxpayer ca fying relative – Plu Me dicare
l
tests sde
a
n claim an ex
u
scrib
(a)
The Quick Tax an add

ed
d
ab
i
itional
If Tath
xaebleyeInc em pt 0.9%
ov e. No limit
v
● arom io n Med
i
if eth 20 17 Fe defo r Ta icare tax on earnings
iseOvde a xde
d
ral Rape
erpe
n
: ndency tests tend above $200,00
I
endu
Sc he t lewho was bo 0 ($250,000 MF
e
exem
Single ptdu were m
Th
J)
Indivi ioal
n may be cla But No rn or died du
Reference Guide prov$9, $0 imed for a ba t Over:et while that person was ring
id325
e a Social Secu by born on or alive. A depe
rn
ndency
u
rity number fo $9,325 before Decem
t
on the inside of the
e
$37,950 The Tax is:
R
r all
,950 dependen ber 31. Taxpay
x
$37
ers must
a
$91,900
ts.
Income T
$100,000 $91,900
back cover of the $191,650 $100,000 10% $932.50 + 15% of taxable inc
ome *
$416,700 $191,650 $5,226.25 + 25% of the excess over $9,325
$416,700 $18,713.75 + of the excess *
$418,400 28% of the exc over $37,950
ess over $91,90 *
textbook includes the Married Filing
Jointly or Qu
alifying Wido $0
$418,400 $18,713.75 +
$46,643.75 +
$120,910.25
28% of the exc
33% of the exc
ess over $91,90 *
ess over $191,6 0
0
w er + 35% of the
excess over $41 50
Tax Equation.
( )
$18,650 $121,505.25
+ 39.6% of the 6,7
85824_ch01_r $75,900 $18,650 excess over $41 00
ev02.indd 15 $100,000 $75,900 8,400
$153,100 $100,000
$233,350 $153,100 $1,865.00 + 15% 10% of taxabl
of the excess e income *
$416,700 $233,350 $10,452.50 + over $18,650
25% of the exc
$470,700 $416,700 $10,452.50 + ess over $75,90 *
25% of the exc 0
$470,700 $29,752.50 + ess over $75,90 *
Married Filing 28% of the exc
ess over $153,1 0
Separately $52,222.50 +
33% of the exc 00
$0 $112,728.00 ess ove r
28/09/17 2:0
+ 35% of the $23 3,3 7 pm
$9,325 $131,628.00 excess over $41 50
+ 39.6% of the
S
6,7
JECTIVE
$37,950 $9,325 excess over $47 00
0,700
NG OB
$76,550 $37,950
LEARNI
$100,000 $76,550
be able to:
$116,675 $100,000 $932.50 + 15% 10% of taxabl
e income *
you should $208,350 $116,675 $5,226.25 + 25% of the excess over $9,325
is ch a p te r, $208,350 $14,876.25 + of the excess *
ting th
$235,350 28% of the exc over $37,950
ess over $76,55 *
After comple
$235,350 $14,876.25 +
Head of House
ta x la w.
28% of the exc 0
ess over $76,55 *
● Learning Objectives
hold $26,111.25 +
iv es of U. S. m en ts.
33% of the exc 0
$0
ob je ct rti ng re qu ire
$56,364.00 + ess over $116,6
hi sto ry an d$50
35% of the exc 75
$13
d re po$13 $65,814.00 + ess over $208,3
Ex pl ai n th e
,350
ec t to ta x an
39.6% of the
excess over $23 50
LO 1.1 en 00
,800
tit ie s su bj ,350
help organize 5,350
e di ffe re nt$131,200
$10 0,0 $50 ,80 0
De sc rib e th
$100,000
$212,5r00in di vi du al s.
LO 1.2 $131,200 $1,335.00 + 15% 10% of taxabl
Ap pl y th e ta x fo rm ul a$41fo 6,700
e ta x re tu rn s. $212,500
rd in g to information
$6,952.50 + 25% of the excand
$6,952.50 + 25% of the excess over $50,80
e income
ess over $13,35 *
0*
LO 1.3 w
$44
ho
4,5
m
50 us t fil $416,700
of ta x ac co of the excess 0*
s
al taxable income io n
are
$27,052.50 +
du at referenced r by
$44
y in di vi * For
e ca lc ul 4,5 50 28% of the exc ove r $50,800
Id en tif d un de rs0,0ta00,nd
bel ow $10 th $49 ,81 6.50 + 33% of ess ove $131,200
LO 1.4
in g sta tu s an
the IRS requir $117,202.50 the excess ove
ay er s. $126,950.00 + 39.
es use of the + 35% of the r $212,5
excess over $41 00
De te rm in e fil xp
Tax Tables pre
taend
LO 1. 5 Ch ild Ta x Cr
ed it pt io n am ou nt tedfo
sens in rApp ix A. the end-of-chapter
6% of the exc
ess over $444,5
6,700
fil in g sta tu s. Credit redper an d th e ex em

Amount 50
child under 17
em pt io ns fo r ta xp ay er s.
e nu mtbe r ion
uct of ofex$50 per $1,000
ct io n am$1, ou nt exercises.
Tra dit ion al IRA
C al cu la te th join filers, in excess of modified AG
m iz ed de du 000 De du cti on
LO 1.6 single or head
t staofnd arsehd or ite
of I: If nei ther individ
maximum ded ual nor spouse is a participan
e comarr ec hou
d filing separa old filers, in exc.ess of
C al cu la te th
rrie $110,000 uction is $5,500 t
es if under age 50, in another plan, the
LO 1.7 l ga in s drs,loinss
tely file
an excess of $75,000 If the individ or $6,500 if age
sic ca pi ta s.
ual is an active 50 or over
vi LO 1.8
C om pu te ba
Single ru le s fo r hi gh -in
Sta nd ardco mDeedutacti xp ay
on s
er $55 ,00 0 Married/Joint
Up to $99,000
AGI
participant in
Single AGI another plan:
Ma x. Ded
ta x uct ion
Id en tif y th eMarried Filing JointlIn s. Up to $62,000
LO 1.9 or rnQuet ta x re so ur ce $5,500 (under
Married va
us e Filing rioSep usaray te alifying Widow
(er) lin g). $6,350
$99,001–$118
,999 $62,001–$71,999 $6,500 (50 or
50)
Ac ce ss an dHe tel y
in g (e -fi $119,000 and
Ov over)
LO 1.10
ad of Household
el ec tro ni c fil $12,700 er $72,000 and Ov Pha sed-out
sicfors 65ofand
AdditionalLearning. If the individ duplicated, in whole or No er
Adeditba
Copyright 2018 Cengage All Rights Reserved. May not be $6, copied,
350 scanned, orual in ded
part.uction
WCN 02-200-202
1.11 De sc rib e th ional for 65 and Older or Blind—Married $9,350 retirement pla is not an active participan
n (but spouse t in a qualified
LO 2018
Copyright Cengage Learning. All Rights Reserved. May not Old
beercopied,
or Bliscanned,
nd—Unma or duplicated,
rried
in whole or$1, part. Due are
in 250 fully dedrights,
to electronic uctiblesome
is), allowable may
up tothird party content be uti
contrib suppressed from the eBook and/or eChapter(s).
ons
$196,0 $18 00 and
The bas
Editorial review has deemed that any suppressed ic sta
content does
ndanot $1,550 Learning
materially affect the overall learning experience. Cengage
rd ded
00 of join
reserves the tright
incomto eremove6,0
additionalpha
content attany
sed-ou at time if subsequent rights restrictions require it.
depe uction for
Real-World Applications
Keep Students Engaged
1-5 Fili ng
Sta tus an d Tax
A legally marrie Co mp uta tio
Cre dit s an d
Sp eci al Tax
es status rules) if d taxpayer ma
he or she qu The “Would You Sign This
y file ●
alifies as an ab
as head of ho
usehold (based
n 1-11
Chapter 6 abandoned spo
●
6-50 use only if all andoned spouse on the general filing

1. A separate
return is filed,
Tax Return?” feature places
of the following
requirements
. A taxpayer qu
are met:
alifies as an
2. The taxpayer
home during
paid more tha readers in the office of a tax
n half the cos
tock.com.
the year, t (rent, utilities,

3. The spouse etc.) to maint
did not live wi
preparer with interesting and ain his or her
ov Oleg/Shutters
al Tax es 4. Fo r ov er 6for th the tax pa yer

dit s an d Sp eci months durin at any time in
Chapter 6
Cre ●
for e, the
de ntcrech dit g the year the the last 6 months
6-40
year in which
the adoption
becomes final.
r in which the
Th ere
adoptio qunalibe
ild
com,esstepchild, or adopted ch
fy as a depend
al. ent t.company
sometimes humorous real-
ho me was the pri
ild. Under cer ncipal residenc
tain condition
of the year, and
e for a depen-
the tax the tax yea es fin
tterstock.com; Zhuk
in in be com s,
or incurred paid or incurred tax year thema adoption In pocer sition tainatciran Interne
world tax ethics questions that a foster child
may
tion expenses only in thehir nageme byntfili
cumstancpe ts.ma Wrriehen
qualified adop r, is allowedrra ed for a ng ely ,ts,oftelany.d Fo other es, d couples may
earlier tax yea Wa nt, was ,000 annim $6 ,00 m”0, resfor doctiv
pe gs,sep caara r ins0,tan he be able to red
final, or in any Your client, William payer pa d als .co wh ce,ich
16nnan d 20 to sta17rt, a website called ion wi
a tax
ys “in$3dulge da
th thesto adckopop tioCh
an d
n nof(IS
tio
cas
anO)
apter20
uaeligltyibl
wo rth e
losses $500 ,00
, are redalte
the ucerna
sin
d by
ce
tivea pewill intrigue students. Many
some itemized
deductions, suc
uce the ir total tax liabil
h as medical exp ity
In 20pla ing enectan incentive ited sSta 5),enc a, spoethe usefor rcentage of ad
ILYA AKINSHIN/Shu
ExAMPLE ins co givnn prefer18

. In item
edn, W
hirtio
pense
exillia m swa Un ate abe tes
tax with a com casua bin ltyedloss and low justed gross inc enses
s op
fiedwa
qualihe
whrci
ad
is nodu
o sed t arinU.S
g the. citi yeazer.n Exeor res rciseide nt
of
pa
of
the
ye
ha
the
ISO
r pa
ve to
cre
yspaan addit
y sub
tte
staion
r off
ntiaall ad
fili,00
ng 0
$3ditionseparately.
or
al of tax
use s
wh
to
en
file the AMT
of these features are inspired
separate adjus om
ted gross incom
e (discussed in
childexe the
uses him
caal, tax to ra on tax an his d ref e ma
T)me ansd fin the2,0 ext00 y be
Would Youyear min
beco of t$1 g to
theimuadm optax tion(AM
r ma yea yr.cla He imisalivi cred dit
abou
al)
d “un. No -Am te:erican” accordin by the authors’ own experi-
nse The
er s.tax item tax forye
s pa the 1-5
taxn isbe“un
T tio come d r”s h
fai fin
anea
d of house
Sign Thisqualiwit fied expe
h his oth ar the
the ad
AM op
fortax 18
20return (th e
be ye
ca use
dit isIfall ow ed . ♦ ho ld
Tax Return?If a for
Forom
her inc m e62tax 51 ret witurn
opyo
h his
tiounsig dones thisnotaxt beret cournme? final, no cre
an unmarried tax
doned spouse payer can meet ences working with various
special tests or
him . Wo
eig n ad uld , he or she is
allowed to file if a married tax
n Ass is ta nc
are lower than
ho e
use ho
rates for single
or ma rrie
clients in tax preparation. As
as head of ho
usehold. Head
payer qualifies
as an aban-
de d A do pt io ld status
ed by if
his bo orth of
d filing separatel
y.
of household
rates12 -4 Sta tute of Lim
er -P ro vi en ses incurr the following con
part of each scenario, students
A taxpayer quali ita tio ns
6-7d Employ ounts pa id or exp 1. Th e taxapa Se lf- St the NyunPr dit ions exist: fie s for head of 12-15
2 earnings am nRofCh chyerIL
ild d by
wa RE s udan maob le m
lud e fro m W- dE wi Oth Fthe ad optio
IN O
M nce progradm.
yea r, an tot al rrie d or 12
ab .3
yee may exc n Ed IN ses con CO necte M Pa Th
rt ea andoned spo See Appendix E
An em
r em
plo
ployer for 6-1 quali 0fieU d ad Nop EA tioRN exp en
hed unIN der an ad
STUd
option TS
EN
assista2. The taxpayer
able amou nt pa foridan y
more tha lf om
decide if they would sign
e-
use as for Sol
of Decemnsbetor Self-Study
utio
31 of thePro taxblems
hejec tive 6.10
Learning Ob ployee, if the amou ANd CE
nts are furnis RTA$1 2017. The excludplace ,54 of 0res Linda file
is po ful ly tax
dofint
her to giv nehainc of the cost of
to 3,570 for 03nin g an ide
sta dnd nce return 2tomo irs late keeping a home tha
Apply the rul
em
am for
esount exc lud ab le per ch ild is lim
ts yer
ite
hasvewifou
d
th ad
nd jus
it ted
be gro
ne fic ssialincfroomm e aovtax
tifid
er
catin
-p$2
lat
esthe
lan
ed depeend
of sam
de po
Wh
ma
sit at,
en an ist dLin
nn ermu
or a
a delpe
astua
da ’s
decketota
pend
funnd
l pe
ds,
en
na
t
thet, inc
chithe
lty om
for
the tax return. You, as the
nth
ld or otherThe
e
.
qu tax
alif pa id wit
ying dependenh the
t was the princi
return amounts pa l
ouny t forparen taxpa -ous,t ba calcul
is nk cerate qu alif y the file is not fra bra t, en suc h asfaialure to file and fai t relati An to un$3
on ther is phasedMa 0. Thstoecks ph,ase bond er inctax om paeyer tax for udu helen
adt? ally cousin, wh o lure to pa assumve. re-,000.
computing tax yea
arn ed inc
eliom
mi enaofted whenear AGnin I reag ch asses ets$2
n
43,54
, suc
cre
. Sin
h as
dit ce. the ch ildren are gene
rally inthe
ita
a low
l ga
parent nesto
ins on ed ck notsal live
es ha
wit h
softra
the
hodituse
ion
ion
s
instructor,can use the cases
hold status. If the is too distany,
tha t de pe nd en
tly relateing the failure to
d, wil l no t
une the ad r ch tioren
opild
dividends, an
d cap may maint Pa rtlaw b tains provistaxpayer.eIn all cases oth t is the taxpayer
en anphdase-out formino h as interest, , taxain a sep con ’s parent,
● minor childrthe
cer tain studen
ts. Real-world examples within
from assets suc er rate than the
parents’ rate. Ho
ed it an d
in the
Ex
wever
encl us
sam
t ch Kim eio
ild ho
ren nuse
und . Th
erp ho
ara
e ld
aid
te residene
net unear
as the
nced ,inc the
pli
om
to spark group discussions on
qualif
es to ying dependent relative mu
er than depend
ent pa $ ren
ts, who
at a low
ngio
Cr
incnome to cer
n de pe mend nts her tax
rat tax
ese ap
pa yer
shiftipt
been tax ed tai , bu op - tax by $10,0div. A st actually live
of do
t Th
ha ad tal
Tax Break segments provide
di na tio n offit A con rennets’
de ones.
ctictio
rat neg
wi sisthe
thlige sigpa
nce ne ren
?d an IRSou forgh m or 23aat the00 orc dueedtopa renlige
basic tax preparation ethics.
neg t whnceo.me ets
6-7e Coor lim im bo it the be ne exc lus ationthe in
ir pa du n to fores the
19 thr qu alif yin Wh at the
is abo ve
dit ma anyd be antaxed and stu excde lusntshis
ionor ag her ex-spo e” g legal agreement shiftin Kim’s penreq uire-
alty
clapendenth t ch a ildcreren
esth18aorcre yoditunge anrd an unearuse ne,dma incyomstill file using he g the dependenfor
An individual
maofy de wht ocla imagbo and Pa whrto chave “net cy
tion of
actual, effective examples of
an eli gib le
de pe chnd ilden, tbu cht ildma reny no
who have
are
at lea st on e living parent,
Divde orcfining ndUsi
itiocou forng a pa ren
tionsam
t, the term is general
ly ad of househo
ld status.
$
se. en d of the year, is no tutory
sta4,0 in qu alifie adsop
ple mathe y sav e info
en 20 e rm
sam e
tax-planning strategies that
exp
In 20con
for the
17, anere
yeama r. Altho
un rrie
ug
d individ
an aag
h the
paren
re
ual pays
t or ste
for the finch
$1 ren“ab
p-pa adtop
al of
ofanthe
hotio
use
doned childspo
n of gan
yoho unld ad
.
undelig
ult
erp
use ibleanchi
’s)”aym incdom entcan
l’s ges use
sig
ld subjeccan nifi
ewere detterm
atio
theary
n
totthe
hea
as
ine
taxin pa
esPar
mi
ofddaofto
ren -
if ton
nodue
b, wh is the
r e oratbo th ofam ounspo
the t ofusethes pen
ExAMPLE sid and ad to metio ency nin ild’s (or filin
ind staua
givid or sal hobeusehold to filin qualialty
fiesif the
op ofn de mi gs.the year, the tus
e wa for oneal civilgfrastaud? as an
clearly illustrate the concepts
ex pe nse
is no
s to
For purpo
t aratchi ld
ses
wi
t un
th spe
ter
cia neom
linc
earned option assistance
In the sam
ed e is never con is com spo
spopro
euse
use
sid
gra
ere
m,
d to
mo
pa
inc
ysnly
lud
an see addit
n
ion
in the the
spo
yea r
use
(or
wit h married filin
g sep
tus. The combin
arately filing sta $
ation of head
who tal tax e, ne
alifie d ad ha s custodon y ofbeaha lf of yea rs) leading up tus for the other
s to an attorney
ted as follow s: child, the
discussed throughout the
emplo chye
under a qupu
ildr, and is com
er qualified ad
option expense ividual is not
$xxsub xx.jecxxtseparated taxpayer
s may each cla
to a divorce. In
cases where ea
ch
$5,000 for oth chi ld. As suming the ind12-4 STAT uT y im head of house
inc om
n of e
the $13,570 an d ma E OF LIMITA hold status.
book and cover nearly every
employee for ss the gre
theear
Un adne opdtio
Let, the individ ate r
ua of:
l ma y cla im a credit ofor The sta exclusion are
1-5 eoncre Qdit
), and the tute of limitax.x
TIONS
to the phase-ou e, ard
de du
use cti
the ua IRSlif ying (xxastio ax)ns is the time period
(chssildinc omnd
’s sta beca
veronbea cla taxim retW urnid
ed ow (er)
basic tax-planning technique
exclude $5,00
1.0$1 fro,05
e
m0gro
all ow abThele ite remmiainzeding dedu A cti
$4 taxon
50 ma
pa s y ne
yer go
on maver y nmconen tin t ue
. Aft er the statut weith of limd
within which
itaep en hade
an action may
ntouCh be taken by the
12.4 Learning
Objective
the sam 2. e Thex pense s.

cte d wi th theofpro du cti
his or hereq r spoues
can tono be
t ne
assessfit fro add m the
itio na joi
tions s run t on ilda Ap ply the genera
not for con ne ome. ♦ half the use
t a .ref l nt
tax esretan giv en tax return,
used by tax preparers. dir
ded fro
credit or exclu of the unearned inc
ect ly
m gro ss inc
ome
or foster chsee
costthe of ma dateintthe
Toun
aintax
qu d.ali
ing ret
In
xxx
a ho
fygen
urn
to
x.x
use
0.0
x
wa
use
era
0)ho
l, the
s ld
the sta
filewh
joitut
nt eretofurnlimita
urnd
rattio
rat
the es
es,nsthe
tax for
pay
forwi
2
er yea
a tax
dow(
canrs noaft
t am er enthe death
d the return to
the the
l rule for
statute of limitat
on tax returns
ions
ild kin lives.
g a Af refter un d,(1,05 d or erethe a deretpeurnnd du
reter)
urnmu runsts pafor y 3 ov
yea and the
household fili the the 2-ystaear
tutepeofriolim en e
t dat
child e,, wh
steich
pch errs fro m imp ortant exception
tutnoryEx depe du nses
cti on 2 yea
ng rs fro
status m the dat $xx xx. xx
thaor-
d, ita
thetio ns
se is pa eve
ild r
, is
ad lat
oper.tedFo s to
Lesspt staio s, cou.rt cos ts,e att t the taxes using tax theyer latseroftofen3 yea chr ild
tax, payers the general rule
6-7f Qualif
ied Ado ne dab inc om ed necessary adoption fee rpo se is for cal,culated we re actthe ually paid. quali
rs fyfrofor
m the thetim heeadofoffiling or
.
tion expenses
Ne unear
tare rea son le an
e dis1-5
ofzer f oTa
wh ich
or x theEX AM
Co e am
ncPLE ipa
less,prithe Norm file ch l pu
ild ’s tax
Interesting tax facts within
s sit
hisive 20, 17thetax child●’s tax is
d incomm
Qualified adop neated d incto,oman pu outa nt is po return on March
thesesnedir
If en t ect
unear ly rel dis custio sed n 18, 2018. Un
other exp the. neFo
if ild t un ear
r 20 17ne tditamount. below applies,
ney fees, and
the tax pa yer ’s leg al
ch ad’soptax
ild n
tio rat of e. anHo eli
wegib
ing
ver le, ch
the pa ren ts’33taxperat rce
, there he
if
e,nt, hig are r,
35 percent, an
to
sev tha
en ad inc ion
omal e “Would You Believe?” sections
tax
tax es.
bra cke
♦
n ts
(ag (10
the IRS has unt
e 7).
perce Ale x il April 15, 20
less an excep
21, to assess
tion
any
by ap ply d 39
1) an d Na tha nt, 15 pe rce
calculated (ag e .6 percent). Th nt, 25 percent,
Dyana and Ma Albert
rk have two ch 12-4a
ildren , Ale
anedEx
x
ha rde
cethastpt nthi rec ng grab students’ attention with
eivinedthe
e ind int ere
$3,000 in ividual tax rates for 20
st 28 percent,
ExAMPLE Einstein: ome“Th Na ions ment expense
s 17 are presen
0 in interest inc The tax law
ted
rib$4 ute,00 d to pay any invest
The following
quota tio n is oft
recen
om
eiv att
ed
e etaxdu.”ring 2017.
Na
Alex andSeveral of the tha n didcon no tai t ns
sev interesting asides, including
eral exception
s to the genera
d is the inc an inc om se special rul l rule
world to underst
es are summa of a 3-year
●
If a fraudulent
The IRS may ass
tax return is file captivatingstafacts
rized below:
d or no return
and
tute of limitatio
ns. stories
85824_ch01_rev
ess a tax deficie is filed, there
of gross incabout the futtax laws andns.preparation.
02.indd 11 ●
If a taxpayer om ncy at any tim is no statute of limita
its an amount e in ure. tio
come shown on ome
the return, the in excess of 25 pm
ample, if a tax n the statute of percent of the
15/09/17 5:51
return with gro limitation s is increased to gross in-
(25 percent of ss income of $40 6 years. For ex-
$40 ,000) of gross inc ,00 0 contains an 28/09/17 2:07
●
The statute of om e, the statute of om ission of over pm
7 years. This lim

limitations for
the deduction lim itations is increased $10,000
itation applies of a bad debt to 6 years.
01.indd 50 deduction; all only to the bad or worthless
85824_ch06_rev other items on debt deduction securities is
the tax return or the worthles
wouldpm normally clo s security
15/09/17 5:50 se out after 3
Prior to 2015, years.
a 25% omission
● New Law Alert boxes 6 years) did not
For example, if
include a basis
of income (and thu
overstatement
s an extension
of the statute of
property is sol that may have limitations to
85824_ch06_rev throughout the textbook
01.indd 40 results; howeve
Similar unders
r, if the basis
d for $100,00
is overstated as
0 and
understated inc
the actual basis
is
ome by that am
$30,000, a $7 ount.
tatements of 25 $80,000, onl 0,000 gain
draw students’ attention to % of income are
now within the
y a $20,000
6-year statute.
gain is recogniz
ed.
specific areas affected by

new tax legislation.
85824_ch12_r
ev01.indd 15
vii
04/09/17 12:1
4 pm
Income Tax Fundamentals
Delivers Proven End-of-Chapter Strengths
● The pages are perforated, allowing students to complete end-of-chapter problems and
submit them for homework. Students can also tear out tax forms as needed.
● Several question types ensure a variety of assignment options:
● Multiple-Choice Questions
● Problems
● Writing Assignments
● Comprehensive Problems
● The Cumulative Software Problem provided in Chapters 1–8 gives students the flexibility to
use multiple resources, such as the tax forms within the book, Intuit ProConnect Online or
alternative tax preparation software.
Digital Tools Enhance Student Understanding

CengageNOWv2 is a powerful online homework tool.
CengageNOWv2 includes an interactive eBook, end-of-
chapter homework, detailed student feedback and interactive
quizzing, that covers the most challenging topics, a lab guide
for using the Intuit ProConnect Online software, flashcards, and much more.
The student companion website offers—at no additional costs—study resources for students.
Go to www.cengagebrain.com, and input the ISBN number of your textbook (from the back
cover of your book). This will take you to the product page where free companion resources
can be found.
Intuit ProConnect Online access is included with each textbook.

A detailed reference lab guide will help the student use the software
for solving end-of-chapter problems.
viii
Note to Students:
Maximize Your
Reading Experience
This book includes many examples to help illustrate learning objectives. After reading
each section, including the examples, answer the corresponding Self-Study Problems. You
can find the solutions to the Self-Study Problems at the end of the textbook in Appendix E
to check your accuracy. Use your performance to measure your understanding, and
re-read the Learning Objective section if needed. Many key tax terms are defined in
each chapter, which will help improve your overall comprehension.
Using Tax Software

Numerous tax return problems in the textbook can be solved using either tax preparation software
or hand preparation. The popular software, Intuit ProConnect Online, is available with the textbook.
A student guide to Intuit ProConnect Online is provided at the companion website. Your college may
offer additional tax preparation software, such as Intuit’s ProSeries®, but remember that you can
always work the problems by hand.
Using the feature “Would you sign this tax return?”

A practitioner who knows when to say “I cannot sign this tax return,” even if it means losing a client,
is exercising the most basic ethical wisdom. Chapters 1–9 each contain a “Would You Sign This Tax
Return?” case reflecting a common client issue. Each issue corresponds to an obvious concept illustrated
in the previous section. However, how to handle the client is not obvious. The art of explaining tax rules
to a client who does not understand them, or, worse, wants to break them, requires not only a good
understanding of the rules, but also good interpersonal skills and sometimes the gift of persuasion. The
news in the last several years has shown reports of respected CPA firms with members who failed to say
the simple words, “I cannot sign this tax return,” demonstrating that simple ethical practice is not always
easy. We hope instructors will use these cases to spark group discussions or contemplation, and, perhaps,
add examples from their own experience.
Using the cumulative software problem

The Cumulative Software Problem can be found at the end of Chapters 1–8. The case information
provided in each chapter builds on the information presented in previous chapters, resulting in a
lengthy and complex tax return by the conclusion of the problem in Chapter 8. Your professor may have
you work in groups to prepare each of the tax returns. The groups can follow the real-world accounting
firm model using a preparer, a reviewer, and a firm owner who takes responsibility for the accuracy of
the return and signs it. All of the issues in the problem are commonly seen by tax preparers and are
covered in the textbook. The full return is difficult to prepare by hand, so tax software is recommended.
If the problem is prepared using tax software, the data should be saved so the additional information in
the succeeding chapters can be added without duplicating input from previous chapters.
Using the alternate tax return problems

Each of the first six chapters contains an alternate tax return problem numbered “2B.” The problems have
been added to increase the variety of full tax returns available for added practice. Problem “2B” is similar
in coverage to problem “2A” in each chapter and uses the same forms. Forms are provided at the end of
the chapter and, if desired, additional forms may be easily obtained from the IRS website (www.irs.gov).
ix
The Annotated 1040 Map
The annotated 1040 map is an expanded tax formula, showing you where each piece of the tax formula
is covered in the textbook. The 1040 map helps you understand how all of the elements of the textbook
and the tax formula fit together. Use this as a reference and bookmark this page.
Chapters 1, 2, & 9
LO 2.2
LO 2.11
LO 2.2
LO 2.2
LO 5.2
LO 2.3
LO 3.1
LO 1.8, Chapter 8
Chapter 8
LO 4.6
LOs 2.5 and 4.8
LO 4.1, Chapters 10 & 11
LO 1.2, Chapter 3
LO 2.12
LO 2.14
LO 2.1
TOTAL INCOME
LO 3.6
LO 4.4
LO 4.5
LO 9.6
LOs 4.7, 4.8, & 4.9
LO 4.3
LO 2.2
LO 2.3
LO 4.6
LO 5.3
DEDUCTIONS FOR AGI

AGI
AGI
ITEMIZED OR
STANDARD
DEDUCTION
LO 1.7, Chapter 5
LOs 1.6 & 5.9

TAXABLE INCOME
LOs 1.5, 2.2, 6.10, & 8.4
LO 6.9
LO 6.4
TAX BEFORE CREDITS
LO 6.6 AND OTHER TAXES
LO 6.3
LO 6.5
LO 4.8
LO 6.1
LO 6.8
LO 6.7
TOTAL CREDITS
LO 9.6
LO 4.6
LO 9.8
LO 6.4
LOs 1.9 & 9.9
TOTAL TAX
LO 9.1, Chapter 1
LO 9.2, Chapter 1
LO 6.2
LO 6.1
LO 6.5
LO 6.4
LO 1.4
TOTAL PAYMENTS
REFUND
-OR-
AMOUNT DUE
xi
xii
About the Authors

Gerald E. Whittenburg On March 8, 2015, we unexpectedly lost our dear friend and co-author Gene
Whittenburg. As the original author of Income Tax Fundamentals, Gene was critical in designing the forms-based approach that
the book has used successfully for over two decades. It is simply not possible to quantify the degree of our loss. Gene started
his life in a small-town in Texas, entered the Navy, served his country in Vietnam, earned a Bachelor’s, Master’s, and PhD
degrees and served as a distinguished faculty at San Diego State University for almost 40 years. The outpouring of sorrow and
gratitude from countless former students and colleagues are a wonderful tribute to Gene’s love and devotion to teaching. We
intend to continue to honor Gene by committing to uphold his standard of publishing excellence for many years to come.
Steven L. Gill is an associate professor of accounting and taxation in the Charles W. Lamden School of Accountancy at
San Diego State University. He received a BS in Accounting from the University of Florida, an MS in Taxation from Northeastern
University, and a PhD in Accounting from the University of Massachusetts. Prior to entering academia, he worked for almost
12 years in the field of tax and accounting, including roles in public accounting, internal audit, corporate accounting, and,
ultimately, vice president of finance. Although currently in inactive status, he holds a Certified Public Accountant designation. His
research interests include a concentration in taxation, encompassing mutual funds and college savings (“529”) plans and taxpayer
compliance behavior under low enforcement conditions. He has published a wide variety of articles in various academic and prac-
titioner journals, and has taught at both the undergraduate and graduate levels, including taxation and financial and management
accounting. Steven also serves as an author on Cengage’s Federal Tax Research series.
Reviewers
Janice Akao, Butler Community College Brian Fink, Danville Area Community College
Sandra Augustine, Hilbert College Brenda Fowler, Central Carolina Community College
George Barbi, Lanier Technical College George Frankel, San Francisco State University
Lydia Botsford, DeAnza College Alan Fudge, Linn-Benton Community College
Mike Bowyer, Montgomery Community College Gregory Gosman, Keiser University
Jerold Braun, Daytona State College Nancy Gromen, Blue Mountain Community College
Lindy Byrd, Augusta Technical College Jeffery Haig, Copper Mountain College
Greg Carlton, Davidson County Community College Tracie Hayes, Randolph Community College
Diana Cescolini, Norco College Michael Heath, River Parishes Community College
Jerry Chaney, Southside Virginia Community College Keith Hendrick, Georgia Piedmont Technical College
John Chappell, Northland Community and Technical College Cindy Hinz, Jamestown Community College
Marilyn Ciolino, Delgado Community College Rob Hochschild, Ivy Tech Community College
Diane Clugston, Cambria-Rowe Business College Japan Holmes, Jr., Savannah Technical College
Tonya Coates, Western Piedmont Community College Jana Hosmer, Blue Ridge Community College
Thomas Confrey, SUNY Orange James Hromadka, San Jacinto College
Amy Conley, Genesee Community College Carol Hughes, Asheville Buncombe Technical
Salle Crutaire, Central Lakes College Community College
Eric DaGragnano, City College Norma Hunting, Chabot College, Hayward, California
William Dams, Lenoir Community College Adrian Jarrell, James Sprunt Community College
Geoffrey Danzig, Miami Dade College – Hialeah Campus Paul Johnson, Mississippi Gulf Coast Community College
Richard Davis, Susquehanna University Jessica Jones, Mesa Community College
Susan Davis, Green River Community College Dieter Kiefer, American River College
Vaun Day, Central Arizona College Christopher Kinney, Mount Wachusett Community College
Men Dennis, San Diego City College Angela Kirkendall, South Puget Sound Community College
Kerry Dolan, Great Falls College Montana State University Mark Klamrzynski, Phoenix College
Vicky C. Dominguez, College of Southern Nevada Raymond Kreiner, Piedmont College
Lisa Farnam, College of Western Idaho William Kryshak, University Wisconsin-Stout
John Fasler, Whatcom Community College Linda Lane, Walla Walla Community College
xiii
Christie Lee, Lanier Technical College Amy Smith, Pearl River Community College
Anna Leyes, Ivy Tech Community College Thomas Snavely, Yavapai College
Jeannie Liu, Rio Hondo College Joanie Sompayrc, UT-Chattanooga
Susan Logorda, Lehigh Carbon Community College Dale Spradling, SFA
Heather Lynch, Northeast Iowa Community College Barbara Squires, Corning Community College
Anthony Masino, East Tennessee State University Todd Stowe, Southwest Florida College
Diania McRae, Southwestern Community College Gracelyn Stuart-Tuggle, Palm Beach State College
Deanne Michaelson, Pellissippi State Community College Robert Taylor, Lees-McRae College
Jennifer Morton, Ivy Tech Community College Robert L. Taylor, C.P.A. Lees-McRae College
Robert Nabhan, Berks Technical Institute Teresa Thamer, Brenau University
LoAnn Nelson, Lake Region State College Craig Vilhauer, Merced College
Michael O’Connell, River Valley Community College Stan Walker, Georgia Northwestern Technical School
Sharon O’Reilly, Gateway Technical College Teresa Walker, Greensboro College
Kevin Parker, York Technical College Jerry Weese, Southwestern Community College
Brooks Peacock, Chemeketa Community College Joe Welker, College of Western Idaho
Roxanne Phillips, Everest College Jean Wells, Howard University
Mike Prockton, Finger Lakes CC Mary Ann Whitehurst, Southern Crescent Technical College
John Ribezzo, Community College of Rhode Island Sharon Williams, Sullivan University
Lance Rodrigues, Ohlone College Douglas Woods, Wayne College
Hanna Sahebifard, Golden West College Patty Worsham, Norco College/Chaffey College
Larry Sayler, Greenville College Jay Wright, New River Community College
Charley Sherman, Oakland Community College Douglas Yentsch, South Central College
James Shimko, Jackson Community College James Zartman, Elizabethtown PA College
Barry Siebert, Concordia University - Saint Paul Jane Zlojutro, Northwestern Michigan College
Kimberly Sipes, Kentucky State University
Acknowledgments
The authors wish to thank all of the instructors who provided feedback for the 2018 edition via surveys as well as the following
supplement authors and verifiers for their most valuable suggestions and support:
D. Elizabeth Stone Atkins—High Point University, High Point, NC Pennie Eddy—Appalachian Technical College, Jasper, GA
David Candelaria—Mt. San Jacinto College, Menifee, CA Paul Shinal—Cayga Community College, Auburn, NY
Jim Clarkson—San Jacinto College South, Houston, TX Lisa Swallow—University of Montana, Missoula, MT
Susan Snow Davis—Green River Community College, Auburn, WA
In addition, gratitude is expressed to Susan Gill, Kathleen Smith, Steve Smith, and Dr. Hannah Smith for their expert assistance
reviewing chapters of this textbook. We also appreciate Susan Snow Davis from Green River Community College, who wrote the
helpful guide about how to use Intuit ProConnect Online in the tax course, which may be found on the companion website. In
addition we would like to thank Janice Stoudemire, Tracy Newman and Wendy Shacker on their work of reviewing and verifying
the content in CengageNOWv2 including the End-of-Chapter items and Test Bank Problems. We would also like to extend our
thanks to the Tax Forms and Publications Division of the Internal Revenue Service for their assistance in obtaining draft forms
each year.
We appreciate your continued support in advising us of any revisions or corrections you feel are appropriate.
Steven L. Gill
ta b l e o f c o n t e n t s
chapter 1 The Individual Income Tax Return

LO 1.1 History and Objectives of the Tax System 1-2
LO 1.2 Reporting and Taxable Entities 1-3
LO 1.3 The Tax Formula for Individuals 1-5
LO 1.4 Who Must File 1-7
LO 1.5 Filing Status and Tax Computation 1-10
LO 1.6 Personal and Dependency Exemptions 1-13
LO 1.7 The Standard Deduction 1-19
LO 1.8 A Brief Overview of Capital Gains and Losses 1-21
LO 1.9 Special Rules for High-Income Taxpayers 1-23
LO 1.10 Tax and the Internet 1-30
LO 1.11 Electronic Filing (E-Filing) 1-31
Questions and Problems 1-34
chapter 2 Gross Income and Exclusions

LO 2.1 The Nature of Gross Income 2-2
LO 2.2 Interest and Dividend Income 2-4
LO 2.3 Alimony 2-6
LO 2.4 Prizes and Awards 2-11
LO 2.5 Annuities 2-12
LO 2.6 Life Insurance 2-15
LO 2.7 Gifts and Inheritances 2-16
LO 2.8 Scholarships 2-17
LO 2.9 Accident and Health Insurance 2-18
LO 2.10 Meals and Lodging 2-18
LO 2.11 Municipal Bond Interest 2-19
LO 2.12 Unemployment Compensation 2-20
LO 2.13 Employee Fringe Benefits 2-20
LO 2.14 Social Security Benefits 2-24
chapter 3 Business Income and Expenses, Part I

LO 3.1 Schedule C 3-2
LO 3.2 Inventories 3-8
LO 3.3 Transportation 3-11
LO 3.4 Travel Expenses 3-14
LO 3.5 Meals and Entertainment 3-16
LO 3.6 Educational Expenses 3-17
LO 3.7 Dues, Subscriptions, and Publications 3-20
LO 3.8 Special Clothing and Uniforms 3-20
LO 3.9 Business Gifts 3-21
LO 3.10 Bad Debts 3-22
xiv
Table of Contents xv
LO 3.11 Office in the Home 3-24

LO 3.12 Net Operating Losses 3-26
LO 3.13 Hobby Losses 3-27
chapter 4 Business Income and Expenses, Part II

LO 4.1 Rental Income and Expenses 4-2
LO 4.2 Passive Loss Limitations 4-5
LO 4.3 Self-Employed Health Insurance Deduction 4-9
LO 4.4 Health Savings Accounts 4-13
LO 4.5 Moving Expenses 4-14
LO 4.6 Individual Retirement Accounts 4-16
LO 4.7 Small Business and Self-Employed
Retirement Plans 4-23
LO 4.8 Qualified Retirement Plans 4-26
LO 4.9 Rollovers 4-28
chapter 5 Itemized Deductions and Other Incentives

LO 5.1 Medical Expenses 5-2
LO 5.2 Taxes 5-7
LO 5.3 Interest 5-11
LO 5.4 Charitable Contributions 5-15
LO 5.5 Casualty and Theft Losses 5-20
LO 5.6 Miscellaneous Deductions 5-22
LO 5.7 Classification of Deductions—Employees 5-24
LO 5.8 Educational Incentives 5-27
LO 5.9 Phase-Out of Itemized Deductions
and Exemptions for High-Income Taxpayers 5-32
chapter 6 Credits and Special Taxes

LO 6.1 Child Tax Credit 6-2
LO 6.2 Earned Income Credit 6-6
LO 6.3 Child and Dependent Care Credit 6-14
LO 6.4 The Affordable Care Act 6-19
LO 6.5 Education Tax Credits 6-30
LO 6.6 Foreign Tax Credit 6-37
LO 6.7 Adoption Expenses 6-39
LO 6.8 Energy Credits 6-41
LO 6.9 The Individual Alternative Minimum Tax (AMT) 6-45
LO 6.10 Unearned Income of Minor Children and
Certain Students 6-50
LO 6.11 Community Property 6-52
xvi Table of Contents
chapter 7 Accounting Periods and Methods

and Depreciation
LO 7.1 Accounting Periods 7-2
LO 7.2 Accounting Methods 7-3
LO 7.3 Depreciation 7-5
LO 7.4 Modified Accelerated Cost Recovery System (MACRS) 7-6
LO 7.5 Election to Expense (Section 179) 7-13
LO 7.6 Listed Property 7-18
LO 7.7 Limitation on Depreciation of Luxury Automobiles 7-19
LO 7.8 Intangibles 7-22
LO 7.9 Related Parties (Section 267) 7-23
chapter 8 Capital Gains and Losses

LO 8.1 What Is a Capital Asset? 8-2
LO 8.2 Holding Period 8-3
LO 8.3 Calculation of Gain or Loss 8-3
LO 8.4 Net Capital Gains 8-8
LO 8.5 Net Capital Losses 8-10
LO 8.6 Section 1231 Gains and Losses 8-12
LO 8.7 Depreciation Recapture 8-13
LO 8.8 Casualty Gains and Losses 8-23
LO 8.9 Installment Sales 8-26
LO 8.10 Like-Kind Exchanges 8-30
LO 8.11 Involuntary Conversions 8-32
LO 8.12 Sale of a Personal Residence 8-33
chapter 9 Withholding, Estimated Payments,

and Payroll Taxes
LO 9.1 Withholding Methods 9-2
LO 9.2 Estimated Payments 9-8
LO 9.3 The FICA Tax 9-10
LO 9.4 Federal Tax Deposit System 9-12
LO 9.5 Employer Reporting Requirements 9-17
LO 9.6 Self-Employment Tax 9-20
LO 9.7 The FUTA Tax 9-21
LO 9.8 The Nanny Tax 9-27
LO 9.9 Computing the 0.9 Percent Medicare tax
for High-Income Taxpayers 9-28
chapter 10 Partnership Taxation

LO 10.1 Nature of Partnership Taxation 10-2
LO 10.2 Partnership Formation 10-3
LO 10.3 Partnership Income Reporting 10-5
LO 10.4 Current Distributions and Guaranteed Payments 10-15
Table of Contents xvii
LO 10.5 Tax Years 10-16

LO 10.6 Transactions Between Partners and the Partnership 10-16
LO 10.7 The At-Risk Rule 10-17
LO 10.8 Limited Liability Companies 10-19
chapter 11 The Corporate Income Tax

LO 11.1 Corporate Tax Rates 11-2
LO 11.2 Corporate Capital Gains and Losses 11-3
LO 11.3 Special Deductions and Limitations 11-4
LO 11.4 Schedule M-1 11-6
LO 11.5 Filing Requirements and Estimated Tax 11-7
LO 11.6 S Corporations 11-15
LO 11.7 Corporate Formation 11-17
LO 11.8 Corporate Accumulations 11-25
LO 11.9 The Corporate Alternative Minimum Tax 11-25
chapter 12 Tax Administration and Tax Planning

LO 12.1 The Internal Revenue Service 12-2
LO 12.2 The Audit Process 12-6
LO 12.3 Interest and Penalties 12-11
LO 12.4 Statute of Limitations 12-15
LO 12.5 Preparers, Proof, and Privilege 12-16
LO 12.6 The Taxpayer Bill of Rights 12-19
LO 12.7 Tax Planning 12-22
Appendices
Appendix A Tax Rate Schedules and Tax Tables A-1
Appendix B Earned Income Credit Table B-1
Appendix C Withholding Tables C-1
Appendix D Additional Comprehensive
Tax Return Problems D-1
Appendix E Solutions to Self-Study Problems E-1
Glossary of Tax Terms G-1
Index I-1
List of Forms L-1
List of Schedules L-2
List of Worksheets L-2
Questions
Please contact the Cengage Learning Taxation publishing team if you have any questions:
Jason Fremder, Product Director: jason.fremder@cengage.com
John Barans, Sr. Product Manager: john.barans@cengage.com
Nathan Anderson, Sr. Marketing Manager: nathan.anderson@cengage.com
Brian Pierce, Associate Content Developer: brian.pierce@cengage.com
iStock.com/Jacob Wackerhausen
C h a p t er 1
The Individual
Income Tax Return
LEARNING OBJECTIVES
After completing this chapter, you should be able to:

LO 1.1 Explain the history and objectives of U.S. tax law.
LO 1.2 Describe the different entities subject to tax and reporting requirements.
LO 1.3 Apply the tax formula for individuals.
LO 1.4 Identify individuals who must file tax returns.
LO 1.5 Determine filing status and understand the calculation of tax according to
filing status.
LO 1.6 Calculate the number of exemptions and the exemption amounts for taxpayers.
LO 1.7 Calculate the correct standard or itemized deduction amount for taxpayers.
LO 1.8 Compute basic capital gains and losses.
LO 1.9 Identify the tax rules for high-income taxpayers.
LO 1.10 Access and use various Internet tax resources.
LO 1.11 Describe the basics of electronic filing (e-filing).
OVERVIEW
T
his chapter introduces the U.S. individual income (short form). Also included is a discussion of reporting
tax system. Important elements of the individual and taxable entities.
tax formula are covered, including the tax calcu- An introduction to capital gains and losses is included
lation, who must file, filing status, exemptions, to provide a basic understanding of capital transactions
and the interaction of itemized deductions and the prior to the detailed coverage in Chapter 8. An overview
standard deduction. The chapter illustrates all the steps of tax information available at the Internal Revenue
required for completion of Form 1040EZ, Income Tax Service (IRS) website and other helpful tax websites is also
Return for Single and Joint Filers With No Dependents, included. A discussion of the process for electronic filing
and Form 1040A, U.S. Individual Income Tax Return (e-filing) of an individual tax return completes the chapter.
1-1
1-2 Chapter 1 ● The Individual Income Tax Return
Learning Objective 1.1 1-1 history and objectives of the tax system

Explain the history and The U.S. income tax was established on March 1, 1913 by the Sixteenth Amendment to the
objectives of U.S. tax Constitution. Prior to the adoption of this amendment, the U.S. government had levied
law. various income taxes for limited periods of time. For example, an income tax was used to
help finance the Civil War. The finding by the courts that the income tax law enacted in
1894 was unconstitutional eventually led to the adoption of the Sixteenth Amendment.
Since adoption of the amendment, the constitutionality of the income tax has not been
questioned by the federal courts.
Many people inaccurately believe the sole purpose of the income tax is to raise revenue
to operate the government. The tax law has many goals other than raising revenue. These
goals fall into two general categories—economic goals and social goals—and it is often
unclear which goal a specific tax provision was written to meet. Tax provisions have been
used for such economic motives as reduction of unemployment, expansion of investment
in productive (capital) assets, and control of inflation. Specific examples of economic
tax provisions are the limited allowance for expensing of capital expenditures and the
bonus depreciation provisions. In addition to pure economic goals, the tax law is used to
encourage certain business activities and industries. For example, an income tax credit
encourages businesses to engage in research and experimentation activities, the energy
credits encourage investment in solar and wind energy businesses, and a special deduction
for soil and water conservation expenditures related to farm land benefits farmers.
Social goals have also resulted in the adoption of many specific tax provisions. The
child and dependent care credit, the earned income credit, and the charitable contribution
deduction are examples of tax provisions designed to meet social goals. Social provisions
may influence economic activities, but they are written primarily to encourage taxpayers to
undertake activities to benefit themselves and society.
An example of a provision that has both economic and social objectives is the provision
allowing the gain on the sale of a personal residence up to $250,000 ($500,000 if married)
to be excluded from taxable income. From a social standpoint, this helps a family afford a
new home, but it also helps achieve the economic goal of ensuring that the United States
has a mobile workforce.
The use of the income tax as a tool to promote economic and social policies has
increased in recent years. Keeping this in mind, the beginning tax student can better
understand how and why the tax law has become so complex.
Most taxpayers know they can deduct contributions of cash to qualified charities but may not
deduct the value of their time or services. However, taxpayers may be able to deduct mileage
($0.14 per mile) associated with the provision of services to a qualified charity.
Self-Study Problem 1.1 See Appendix E for Solutions to Self-Study Problems
Which of the following is not a goal of the income tax system?

a. Raising revenue to operate the government.
b. Providing incentives for certain business and economic goals, such as higher
employment rates, through business-favorable tax provisions.
c. Providing incentives for certain social goals, such as charitable giving, by
allowing tax deductions, exclusions, or credits for selected activities.
d. All the above are goals of the income tax system.
1-2 Repor ting and Taxable Entities 1-3
1-2 Reporting and Taxable Entities 1.2 Learning Objective

Under U.S. tax law, there are five basic tax reporting entities. They are individuals, corpo- Describe the different
rations, partnerships, estates, and trusts. The taxation of individuals is the major topic of entities subject to
this textbook; an overview of the taxation of partnerships and corporations is presented tax and reporting
in Chapters 10 and 11, respectively. Taxation of estates and trusts is a specialized area not requirements.
covered in this textbook.
1-2a The Individual
The most familiar taxable entity is the individual. Taxable income for individuals generally
includes income from all sources such as wages, salaries, self-employment earnings, rents,
interest, and dividends. Individual taxpayers file Form 1040EZ, Form 1040A, or Form 1040.
Form 1040X is used to amend any of these three individual tax returns for changes or errors
discovered after filing. Form 1040EZ is the simplest tax form, but may be used, in general,
only by taxpayers who have the following characteristics:
1. The taxpayer must be single or married filing a joint return.
2. The taxpayer must not be age 65 or over and/or blind.
3. The taxpayer must not claim any dependents.
4. The taxpayer’s taxable income must be less than $100,000.
5. The taxpayer’s income must include only wages, salaries, certain reported tips, taxable
scholarship or fellowship grants, unemployment compensation, Alaska Permanent
Fund dividends, and not more than $1,500 of taxable interest income (note: a taxpayer
reporting any amount of dividend income cannot file Form 1040EZ).
6. The taxpayer must not claim any credits other than the earned income credit.
7. The taxpayer, spouse or any other person the taxpayer enrolled in coverage under the
Affordable Care Act must not have received advance payments of the premium tax credit.
8. The taxpayer does not claim any adjustments to income.
9. The taxpayer does not owe any employment taxes on wages paid to a household employee.
Many taxpayers who cannot file Form 1040EZ file Form 1040A. Generally, Form 1040A
is filed by taxpayers who are not self-employed, have no capital gains or losses, report
taxable income of less than $100,000, and do not benefit from itemizing their deductions.
Form 1040, the long form, is used by all individual taxpayers who must file a tax return
and do not qualify to file Form 1040EZ or Form 1040A.
Certain types of income and deductions must be reported on specific schedules that
are included with the Form 1040. An individual taxpayer’s interest income (over $1,500)
and dividend income (over $1,500) are reported on Schedule B of Form 1040 (and Form
1040A). Self-employment income from a trade or business, other than farm or ranch
activities, is included on Schedule C. Farm or ranch income is reported on Schedule F.
The supplemental income schedule, Schedule E, is used to report rental or royalty income
and pass-through income from partnerships, S corporations, and estates and trusts. If an
individual taxpayer has capital gains or losses, he or she must generally report the details
on Schedule D. Schedule A is completed by individuals who itemize their deductions.
Itemized deductions on Schedule A include medical expenses, certain taxes, certain interest,
charitable contributions, casualty and theft losses, and other miscellaneous deductions.
These tax forms and schedules and some less common forms are presented in this textbook.
The origin of the Form 1040 has been rumored to be associated with the year 1040 b.c.
when Samuel warned his people that if they demanded a king, the royal leader would be
likely to require they pay taxes. However, in the early 1980s, the then-Commissioner of the
IRS, Roscoe Eggers indicated that the number was simply the next one in the control numbering
system for federal forms in 1914 when the form was issued for taxpayers for the tax year
1913. About 350,000 people filed a 1040 for 1913. All the returns were audited. In 2016,
less than 1% of the approximately 150 million individual tax returns were audited.
Another random document with
no related content on Scribd:
CHAPTER II
The full flood of the sun, now low in the heavens, poured through the
western windows upon the figure of the boy standing in the doorway.
The room was beginning to darken, and the ruddy firelight, too, fell
glowingly upon him.
The earl was instantly roused, and could scarcely persuade himself
that the boy before him was only fifteen; seventeen, or even
eighteen, would have seemed nearer the mark, so tall and well-
developed was he. Like all creatures of the highest breeding, George
looked handsomer the handsomer his dress; and although his
costume was really simple enough, he had the splendid air that
made him always appear to be in the highest fashion. His coat and
knee-breeches were of dark-blue cloth, spun, woven, and dyed at
home. His waistcoat, however, was of white brocade, and was made
of his mother’s wedding-gown, Madam Washington having indulged
her pride so far as to lay this treasured garment aside for waistcoats
for her sons, while Mistress Betty was to inherit the lace veil and the
string of pearls which had gone with the gown.
George’s shoebuckles and kneebuckles were much finer than the
earl’s, being of paste, and having been once worn by his father. His
blond hair was made into a club, and tied with a black ribbon, while
under his arm he carried a smart three-cornered hat, for the hat
made a great figure in the ceremonious bows of the period. His dog,
a beautiful creature, stood beside him.
Never in all his life had the Earl of Fairfax seen so noble a boy. The
sight of him smote the older man’s heart; it flashed through him how
easy it would be to exchange all his honors and titles for such a son.
He rose and saluted him, as Madam Washington said, in a tone that
had pride in every accent:
“My lord, this is my son, Mr. Washington.” George responded with
one of those graceful inclinations which, years after, made the
entrance of Colonel Washington at the Earl of Dunmore’s levee at
Williamsburg a lesson in grace and good-breeding. Being “Mr.
Washington” and the head of the house, it became his duty to speak
first.
“I am most happy to welcome you, my lord, to our home.”
“‘THIS IS MY SON, MR. WASHINGTON’”

“And I am most happy,” said the earl, “to meet once more my old
friend, Madam Washington, and the goodly sons and sweet daughter
with which she has been blessed.”
“My mother has often told us of you, sir, in speaking of her life during
the years she spent in England.”
“Ah, my lord,” said Madam Washington, “I perceive I am no longer
young, for I love to dwell upon those times, and to tell my children of
the great men I met in England, chiefly through your lordship’s
kindness.”
“It was my good-fortune,” said the earl, “to be an humble member of
the Spectator Club, and through the everlasting goodness of Mr.
Joseph Addison I had the advantage of knowing men so great of
soul and so luminous of mind that I think I can never forget them.”
“I had not the honor of knowing Mr. Addison. He died before I ever
saw England,” replied Madam Washington.
“Unfortunately, yes, madam. But of those you knew, Mr. Pope, poor
Captain Steele, and even Dean Swift, with all his ferocious wit, his
tremendous invective, his savage thirst for place and power,
respected Mr. Addison. He was a man of great dignity—not odd and
misshapen, like little Mr. Pope, nor frowzy like poor Dick Steele, nor
rude and overbearing like the fierce Dean—but ever gentle, mild,
and of a most manly bearing. For all Mr. Addison’s mildness, I think
there was no man that Dean Swift feared so much. When we would
all meet at the club, and the Dean would begin his railing at persons
of quality—for he always chose that subject when I was present—Mr.
Addison would listen with a smile to the Dean as he lolled over the
table in his huge periwig, and roared out in his great rich voice all the
sins of all the people, always beginning and ending with Sir Robert
Walpole, whom he hated most malignantly. Once, a pause coming in
the Dean’s talk, Mr. Addison, calmly taking out his snuffbox, and
helping himself to a pinch, remarked that he had always thought
Dean Swift’s chiefest weakness, until he had been assured to the
contrary, was his love for people of quality. We each held our breath.
Dick Steele quietly removed a pewter mug from the Dean’s elbow;
Mr. Pope, who sat next Mr. Addison, turned pale and slipped out of
his chair; the Dean turned red and breathed hard, glaring at Mr.
Addison, who only smiled a little; and then he—the great Dean Swift,
the man who could make governments tremble and parliaments
afraid; who made duchesses weep from his rude sneers, and great
ladies almost go down on their knees to him—sneaked out of the
room at this little thrust from Mr. Addison. For ’twas the man, madam
—the honest soul of him—that could cow that great swashbuckler of
a genius. Mr. Addison abused no one, and he was exactly what he
appeared to be.”
“That, indeed, is the highest praise, as it shows the highest wisdom,”
answered Madam Washington.
George listened with all his mind to this. He had read the Spectator,
and Mr. Addison’s tragedy of “Cato” had been read to him by Mr.
Hobby, the Scotch school-master who taught him, and he loved to
hear of these great men. The earl, although deep in talk with Madam
Washington, was by no means unmindful of the boy, but without
seeming to notice him watched every expression of his earnest face.
“I once saw Dean Swift,” continued Madam Washington. “It was at a
London rout, where I went with my brother’s wife, Madam Joseph
Ball, when we were visiting in London. He had great dark eyes, and
sat in a huge chair, and called ladies of quality ‘my dear,’ as if they
were dairy-maids. And the ladies seemed half to like it and half to
hate it. They told me that two ladies had died of broken hearts for
him.”
“I believe it to be true,” replied the earl. “That was the last time the
Dean ever saw England. He went to Ireland, and, as he said,
‘commenced Irishman in earnest,’ and died very miserably. He could
not be bought for money, but he could very easily be bribed with
power.”
“And that poor Captain Steele?”
The earl’s grave face was suddenly illuminated with a smile.
“Dear Dick Steele—the softest-hearted, bravest, gentlest fellow—
always drunk, and always repenting. There never was so great a
sermon preached on drunkenness as Dick Steele himself was. But
for drink he would have been one of the happiest, as he was by
nature one of the best and truest, gentlemen in the world; but he was
weak, and he was, in consequence, forever miserable. Drink brought
him to debts and duns and prison and rags and infamy. Ah, madam,
’twould have made your heart bleed, as it made mine, to see poor
Dick reeling along the street, dirty, unkempt, his sword bent, and he
scarce knowing what he was doing; and next day, at home, where
his wife and children were in hunger and cold and poverty, behold
him, lying in agony on his wretched bed, weeping, groaning,
reproaching himself, and suffering tortures for one hour’s wicked
indulgence! Then would he turn gentleman again, and for a long time
be our own dear Dick Steele—his wife smiling, his children happy. I
love to think on honest Dick at these times. It was then he wrote that
beautiful little book, which should be in every soldier’s hands, The
Christian Hero. We could always tell at the club whether Dick Steele
were drunk or sober by Mr. Addison’s face. When Steele was acting
the beast, Mr. Addison sighed often and looked melancholy all the
time, and spent his money in taking such care as he could of the
poor wife and children. Poor Dick! The end came at last in
drunkenness and beastliness; but before he died, for a little while, he
was the Dick Steele we loved, and shall ever love.”
“And Mr. Pope—the queer little gentleman—who lived at
Twickenham, and was so kind to his old mother?”
“Mr. Pope was a very great genius, madam, and had he not been
born crooked he would have been an admirable man; but the crook
in his body seemed to make a crook in his mind. He died but last
year, outliving many strong men who pitied his puny frame. But let
me not disparage Mr. Pope. My Lord Chesterfield, who was a very
good judge of men, as well as the first gentleman of his time,
entertained a high esteem for Mr. Pope.”
“I also had the honor of meeting the Earl of Chesterfield,” continued
Madam Washington, with animation, “and he well sustained the
reputation for politeness that I had heard of him, for he made as
much of me as if I had been a great lady instead of a young girl from
the colonies, whom chance and the kindness of a brother had
brought to England, and your lordship’s goodness had introduced to
many people of note. ’Tis true I saw them but for a glimpse or two,
but that was enough to make me remember them forever. I have
tried to teach my son Lord Chesterfield’s manner of saluting ladies,
in which he not only implied the deepest respect for the individual,
but the greatest reverence for all women.”
“That is true of my Lord Chesterfield,” replied the earl, who found it
enchanting to recall these friends of his youth with whom he had
lived in close intimacy, “and his manners revealed the man. He had
also a monstrous pretty wit. There is a great, lumbering fellow of
prodigious learning, one Samuel Johnson, with whom my Lord
Chesterfield has become most friendly. I never saw this Johnson
myself, for he is much younger than the men of whom we are
speaking; but I hear from London that he is a wonder of learning,
and although almost indigent will not accept aid from his friends, but
works manfully for the booksellers. He has described my Lord
Chesterfield as ‘a wit among lords, and a lord among wits.’ I heard
something of this Dr. Johnson, in a late letter from London, that I
think most praiseworthy, and affording a good example to the young.
His father, it seems, was a bookseller at Lichfield, where on market-
days he would hire a stall in the market for the sale of his wares.
One market-day, when Samuel was a youth, his father, being ill and
unable to go himself, directed him to fit up the book-stall in the
market and attend it during the day. The boy, who was otherwise a
dutiful son, refused to do this. Many years afterwards, his father
being dead, and Johnson, being as he is in great repute for learning,
was so preyed upon by remorse for his undutiful conduct that he
went to Lichfield and stood bareheaded in the market-place, before
his father’s old stall, for one whole market-day, as an evidence of his
sincere penitence. I hear that some of the thoughtless jeered at him,
but the better class of people respected his open acknowledgment of
his fault, the more so as he was in a higher worldly position than his
father had ever occupied, and it showed that he was not ashamed of
an honest parent because he was of a humble class. I cannot think,
madam, of that great scholar, standing all day with bare, bowed
head, bearing with silent dignity the remarks of the curious, the jeers
of the scoffers, without in spirit taking off my hat to him.”
During this story Madam Washington fixed her eyes on George, who
colored slightly, but remarked, as the earl paused:
“It was the act of a brave man and a gentleman. There are not many
of us who could do it.”
Just then the door opened, and Uncle Jasper, bearing a huge tray,
entered. He placed it on a round mahogany table, and Madam
Washington proceeded to make tea, and offered it to the earl with
her own hands.
The earl while drinking his tea glanced first at George and then at
pretty little Betty, who, feeling embarrassed at the notice she
received, produced her sampler from her pocket and began to work
demurely in cross-stitch on it. Presently Lord Fairfax noticed the
open harpsichord.
“I remember, madam,” he said to Madam Washington, as they
gravely sipped their tea together, “that you had a light hand on the
harpsichord.”
“I have never touched it since my husband’s death,” answered she,
“but my daughter Betty can perform with some skill.”
Mistress Betty, obeying a look from her mother, rose at once and
went to the harpsichord, never thinking of the ungraceful and
disobliging protest of more modern days. She seated herself, and
struck boldly into the “The Marquis of Huntley’s Rigadoon.” She had,
indeed, a skilful little hand, and as the touch of her small fingers filled
the room with quaint music the earl sat, tapping with his foot to mark
the time, and smiling at the little maid’s grave air while she played.
When her performance was over she rose, and, making a reverence
to her mother and her guest, returned to her sampler.
The earl had now spent nearly two hours with his old friend, and the
sun was near setting, but he could scarcely make up his mind to
leave. The interest he felt in her seemed transferred to her children,
especially the two eldest, and the resolve entered his mind that he
would see more of that splendid boy. He turned to George and said
to him:
“Will you be so good, Mr. Washington, as to order my people to put
to my horses, as I find that time has flown surprisingly fast?”
“Will you not stay the night, my lord?” asked Madam Washington.
“We can amply accommodate you and your servants.”
“Nothing would please me more, madam, but it is my duty to reach
Fredericksburg to-night, where I have business, and I am now
seeking a ferry where I can be moved across.”
“Then you have not to seek far, sir, for this place is called Ferry
Farm; and we have several small boats, and a large one that will
easily hold your coach; and, with the assistance of your servants, all
of them, as well as your horses, can be ferried over at once.”
The earl thanked her, and George left the room promptly to make the
necessary arrangements. In a few moments the horses were put to
the coach, as the ferry was half a mile from the house; and George,
ordering his saddle clapped on his horse, that was just then being
brought from the pasture, galloped down to the ferry to superintend
the undertaking—not a light one—of getting a coach, eight horses,
and eight persons across the river.
The coach being announced as ready, Madam Washington and the
earl rose and walked together to the front porch, accompanied by
little Mistress Betty, who hung fondly to her mother’s hand. Outside
stood the three younger boys, absorbed in contemplation of the
grandeur of the equipage. They came forward promptly to say good-
bye to their mother’s guest, and then slipped around into the
chimney corner that they might see the very last of the sight so new
to them. Little Betty also disappeared in the house after the earl had
gallantly kissed her hand and predicted that her bright eyes would
yet make many a heart ache. Left alone on the porch in the twilight
with Madam Washington, he said to her very earnestly:
“Madam, I do not speak the language of compliment when I say that
you may well be the envy of persons less fortunate than you when
they see your children. Of your eldest boy I can truly say I never saw
a nobler youth, and I hope you will place no obstacle in the way of
my seeing him again. Greenway Court is but a few days’ journey
from here, and if I could have him there it would be one of the
greatest pleasures I could possibly enjoy.”
“Thank you, my lord,” answered Madam Washington, simply. “My
son George has, so far, never caused me a moment’s uneasiness,
and I can very well trust him with persons less improving to him than
your lordship. It is my wish that he should have the advantage of the
society of learned and polished men, and your kind invitation shall
some day be accepted.”
“You could not pay me a greater compliment, madam, than to trust
your boy with me, and I shall claim the fulfilment of your promise,”
replied Lord Fairfax. “Farewell, madam; the sincere regard I have
cherished during nearly twenty years for you will be extended to your
children, and your son shall never want a friend while I live. I do not
know that I shall ever travel three days’ journey from Greenway
again, so this may be our last meeting.”
“Whether it be or not, my lord,” said Madam Washington, “I can only
assure you of my friendship and gratitude for your good-will towards
my son.”
The earl then respectfully kissed her hand, as he had done little
Betty’s, and stepped into the coach. With a great smacking of whips
and rattle and clatter and bang the equipage rolled down the road in
the dark towards the ferry.
A faint moon trembled in the heavens, and it was so dark that
torches were necessary on the river-bank. George had dismounted
from his horse, and with quiet command had got everything in
readiness to transport the cavalcade. The earl, sitting calmly back in
the chariot, watched the proceedings keenly. He knew that it
required good judgment in a boy of fifteen to take charge of the
ferriage of so many animals and men without haste or confusion. He
observed that in the short time George had preceded him everything
was exactly as it should be—the large boat drawn up ready for the
coach, and two smaller boats and six stalwart negro ferry-men to do
the work.
“I have arranged, my lord, with your permission,” he said, “to ferry
the coach and horses, with your own servants, over first, as it is not
worth while taking any risks in crowding the boats; then, when the
boats return, the outriders and their horses may return in the large
boat.”
“Quite right, Mr. Washington,” answered the earl, briskly; “your
dispositions do credit to you, and I believe you could transport a
regiment with equal ease and precision.”
George’s face colored with pleasure at this. “I shall go on with you
myself,” he said, “if you will allow me.”
The boat was drawn up, a rude but substantial raft was run from the
shore to the boat, the horses were taken from the coach, and it was
rolled on board by the strong arms of a dozen men. The horses were
disposed to balk at getting in the boat, but after a little coaxing trotted
quietly aboard; the ferry-men, reinforced by two of Lord Fairfax’s
servants, took the oars, and the boat, followed by two smaller ones,
was pulled rapidly across the river. After a few minutes, seeing that
everything was going right, George entered the coach, and sat by
the earl’s side. The earl lighted his travelling-lamp, and the two sat in
earnest conversation. Lord Fairfax wished to find out something
more about the boy who had made so strong an impression on him.
He found that George had been well taught, and although not
remarkable in general literature, he knew more mathematics than
most persons of twice his age and opportunities. He had been under
the care of the old Scotchman, Mr. Hobby, who was, in a way, a
mathematical genius, and George had profited by it.
“And what, may I ask, Mr. Washington, is your plan for the future?”
“I hope, sir,” answered George, modestly, “that I shall be able to get
a commission in his Majesty’s army or navy. As you know, although I
am my mother’s eldest son, my brother Laurence, of Mount Vernon,
is my father’s eldest son, and the head of our family. My younger
brothers and I have small fortunes, and I would like to see something
of the world and some service in arms before I set myself to
increasing my part.”
“Very creditable to you, and you may count upon whatever influence
I have towards getting you a commission in either branch of the
military service. I myself served in the Low Countries under the Duke
of Marlborough in my youth, and although I have long since given up
the profession of arms I can never lose my interest in it. Your
honored mother has promised me the pleasure of your company for
a visit at Greenway Court, when we may discuss the matter of your
commission at length. I am not far from an old man, Mr. Washington,
but I retain my interest in youth, and I like to see young faces about
me at Greenway.”
“Thank you, my lord,” answered George, with secret delight. “I shall
not let my mother forget her promise—but she never does that.”
“There is excellent sport at Greenway, and I have kept a choice
breed of deer-hounds as well as fox-hounds. I brought with me from
England a considerable library, and you can, I hope, amuse yourself
with a book; but if you cannot amuse yourself with a book, you will
always be dependent upon others for your entertainment.”
“I am fond of reading—on rainy days,” said George, at which candid
acknowledgment the earl smiled.
“My man, Lance, is an old soldier; he is an intelligent man for his
station and a capital fencer. You may learn something from him with
the foils. He was with me at the siege of Bouchain.”
What a delightful vista this opened before George, who was, like
other healthy minded boys, devoted to reading and hearing of
battles, and fencing and all manly sports! He glanced at Lance,
standing erect and soldierly, as the boat moved through the water.
He meant to hear all about the siege of Bouchain from Lance before
the year was out, and blushed when he was obliged to acknowledge
to himself that he had never heard of the siege of Bouchain.
CHAPTER III
Next morning, as usual, George was up and on horseback by
sunrise. Until this year he had ridden five miles a day each way to
Mr. Hobby’s school; but now he was so far ahead of the school-
master’s classes that he only went a few times a week, to study
surveying and the higher mathematics, and to have the week’s study
at home marked out for him. Every morning, however, it was his duty
to ride over the whole plantation before breakfast, and to report the
condition of everything in it to his mother. Madam Washington was
one of the best farmers in the colony, and it was her custom, after
hearing George’s account at breakfast, to mount her horse and ride
over the place also, and give her orders for the day.
The first long lances of light were just tipping the woods and the river
when George came out and found his horse held by Billy Lee, a
negro lad of about his own age, who was his body-servant and
shadow.[A] Billy was a chocolate-colored youth, the son of Aunt
Sukey the cook and Uncle Jasper the butler. He had but one idea
and one ideal on earth, and that was “Marse George.” It was in vain
that Madam Washington, the strictest of disciplinarians, might lay her
commands on Billy. Until he had found out what “Marse George”
wanted him to do, Billy seemed unconscious of having got any
orders. Madam Washington, who could awe much older and wiser
persons than Billy, had often sent for the boy, when he was regularly
taken into the house, and after reasoning with him, kindly explaining
to him that both “Marse George” and himself were merely boys, and
under her authority, would give him a stern reproof, which Billy
always received in an abstracted silence, as if he had not heard a
word that was said to him. Finding that he acted throughout as if he
had not heard, Madam Washington turned him over to Aunt Sukey,
who, after the fashion of those days, with white boys as well as
black, gave him a smart birching. Billy’s roars were like the
trumpeting of an elephant; but within a week he went back to his old
way of forgetting there was anybody in the world except “Marse
George.” Then Madam Washington turned him over to Uncle Jasper,
who “lay” that he would “meck dat little triflin’ nigger min’ missis.” A
second and much more vigorous birching followed at the hands of
Uncle Jasper, who triumphed over Aunt Sukey when Billy for two
days actually seemed to realize that he had something else to do
besides following George about and never taking his eyes off of him.
Uncle Jasper’s victory was short-lived, though. Within a week Billy
was as good-for-nothing as ever, except to George. Madam
Washington then saw that it was not a case of discipline—that the
boy was simply dominated by his devotion to George, and could
neither be forced nor reasoned out of it. Therefore it was arranged
that the care of the young master’s horse and everything pertaining
to him should be confided to Billy, who would work all day with the
utmost willingness for “Marse George.” By this means Billy was
made of use. Nobody touched George’s clothes or books or
belongings except Billy. He scrubbed and then dry-rubbed the floor
of his young master’s room, scoured the windows, cut the wood and
made the fires, attended to his horse, and when George was there
personally to direct him, Billy would do whatever work he was
ordered. But the instant he was left to himself he returned to
idleness, or to some perfectly useless work for his young master—
polishing up windows that were already bright, dry-rubbing a floor
that shone like a mirror, or brushing George’s clothes which were
quite spotless. His young master loved him with the strong affection
that commonly existed between the masters and the body-servants
in those days. Like Madam Washington, George was a natural
disciplinarian, and, himself capable of great labor of mind and body,
he exacted work from everybody. But Billy was an exception to this
rule. It is not in the human heart to be altogether without
weaknesses, and Billy was George’s weakness. When his mother
would declare the boy to be the idlest servant about the place,
George could not deny it; but he always left the room when there
were any animadversions on his favorite, and could never be
brought to acknowledge that Billy was not a much-injured boy.
Serene in the consciousness that “Marse George” would stand by
him, Billy troubled himself not at all about Madam Washington’s
occasional cutting remarks as to his uselessness, nor his father’s
and mother’s more outspoken complaints that he “warn’t no good
’scusin’ ’twas to walk arter Marse George, proud as a peacock ef he
kin git a ole jacket or a p’yar o’ Marse George’s breeches fur ter go
struttin’ roun’ in.” Aunt Sukey was very pious, and Uncle Jasper was
a preacher, and held forth Sunday nights, in a disused corn-house
on the place, to a large congregation of negroes from the
neighboring places. But Billy showed no fondness whatever for these
meetings, preferring to go to the Established Church with his young
master every Sunday, sitting in a corner of the gallery, and going to
sleep with much comfort and regularity as soon as he got there.
Madam Washington always exacted of every one who went to
church from her house that he or she should repeat the clergyman’s
text on coming home, and Billy was no exception to the rule. On
Sunday, therefore, instead of joining the gay procession of youths
and young men, all handsomely mounted, who rode along the
highway after church, George devoted his time on his way home to
teaching Billy the text. The boy always repeated it very glibly when
Madam Washington demanded it of him, and thereby won her favor,
for a short time, once a week.
On this particular morning, as George took the reins from Billy and
jumped on the back of his sorrel colt, and galloped down the lane
towards the fodder-field, Billy, who was keen enough where his
young master was concerned, saw that he was preoccupied.
Contrary to custom, he would not take his dog Rattler with him, and
Billy, dragging the whining dog by the neck, hauled him back into the
house and up into George’s room, where the two proceeded to lay
themselves down before the fire and go to sleep. An hour later the
indignant Aunt Sukey found them, and but for George’s return just
then it would have gone hard with Billy, anyhow.
As George galloped briskly along in the crisp October morning, he
felt within him the full exhilaration of youth and health and hope. He
had not been able to sleep all night for thinking of that promised visit
to Greenway Court. He had heard of it—a strange combination of
hunting-lodge and country-seat in the mountains, where Lord Fairfax
lived, surrounded by dependants, like a feudal baron. George had
never in his life been a hundred miles away from home. He had been
over to Mount Vernon since his brother Laurence’s marriage, and the
visit had charmed him so that his ever prudent mother had feared
that the simpler and plainer life at Ferry Farm would be distasteful to
him; for Mount Vernon was a fine, roomy country-house, where
Laurence Washington and his handsome young wife, both rich,
dispensed a splendid hospitality. There was a great stable full of
saddle-horses and coach-horses, a retinue of servants, and a
continual round of entertaining going on. Laurence Washington had
only lately retired from the British army, and his house was the
favorite resort for the officers of the British war-ships that often came
up the Potomac, as well as the officers of the military post at
Alexandria. Although he enjoyed this gay and interesting life at
Mount Vernon, George had left it without having his head turned, and
came back quite willingly to the sober and industrious regularity of
the home at Ferry Farm. He was the favorite over all his brothers
with Laurence Washington and his wife, and it was a well-understood
fact that, if they died without children, George was to inherit the
splendid estate of Mount Vernon. Madam Washington had been a
kind step-mother to Laurence Washington, and he repaid it by his
affection for his half-brothers and young sister. In those days, when
the eldest son was the heir, it seemed quite natural that George, as
next eldest, should have preference, and should be the next person
of consequence in the family to his brother Laurence.
He spent an hour riding over the place, seeing that the fodder had
been properly stripped from the stalks in a field, looking after the
ferry-boats, giving an eye to the feeding of the stock, and a sharp
investigation of the stables, and returned to the house by seven
o’clock. Precisely at seven o’clock every morning all the children,
servants, and whatever guests there were in the house assembled in
the sitting-room, where prayers were read. In his father’s time the
master of the house had read these prayers, and after his death
Laurence, as the head of the family, had taken up this duty; but since
his marriage and removal to Mount Vernon it had fallen upon
George.
When he entered the room he found his mother waiting for him, as
usual, with little Mistress Betty and the three younger boys. The
servants, including Billy, who had already been reported by Aunt
Sukey, were standing around the wall. After an affectionate good-
morning to his mother, George, with dignity and reverence, read the
family prayers in the Book of Common Prayer. His mother was as
calm and as collected as usual, but in the small velvet bag she
carried over her arm lay an important letter, received between the
time that George left the house in the morning and his return.
Prayers over, breakfast was served, George sitting in his father’s
place at the head of the table, and Madam Washington talking
calmly over every-day matters.
“I do not know what we are to do with that boy Billy,” she said. “This
morning, when he ought to have been picking up chips for the
kitchen, he was lying in front of your fireplace with Rattler, both of
them sound asleep.”
George, instead of being scandalized at this, only smiled a little.
“I do not know which is the most useless,” exclaimed Madam
Washington, with energy, “the dog or that boy!”
George ceased smiling at this; he did not like to have Billy too
severely commented on, and deftly turned the conversation. “Lord
Fairfax again asked me, when we were crossing the river last night,
to visit him at Greenway Court. I should like very much to go, mother.
I believe I would rather go even than to spend Christmas at Mount
Vernon, for I have been to Mount Vernon, but I have never been to
Greenway, or to any place like it.”
“The earl sent me a letter this morning on the subject before he left
Fredericksburg,” replied Madam Washington, quietly.
The blood flew into George’s face, but he spoke no word. His mother
was a person who did not like to be questioned.
“You may read it,” she continued, handing it to him out of her bag.
It was sealed with the huge crest of the Fairfaxes, and was written in
the beautiful penmanship of the period. It began:
“Honored Madam.—The promise you graciously made
me, that your eldest son, Mr. George Washington, might
visit me at Greenway Court, gave me both pride and
pleasure; and will you not add to that pride and pleasure
by permitting him to return with me when I pass through
Fredericksburg again on my way home two days hence?
Do not, honored madam, think that I am proposing that
your son spend his whole time with me in sport and
pleasure. While both have their place in the education of
the young, I conceive, honored madam, that your son has
more serious business in hand—namely, the improvement
of his mind, and the acquiring of those noble qualities and
graces which distinguish the gentleman from the lout.
“He would have at Greenway, at least, the advantage of
the best minds in England as far as they can be writ in
books, and for myself, honored madam, I will be as kind to
him as the tenderest father. If you can recall with any
pleasure the days so long ago, when we were both twenty
years younger, and when your friendship, honored
madam, was the chief pleasure, as it always will be the
chief honor, of my life, I beg that you will not refuse my
request. I am, madam, with sentiments of the highest
esteem,
“Your obedient, humble servant,
“Fairfax.”
“Have you thought it over, mother?”
“Yes, my son; but, as you know I am a person of deliberation, I will
think it over yet more.”
“I will give up Christmas at Mount Vernon, mother, if you will let me
go.”
“I have already promised your brother that you shall spend
Christmas with him, and I cannot recall my word.”
George said no more. He got up, and, bowing respectfully to his
mother, went out. He had that morning more than his usual number
of tasks to do; but all day long he was in a dream. For all his
steadiness and willingness to lead a quiet life with his mother and
the younger children at Ferry Farm, he was by nature adventurous,
and for more than a year he had chafed inwardly at the narrow and
uneventful existence which he led. He had early announced that he
wished to serve either in the army or the navy, but, like all people,
young or old, who have strong determination, he bided his time
quietly, doing meanwhile what came to hand. He had been every
whit as much fascinated with Lord Fairfax as the elder man had been
with him; and the prospect of a visit to Greenway—of listening to his
talk of the great men he had known, of seeing the mountains for the
first time in his life, and of hunting and sporting in their wilds, of
taking lessons in fencing from old Lance, of looking over Lord
Fairfax’s books—was altogether enchanting. He had a keen taste for
social life, and his Christmas at Mount Vernon, with all its gayety and
company, had been the happiest two weeks of his life. Suppose his
mother should agree to let him go to Greenway with the earl and
then come back by way of Mount Vernon? Such a prospect seemed
almost too dazzling. He brought his horse down to a walk along the
cart-road through the woods he was traversing while he
contemplated the delightful vision; and then, suddenly coming out of
his day-dream, he pulled himself together, and, striking into a sharp
gallop, tried to dismiss the subject from his mind. This he could not
do, but he could exert himself so that no one would guess what was
going on in his mind, and in this he was successful.
Two o’clock was the dinner-hour at Ferry Farm, and a few minutes
before that time George walked up from the stables to the house.
Little Betty was on the watch, and ran down to the gate to meet him.
Their mother, looking out of the window, saw them coming across
the lawn arm in arm, Betty chattering like a magpie and George
smiling as he listened. They were two of the handsomest and
healthiest and brightest-eyed young creatures that could be
imagined, and Madam Washington’s heart glowed with a pride which
she believed sinful and strove unavailingly to smother.
At dinner Madam Washington and George and Betty talked, the
three younger boys being made to observe silence, after the fashion
of the day. Neither Madam Washington nor George brought up the
subject of the earl’s visit, although it was a tremendous event in their
quiet lives. But little Betty, who was the talkative member of the
family, at once began on him. His coach and horses and outriders
were grand, she admitted; but why an earl, with bags of money,
should choose to wear a plain brown suit, no better than any other
gentleman, Mistress Betty vowed she could not understand. His
kneebuckles were not half so fine as George’s, and brother
Laurence had a dozen suits finer than the earl’s.
“His sword-hilt is worth more than this plantation,” remarked George,
by way of mitigating Betty’s scorn for the earl’s costume. Betty
acknowledged that she had never seen so fine a sword-hilt in her
life, and then innocently remarked that she wished she were going to
visit at Greenway Court with George. George’s face turned crimson,
but he remained silent. He was a proud boy, and had never in his life
begged for anything, but he wanted to go so badly that the
temptation was strong in him to mount his horse without asking
anybody’s leave, and, taking Billy and Rattler with him, start off alone
for the mountains.
Dinner was over presently, and as they rose Madam Washington
said, quietly:
“My son, I have determined to allow you to join Lord Fairfax, and I
have sent an inquiry to him, an hour ago, asking at what time to-
morrow you should meet him in Fredericksburg. You may remain
with him until December; but the first mild spell in December I wish
you to go down to Mount Vernon for Christmas, as I promised.”
George’s delight was so great that he grew pale with pleasure. He
would have liked to catch his mother in his arms and kiss her, but
mother and son were chary of showing emotion. Therefore he only
took her hand and kissed it, saying, breathlessly:
“Thank you, mother. I hardly hoped for so much pleasure.”
“But it is not for pleasure that I let you go,” replied his mother, who,
according to the spirit of the age, referred everything to duty. “’Tis
because I think my Lord Fairfax’s company will be of benefit to you;
and as there is but little prospect of a school here this winter, and I
have made no arrangements for a tutor, I must do something for your
education, but that I cannot do until after Christmas. So, as I think
you will be learning something of men as well as of books, I have
thought it best, after reflecting upon it as well as I can, to let you go.”
“I will promise you, mother, never to do or say anything while I am
away from you that I would be ashamed for you to know,” cried
George.
Madam Washington smiled at this.
“Your promise is too extensive,” she said. “Promise me only that you
will try not to do or say anything that will make me ashamed, and
that will be enough.”
George colored, as he answered:
“I dare say I promised too much, and so I will accept the change you
make.”
Here a wild howl burst upon the air. Billy, who had been standing
behind George’s chair, understood well enough what the
conversation meant, and that he was to be separated until after
Christmas from his beloved “Marse George.” Madam Washington,
who had little patience with such outbreaks of emotion, sharply
spoke to him. “Be quiet, Billy!”
Billy’s reply was a fresh burst of tears and wailing, which brought
home to little Betty that George was about to leave them, and
caused her to dissolve into tears and sobs, while Rattler, running
about the room, and looking from one to the other, began to bark
furiously.
Madam Washington, standing up, calm, but excessively annoyed at
this commotion in her quiet house, brought her foot down with a light
tap, which, however, meant volumes. Uncle Jasper too appeared,
and was about to haul Billy off to condign punishment when George
intervened.
“Hold your tongue, Billy,” he said; and Billy, digging his knuckles into
his eyes, subsided as quietly as he had broken forth.

Full Download PDF of (Original PDF) Income Tax Fundamentals 2018 36th Edition All Chapter

Uploaded by

Copyright:

Available Formats

You might also like

Full Download PDF of (Original PDF) Income Tax Fundamentals 2018 36th Edition All Chapter

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Full Download PDF of (Original PDF) Income Tax Fundamentals 2018 36th Edition All Chapter

Uploaded by

Copyright:

Available Formats

(Original PDF) Income Tax

Fundamentals 2018 36th Edition

(eBook PDF) Income Tax Fundamentals 2019 37th Edition

(eBook PDF) Income Tax Fundamentals 2016 34th Edition

(eBook PDF) Income Tax Fundamentals 2020 38th Edition

Income Tax Fundamentals 2020 38th Edition Gerald E.

(eBook PDF) Canadian Income Taxation, 2018 - 2019 by

(eBook PDF) Canadian Income Taxation 2017-2018 by

(eBook PDF) Canadian Tax Principles 2018-2019 Edition

(eBook PDF) Core Tax Legislation and Study Guide 2018

Updated for energy credits and other expiring provisions

Introduction of additional real-life source documents

Cost of Living Changes and Extensions Expired and Made Permanent

Updated Cumulative Software Problem

A Complete Learning System—CengageNOWv2

Cengage Learning Testing Powered by Cognero®

eliable Instructor Resources Are Convenient

Comprehensive Instructor Companion Website

Builds Student Confidence

The Quick Tax an add

is ch a p te r, $208,350 $14,876.25 + of the excess *

fil in g sta tu s. Credit redper an d th e ex em

6-50 use only if all andoned spouse on the general filing

the year, t (rent, utilities,

al Tax es 4. Fo r ov er 6for th the tax pa yer

ExAMPLE ins co givnn prefer18

the sam 2. e Thex pense s.

7 years. This lim

specific areas affected by

Digital Tools Enhance Student Understanding

Intuit ProConnect Online access is included with each textbook.

Using Tax Software

Using the feature “Would you sign this tax return?”

Using the cumulative software problem

Using the alternate tax return problems

DEDUCTIONS FOR AGI

LOs 1.6 & 5.9

About the Authors

chapter 1 The Individual Income Tax Return

chapter 2 Gross Income and Exclusions

chapter 3 Business Income and Expenses, Part I

LO 3.11 Office in the Home 3-24

chapter 4 Business Income and Expenses, Part II

chapter 5 Itemized Deductions and Other Incentives

chapter 6 Credits and Special Taxes

chapter 7 Accounting Periods and Methods

chapter 8 Capital Gains and Losses

chapter 9 Withholding, Estimated Payments,

chapter 10 Partnership Taxation

LO 10.5 Tax Years 10-16

chapter 11 The Corporate Income Tax

chapter 12 Tax Administration and Tax Planning

After completing this chapter, you should be able to:

Learning Objective 1.1 1-1 history and objectives of the tax system

Self-Study Problem 1.1 See Appendix E for Solutions to Self-Study Problems

Which of the following is not a goal of the income tax system?

1-2 Reporting and Taxable Entities 1.2 Learning Objective

“‘THIS IS MY SON, MR. WASHINGTON’”