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MGMT 504: Lecture 4

by: Emily McIlhattan

MGMT 504: Lecture 4 MGMT 504

Marketplace > Purdue University > Accounting > MGMT 504 > MGMT 504 Lecture 4
Emily McIlhattan
GPA 3.72
Tax Accounting
Jason Stanfield

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About this Document

We continue talking about tax legislation, the judiciary side, and then get into some key fundamental concepts of tax
Tax Accounting
Jason Stanfield
One Day of Notes
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This 3 page One Day of Notes was uploaded by Emily McIlhattan on Thursday January 22, 2015. The One Day of Notes belongs to MGMT 504 at Purdue University taught by Jason Stanfield in Winter2015. Since its upload, it has received 122 views. For similar materials see Tax Accounting in Accounting at Purdue University.

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Date Created: 01/22/15
Lecture 4 MGMT 504 Outline of Last Lecture Types of Tax models Cont d Tax Legislation Outline of Current Lecture Tax Legislation Tax Concepts Tax Administration Current Lecture Administrative Sources of Tax Law a b Congress delegates its authority to the IRS and Treasury Department to pass and administer laws IRS Internal Revenue Service i Note employing less quali ed people not perfect organization ii When there is a disagreement between the tax payer and the executive there is a need forjudiciary branch Regulations are applications of the law Executive Action exists because Congress delegated the authority Treasury Department and IRS ll in the vagueness of Congress Letter Rulings don t have the same legal precedence as regulations do issued by the IRS about a speci c taxpayer situation a You can pay the IRS 2500 to gure out how a speci c transaction is going to be taxed no guarantee that the IRS will tell two people with the same transaction the same thing BC this is nonbinding to the IRS Federal Judicial System a When you have a discrepancy with the IRS go to V Small cases Division Court abbreviated process BUT no appeals and no precedential value don t need to be consistent with rulings Tax Court and above you can go to without paying the IRS the money that s not true with the other courts US District Court must pay IRS rst you are suing the IRS for the money not technical tax in nature US Court of Federal Claims you are suing the federal government because you believe you have been wronged tax matter that are broad and general You can try and take it to the Supreme Court however they don t grant writs that often IV US Tax Treaties a US takes a worldwide approach to its taxes meaning that we make noncitizens pay taxes in the US and we make our own citizens pay taxes when abroad The other countries are territorial tax people within their own country this means that our citizens abroad can be subject to double taxations why there are treaties try to minimize this Treaties are made to agree on how something should be taxed in both countries b When abroad you may still bene t from US things ie National Defense c Enforcement of Treaties if you don t pay taxes the country you are in can kick you out helps with immigration because if an immigrant doesn t pay at home we do not want them here Expanded Material Expected ValueCheating on taxes Ewhat I get from cheating Epunishment If E is positive I will cheat gt the probability of punishment if caught is low however punishment is severe so people still do not cheat quot This can also be applied to immigration Fundamental Concepts Not in Book I Ability to pay a The amount of tax income tax should represent an amount the taxpayer can afford to pay make sure you cant tax people into bankruptcy Equity VI VII Administrative Convenience Huge a The bene t of any tax provision to the taxing authority should exceed the cost of implementation and administration i Economy ie sometimes it is not worth spending dollars to track down dimes Pay As You Go Convenience a Taxes should be collected at frequent intervalswhy i Time Value of Money Concept ii Human Nature is not inclined to save imagine if you would have to wait all year people like to spend their money Aincusive Income Concept a Unless an exception is provided by Congress ALL of your income is taxable Arm s Length Transactions a Two people doing business are independent don t care about the utility of the other party i Ex Middle School Girl Drama the three girl analogy 1 IRSGov t does not want to be the third girl that is left out and hurt while the other two are looking out for each other it wants everyone to be looking out for themselves 2 Comes up between related party transactions if a brother ses something to his sister he cant deduct anyoss Substance Over Form Doctrine a IRS has the right to restructure a transaction to what they believed happened Assignment of Income Doctrine a You can not push income on to someone else i Dad and him getting 20 for helping a guy Dad did the service so he has to pay taxes on the income even though the guy gave it to the kid


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