Summary CHAPTER 1 An Introduction to Taxation and Understanding the Federal Tax Law

LEARNING OBJECTIVES: After completing Chapter 1, you should be able to:  LO.1 Demonstrate why taxation is important.  LO.2 Describe some of the history and trends of the Federal income tax.  LO.3 Assess some of the criteria for selecting a tax structure; recognize the components of a tax structure.  LO.4 Identify the different taxes imposed in the United States at the Federal, state, and local levels.  LO.5 Explain the administration of the tax law, including the audit process utilized by the IRS.  LO.6 Evaluate some of the ethical guidelines involved in tax practice.  LO.7 Recognize the economic, social, equity, and political considerations that justify various aspects of the tax law.  LO.8 Describe the role played by the IRS and the courts in the evolution of the Federal tax system. CHAPTER OUTLINE • 1-1 Learning and Coping with Taxation, 1-2 • 1-2 A Brief History of U.S. Taxation, 1-3 o 1-2a Early Periods, 1-3 o 1-2b Revenue Acts, 1-3 o 1-2c Historical Trends, 1-4 • 1-3 Criteria Used in the Selection of a Tax Structure, 1-4 • 1-4 The Tax Structure, 1-5 o 1-4a Tax Base, 1-5 o 1-4b Tax Rates, 1-5 o 1-4c Incidence of Taxation, 1-6 • 1-5 Major Types of Taxes, 1-6 o 1-5a Property Taxes, 1-6 o 1-5b Transaction Taxes, 1-8 o 1-5c Taxes on Transfers at Death, 1-10 o 1-5d Gift Taxes, 1-12 o 1-5e Income Taxes, 1-13 o 1-5f Employment Taxes, 1-15 o 1-5g Other U.S. Taxes, 1-17 o 1-5h Proposed U.S. Taxes, 1-18 • 1-6 Tax Administration, 1-20 o 1-6a Internal Revenue Service, 1-20 o 1-6b The Audit Process, 1-20 o 1-6c Statute of Limitations, 1-22 o 1-6d Interest and Penalties, 1-23 o 1-6e Tax Practice, 1-24 • 1-7 Understanding the Federal Tax Law, 1-25 o 1-7a Revenue Needs, 1-25 o 1-7b Economic Considerations, 1-26 o 1-7c Social Considerations, 1-27 o 1-7d Equity Considerations, 1-28 o 1-7e Political Considerations, 1-30 o 1-7f Influence of the Internal Revenue Service, 1-32 o 1-7g Influence of the Courts, 1-33 • 1-8 Summary, 1-34