Business Tax I Spring 2016 University of Cincinnati College of Law

Business Tax I
Spring 2016
University of Cincinnati College of Law
Professor Stephanie Hunter McMahon
Overview. This course covers the fundamentals of the federal income tax as it applies to
business, focusing on the formation of a business entity and the distribution of business income.
This course discusses the tax treatment of the most common business entities: C corporations,
partnerships, and S corporations. Other issues will be introduced to the extent there is time.
Methodology. This course uses the problem method that, in addition to teaching you the
law, also helps you develop lawyering skills. Our exploration takes a comparative approach that
makes it crucial that you attend class prepared and stay up-to-date in the reading. While this is
not a course in accounting, you will have to do some basic math (addition, subtraction,
multiplication, and division, as well as some basic fractions). Feel free to bring a calculator.
The prerequisite for this course is Federal Income Tax.
Learning outcomes. In this course, students will:
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Read, understand, and apply the Internal Revenue Code, Treasury Regulations, other
primary sources, and various secondary sources to resolve complex issues in the area of
business formation and income distribution.
Apply analytical skills to assess how taxes affect economic decisions for business
entities, including the choice of business entity.
Communicate conclusions regarding complex tax issues orally and in writing.
Materials. The assigned texts are:
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Handouts for each topic;
Income Tax Code and Regulations handouts (you must bring these to each class session);
Supplemental, mandatory material consisting of draft agreements, treasury documents,
and other sample documents posted on the course’s TWEN website.
Class Meetings, Contact Information, and Office Hours. The class meets on Mondays
and Wednesdays from 10:40 to 12:05 in Room 100A. My office hours are Mondays and
Wednesdays from 12:15 to 1:00 in Room 430. I will also make myself available to meet with
students by appointment. I can be reached by email at [email protected] or by
phone at 556-4206. Please feel free to contact me as often as you wish to ask me questions or
communicate any suggestions or concerns about the course, law school, or the legal profession
and your future role in it. I encourage you to write me comments or questions about the subjects
we will be covering in class. As these questions will often be of interest to your fellow students,
I reserve the right to forward your questions to your classmates, without your name attached,
unless your email asks that your communication remain confidential.
Professor McMahon
Business Tax I
Attendance and Participation. Class attendance is essential. Not only is regular class
attendance a requirement for you to get your degree and be admitted to the bar, students who
miss a lot of classes generally perform poorly on the exam. Because much of this course is of a
comparative nature, it will be very hard to succeed if you do not prepare thoroughly and
attend class. To facilitate your development as attorneys, there is no panel of students on call
and I will try to call on many, if not all, students each class, so you must come prepared to
participate in classroom discussion.
I take attendance at the beginning of class. If you are not in class at the time I take roll,
you are counted absent for the day; therefore it is important to be on time. If you miss more than
four classes, for any reason, your grade may be significantly adversely affected at my discretion.
Chronic absenteeism or unpreparedness may result in additional sanctions, including the receipt
of a “UWF” grade. You must keep track of your own absences (mine are for my records and
your grade only).
If you know that you will be absent or late for an excused reason, send me an email at
[email protected] before class. Notification does not mitigate an absence. If you are
absent more than two consecutive days without providing me written communication in advance,
I am required to contact Associate Dean Oliver.
Grading. Fifteen percent of your grade is composed of class participation. Expect to be
called on every class meeting.
Fifteen percent of your grade is composed of review problems to be completed following
our discussion of each topic. The review problems are graded on a good faith effort and not
accuracy. You will, however, lose ½ credit if you omit relevant citations. Additionally, each
student will receive one warning if the level of effort as exhibited in the email (determined in my
sole discretion) is insufficient for credit.
The remaining seventy percent of your grade is composed of an examination. The format
of the examination will be decided before Spring Break.
In this course, you must synthesize the material and practice professional lawyering
skills. One of the most important skills of a good lawyer (and one of the most important skills
that you must demonstrate in this course) is the ability to apply law to fact and come to
conclusions.
Course Schedule. The following is a guide; I will designate which topic(s) will be
covered next at the end of each class and I will post that assignment on the course’s TWEN
website’s Calendar. If you miss a class, check the Calendar on TWEN site for that
information. The assignments are grouped by topic; after the first class, they do not necessarily
correspond to class sessions. Always read the Code and Regulation provisions under study and
always bring these handouts to class!
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Professor McMahon
Business Tax I
ASSIGNMENTS
TOPIC
POSTINGS
CODE AND REGULATIONS (§)
Choice of entity
Handout; Form 8832
11; 61; 162; 1001; 1012; 7701
301.7701-1, -2, -3
Incorporation
Handout
Assumption of
Liability
Operating
distributions
Redemptions I
Handout
Redemptions II
Handout
Redemptions III
Handout
Contributions I
Contributions II
Agreements
Substantial
Economic
Effect
Partnership
Minimum Gain
§704(c) and
§704(d)
Transactions
between
partners and
partnerships
Distributions I
Handout
PART II: Subchapter K
Handout (read twice); Form 1065;
701; 702; 703; 705; 721; 722; 723; 6031
Schedule K-1
1.704-1(b)(2)(iv)(a), (b); 1.705-1
1.704-1(b)(2)(iv)(f) (proposed)
Handout
752
1.704-1(b)(2)(iv)(c); 1.752-1; 1.752-2; 1.752-3
Handout; Sample Partnership
Agreement; Sample LLC Agreement
Handout
704(a), (b)
1.704-1(a)-(b)(2)(iv)(b)
Handout
1.704-2
Handout
704(c), (d)
1.704-3
707; 1402
1.707-1; 1.721-1
1.721-1 (proposed)
Handout
Handout (read twice)
Handout
Distributions III
Handout
Operation
1; 243; 301; 311; 316; 317
1.243-1; 1.301-1; 1.316-1
302; 317; 318
1.302-1; 1.318-1, -2
(Review 302)
1.302-2, -3, -4
(Review 302; 311)
Handout; Revenue Procedures
Distributions II
Formation
PART I: Subchapter C
83; 351; 358; 362; 368; 1032
1.351-1; 1.358-2
357; 385
731; 733; 736; 751
1.731-1; 1.732-1; 1.734-1; 1.736-1; 1.751-1
731; 732; 733
1.704-1(b)(2)(iv)(e), (f); 1.732-1
734; 754; 755
1.755-1
PART III: Subchapter S
Handout; Form 1120S; Instructions
(review 362(e)(2)); 1361; 1362
for Form 1120S (Skim); Form 2553
Handout
1363; 1366; 1367; 1368; 1371; 1377
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