ebook download (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:
Although a large number of European witnesses gave evidence, the
case was purely a Native one. The proceedings were conducted in
English and Zulu, the principal interpreter being Mr. J.W. Cross, J.P.,
one of the senior Magistrates of the Colony, and Magistrate at
Greytown, as will be remembered, when the Rebellion broke out.
In view of the large numbers of witnesses required by the prosecution
and the defence, and the long duration of the trial, it became
necessary for separate camps to be erected for them.
At the beginning of the trials, considerable interest was taken in the
proceedings by residents of Greytown and neighbourhood. This,
however, soon began to wear off until Dinuzulu himself gave
evidence and, later on, when counsel for the Crown and for the
Defence were addressing.
The Court adjourned on the 22nd December, and resumed on the 4th
January, 1909. The prosecution closed on the 18th. Beginning on the
following day, the defence terminated on the 23rd February. By this
time, the Court had sat sixty-seven days; ninety-five witnesses had
been examined for the Crown, and sixty-eight for the Defence.
Of the witnesses called for the prosecution, forty-seven were
Europeans and forty-eight Natives. Of those for the defence, sixty-
four were Natives, including Dinuzulu (who took no less than ten and
a half days to give his evidence), and four Europeans. The evidence
amounted to no less than 6,148 typed folio pages.
Mr. Carter addressed on the 24th and 25th, and Mr. Schreiner,
beginning on the 25th, concluded on the 2nd March.
Judgment was delivered on the 3rd, that is, on the seventy-third day's
sitting. The prisoner was found guilty of high treason: (a) by
harbouring and concealing Bambata's wife and children for over
fifteen months; (b) by harbouring and assisting the ringleaders
Bambata and Mangati during the actual progress of the Rebellion;
and (c) by harbouring and concealing 125 named and other rebels at
various times between May, 1906 (when the Rebellion was at its
height), and the date of his arrest.
With regard to the most serious count of which he was found not
guilty, one of the judges felt it necessary to say: "The matter has
given me a great deal of concern, and, up to this very morning, the
thought has occurred to me again and again whether it would not be
my duty to stand out from the majority of the Court in the conclusion
to which they have arrived on this point." There "certainly is evidence
which makes one hesitate very much, as far as I am concerned, in
giving the prisoner a clean bill."
HON. W.P.
MR. E. MR. R.C. MISS H.E.
SCHREINER, DINUZULU.
RENAUD, SAMUELSON, COLENSO.
K.C., M.LA.
Senior
Counsel for Advocate. Attorney.
the Defence.
The Attorney-General had already withdrawn two counts whilst some
of the others unavoidably overlapped, consequently it was felt
unnecessary to consider them. In respect of one, the Judge President
said as "two of the alleged conspirators are to be tried before this
court ... I think it better that we should give no finding." Dinuzulu, after
admitting a previous conviction for high treason in April, 1889, (his
age then being between twenty-one and twenty-two) was sentenced
to four years' imprisonment in respect of (b) and (c) "to date from the
9th day of December, 1907" (i.e. the date of his surrender), and a fine
of £100 or twelve months' imprisonment in respect of (a), the "twelve
months to be cumulative, not concurrent."
Thus ended a State trial which will long be remembered in South
Africa. Remarkable for its intricacy and duration, it was even more so
for the deep and sustained interest aroused by its various issues
among all sections of the community, in Natal and Zululand,
throughout South Africa, and in England and elsewhere. Although
practically the whole of the evidence for the Crown and the Defence
was laid by the press before the public, attention tended to become
more and more focussed on the judgment of the court, a judgment
from which there was no appeal. And it was generally anticipated and
hoped that such judgment would supply a complete and decisive
answer to the question as to the exact extent to which Dinuzulu was
implicated in the Rebellion of 1906. It is, however, impossible to deny
that the judgment, notwithstanding the honest, persevering and
exhaustive efforts of the Bench and the Bar, failed to carry conviction
home to many who, having followed the proceedings, were at least
familiar with the principal features. Convicted on but three counts
(and these not including the most important) out of twenty-three,
Dinuzulu was commonly believed to have escaped far more lightly
than he deserved, or than the evidence appeared to permit. But,
owing to the extreme length and complexity of the case, people felt
they had to be content with the result, as there was neither
opportunity nor inclination to examine the masses of evidence for
themselves in detail.
The result of the conviction, as anticipated by the President when
passing sentence, was that Dinuzulu not only forfeited the position of
Government Induna, but was formally deposed from his chieftainship.
To have left standing the Usutu kraal or the house constructed for him
at Eshowe, would have been but to perpetuate an impression
amongst a credulous people, that a Chief, convicted for the second
time of high treason, was returning to the country. It was because the
Natal Government could not for a moment contemplate such
contingency that the establishments were either removed or
dismantled. Other action, moreover, had to be taken. When the ex-
Chief was arrested, as previously pointed out, headmen were
appointed to take charge of the tribe. The arrangement, however, was
purely temporary. But with the deposition of the Chief, it became
necessary to introduce some more permanent and final arrangement.
It was decided to break the tribe up into three parts, and attach a
section to each of three adjoining tribes. Under the circumstances,
the settlement gave satisfaction to all concerned, and has continued
to work well from that day to this.
On the conclusion of the trial, the President of the Court (Sir William
Smith) returned to the Transvaal, his place being taken by Mr. Justice
Dove Wilson of the Natal Supreme Court; Mr. Schreiner, too, went
back to Cape Town. Dinuzulu was removed to Pietermaritzburg.
It is but right here to call attention to the fact that notwithstanding the
consummate ability with which Mr. Schreiner had defended Dinuzulu,
necessitating absence from his practice at Cape Town for a period of
over four months—thereby, no doubt, involving him in considerable
pecuniary loss—the whole of his services in connection with the trial
were given gratis, an act which cannot but redound to his credit,
especially when one considers the inability of the prisoner or his
friends to pay such heavy charges as Mr. Schreiner might very
properly have made.
Instead of Greytown, the venue for the remaining cases became
Pietermaritzburg. Dinuzulu's indunas Mankulumana and Mgwaqo,
also charged with high treason, were tried on the 9th and 10th of
March, the Attorney-General prosecuting and Mr. Renaud appearing
on behalf of the accused. Both were found guilty of three counts in
the indictment. The former was sentenced to nine, and the latter to
fifteen, months—in respect of two counts—whilst both were
sentenced to a fine of £50 or eight months' imprisonment in respect of
the third. In passing the sentences, account was taken of the fact that
they had already been fifteen months in gaol.
As soon as the Union of the South African Colonies became
imminent, and shortly after the conclusion of Dinuzulu's trial, the Natal
Ministry proposed to the future Prime Minister the desirability of
removing Dinuzulu to some suitable part of South Africa, beyond the
borders of Natal. It was recommended that such portion of the
sentence as remained unexpired on the advent of Union should be
remitted on condition that the foregoing settlement was agreed to by
the prisoner. The suggestion at once met with the approval of
General Botha. Dinuzulu was thereupon taken from Pietermaritzburg
to Newcastle, so as to be in readiness to conform to the terms of his
proposed release. He, however, was not made acquainted with the
reasons for his removal to Newcastle, except that that place was
regarded as more beneficial for his health than Pietermaritzburg had
appeared to be. Union came into force on the 31st May, 1910.
Towards the end of that month, Mr. J.C. Krogh, one of the senior
Magistrates of the Transvaal and formerly Special Commissioner in
Swaziland, was instructed by General Botha to proceed to Newcastle
and there, assisted by the Magistrate, Mr. B. Colenbrander, interview
Dinuzulu with the object of placing before him, and securing his
acceptance of, the following proposition, which the ex-Chief was told
General Botha was prepared to recommend to the Governor-General:
That he should be released from prison and the remainder of his
sentence remitted on the following conditions:
(a) Acceptance of domicile in the Transvaal at a place to be put at his
disposal by the Government.
(b) That, as from the date of release, his salary of £500 per annum be
again paid to him during good behaviour.
The result of the interview was that Dinuzulu unreservedly accepted
the conditions, and signed a formal document to that effect. On the
31st, the authority of the Governor-General-in-Council having been
obtained, and with the knowledge of Dinuzulu's friends (Miss Colenso
and the Hon. W.P. Schreiner), Dinuzulu was released and left
Newcastle by the afternoon train for Pretoria. At Pretoria, he came
under the Native Affairs Department of the Union, it being arranged
that all instructions would, in future, be received by him from or
through that Department.
Steps were taken to secure a farm on which he, his family and
immediate dependants could reside, with sufficient ground for
agriculture, grazing, etc. Some difficulty was at first experienced in
finding land suitable for one who, like Dinuzulu, had lived most of his
life in the mild climate of northern Zululand. The farm Rietfontein,
seven or eight miles from Middleburg, was eventually selected. To
this he proceeded early in 1911, accompanied by certain members of
his family; his induna Mankulumana was also permitted to join him.
The release, prior to expiration of the sentence and on the terms
above set forth, was generally approved in Natal, as also throughout
South Africa, and in England.
Almost simultaneously with Dinuzulu's expatriation, those Native
rebels who were still in prison, including the ones at St. Helena, were
released and allowed to return to their districts, except such ex-Chiefs
as Ndhlovu and Meseni, who were obliged to take up their residence
in districts other than their own.
FOOTNOTES:
[331] Ten days after Dinuzulu's arrest, Mr. E.G. Jellicoe, K.C., an
English barrister, was selected to assist Mr. Renaud in the
defence. He arrived in Pietermaritzburg on the 19th January,
attended the examination on two or three occasions, after which,
because unable to make the Government conform to his wishes in
various particulars, he threw up the brief and, on the 7th February,
returned to England.
[332] As soon as martial law was withdrawn, counsel for the
defence proceeded to Zululand to work up their case, a period of
two months being allowed before the accused was brought to trial.
[333] In 1888, although preliminary examinations were held, the
same difficulties were not experienced. The reason for this was
that the issues were far simpler than those of 1907.
[334] For trying, not only Dinuzulu, but other Native political
prisoners.
[335] Act No. 8, 1908.
[336] Many of the depositions in Dinuzulu's case were taken in
Nkandhla district whilst the country was still under martial law.
[337] Cd. 4328, p. 92.
XXIII.
REVIEW OF POLICY FOLLOWED IN CONNECTION WITH
DINUZULU.—HIS STATUS.—HIS ATTITUDE DURING, AND
SUBSEQUENT TO, THE REBELLION.
The amount of misunderstanding that has arisen in connection with

Dinuzulu, both in England and South Africa, is astonishing. Probably
no other case in South Africa has called forth quite such volumes of
criticism and vituperation. Natal has been accused of following
towards him a policy of petty injustice and malice—either because of
refusal to hold a non-judicial inquiry; or because, when the ex-Chief
was arrested, it suspended his salary without the consent of the
Imperial Government; or for deferring release of the rank and file of
the rebels; or maintaining martial law longer than appeared
necessary, or for some other reason. In these and other connections,
the Colony and its public officers have been reviled and held up to
scorn by those who did not know the facts, or did not care to know
them. As Natal is still held by various persons, chiefly such as live
outside her borders, to have been mistaken, and Dinuzulu nothing but
a martyr to official spleen and vindictiveness, it is perhaps not
unfitting, in a work of this kind, that an attempt should be made to
examine the position from a somewhat wider point of view than was
possible during the trial or, indeed, on any other occasion.
The history of the Zulus has already been dealt with briefly in the
Introduction, whilst the earlier events in Dinuzulu's life have also been
touched on here and there. It is necessary now to consider the
position he assumed on his return from St. Helena in 1898.
During the latter portion of his imprisonment, a great deal of agitation
arose among the colonists in favour of Zululand being annexed to
Natal, largely because land was required for growing sugar. As the
Imperial Government had, since 1887, been directly responsible for
the management of Zululand; as the cost of that territory's
administration was constantly increasing; and because of the
agitation referred to, a settlement was necessary under which Natal
would assume the administration and become responsible for Native
affairs.
So anxious was the Imperial Government to repatriate the prisoners,
that negotiations with Natal began in the year following that in which
responsible government was granted. The desire was that they
should return as soon as possible. The Natal Government, however,
repeatedly urged postponement of the execution of such decision.
But, as the Imperial Government was wholly responsible for sending
Dinuzulu to St. Helena, and as his stay there depended on the length
of his sentence, it was essential to bear in mind that repatriation was
later on inevitable. It was accordingly resolved to make this one of the
conditions of annexation. The agreement finally arrived at between
the Governments was that, although Dinuzulu was to be restored, he
should not return until Zululand had been actually annexed, and then
only on condition that he agreed to become a servant of the Natal
Government at a salary of £500 per annum, and to serve in the
capacities of Induna and Chief on clearly defined terms. These terms,
being of great importance in appreciating the position and difficulties
that subsequently arose, are set forth in extenso:
"Dinuzulu will be taken into the service of the Government of
Zululand, his position being that of Government Induna. A house will
be provided for him on a site to be selected by the Governor, and a
salary of £500 per annum will be attached to his office.
"He must clearly understand that he does not return to Zululand as
Paramount Chief. He must respect, listen to, and obey those officers
of the Government who are placed in authority over him. The position
assigned to him by the Government, and the salary allotted to it, will
be held during the pleasure of the Government, and will be strictly
dependent on the manner in which he behaves and obeys the laws
laid down for his guidance, but will not be withdrawn without the
approval of the Secretary of State.
"As Government Induna, he will be liable to be employed in Native
matters that may arise and be brought to the notice of the Governor's
representative in Zululand, such as questions of inheritance and
others on which it may be desirable to obtain independent evidence
and opinion.
"He will be the Chief over those people residing in the location
marked off for the Usutu. He will govern amongst and will rule them
by the same laws and form of Government as other Chiefs of tribes in
Zululand, and he will himself, like those Chiefs, be under the laws of
the Government of Zululand."[338]
The foregoing was agreed to before Dinuzulu left St. Helena. He
knew that, in accepting the office of Induna, it would be obligatory on
him to live within three or four miles of the principal Government
officer in Zululand,—for an induna is the principal Native executive
officer on anyone's staff, be he Secretary for Native Affairs, Resident
Commissioner, or Magistrate.
On his arrival with his uncles at Durban, on the 6th January, 1898,
seven days after issue of the proclamation of annexation, a copy of
the conditions, as well as a translation thereof into Zulu, were handed
to him by the senior officer of the Native Affairs Department. The
Chiefs were thereupon escorted to Eshowe by the Magistrate of that
district. At Eshowe, Dinuzulu occupied the house which had been
specially constructed and furnished for him at public expense.
Although it was not expressly stated in the conditions where he
should reside, it was understood by the Governments that he would
live at Eshowe, at any rate for the time being. It was inexpedient, with
matters as they then were, to name a particular place in conditions
intended to be permanent. Although the Resident Commissioner had,
ever since the Imperial Government took over the administration,
been stationed at Eshowe, except for a short while during the
disturbances of 1887-88, it was conceivable that, with a change of
control, the headquarters might have to be altered. As a matter of
fact, they have not been changed to this day. At the same time, as
Chief over a tribe nearly 100 miles from Eshowe, it was recognized
that he would have a little difficulty in controlling its affairs. There
were, however, and still are, many Chiefs in Natal whose tribes are
broken up and distributed over various magisterial districts, thereby
necessitating the appointment of headmen to exercise jurisdiction
over each section in the absence of the Chief. Thus, for Dinuzulu to
manage his tribe from Eshowe, was a by no means unexperienced or
insuperable difficulty.
After an absence of nine years, he and the others very naturally
desired to return to their respective homes. This desire was so
strongly urged, that the Minister for Native Affairs (Mr., now Sir, J.L.
Hulett) agreed, on the 22nd January, to allow him and his uncles to
go back permanently. The same concession was granted to his old
enemy, Zibebu, who had, for some years, been required to live in
Eshowe district. Dinuzulu was allowed to build kraals for himself,
including that which he named Usutu. His position then gradually
became that of a Chief pure and simple, instead of Government
Induna, as prescribed in the conditions. It is true that he paid
periodical visits to Eshowe and Pietermaritzburg, and there discussed
political and other affairs with the Commissioner for Native Affairs, but
these were of short duration and discontinued altogether after the
appointment of the Commission in 1903 (of which Mr. Saunders was
a member), to set apart land for the occupation of Natives and
Europeans. We find, then, that between 1898 and the beginning of
the Rebellion, the principal condition under which Dinuzulu had
returned to Zululand was being practically ignored. During this time,
the house at Eshowe was available whenever he felt disposed to
reside there. Although not discharging the functions of the principal
appointment, he continued to draw a salary, liberal when at Eshowe,
but excessive when in so remote and uncivilized a quarter as Usutu
kraal, with only a Native Chief's duties to perform.
Living the indolent life he did at Usutu, he, as has been seen, became
exceedingly corpulent. This, no doubt, is one of the reasons why,
after the Commission referred to ceased to exist, he failed to visit
Eshowe.
He, as well as the Commissioner, knew that his residing continuously
at Usutu was an infringement of the conditions. His friends also,
among them Miss Colenso, knew. It would have been possible for
him, or for them, at any time to have insisted with success on the
original terms being fulfilled. He might have been given a piece of
land near Eshowe on which to locate a few of his kraals, as was done
in the case of the previous Government Induna. For reasons best
known to himself, nothing appears to have been done, not until he
urged Sir Henry McCallum to take action, nearly ten years after his
release. That the man was allowed to go on as he was doing, was
undoubtedly an error on the part of the Governments. And yet the
Imperial Government had, in 1897, foreseen with remarkable
clearness what might arise. Here are the words of Lord Ripon:
"The internal politics of Zululand are such that under the arrangement
referred to [i.e. installing Dinuzulu as a tribal Chief, with authority over
a strictly-defined district, inhabited by devoted followers], Dinuzulu
might, in the course of time, have been drawn into a false and
embarrassing position with respect to the Government, however
desirous he might be at the outset to work loyally under it."
When one looks back on this period, he cannot but wonder how it
happened that successive Secretaries of State omitted to inquire how
far the conditions under which Dinuzulu had been returned to his
country were being fulfilled, and, if inquiries were made, why the
Natal Government was not pressed to conform to the spirit and letter
of the agreement.
One of the chief indirect causes of the Rebellion, as well as the key-
note of Dinuzulu's trial, was the isolated position he occupied at
Usutu. That it put him into a false position is undoubted; that Dinuzulu
knew he was in a false position, and that he knew he was himself
primarily responsible for being therein, admits of no question. The
reason why he tolerated it was because he realized it gave him an
opportunity of gradually building up his influence among the Natives
without the knowledge of Government, until too late to exercise
effective control. If responsibility rests to some extent with the Natal
Government for permitting him to drift into the position he did, he
himself (30 years of age when repatriated) cannot be absolved from
blame, especially as it was at his own request that he was permitted
to go to his tribe.
This is the state of affairs which anyone who desires to understand
the underlying causes of the Rebellion must have clearly in mind.
After leaving Eshowe, Dinuzulu assumed the duties of a Chief,
though because of his parentage, not of an ordinary Chief, whatever
the wording of the conditions might have been. Instead of being in
close touch with the larger political and social affairs of the territory,
as would have been the case had he continued to reside near the
Commissioner, he preferred to limit himself ostensibly to those of his
tribe and be under the jurisdiction of the Magistrate of the district
within which his ward happened to fall. Being the eldest son and
successor of Cetshwayo,—descendant of still more notable kings,—it
was impossible to repress feelings of loyalty and affection exhibited
towards him by many staunch adherents of the royal house in all
parts of the territory. More than this, in consequence of the military
assistance given him in 1883 and 1884 by the Boers, a large section
of the north-western portion of Zululand was granted by him to the
Boers. Such land, although promptly cut up into farms, was
extensively occupied by some of his most devoted followers, among
them the Baqulusi. To this day, the staunchest followers will be found
in the districts of Vryheid and Ngotshe. If many people showed loyalty
towards the senior representative of the royal house, it is not
surprising that even greater devotion was displayed by those in the
districts named. Nor is this all. With large numbers of those in
Zululand and many others in the districts referred to (which, of
course, were under an entirely different government,—for annexation
to Natal did not take place until after the conclusion of the Boer War),
it is only natural to suppose that numbers of other Natives in Natal,
Transvaal and elsewhere should also have become partial to
Dinuzulu. With the increase of European population in Natal, scarcity
of land, higher cost of living and higher rents, in addition to other
exacting conditions, Natives keenly felt the necessity for having a
protector of their own flesh and blood—someone whom they could
trust to voice their interests, and one who, because of his rank, would
ensure adequate and prompt attention being given thereto. The more
Dinuzulu allowed these exhibitions of feeling to go on, the more
Natives in an ever-widening circle looked on him as their natural
champion, and as one who in every way ought to lay their grievances
before the Government. They wanted him to stand up for them with a
view to the ancient life, habits and customs—with which, for so many
centuries, they had been intimately associated—being allowed to
continue with less restrictions and innovations than had become
customary. Dinuzulu, of course, had no complaint to make on account
of receiving these demonstrations. He would have been the last
person in the world to have complained about such a matter as that.
It would have been unnatural in him to do so. He felt and knew he
was being gradually driven by multitudes, living far beyond the
confines of his own area, into a position much falser than the one in
which, as we have seen, he had deliberately placed himself. But it
exactly suited his plans. In his dealings with the Natal Government,
he perpetually bore in mind that behind him was the Imperial
Government. His constant effort was apparently to bring about by
degrees such a state of affairs in Zululand as to induce, if not compel,
the latter Government to intercede with Natal on his behalf, and get
himself appointed Paramount Chief, instead of being merely an
Induna and Chief. The latter appointments, although accepted by
him, were not really to his liking; they were restrictive, and derogatory.
In the countries of Basutoland and Swaziland, formerly subject to
Zululand, there were Paramount Chiefs. In India, too, many states
had their Feudatory Princes or Paramount Chiefs; what had Zululand
done, asked Dinuzulu, to be so discriminated against as to be without
a Native protector of its interests? Even the Boers, though recently
conquered, had been granted the most liberal form of autonomy.
Throughout the time he was at Usutu, up to the outbreak of rebellion,
is nothing but a tale of the spreading of his influence by one means or
another in all directions, and this notwithstanding the clearly-
expressed condition that it was not as Paramount Chief that he was
returning to Zululand. With such an environment, the people so prone
in many parts to regard him as their natural head, is it surprising that
when the mysterious order that all pigs, white fowls, European
utensils, etc., were to be killed or discarded was circulated, reference
should have been made to him by many to ascertain his will and
pleasure?
One of the ways in which his influence was considerably augmented,
but which involved him in trouble with the Government at a later time,
occurred towards the conclusion of the Boer War. Guerilla warfare
was then going on in the Transvaal and elsewhere. To denude
country occupied by the Boers of stock was recognized as one of the
most effective means of bringing hostilities to a close. The idea of
organizing raids along the north-western border of Zululand occurred
to the authorities, whereupon one Colonel Bottomley was dispatched
to arrange accordingly. Bottomley went to Dinuzulu and, without
obtaining the authority of the Natal Government, ordered the Chief to
arm and assemble his men. Dinuzulu reported to the Magistrate, who
objected to Natives being employed in such way. The Magistrate,
however, as well as the Commissioner, were overruled under martial
law, then in force in Zululand, whereupon Dinuzulu went forth with
some twenty-four companies (i.e. about 1,500 men), and, at a hill
called Dhleke, successfully performed the required duty. It is claimed
by him that, in consequence of this demonstration and other
assistance in the shape of scouts, the magistracy was prevented from
being attacked, as happened at four other magistracies in Zululand.
During the Dhleke expedition, besides looting stock, some firearms
were taken from a Boer waggon. Dinuzulu seems afterwards to have
attempted to call in the guns, but, because there had been bloodshed
(a couple of his force having been killed), his men refused to produce
them. He declares that Bottomley then allowed the men to retain the
guns. Later, in 1902, the Magistrate ordered the weapons to be
brought in for registration. A few that were produced were not,
apparently, returned to the holders. Such retention seems to be the
reason why other holders refused to produce theirs. The matter
seems then to have dropped. It is idle to suppose that Dinuzulu could
not have called in every gun had he been so inclined. Universally-
recognized Zulu law requires that all loot shall go to the King as a
matter of course, who thereupon deals with it as he sees fit.
During the same War took place the Holkrantz massacre referred to
in a former chapter. Owing to the tribe (Baqulusi) which carried out
the massacre being known to be intimately associated with the Zulu
royal house, credit for the achievement was regarded as attaching
principally to Dinuzulu as head of the house. The massacre created a
profound impression on Natives in general; it revealed new and
unexpected possibilities.
The attitude assumed by him when questioned by the Government

for allowing messengers to come and see him about the poll tax and
the pig-killing order can be readily understood. He practically said:
"You allowed me to come back, but gave me a position not in keeping
with my rank. This, Natives at large, have begun to see. Although my
jurisdiction is limited to my particular ward, and such fact is well
known, it is impossible for me to prevent people coming to see me."
When Sir Henry McCallum spoke to him at Nongoma in 1904, he was
distinctly instructed to report the arrival of people from tribes other
than his own. These instructions he frequently disobeyed, and such
disobedience was subsequently admitted by his induna,
Mankulumana, as well as by himself.
There is another aspect in regard to the man which should not be lost
sight of. The question arose many years ago as to whether the Chiefs
of Zululand were prepared to surrender the status conferred on them
by Sir Garnet (afterwards Viscount) Wolseley, in order that
Cetshwayo should become Paramount Chief. On the Chiefs in
question being approached, several objected in the strongest terms,
among them Zibebu and Hamu. The Zulus regarded it as impossible
to serve a King who had been conquered by another race, and whose
restoration was on the condition, inter alia, that the regimental system
should be done away with, and his jurisdiction confined to territory
reduced by about a third of its original size. This opposition to his
father or his becoming Paramount Chief, is what was always
uppermost in Dinuzulu's mind, and what it was ever his greatest care
to break down or remove. The long-continued warfare (1883 to 1887)
between Cetshwayo (and, later, himself) and Zibebu took place for no
other reason than that the latter had refused to acknowledge his
father's and, therefore, his own authority. It was in consequence of
this attempt, vigorously carried on as it was after formal assumption
of the administration by the Queen, that Dinuzulu was arrested, tried
and convicted of high treason, and banished to St. Helena. On
coming back, he realized the futility of waging war as a means of
attaining his object. The problem then was: How am I, by adopting
means to which the European Government can take no reasonable
exception, to induce the great mass of the Zulu people to become
unanimous in the proposal of my being appointed Paramount Chief?
Here, as we believe, is the motive for his sedulously promoting the
development of his influence in the extraordinary, irrepressible and
obscure manner outlined above.
It can, therefore, be seen that he found himself ere long in a serious
dilemma. His position has, indeed, always been recognized as
difficult. But, owing to being a Native, and therefore living out of touch
with the European community, the nature and intensity of his
embarrassment could not be realized as completely and as vividly as
they were by him and his immediate followers.
And yet at the beginning of the Rebellion he stood in a singularly
favourable light as far as the Government was concerned. The
Commissioner had, as is commonly known, implicit confidence in his
loyalty; he lost no opportunity of supporting the Chief, repudiating
every allegation and calumny in the most vigorous manner. The
earnest and determined way in which Dinuzulu was defended by this
officer excited the admiration of all who observed it.[339] By his ready
response in paying the poll tax, as well as by protestations of loyalty,
coupled with an offer to take or send an impi to Nkandhla to deal with
Bambata, Dinuzulu at once ingratiated himself with the Government
and the European public, who, though not absolutely believing in his
loyalty, were only too anxious for him to co-operate at that most
critical juncture. But, as it happened, he had already cast the die
which, as time went on and the truth eked slowly out, rendered it
more and more impossible for him to restore those good relations
which, but for his own lapse, would undoubtedly have been even
more cordial than ever before.
It would, we believe, be unfair to assume that he deliberately and
systematically persuaded people to come and see him. He was
astute enough to know that, by adopting a merely passive and
nonchalant attitude, many would be seized by an overpowering
inclination to pay their respects, especially when they observed that
an increasing number of other people came to do so. To visit and get
in touch with him became, from their point of view, quite the proper
thing to do. There is no instinct among the Zulus stronger than that of
desiring to do what everybody else is doing. Such arises, no doubt,
from the force of long-continued custom. Living, as they once did,
under the rule of as despotic kings as could be found anywhere on
the globe, whose political and social habits made all sorts of
demands on the people, they became alive to the necessity of being
always on the alert for fear of being punished unless conforming to
what others were doing. For, whatever others did was supposed to be
in accordance with the will or desire of the king, even though
unproclaimed. Apart from this, respect for authority is ingrained in
their natures to a remarkable degree. As proof of this, it is necessary
merely to mention the custom of hlonipa, which universally enforces
propriety of behaviour, especially in the female sex.
Instead, therefore, of sending out messages to persuade people to
come and see him, Dinuzulu adopted the more law-abiding and
dignified policy of waiting until they called.
When, after the promulgation of the Poll Tax Act, agitation arose
among the Natives to such an extent that many sent messages to
him, including Chiefs who, it would seem, had never communicated
with him before, he had a valid answer always ready: "What is the
use of your coming to me? I can do nothing. You are a Chief just as I
am. I do not refer to you when in a quandary. Go to the Government
and lay your case before it for yourself." Profiting by his experience at
St. Helena, and not again wishing to come into conflict with the
Government, he at once made his own tribe comply with the
demands. They did so at the earliest date, viz. January, 1906.
His attitude of allowing people to come and see him began at length
to assume a character more or less criminal. Instead of the
messengers coming to pay their respects, in order to discuss various
matters appertaining to their tribes, they, one and all, came to consult
him about a particular matter, and one having reference to a law
already enacted. This law, moreover, had received the sanction of the
representative of that Government which, as we have seen, was
party to the agreement under which Dinuzulu was restored to the
country. In no case did he report to the Magistrate, the Commissioner,
or the Governor that these visits were being made, and that his
advice was being solicited as to what action should be taken. We
have seen the form of reply to those who came about the poll tax. As
regards the pig-and-white-fowl-killing rumour, he said: "Such order did
not emanate from me; I know nothing whatever about it."
Judging from his antecedents and his conduct during the period
immediately before the Rebellion, we cannot come to any other
conclusion than that his decision to pay was actuated, not by a
natural desire to comply with the law, but rather because afraid, his
social rank being what it was, that the first attention of the
Government would be directed to himself, when he might, before he
knew where he was, find that a casus belli had arisen between him
and people whom his father's entire army had been unable to
withstand. It is, therefore, not surprising that he should have paid, and
that his people paid four months before they need have done, in
order to escape the prescribed penalty. Just as his compliance did
not arise out of a natural desire to obey (any more than, at that time,
there was such disposition on the part of hundreds of thousands of
other Natives in Natal and Zululand), so it cannot be said that his
object was to parade before other Chiefs his approval of the new and
strongly-resented law. He was never tired of referring to, and, at his
trial, never ceased to quote, his action in being among the first to pay
the tax and claiming greater credit therefor than he actually deserved.
His compliance was undoubtedly a satisfactory feature, but the act
should not be considered except in connection with the general
political situation and his own to a large extent underhand conduct at
that time and afterwards.
In or about 1903, Chiefs living outside Zululand and north of the
Pongolo sent messengers to complain to him of being taxed £3 per
hut in the Transvaal, whereas only 14s. was being paid in Natal. The
Governor later on spoke to Dinuzulu about this, asking why he had
interfered. It was bad enough to exercise influence over Chiefs in
Natal and Zululand, but a far more serious matter to do so in regard
to those of a different administration. He replied that he had reported
the incident to his Magistrate, when he received orders not to concern
himself with the matter. These orders, he added, were obeyed. He
pressed the Governor to produce the informant, but as this could not
be done, he felt aggrieved that an insinuation of his having done
wrong was allowed to drop, although informed that his explanation
was satisfactory.
This accusation, in conjunction with the further allegations that he and
his tribe were in possession of unregistered firearms obtained at
Dhleke and Holkrantz, were the origin of a definite application by him
that a full inquiry into his conduct should be held. The application was
repeated on various occasions, but the Government was unable to
comply. At the same time, the Governor strongly supported him in
connection with the Holkrantz affair, and told him he had done so.
In consequence of evidence given at various courts-martial tending to
implicate him in the Rebellion, the Government had no alternative but
to decide to hold some form of inquiry. A difficulty arose as to the
composition of the proposed Commission. In the meantime, an
investigation had been started by the Magistrate, Mahlabatini, into the
circumstances attending his predecessor's murder. The evidence
therein, too, was found to some extent to implicate Dinuzulu. Under
all the circumstances, Ministers, in November, 1906, resolved to
refrain from holding an inquiry until a prima facie charge could be
established against him, as the effect of any inquiry being abortive
would have been greatly to increase his prestige.
The desire for inquiry was again referred to by the Chief in May,
1907, when, with his indunas, he paid Sir Henry McCallum a visit at
Pietermaritzburg. By this time, however, the Government was in
possession of a good deal of other reliable information tending to
prove that he was personally concerned in the Rebellion, especially
by harbouring rebels, including the ringleaders, at Usutu, well
knowing warrants were out for their arrest, and either inspiring, or
being privy to, various murders of Native loyalists that had taken
place in Zululand.
Shortly after Dinuzulu's return to Usutu, the murder of Sitshitshili
occurred, followed by the escape from Usutu of Bambata's wife and
children.

ebook download (Original PDF) Income Tax Fundamentals 2018 36th Edition all chapter

Uploaded by

Copyright:

Available Formats

You might also like

ebook download (Original PDF) Income Tax Fundamentals 2018 36th Edition all chapter

Uploaded by

Document Information

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

ebook download (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

The amount of misunderstanding that has arisen in connection with

The attitude assumed by him when questioned by the Government