DRAFT Spring 2015 Course Outline TA 330: Taxation of Property Transactions. Professor Kathleen K. Wright CPA, MBA, JD, LLM Visiting Professor

Transcription

1 DRAFT Spring 2015 Course Outline TA 330: Taxation of Property Transactions Professor Kathleen K. Wright CPA, MBA, JD, LLM Visiting Professor Contact Information Telephone: Office Hours: By appointment on the San Francisco Campus. Will check Professors Office every day (Tuesday through Friday) for questions/comments regarding course. Office: Room Course Information: This course runs for 16 weeks (January 7 and going through April 28). The course provides three semester units of course credit. TA 330 is required for students in the MST program and has two co-requisites which are TA 318 and TA 329. This course is an online course. 1) Welcome and Instructor Introduction. Welcome to Taxation of Property Transactions. I look forward to meeting you on CyberCampus and discussing the intricacies of property transactions throughout the term. Please take a moment to logon to CyberCampus and introduce yourself to me and to the class. Be sure to watch the Introduction Video and what follows is a little bit about me. a) Instructor Background. Kathleen K. Wright (CPA, MBA, JD, LLM) is a CPA and Lawyer who has been practicing in the field of tax for over forty years. She has previously worked in audit/tax at KPMG and then in varied positions at Citigroup where she was the financial controller of Citicorp Savings (the subsidiary that owned Citi s west coast operations). For the last 30 years she has had her own tax practice specializing in State and Local tax. She also has taught at various California State University campuses, most recently at CSU Fullerton. She frequently conducts seminars for the California CPA Education Foundation on various federal and state and local topics. She is one of the authors of the CCH Expert Treatise Series (State Taxation and Other Business Taxes). She is also a California correspondent for State Tax Notes (a weekly periodical published by Tax Analysts in Washington DC covering developments in all fifty states). She serves on the FTB s Executive Advisory Board. 1

2 2) Course Description This course provides a foundation for understanding and competently handling the tax treatment of transactions dealing with property. The course is divided into six major parts which are briefly described here. a) Part I: Dispositions Generally: Comprised of II through IV, this portion of the course looks at the types of transactions that give rise to dispositions of property, and how gain or loss is measured. To put it differently, this portion of the course shows us the types of dealings in property that result in realized gains or losses. Recall that in the case of gains, once realized, they are taxable unless some nonrecognition rule applies. Losses on the other hand are only deductible if allowed by the Code. b) Part II: Characterization of Gain or Loss. V through VIII explore the rules that govern the characterization of gain or loss. Once we ve determined that a taxable disposition of property has occurred, these rules are resorted to in order to determine how the resulting gain or loss is taxed. These rules are of particular importance, since capital gains are taxed at preferential tax rates, while the deductibility of capital losses is subject to limitation. We shall look at the specific rules applicable to capital transactions, as well as some special rules that create deemed capital transactions; e.g., c) Part III: Capital Recovery. IX of the course reviews the applicable rules for determining whether a particular property interest is subject to an allowance for cost recovery -- i.e., depreciation or amortization. (Note that the focus is not on the rules that govern the determination of the amount of the allowance; i.e., the MACRS rules under 168.) In addition, we will consider the rules that require a recapture of the cost recovery allowance as ordinary income upon a subsequent disposition of the property. d) Part IV: Nonrecognition of Gain. As we ve already stated, any realized gain must be recognized for income tax purposes, unless an applicable rule of nonrecognition can be found in the Code. X discusses three nonrecognition rules. They are: i) 1031 Like-kind Exchanges ii) 1033 Involuntary Conversions iii) 1038 Reacquisitions of Real Property Each of these rules allows a taxpayer to defer all or part of the realized gain from a covered transaction. The deferral of gain results from the fact that the unrecognized portion of the gain is reflected in the taxpayer s basis in the property received in the transaction. Consequently, on a subsequent taxable disposition of the newly acquired property, the gain that went unrecognized on the original transaction will be recognized, (to the extent of gain on the subsequent disposition). This section also looks at 121, which provides for an exclusion of gain from the sale of a principal residence. Unlike a nonrecognition rule, 121, to the extent applicable, 2

3 results in the permanent exclusion of gain from gross income. e) Part V: Loss Limitation Provisions. In order to be deductible, losses must be realized, recognized, allowed, and not subject to suspension. This part of the course introduces us to the general loss limitation provisions of 165, and then looks at the loss suspension rules of 465: the at-risk rules, and 469: the passive activity rules. (See XI of the course materials). f) Part VI: Capstone. Finally, XII of the course looks at the sale of a business. This section is intended to incorporate many of the rules we ve learned over the course of the semester, and should therefore act as a comprehensive review of the course. 3) Course Materials. Required: TA 330 GGU printed materials. You can purchase the TA 330 GGU Digital Course Materials through the GGU Bookstore. You will also have the option of purchasing in hard copy if that is your choice. Optional: Practical Guide To Real Estate Taxation; Author: David Windish Publisher: Commerce Clearing House, 2013 Edition. Note that this textbook is not required but may serve as a helpful addition for the course. Power Points used in the lectures, handouts and homework problem solutions will be posted on Cybercampus. 4) Course Objectives. By the end of this course, you should be able to determine: When dealings in property give rise to a taxable event. How to measure property gains and losses. When realized gain is recognized. Identify situations where gain is deferred or excluded. How property gains and losses are characterized. When losses on sales of property are deductible. 5) University Library. We will be using primarily RIA Checkpoint in this class. I will provide you with separate login codes that will enable you to access these services from any location. 6) Structure of the Course and Student Responsibilities. 3

4 If someone else has already responded to a question, then you should move on to another question to get credit for your answer. No single question is intended to be more difficult than the next question, but you will have a greater choice of questions to which you want to respond if you look at the question shortly after they are posted. The questions are in the format of case studies or factual scenarios that raise questions regarding the material in that section; or actual cases that discuss the legal issues related to the topic. Other students are welcome to comment on the posting of another student. I will comment on all posts to a question, but will grade the first posting to the question. 4

5 7) Quizzes and Exams. a) Quizzes - We will have four online quizzes throughout the term and a final exam. Each quiz/exam is scheduled on the course outline. The online quizzes will be made available as indicated (generally on Friday) and must be finished by midnight of the following Sunday night. There are no make up quizzes after the quiz window has closed. If you cannot take the quiz during the scheduled time, then I can arrange to give you the quiz early, but not late. The quizzes will be short answer and multiple choice and will be given online. You may login and take the quiz at any time the quiz window is open. You can only login once to take the quiz. Once you login to take the quiz, you will be allowed only a specified amount of time to finish the quiz. At the end of the allowed time, your quiz will be graded, and your grade forwarded to you. The quiz is open book and open notes, but remember that your time is limited and therefore there will not be enough to time to look up each answer. You should prepare for a quiz as though it were a closed book exam. b) Final Exam. The final exam will be a combination of short answers and essay questions and problems. The final exam is a proctored exam and must be taken during final exam week. Details on proctor selection and approval will be sent to you by CyberCampus the first week of class. GGU also offers an alternative to take the final exam online with Proctor U. I will post information on CyberCampus that describes this online proctoring process. If you cannot take the exam during the scheduled week, I can provide a makeup exam prior to the test date, but not after the test date. If you do not take the exam, then you will receive an Incomplete for the course. 9) Extra Credit Research Problems. During the first week of class, I will distribute an extra credit research problem. The problem will require that you go beyond the assigned reading to determine how to respond to the taxpayer s question. We will discuss very briefly the research process and format of the paper. (Note that TA 329 Tax Research is a prerequisite for this class). Your research problem should be in good form, outline the issues and provide discussion of primary sources reviewed to respond to the question. The research problem can be turned in at any time during the term, but must be completed by Monday, April 13, You are not required to complete the research problem. If you decide to do the problem, then you can earn up to 3 points that will be added to your overall grade in the class. This means that after I average your quiz scores (weighted at 40% of your grade), class participation (10% of grade) and final exam (50% of grade) I will then add a maximum of three additional points to your overall score if you successfully complete the research problem. I encourage you to consider completing this assignment it can only help your score and will enhance your research capabilities. 5

6 10) Determination of Grade. Each of the elements of the class is weighted as follows to determine your final grade. % of total grade Online discussion forums 10% Online quizzes 40% Final Exam 50% Total 100% The actual grade in the class is determined on a curve meaning that the scale is based on your performance versus the performance of the entire class. 11) Evaluations. You will receive an opportunity to evaluate the course and instructor at least once this term. 12) Academic Integrity. GGU's Policy on Student Academic Integrity is in effect at all GGU teaching locations, including regional classroom sites, corporate sites, and distance courses delivered in any medium. This policy applies to all business, taxation, and technology students at Golden Gate University. Academic integrity means doing academic work in a manner that strives to achieve the learning objectives your courses have set out for you. It means that you follow the rules and procedures prescribed by your instructors so that you acquire the skills and knowledge your courses are designed to give you. It means that you engage in ethical practices in taking tests and doing assignments and that you respect intellectual property rights by fully disclosing sources of information that appear in your papers and presentations. Please read GGU s Policy on Student Academic Integrity: Policy on Student Academic Integrity. Students are responsible for adhering to University standards of academic integrity (as set forth in the Golden which includes but is not limited to both cheating and plagiarism. Students are responsible for understanding what plagiarism is and how to avoid unintentional plagiarism by carefully following accepted scholarly practices- accurately recording sources of materials to be cited, quoted, paraphrased, or summarized, and acknowledging these sources in accepted documentation formats. Plagiarism is the intentional or negligent presentation of another person's idea or product as one's own. It includes but is not limited to: 6

7 Copying all or part of another person's written work without proper citation or attribution Representing as one's own specific phrases, sentences, paragraphs, or the specific substance another person's work without giving appropriate credit Paraphrasing another person's original ideas, theories, explanations, examples, models, principles, research issues and strategies, cases, conclusions, etc. without proper attribution Representing as one's own another person's computer programs, web content or designs, graphic or artistic works, mathematical or scientific solutions, charts, tables, figures, or illustrations in any medium. All work submitted by students in this class (including but not limited to, comments, postings, charts, examples, problem set solutions, and exam answers) must either be the product of the student's own words, understanding or work, or must have credit attributable to the original source. Students may post content from another source verbatim so long as the original source is given credit. It is generally suggested that a higher learning outcome is achieved by a student who has to synthesize information from different sources and express an understanding in his or her own words. The process of synthesizing and paraphrasing also allows the student the step of self assessing their real understanding of what they have just read. (Mary Canning, Dean, Schools of Accounting and Taxation). 13) Course Outline. Note that a detailed course outline is posted each week on Cyber Campus. This is only a summary outline of topics covered over the course of the term. Week Topic January 7 Section I. General Introduction. Section II. Definition of Property January 12 Section II. Definition of Property (continued). January 19 Section III. Dispositions. January 26: Interactive Class Session, Tuesday, January 27 from 5:00 pm to 6:30 pm. January 30: Quiz 1 (Quiz opens Friday, January 30 (6:00 am) and closes Sunday, February 1 at midnight.) February 2: Section IV Measuring Gains or Losses February 9 Section V Capital Assets February 16 Section VI Sale or Exchange February 23: Interactive Class Session, Tuesday, February 24 from 5:00 pm to 6:30 pm. February 27. Quiz 2 (Quiz opens Friday, February 27 (6:00 am) and closes Sunday, March 1 at midnight.) February 23 Section VII Holding Period March 2 Section VIII Section 1231 and capital gains/losses. 7

8 March 9 Section IX Capital Recovery March 16: Interactive Class Session, Tuesday, March 17 from 5:00 pm to 6:30 pm. Quiz 3 (Quiz opens Friday, March 20 (6:00 am) and closes Sunday, March 22 at midnight.) March 16 Section X Nonrecognition Rules March 23 Section X Nonrecognition Rules March 30: Interactive Class Session, Tuesday, March 31 from 5:00 pm to 6:30 pm. Quiz 4 (Quiz opens Friday, April 3 (6:00 am) and closes Sunday, April 5 at midnight.) March 30 Section XI Loss Limitations April 6 Section XI Loss Limitations (continued) April 13 Section XII Sale of a Business. April 20 Section XII Sale of a Business and Final Exam Review. April 20: Interactive Class Session, Tuesday, April 21 from 5:00 pm to 6:30 pm. Final Exam can be scheduled between April 23 and 28. 8