Module 1: Chapter 3 - In chapter 3, we will cover the tax formula and introduce property transactions. "The tax formula provides a framework for applying the Federal income tax to individuals. It is an integral part of our U.S. tax system (i.e., local, state, and Federal). Chapter 3 presents a summary of its components while providing a detailed discussion of several of its key components—the standard deduction, determination of whether someone is a dependent, and tax determination." In addition, the tax formula establishes the framework for the rest of this class." (Chapter 3 Introduction)
Module 2: Chapter 4 - In this module we will learn about what is included in gross income and complete the Volunteer Income Tax Assistance (VITA) certifications. These take a significant time commitment, so get started early! "This chapter addresses the first step in the computation of taxable income—the determination of gross income. Questions that are addressed include the following: What is gross income? When is gross income recognized? To whom is gross income taxable?" (Ch. 4 Introduction)
Module 3: Chapter 5 - "Chapter 4 discussed the concepts and judicial doctrines that affect the determination of gross income. If an income item is within the all-inclusive definition of gross income, the item can be excluded only if the taxpayer can locate specific authority for doing so. Chapter 5 focuses on the exclusions Congress has authorized. The chapter begins by defining exclusions and distinguishing them from items that are not income." (Ch. 5 Introduction)
Module 4: Chapter 6 - Chapter 6 introduces deductions. "A deduction is allowed only if there is a specific provision in the tax law that permits it. The inclusive definition of income and the exclusive definition of deductions may not seem fair to taxpayers, but it is the structure of the tax law. The courts agree with this structure, holding that any exclusions from income and all deductions are gifts from Congress." (Ch. 6 Introduction)
Module 5: Chapter 7 - Chapter 7 continues the discussion of deductions and losses with a specific focus on business expenses and losses. We will complete our second assigned tax return in this module that includes a small business owner operating at a loss. "Individual deductions must be properly classified as either for adjusted gross income (AGI) or from AGI (e.g., itemized deductions). Business expenses and losses, along with expenses and losses related to rent and royalty activities (entered into for profit), are deducted for AGI. Most other investment expenses are deducted from AGI. The determination of the taxpayer’s activity (i.e., whether the taxpayer is engaged in a trade or business, an investment, or a personal activity) is crucial in this classification process." (Ch. 7 Introduction)
Module 6: Chapter 8 - Chapter 8 begins our discussion of cost recovery of assets and we will complete your third assigned tax return. This tax return is for another small business owner, but this time she is operating at a gain. Consequently, a lot more complication is involved including self-employment tax and the QBI deduction. "The Internal Revenue Code allows a depreciation, cost recovery, amortization, or depletion deduction based on an asset’s cost. These deductions reflect the recovery of capital doctrine (see text Section 4-1b). Cost recovery deductions are based on the idea that the asset acquired (or improvement made) benefits more than one accounting period. If not, the expenditure is deducted in the year incurred." (Ch. 8 Introduction)
Module 7: Chapter 9 - Chapter 9 covers employee and self-employed related expenses. "Considering the large number of taxpayers affected, the tax treatment of job-related expenses is somewhat complex. To resolve this complexity, a number of key questions must be asked: Is the taxpayer an employee or self-employed? What expenses qualify as deductions? How are the deductible expenses classified for tax purposes (for AGI or from AGI)? To the extent the expenses are classified as deductions from AGI, are they subject to any limitation? In addition to answering these questions, the chapter also discusses the deduction for qualified business income and some tax planning ideas." (Ch. 9 Introduction)
Module 8: Chapter 10 - Chapter 10 covers itemized deductions and you will complete your 4th assigned tax return (with some extensive itemized deductions) "As a general rule, personal expenses are not deductible (see § 262 of the Code). However, Congress has chosen to allow certain personal expenses to be deducted as itemized deductions. Personal expenses that are deductible as itemized deductions include medical expenses, certain taxes, mortgage interest, and charitable contributions. These (and other) personal expenses allowed as itemized deductions are covered in this chapter." (Ch. 10 Introduction)
Module 9: Chapter 11 - Ch. 11 covers investor losses and related limitations. "As discussed in Chapter 6, a tax deduction for an expense or a loss is not allowed unless specifically permitted by Congress. For example, losses can be recognized and deducted in the case of certain unprofitable investments only because the Code allows them. These losses can arise from the operation of an activity or on its sale. For most individual taxpayers, deductible investor losses come within the scope of § 165(c)(2) relating to transactions entered into for profit. But what happens if the investment is mostly motivated by the tax loss it generates? Or what if the investment generates expenses that offset ordinary income and it later is expected to produce appreciation taxed at capital gain rates? This chapter addresses these tax minimization strategies and the rules put in place to restrict their use." (Chapter 11 Introduction)
Module 10: Chapter 13 - In Chapter 13 we cover one of the best aspects of tax law, tax credits! We will also complete your fifth assigned tax return which you will have two options: 1) amending your own tax return if you missed the American Opportunity Credit in the past or 2) maximizing multiple credits (i.e., AOTC, EITC) for a married student couple going to school.