Mastering Income Tax

Christopher M. PietruszkiewiczDean and Professor of Law

Stetson University College of Law

Gail Levin RichmondProfessor of Law

Nova Southeastern University Shepard Broad Law Center

Carolina Academic PressDurham, North Carolina

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Copyright © 2014Christopher M. Pietruszkiewicz and Gail Levin Richmond

All Rights Reserved

Library of Congress Cataloging-in-Publication Data

Library of Congress Cataloging-in-Publication Data

Pietruszkiewicz, Christopher M. author.Mastering income tax / Christopher M. Pietruszkiewicz and Gail Levin Rich-mond.

p. cm. -- (Carolina Academic Press Mastering Series)Includes bibliographical references and index.ISBN 978-1-59460-374-7 (alk. paper)1. Income tax--Law and legislation--United States. I. Richmond, Gail Levin,author. II. Title.

KF6369.85.P54 2014343.7305'2--dc23

2014019586

Carolina Academic Press700 Kent Street

Durham, North Carolina 27701Telephone (919) 489-7486

Fax (919) 493-5668www.cap-press.com

Printed in the United States of America

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ContentsTable of Statutes xxvTable of Regulations xliTable of Cases xlvTable of Administrative Authorities xlixSeries Editor’s Foreword liPreface liiiAcknowledgments lv

Chapter 1 · Overview of Income Tax 3Roadmap 3A. Chapter Overview 3B. Components of Tax Computation 3

1. Gross Income 42. Deductions 53. Tax Liability 5

a. Tax Rates 5b. Filing Status 8

4. Tax Credits 105. Alternative Minimum Tax 11

C. Inflation Adjustments and Extenders 12D. Sources of Law 13

1. Constitution and Statutes 132. Administrative Guidance 143. Judicial Decisions 15

E. Introduction to Tax Procedure 161. Tax Returns 162. IRS Investigatory Authority 173. 30- Day and 90- Day Letters 174. Assessments 185. Tax Litigation 196. Tax Collection 20

Checkpoints 22

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Chapter 2 · Gross Income 23Roadmap 23A. Chapter Overview 23B. Receipt of a Financial Benefit 23

1. Undeniable Accessions to Wealth 242. Treasure Trove and Bargain Purchases 243. Compensation for Services 254. Promotional Programs 26

C. Loans 27D. Bartering and Other Noncash Transactions 27E. Imputed Income 28F. Topics Covered in Other Chapters 29Checkpoints 30

Chapter 3 · Gifts, Bequests, Devises, and Inheritances 31Roadmap 31A. Chapter Overview 31B. Gifts 31

1. Definition 312. Transfers in an Employment Setting 333. Transfers Incident to a Divorce 34

C. Bequests, Devises, and Inheritances 34D. Gifts or Bequests Involving Income 35E. Sale of Property Received by Gift or Bequest 36F. Donor’s Tax Consequences 36Checkpoints 37

Chapter 4 · Employee Benefits 39Roadmap 39A. Chapter Overview 39B. Health Care 40C. Group- Term Life Insurance 40D. Education 41

1. Potential Exclusions 412. Comparison of Exclusions 433. Other Benefits for Education Costs 43

E. Children and Other Dependents 441. Dependent Care Assistance Programs 442. Adoption Assistance Programs 45

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F. Meals and Lodging 461. Section 119 462. Parsonage Allowance 483. Employer Cafeteria 49

G. Section 132 491. No- Additional-Cost Service Benefit 50

a. General Rule 50b. Qualifying as Employee 51c. Limitations 51

2. Qualified Employee Discount 513. Working Condition Fringe Benefit 524. De Minimis Fringe Benefit 535. Qualified Transportation Fringe 546. Other Section 132 Benefits 56

H. Miscellaneous Employment- Related Exclusions 57I. Cafeteria Plans 57Checkpoints 59

Chapter 5 · Prizes, Awards, and Scholarships 61Roadmap 61A. Chapter Overview 61B. Prizes and Other Awards 61

1. General Rule 612. Prizes and Awards Directed to Charity 62

a. Requirements 62b. Tax Benefit 62

3. Employee Achievement Awards 63a. Requirements 63b. Computing the Amount Excluded 64

4. De Minimis Fringe Benefits 665. Employer Payments for Its Own Benefit 666. Amount of Gross Income 66

C. Scholarships 671. Qualified Scholarship 672. Candidate for Degree 693. Payments Related to Employment 69

D. Determining the Governing Code Section 70Checkpoints 71

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Chapter 6 · Gains from Dealings in Property 73Roadmap 73A. Chapter Overview 73B. General Rules and Terminology 73

1. Computing Gain or Loss 732. Amount Realized 743. Cost Basis 744. Adjustments to Basis 755. Gain or Loss Realized and Recognized 76

C. Transactions Involving Debt 771. Cost 772. Amount Realized 78

D. Taxable Transactions Other than Purchases 801. Basis of Property Received as a Prize or as Compensation 802. Amount Realized if Property Is Transferred in Exchange for

Services 803. Property Received in an Exchange 81

E. Property Acquired by Gift 831. General Rule 832. Exception for Donor’s Unrealized Loss 843. Part Gift/Part Sale Transfers 85

F. Property Transfers Between Spouses 86G. Property Acquired from a Decedent 88Checkpoints 91

Chapter 7 · Life Insurance and Annuities 93Roadmap 93A. Chapter Overview 93B. Life Insurance Terminology 93C. Excluded Life Insurance Proceeds 95D. Taxable Life Insurance Proceeds 96

1. Transfer for a Valuable Consideration 962. Employer- Owned Life Insurance Contracts 973. Proceeds Paid at a Date Later than Death 97

E. Miscellaneous Tax Consequences of Life Insurance 981. Sale, Surrender, or Exchange of Policy 982. Deducting Premiums Paid 1003. Borrowing Against the Cash Surrender Value 100

F. Annuities Terminology 100

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G. Taxation of Annuity Payments 1011. Amounts Received as an Annuity 1012. Other Amounts Received Under the Contract 1043. Borrowing Against the Investment in the Contract 1044. Exchanging an Annuity Policy 1045. Penalties for Early Withdrawals 104

H. Criticisms of Exclusion 105Checkpoints 106

Chapter 8 · Discharge of Indebtedness 107Roadmap 107A. Chapter Overview 107B. Tax Consequences of Borrowing 107C. Early Judicial Decisions 109D. Section 108(a)(1) Exclusions 110

1. Bankruptcy and Insolvency 1102. Other Exclusions 1113. Order of Exclusions 1124. Reduction in Tax Attributes 1125. Basis Reduction 114

E. Other Exclusions 1151. Deductible Payments 1152. Purchase Money Debt Reductions 1163. Student Loans 1174. Miscellaneous Section 108 Provisions 1175. Contested Debts 117

F. Acquisition of Debt by Related Persons 118G. Distinguishing Debt Discharge from Other Income 118Checkpoints 120

Chapter 9 · Damages and Payments for Physical Injuries or Sickness 121Roadmap 121A. Chapter Overview 121B. Damages in General 121C. Payments Covered by Section 104 123

1. Workmen’s Compensation 1232. Damages for Personal Physical Injuries or Sickness 123

a. Medical Expenses 124b. Punitive Damages 125

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c. Lost Income 125d. Emotional Distress, Defamation, and Other Nonphysical

Injury 125e. Deferred Payments 126f. Allocating Damages 126g. Litigation Expenses 128

3. Amounts Received Through Accident or Health Insurance 128D. Employer- Funded Accident and Health Plans 129

1. Employer Contributions to Accident and Health Plans 1292. Benefits Received from an Employer- Funded Plan 129

Checkpoints 131

Chapter 10 · Divorce and Separation 133Roadmap 133A. Chapter Overview 133B. Alimony and Separate Maintenance Payments 133

1. Tax Consequences 1332. Requirements 1343. Recapture of Excess Payments 137

a. Rules Governing Recapture 137b. Recapture Computations 138c. Avoiding Recapture 140

4. Alimony Trusts 141C. Child Support 141D. Property Settlements 143E. Miscellaneous Tax Consequences 145F. Effect of State Law 146Checkpoints 147

Chapter 11 · Miscellaneous Exclusions 149Roadmap 149A. Chapter Overview 149B. Sale of a Principal Residence 149

1. Qualifying for the Exclusion 1502. Maximum Exclusion 1513. Frequency of Using the Exclusion 1514. Relief Provisions 152

a. Change in Place of Employment, Health, or Unforeseen Circumstances 152

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b. Marital Status 154c. Extension of Five- Year Period 154

5. Anti- Abuse Provisions 154a. Residence Acquired in a Like- Kind Exchange 154b. Deducting Depreciation of the Residence 155c. Nonqualified Use of the Residence 155d. Dual Use of the Residence 156

6. Coordination with Other Code Provisions 157C. Education Benefits 157

1. United States Savings Bond Interest 1582. Qualified Tuition Programs and Coverdell Education

Savings Accounts 159D. State and Local Government Activities 160E. Foreign- Source Income 162F. Additional Miscellaneous Exclusions 163

1. Statutory Exclusions 1632. Other Exclusions 164

Checkpoints 165

Chapter 12 · Assignment of Income 167Roadmap 167A. Chapter Overview 167B. Income from Services 167

1. Code Rules 1672. Judicial and Administrative Decisions 168

a. Contractual Assignments 168b. Directing Payment to Another Person 169c. Refusal to Accept Income 169d. Service Provider Acting as Agent 170

C. Income from Property 1711. Fruit and Tree Doctrine 1712. Relevance of Title to Property 1733. Sale of Future Income Rights 173

D. Joint Returns 174E. Kiddie Tax and Related Limitations 175

1. Kiddie Tax 1752. Personal Exemption and Standard Deduction 177

Checkpoints 178

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Chapter 13 · Income- Producing Entities 179Roadmap 179A. Chapter Overview 179B. Corporations 179

1. C Corporations and S Corporations 1802. Using Corporations to Reduce Taxes 182

C. Partnerships 182D. Electing Corporate Treatment 185E. Trusts and Estates 185Checkpoints 187

Chapter 14 · Overview of Deductions and Credits 189Roadmap 189A. Chapter Overview 189B. Type of Activity 189

1. Deductions for Expenses and Losses 1902. Limitations on Deductions 1913. Tax Credits 191

C. Tax Return Placement 1921. Trade or Business Expenses 1922. Expenses for the Production of Income 1933. Losses Related to Sale or Exchange of Property 1934. Expenses Related to Retirement Income 1935. Expenses That Do Not Require a Business or

Income- Producing Activity 1936. Expenses Related to Litigation 1947. Miscellaneous Expenses 1948. Standard Deduction 1949. Personal Exemptions 194

D. Itemized Deductions 195E. Deductions Affected by AGI 195F. Timing and Character of Deductions 195G. Deductions Disallowed by the Alternative Minimum Tax 196H. Credits 196Checkpoints 197

Chapter 15 · Business and Income- Producing Expenses 199Roadmap 199A. Chapter Overview 199

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B. Section 162 Requirements 1991. Ordinary and Necessary 2002. Expenses Versus Capital Expenditures 201

a. Tangible Assets 201b. Intangible Assets 202

3. Trade or Business 2034. Paid or Incurred 204

C. Section 162 Expenses 2041. Reasonable Salaries 2042. Travel Away from Home 207

a. Away from Home 207b. Personal Aspects of Travel 208c. Foreign Travel 209d. Commuting Expenses 210

3. Rental Payments 2114. Educational Expenses, Seminars, and Meetings 2115. Business Entertainment and Gifts 2136. Job- Related Clothing 214

D. Expenses with a Business Connection 2141. Depreciation, Depletion, and Amortization 214

a. Applicable Method, Recovery Period, and Convention 215b. Computing Declining Balance Depreciation 216c. First- Year Expensing 217d. Listed Property 218e. Depletion and Amortization 218

2. Start- Up Expenditures 2193. Moving Expenses 2204. Interest and Taxes 221

E. Significance of Employee Status 2221. Expenses Deducted in Computing AGI 2222. Phase- Outs and Deduction Limitations 223

F. Section 212 Expenses 2241. Interpretive Issues 2252. Litigation Expenses 2253. Reason for Holding Property 2264. Deduction Limitations 226

G. Tax Credits 2271. Household and Dependent Care Expenses 2272. Earned Income Tax Credit 228

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3. Credit for Retirement Savings 2284. Foreign Tax Credit 229

Checkpoints 230

Chapter 16 · Personal Expenses 233Roadmap 233A. Chapter Overview 233B. Deductions in Computing AGI 233

1. Alimony and Alimony Recapture 2342. Education Loan Interest 2343. Qualified Tuition and Related Expenses 2354. Contributions to Health Savings Accounts 235

C. Interest Expense 2361. Qualified Residence 2362. Acquisition Indebtedness and Home Equity Indebtedness 2373. Points 238

D. State, Local, and Foreign Taxes 2391. Real Property Taxes 2392. Personal Property Taxes 2413. Income Taxes 2414. Sales Taxes 242

E. Charitable Contributions 2431. Definition 2432. Amount 245

a. Money, Other Property, and Forgone Income 245b. Bargain Sales 247

3. Percentage Limits and Carryovers 2484. Substantiation Rules 2505. Miscellaneous Rules 251

F. Expenses to Determine a Tax 252G. Medical Care Expenses 252

1. General Rules 2522. Qualifying Outlays 253

a. Drugs 253b. Capital Expenditures 253c. Travel, Transportation, Meals, and Lodging 254d. Care Provided by Nonprofessionals 255e. Outlays for Changes in Taxpayer’s Appearance 255f. Insurance 256

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3. Coordination with Other Code Sections 256H. Standard Deduction 257I. Personal Exemptions 258

1. Overview 2582. Taxpayer and Spouse 2593. Qualifying Dependents 259

a. Qualifying Child 259b. Qualifying Relative 261

J. Floors and Phase- Outs 263K. Tax Credits 264Checkpoints 265

Chapter 17 · Losses 267Roadmap 267A. Chapter Overview 267B. Overall Losses, Activity Losses, and Losses from Discrete Events 267C. Basis for Loss 268D. Loss Deductions Allowed by Section 165 268

1. Losses Incurred in a Trade or Business or a Transaction Entered into for Profit 269a. Sales and Exchanges 269b. Casualties and Thefts 269c. Other Compulsory or Involuntary Conversions 272d. Abandonment 273e. Placement on the Tax Return 273

2. Casualty or Theft Losses of Personal- Use Property 273a. Requirements 274b. Year of Deduction 275c. Amount of Deduction 275d. Placement on the Tax Return 278

3. Worthless Securities 2784. Wagering Losses 278

E. Bad Debt Losses 2791. Requirements 2792. Basis for Loss 2803. Type of Loss 2814. Recovery of Previously Deducted Loss 282

Checkpoints 282

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Chapter 18 · Limitations on Deductions 283Roadmap 283A. Chapter Overview 283B. Public Policy Limitations 283

1. Section 162(c) 2842. Section 162(e) 2853. Section 162(f) 2854. Section 162(g) 2865. Section 165 2866. Section 280E 287

C. Activities with Personal Aspects 2871. Section 274 2872. Section 280A 288

a. Definitions 288b. Rental Use 288c. Business Use 291d. Coordination with Other Code Sections 295

3. Section 183 295a. Determining the Status of the Activity 295b. Limitations on Deductions 297

D. Activities for Which the Taxpayer Is Not at Risk 2981. Overview 2982. Computing the Amount at Risk 2983. Amount at Risk Reduced Below Zero 299

E. Passive Activities 3001. Avoiding Section 469 300

a. Material Participation 300b. Real Estate 301

2. Applying Section 469 3033. Coordination with Other Code Sections 304

F. Losses from Transactions with Related Persons 3051. Transactions Covered by Section 267(a)(1) 3052. Categories of Related Persons 3063. Constructive Ownership 3074. Treatment of Related Purchaser 3095. Coordination with Nonrecognition Provisions 310

G. Miscellaneous Limitations 311Checkpoints 313

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Chapter 19 · Fundamental Timing Principles 315Roadmap 315A. Chapter Overview 315B. Taxable Year 315C. Accounting Methods 316

1. Cash Receipts and Disbursements Method 317a. Gross Income 317b. Expenses 318

2. Accrual Method 320a. Gross Income 320b. Expenses 321

3. Inventories 322D. Forced Matching of Reporting Periods 324E. Other Exceptions 324Checkpoints 325

Chapter 20 · Exceptions to Taxable Year Rules 327Roadmap 327A. Chapter Overview 327B. Tax Benefit Rule 327C. Restoring Amounts Received Under Claim of Right 329

1. Applying Section 1341 3292. Failure to Satisfy Requirements 331

D. Net Operating Loss Deduction 331E. Other Events Affecting Multiple Years 332Checkpoints 333

Chapter 21 · Capital Gains and Losses 335Roadmap 335A. Chapter Overview 335B. Critique of Capital Gain Preference 335C. Capital Gain and Loss Computations 336

1. Gains and Losses Covered 3362. Netting Gains and Losses 3363. Loss Deductions and Carryovers 3374. Relevant Tax Rates 3395. Basic Section 1(h) Computation 3406. Computations Involving 25 Percent and 28 Percent Rates 341

a. Unrecaptured Section 1250 Gain and 28- Percent Rate Gain 341

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b. Computing Adjusted Net Capital Gain 3437. Qualified Dividends 3448. Corporations 344

D. Holding Period 3441. Section 1223 Holding Periods 3452. Holding Periods Governed by Other Code Sections 346

E. Transactions Covered by Capital Gain and Loss Rules 3461. Sale or Exchange of a Capital Asset 3462. Statutory Exclusions in Section 1221(a) 347

a. Inventory 347b. Property Used in a Trade or Business 349c. Certain Intellectual Property 349d. Other Section 1221(a) Exclusions 350

3. Judicially Recognized Exclusions 3504. Section 1231 Transactions 352

a. Property Covered by Section 1231 352b. Section 1231 Computations 354c. Preliminary Hotchpot 354d. General Hotchpot 355e. Loss Recapture 355

5. Other Transactions Treated as Capital Gains and Losses 3576. Provisions That Prevent Capital Gain or Loss Treatment 358

F. Coordination with Other Code Sections 358Checkpoints 359

Chapter 22 · Depreciation Recapture 361Roadmap 361A. Chapter Overview 361B. Major Statutory Provisions 361C. Rationale for Depreciation Recapture 362D. Factors Affecting Recapture 362E. Section 1245 364

1. Computations 3642. Other Section 1245 Issues 365

F. Section 1250 3661. Computations 3662. Other Section 1250 Issues 367

G. Section 1239 368Checkpoints 369

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Chapter 23 · Miscellaneous Timing and Characterization Issues 371Roadmap 371A. Chapter Overview 371B. Installment Sales 371

1. Definitions 3722. Computations 372

a. Basic Computations 372b. Contingent Payments and Open Transactions 373

3. Special Rules 375a. Depreciation Recapture 375b. Sale of Depreciable Property to Related Entity 375c. Like- Kind Exchanges 376d. Disposition by Related Party Purchaser 376e. Reacquiring the Property Sold 377

4. Exceptions 3785. Interest on Deferred Tax 3786. Dispositions of Installment Obligation 378

C. Original Issue Discount 3791. Issue Price 3792. Accruing OID 3803. Sale, Exchange, or Retirement 3814. Related Provisions 382

D. Imputed Interest 3831. Section 483 3832. Section 7872 384

a. Gift Loans 385b. Compensation- Related Loans 386c. Other Loans 387

E. Compensation Subject to a Substantial Risk of Forfeiture 3871. Scope of Section 83 3872. Transfers Covered 3883. Employee Does Not Elect Immediate Gross Income 3894. Employee Elects Immediate Gross Income 3915. Employer’s Tax Consequences 391

F. Income in Respect of a Decedent 392Checkpoints 394

Chapter 24 · Nonrecognition Provisions 395Roadmap 395

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A. Chapter Overview 395B. Like- Kind Exchanges 396

1. Overview 3962. Qualifying Property 397

a. Type of Property 397b. Reason for Holding Property 397c. Attempting to Avoid Section 1031 399

3. Like- Kind Property 400a. General Rule 400b. Depreciable Personal Property 400c. Intangible Personal Property 401d. Real Property 402

4. Receipt of Boot 4025. Transfer of Other Property or Money 4046. Tax Attributes of Property Received 405

a. Exchange Involves only Like- Kind Property 405b. Exchange Involves Receipt of Boot 406c. Exchange Involves Transfer of Other Property or Money 407

7. Exchange Groups 4088. Multi- Party Transactions 4099. Deferred Exchanges 41010. Related Party Exchange 41111. Exchange Involving a Principal Residence 412

C. Compulsory or Involuntary Conversions 4131. Section 1033(a) 413

a. General Rule 413b. Compulsory or Involuntary Conversion 414c. Qualifying Replacement Property 415d. Time Period for Purchasing Replacement Property 416

2. Condemnation of Real Property 4173. Federally Declared Disasters 4184. Compulsory or Involuntary Conversion of Principal Residence 4195. Tax Attributes of Replacement Property 419

D. Wash Sales 4201. Transactions Covered 4202. Substantially Identical Stock or Securities 4223. Tax Attributes of Stock or Securities Acquired 422

E. Reacquisition of Real Property 423F. Other Nonrecognition Transactions 424

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Checkpoints 425

Mastering Income Tax Checklist 427Index 441

CONTENTS xxiii

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Table of Statutes

xxv

Internal Revenue Code

1, 121(a), 174, 3391(a)–(d), 339, 3781(c), 1741(d), 1741(e), 1861(g), 8, 175, 1831(g)(1), 1761(g)(2), 1761(g)(3)(A), 1771(g)(3)(B), 1761(g)(4), 1761(g)(5), 1771(h), 182, 311, 337, 338, 339, 340,

343, 344, 356, 357, 358, 359,378, 404

1(h)(1), 3401(h)(1)(A), 3411(h)(1)(B), 340, 3411(h)(1)(B)–(D), 3671(h)(1)(C), 340, 341, 3441(h)(1)(D), 3411(h)(1)(E), 3671(h)(1)(F), 3441(h)(2), 3581(h)(3), 3401(h)(4), 3431(h)(4)(A), 3411(h)(5)(A), 342

1(h)(6), 3661(h)(6)(A), 3431(h)(6)(B), 3421(h)(8), 3561(h)(11), 340, 3441(h)(11)(D)(i), 3582(a), 92(b), 9, 14511(b)(1), 18011(b)(2), 18021, 44, 227, 257, 26421(a), 4421(c), 4421(e)(5), 14523, 12, 45, 26423(d), 12, 4524, 12, 145, 26424(d), 26425A, 12, 235, 26425A(f)(1), 23525A(f)(1)(C), 23525A(f)(2), 23525B, 22826, 1031, 1132, 12, 228, 26432(c)(3), 14555, 11, 1256, 1157, 11

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58, 1159, 1261, 4, 2361(a), 23, 2461(a)(1), 25, 39, 38761(a)(2), 287, 32261(a)(3), 7361(a)(4), 12361(a)(10), 9561(a)(12), 108, 10962, 5, 193, 194, 222, 23362(a), 192, 19462(a)(1), 128, 192, 27362(a)(2)(A), 192, 22262(a)(2)(B), 19262(a)(2)(C), 19262(a)(2)(D), 19262(a)(2)(E), 19262(a)(3), 193, 27862(a)(4), 193, 273, 29062(a)(5), 19462(a)(6), 19362(a)(7), 19362(a)(9), 19362(a)(10), 134, 19362(a)(11), 19462(a)(12), 19262(a)(13), 19262(a)(14), 19462(a)(15), 192, 22062(a)(16), 193, 23662(a)(17), 193, 23462(a)(18), 193, 23562(a)(19), 193, 23562(a)(20), 128, 194, 22362(a)(21), 19462(c), 19262(e), 128, 19463, 5, 12, 19163(b), 257

63(c), 19463(c)(1), 17763(c)(2), 25763(c)(3), 25763(c)(4), 25763(c)(5), 177, 25763(c)(5)(A), 176, 177, 17863(c)(5)(B), 17763(c)(6), 25763(e), 25763(f), 25866, 16866(a), 16867, 195, 223, 25767(a), 26367(b), 26368, 12, 19568(a), 263, 26468(c), 26468(d), 26371, 134, 13871(a), 13471(b), 134, 14171(b)(1), 13471(b)(1)(A), 134, 13571(b)(1)(B), 13571(b)(1)(C), 13671(b)(1)(D), 13671(b)(2), 13571(c), 137, 14171(c)(1), 14171(c)(2), 141, 14371(c)(2)(A), 14171(c)(2)(B), 14271(c)(3), 14371(e), 13771(f), 137, 140, 19371(f)(1)(B), 13871(f)(3), 13871(f)(4), 138

xxvi TABLE OF STATUTES

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71(f)(5), 14071(f)(5)(A), 14071(f)(5)(B), 14071(f)(5)(C), 14072, 15972(a)(1), 10172(b), 10272(b)(2), 10372(b)(3), 10372(b)(3)(C), 33272(b)(4), 10372(c)(1), 10272(e), 9972(e)(1)(B), 9472(e)(2)(A), 10472(e)(2)(B), 10472(e)(3), 10472(e)(4), 10072(e)(4)(A), 10472(e)(5), 9872(e)(5)(C), 10072(q), 10472(t), 10473, 16774, 61, 66, 7074(a), 61, 70, 8074(b), 62, 6374(b)(1), 6274(b)(2), 6274(b)(3), 6274(c), 63, 6674(c)(1), 6474(c)(2), 6574(c)(4), 6679, 41, 9579(a), 4079(c), 4179(d), 4183, 387, 388, 38983(a), 346, 387, 389, 390

83(b), 346, 39183(b)(1), 39183(c)(1), 38883(c)(2), 38983(c)(3), 38983(d), 38983(f), 346, 38983(h), 324, 39186, 57, 26286(a)(1)(A), 16386(a)(1)(B), 16386(a)(2), 57, 163101, 40101(a), 41, 95, 96, 97101(a)(1), 135101(a)(2), 96101(a)(2)(A), 96101(a)(2)(B), 96101(c), 98101(d), 98101(f), 94101(g), 95101(g)(1), 95101(g)(2), 95101(g)(3), 95101(g)(4), 95101(j), 97101(j)(2), 97101(j)(4), 97102, 33, 35, 83, 87, 213102(a), 31, 33, 34, 36, 144, 386,

393102(b)(1), 35102(b)(2), 36102(c), 25, 32, 33, 34, 213103, 161103(a), 160, 161103(b)(1), 161103(b)(2), 161103(b)(3), 161

TABLE OF STATUTES xxvii

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103(c)(1), 160104, 57, 121, 222, 333104(a), 123, 124, 125104(a)(1), 123104(a)(2), 123, 124, 125, 126, 312104(a)(3), 128, 129104(c), 125105, 40, 121, 129, 130105(a), 129105(b), 129105(c), 129105(e), 129105(g), 130105(h), 130106, 40, 121, 129106(a), 129106(b), 58106(d), 129107, 48108, 109, 111, 117, 118, 119108(a)(1), 107, 113108(a)(1)(A), 110108(a)(1)(B), 110, 111108(a)(1)(C), 111108(a)(1)(D), 111108(a)(1)(E), 112108(a)(2), 112108(a)(3), 110108(b), 113108(b)(2)(A)–(G), 113108(b)(2)(E), 114108(b)(3), 113108(b)(4), 113108(b)(5), 114108(c)(1), 114108(c)(2)(A), 111108(c)(2)(B), 112108(c)(3), 111, 112108(c)(4), 111108(d), 117

108(d)(1), 111108(d)(2), 110108(d)(3), 110108(e), 117108(e)(1), 111108(e)(2), 115108(e)(4), 118108(e)(5), 116108(f), 117108(g), 111108(g)(2), 111108(h)(1), 114108(h)(2), 112108(h)(3), 112108(h)(4), 112108(h)(5), 112109, 163111, 329111(a), 327111(c), 329112, 57115, 160117, 42, 58, 61, 70117(a), 67117(b)(1), 67, 68117(b)(2), 68117(c)(1), 69117(d), 42, 43117(d)(2), 42, 69, 70117(d)(3), 70117(d)(5), 42, 69119, 46, 49, 289119(a), 46, 48119(b)(3), 47119(d), 48119(d)(2), 48121, 145, 149, 150, 151, 154, 156,

157, 367, 412, 419, 424121(a), 150121(b)(1), 151

xxviii TABLE OF STATUTES

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121(b)(2)(A), 151121(b)(2)(B), 151121(b)(3), 151121(b)(4), 154, 155, 156121(b)(4)(B), 155121(b)(4)(C), 156121(b)(4)(D), 156121(c)(2), 152121(d)(2), 154121(d)(3), 154121(d)(3)(A), 154121(d)(3)(B), 154121(d)(4), 150121(d)(5), 157121(d)(6), 155, 367121(d)(7), 153121(d)(9), 154121(d)(10), 155, 412121(d)(12), 154121(f), 151125, 12, 57125(a), 57125(d)(1), 57125(f), 57125(i), 58127, 42, 43, 53, 58127(a), 41127(b), 41127(c)(1), 42127(c)(5)(B), 42127(c)(6), 42129, 44131, 163132, 42, 43, 49, 53, 55, 58132(a)(1), 50132(a)(2), 51132(a)(3), 42, 43, 52, 53132(a)(4), 53132(a)(5), 54132(a)(6), 56, 221

132(a)(7), 56132(a)(8), 56132(b), 50132(b)(1), 50132(b)(2), 50132(c)(1), 51132(c)(1)(A), 52132(c)(1)(B), 52132(c)(2), 52132(d), 42, 52132(e), 66132(e)(1), 53132(e)(2), 49, 54132(f), 12, 55, 56132(f)(1), 54132(f)(3), 55132(f)(4), 55132(f)(5)(A), 55132(f)(5)(B), 55132(f)(5)(C), 55132(f)(5)(D), 55132(f)(5)(F), 54132(f)(5)(F)(i), 55132(f)(5)(F)(iii)(II), 55132(g), 56, 221132(h), 42, 51, 52, 70132(h)(3), 51132(i), 51132(j)(1), 51132(j)(4), 40, 56132(j)(8), 43, 53132(l), 42132(m), 56134, 57, 164135, 12, 158, 159135(a), 158135(b)(1), 158135(b)(2), 159135(c)(1), 158135(c)(2)(A), 158

TABLE OF STATUTES xxix

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135(c)(4), 159136, 163137, 12, 45137(a)(2), 45137(f), 45141(e), 161148(a), 161148(c), 161148(e), 161149, 161151, 5, 12, 191, 194, 258151(b), 259151(c), 259151(d)(1), 258151(d)(2), 177151(d)(3), 258151(d)(4), 258152, 194, 259, 260152(b)(3), 259152(c)(1), 259152(c)(1)(A), 260152(c)(1)(B), 260152(c)(1)(C), 260152(c)(1)(D), 260152(c)(1)(E), 260152(c)(2), 306152(c)(3)(A), 176, 260152(c)(3)(B), 260152(c)(4), 260152(d)(1), 261152(d)(1)(A), 261152(d)(1)(B), 262152(d)(1)(C), 262152(d)(1)(D), 262152(d)(2), 306152(d)(2)(H), 261, 262152(d)(3), 262152(e), 9, 145, 252, 261152(f)(1), 51, 260, 262152(f)(2), 260

152(f)(3), 262152(f)(4), 260152(f)(5), 260162, 42, 100, 190, 191, 192, 199,

200, 201, 203, 221, 222, 227,256, 257, 295, 297, 312, 391

162(a), 199, 204, 224, 236162(a)(1), 204162(a)(2), 207162(a)(3), 211162(c), 284162(c)(1), 284162(c)(2), 284162(c)(3), 284162(e), 285162(e)(2), 285162(e)(3), 285162(e)(5)(A), 285162(e)(5)(B), 285162(e)(6), 285162(f), 285, 286162(g), 286162(l), 256162(m), 206162(m)(5), 206162(m)(6), 206163, 190, 221, 236, 312, 384, 386163(a), 236163(b), 383163(d), 227, 311, 358, 385163(d)(2), 311163(d)(4)(B), 358163(f), 383163(h), 234, 236163(h)(2)(A), 221, 223163(h)(2)(D), 236163(h)(2)(F), 234163(h)(3)(A), 236163(h)(3)(B)(i), 237163(h)(3)(B)(ii), 237

xxx TABLE OF STATUTES

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163(h)(3)(C), 237163(h)(4)(A), 236164, 191, 221, 239164(a), 222, 239164(a)(1), 239164(a)(2), 241164(a)(3), 241164(b)(1), 241164(b)(5)(A), 242164(b)(5)(B), 242164(b)(5)(C), 242164(b)(5)(D), 242164(b)(5)(E), 242164(b)(5)(F), 242164(b)(5)(H), 242164(c)(1), 239164(d), 240164(d)(2)(A), 240164(d)(2)(B), 241164(f), 11165, 286, 421165(a), 268165(b), 268165(c), 98, 268, 279165(c)(1), 191, 269, 270, 272165(c)(2), 67, 191, 219, 226, 269,

270, 272, 331, 398165(c)(3), 191, 268, 269, 273, 274,

277, 354, 414, 415165(d), 191, 278, 279165(e), 272, 275165(g), 191, 278, 346165(g)(2), 278165(h), 263, 357, 415165(h)(1), 276165(h)(2), 276, 357165(h)(2)(A), 277165(h)(2)(B), 278165(h)(5)(A), 278165(h)(5)(E), 278

165(i), 275166, 191, 278, 279, 280166(a), 281166(b), 280166(d), 281, 346167, 76, 190, 214, 254168, 190, 214, 215, 218, 363, 365168(a), 215168(b), 215168(b)(4), 215168(c), 216, 218168(d), 216168(d)(3), 216168(g), 215, 218168(i)(6), 76168(k), 215170, 69, 191, 251170(a)(1), 244, 250170(a)(3), 251170(b)(1), 248170(b)(1)(A), 62, 248170(b)(1)(A)(ii), 67, 69170(b)(1)(B), 249170(b)(1)(C), 249170(b)(1)(C)(iii), 250170(b)(1)(D), 250170(b)(1)(E), 250170(b)(1)(G), 248170(c), 243170(c)(1), 62170(c)(2), 62, 243170(d)(1), 250170(e), 85, 245, 246, 247, 251170(e)(1), 359170(e)(1)(A), 246170(e)(1)(B), 247170(e)(1)(B)(i)(I), 246170(e)(1)(B)(i)(II), 247170(e)(7), 247170(e)(7)(D), 247

TABLE OF STATUTES xxxi

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170(f), 250170(f)(2)(A), 251170(f)(2)(B), 251170(f)(3), 251170(f)(3)(A), 245170(f)(8), 250170(f)(11), 251170(f)(12), 251170(f)(16), 251170(h), 251170(i), 245170(j), 245170(l), 244170(m), 251172, 103, 331172(b)(1)(A), 332172(b)(1)(C)–(J), 332172(b)(3), 332172(c), 331172(d), 331179, 190, 217, 218, 227, 364, 365179(b), 217179(b)(3)(B), 218179(d)(10), 365183, 191, 204, 279, 283, 295, 296,

297183(b), 297183(b)(1), 297183(b)(2), 297183(c), 295183(d), 296, 297183(e), 296, 297195, 190, 203, 219195(b)(1), 219195(c), 219197, 122, 190, 219212, 190, 193, 199, 224, 225, 226,

295, 297, 312212(1), 146, 190, 224, 226, 236212(2), 190, 224, 236

212(3), 145, 191, 224, 242, 252213, 191, 255, 257, 333213(a), 252, 263213(b), 253213(d)(1)(A), 253213(d)(1)(B), 254213(d)(1)(C), 256213(d)(1)(D), 256213(d)(2), 255213(d)(3), 253213(d)(5), 145, 252213(d)(9)(A), 255213(d)(9)(B), 256213(d)(10), 256213(d)(11), 255213(e), 257213(f), 252215, 133, 191215(a), 133215(b), 133215(c), 134215(d), 141216(a), 240217, 56, 190, 192, 220, 221217(b)(1), 221217(c), 220217(d)(1), 220217(d)(3), 221220, 12, 236221, 12, 191, 234221(b), 234221(c), 234221(d)(1), 234221(d)(2), 234221(e)(2), 234222, 191, 235222(b), 235222(c), 235222(e), 235223, 12, 129, 235, 236

xxxii TABLE OF STATUTES

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223(f), 235223(g), 235248, 220262, 41, 100, 190, 233263, 319263(a)(1), 201, 214264(a)(1), 100265, 100, 191, 311265(a)(1), 49, 312265(a)(2), 161, 312265(a)(6), 49, 312267, 191, 255, 305, 307, 310, 311267(a)(1), 86, 305, 309, 310, 311267(a)(2), 324267(b), 118, 301, 306, 307, 377267(b)(1), 306267(b)(3), 268267(b)(10), 268267(b)(11), 268267(b)(12), 268267(b)(13), 306267(c), 368267(c)(1), 307267(c)(2), 308267(c)(3), 308267(c)(4), 97, 306, 384267(c)(5), 308267(d), 309, 310, 311267(g), 311274, 53, 213, 287274(a)(1)(A), 213274(a)(1)(B), 213274(a)(3), 213274(b)(1), 33, 213274(c)(1), 209274(c)(2)(A), 209274(c)(2)(B), 209274(d), 213274(h)(1), 212274(h)(2), 212

274(h)(3), 212274(h)(6), 212274(j), 63, 64, 66, 191274(j)(2)(A), 64274(j)(2)(B), 65274(j)(3)(B), 65274(j)(4)(B), 64274(j)(4)(C), 64274(k)(1), 213274(l)(1), 213274(l)(2), 213274(m)(2), 213274(n)(1), 207, 208, 213280A, 191, 288, 289, 292, 295, 297,

397280A(a), 288, 289, 292280A(b), 289, 290, 292280A(c), 412280A(c)(1), 291, 292280A(c)(2), 292280A(c)(4), 292280A(c)(5), 290, 291, 293, 294, 304280A(c)(6), 292280A(d)(1), 288280A(d)(2), 289280A(d)(3), 289280A(d)(4), 289280A(e)(1), 290, 291280A(f)(1), 163, 288280A(f)(3), 295, 297280A(g), 289280E, 191, 287280F, 191, 218, 365280F(a), 218280F(b)(1), 218280F(b)(2), 218, 365280G, 206, 207301(c)(1), 180305(b)(1), 421316, 180

TABLE OF STATUTES xxxiii

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318(a)(1)–(3), 377318(a)(3)(B)(i), 369401(c)(1), 130408(m), 342416(i), 302441, 315441(g), 316441(i), 316444, 316446(c), 316446(d), 316446(e), 317448, 317448(a), 317448(b), 317448(d)(2), 180, 317451, 317453, 371, 376453(a), 371453(b)(1), 372453(c), 372453(d), 378453(e), 377453(e)(3), 377453(e)(6), 377453(e)(7), 377453(f)(1), 377453(f)(3), 373453(f)(4), 373453(f)(5), 373453(f)(6), 376453(f)(7), 375453(g), 375453(g)(1), 376453(g)(2), 375453(g)(3), 375453(i)(1), 375453(i)(2), 375453(j)(2), 373453(l), 378

453A, 378453A(b)(1)–(3), 378453A(b)(4), 378453A(c)(3), 378453B, 378, 379453B(a), 378, 379453B(b), 379453B(c), 379453B(d), 379453B(g), 379453B(h), 379454, 172, 325454(a), 172454(b), 325455, 320, 321456, 320461, 317461(c), 241461(g)(1), 238461(g)(2), 238461(h)(1), 321461(h)(2), 321461(h)(3), 322461(h)(4), 321465, 191, 295, 298, 304465(a)(2), 298465(b), 299465(b)(5), 299465(d), 298465(e), 299467, 324467(a), 324467(d), 324469, 191, 204, 295, 300, 301, 304469(a)(1), 303469(b), 304469(c)(2), 300, 301469(c)(4), 301469(c)(7), 300, 302469(c)(7)(B), 302

xxxiv TABLE OF STATUTES

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469(c)(7)(C), 302469(d)(1), 303469(e), 303469(f)(1), 304469(f)(3), 304469(g)(1), 304469(g)(2), 304469(g)(3), 304469(h)(1), 300469(h)(5), 300469(i)(1), 301469(i)(2), 301469(i)(3), 302469(i)(6), 301469(j)(6), 304469(j)(10), 295, 304472(c), 323483, 383, 384483(b), 383483(c)(1), 383483(d), 383483(e), 384501(a), 117501(c)(3), 117501(h), 243513(h), 12529, 158, 159529(c)(1), 159529(c)(2), 159529(c)(3)(C), 159529(e)(3), 159529(e)(5), 158530, 158, 159530(b)(1)(A)(ii), 159530(b)(1)(A)(iii), 160530(b)(1)(E), 159530(b)(2), 159530(c)(1), 160530(d)(2), 159530(d)(3), 159

530(d)(6), 159611, 218613, 219613A, 219631, 353641, 186642, 251644, 316664, 251671, 186682(a), 141691, 88, 390691(a)(1), 393691(a)(3), 393691(b), 393691(c), 393701, 182702, 183704(b), 183704(e), 183706(b), 316707, 183, 255707(b)(1), 118, 307709, 220901, 229904(a), 229904(c), 229904(d), 229911, 12, 192911(a), 162, 163911(b)(1), 162911(b)(2), 162911(c)(1)–(2), 163911(c)(3), 163911(c)(4), 163911(d)(1), 162911(d)(2)(A), 162911(d)(6), 1621001, 74, 991001(a), 73, 74, 76, 268

TABLE OF STATUTES xxxv

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1001(b), 74, 75, 78, 801001(c), 74, 76, 86, 144, 1451011, 74, 751011(a), 741011(b), 85, 2471012, 75, 3091012(a), 751014, 36, 88, 345, 3931014(a), 88, 891014(a)(1), 881014(a)(2), 881014(b), 881014(e), 891015, 36, 1451015(a), 83, 87, 144, 2681015(d)(6), 841015(e), 871016, 751016(a), 751016(a)(2), 76, 3621017, 113, 114, 1151017(a), 1141017(b), 1151017(b)(1), 1141017(b)(2), 1151017(b)(3), 1151017(b)(4), 1151017(c), 1151017(d), 1151019, 1631031, 76, 154, 157, 269, 309, 310,

311, 396, 397, 398, 399, 400,401, 404, 411, 412, 417, 424

1031(a)(1), 396, 402, 403, 4041031(a)(2), 397, 4001031(a)(3), 410, 4111031(a)(3)(A), 4101031(a)(3)(B), 4101031(b), 376, 402

1031(c), 4021031(d), 310, 403, 404, 405, 407,

4241031(e), 3971031(f), 311, 4111031(f)(2), 4111031(f)(4), 4111032, 3921033, 276, 357, 413, 414, 415, 416,

418, 419, 4201033(a), 413, 4181033(a)(1), 4131033(a)(2), 157, 4131033(a)(2)(B), 4161033(a)(2)(B)(ii), 4161033(b)(1), 4191033(b)(2), 4191033(g), 417, 4181033(g)(1), 4171033(g)(2), 4171033(g)(4), 4171033(h), 4181033(h)(1), 4181033(h)(1)(A)(i), 4181033(h)(1)(A)(ii), 4181033(h)(2), 418, 4191033(h)(4), 4181033(i), 4131034, 4241035(a)(1), 1001035(a)(3), 1041035(d), 4241038, 3771038(a), 4231038(b), 4231038(b)(1), 4231038(b)(2), 4231038(c), 4241038(d), 424

xxxvi TABLE OF STATUTES

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1038(e), 4241041, 76, 86, 87, 143, 145, 305,

311, 363, 4241041(a), 86, 87, 1441041(a)(2), 1431041(b)(1), 34, 87, 1441041(b)(2), 87, 1441041(c), 1431041(d), 861041(e), 871043, 4241091, 311, 421, 4221091(a), 420, 4211091(b), 4231091(c), 4231091(d), 4221201, 3441202, 340, 341, 342, 3661211, 3541211(a), 3441211(b), 3371212(a), 3441212(b), 3381212(b)(1), 3381212(b)(2), 3381221, 201, 347, 3521221(a)(1), 347, 349, 350, 3531221(a)(2), 349, 3521221(a)(3), 349, 3531221(a)(3)(C), 901221(a)(4), 3501221(a)(5), 350, 3531221(a)(6), 3501221(a)(7), 3501221(a)(8), 3501221(b)(3), 349, 3501222, 3441222(1), 3361222(2), 3361222(3), 336

1222(4), 3361222(5), 3361222(6), 3361222(7), 3361222(8), 3361222(9), 3371222(10), 3371222(11), 337, 3401223, 345, 3461223(1), 345, 405, 4201223(2), 144, 3451223(3), 346, 4231223(5), 3461223(9), 90, 3451231, 201, 246, 247, 333, 342, 345,

347, 349, 352, 353, 354, 355,356, 357, 358, 359, 362, 366,368, 398, 404, 414, 415, 420

1231(a)(1), 3541231(a)(2), 3541231(a)(3), 3521231(a)(3)(A), 3521231(a)(3)(A)(i), 3521231(a)(3)(A)(ii)(I), 3521231(a)(3)(A)(ii)(II), 3521231(a)(3)(B), 3521231(a)(4)(A), 3541231(a)(4)(C), 3541231(b)(1), 3521231(b)(1)(A)–(D), 3531231(b)(2)–(4), 3531231(c), 3561231(c)(5), 3561233, 3461233(b)(1), 3461233(d), 3461234, 3571234A, 3571234B, 3571235, 350

TABLE OF STATUTES xxxvii

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1236(a), 3491237, 3481237(a), 3481237(b), 3481239, 358, 362, 368, 369, 3751239(b), 3681239(b)(2), 3691239(b)(3), 3691239(c)(1)(A), 3681239(c)(1)(B), 3681239(c)(1)(C), 3681239(c)(2), 3681241, 3571242, 3581243, 3581244, 3581245, 115, 144, 217, 341, 361, 362,

363, 364, 365, 366, 367, 375,399, 404, 413

1245(a)(1), 363, 3641245(a)(2), 3641245(a)(2)(A), 363, 365, 4201245(a)(2)(B), 3641245(a)(2)(C), 3651245(a)(3), 3611245(b), 3631245(b)(4), 4131245(d), 3631250, 115, 144, 156, 340, 341, 342,

343, 356, 361, 362, 363, 366,367, 368, 375, 404, 413

1250(a)(1), 3631250(a)(1)–(3), 3631250(a)(1)(A), 3631250(a)(1)(B), 3631250(a)(1)(B)(v), 3631250(b)(1), 363, 3661250(b)(3), 368, 4201250(c), 3611250(d), 363

1250(d)(4), 4131250(h), 3631252, 3581253, 3581271, 3811271(a)(2)(A), 3811272, 3811272(a)(1), 3801272(a)(2), 3811272(a)(3), 3811272(a)(4), 3811272(a)(5), 3801273(a), 3791273(a)(3), 3791273(a)(5), 3801273(b)(1), 3791273(b)(2), 3801273(b)(3), 3801273(b)(4), 3801274, 3801274(a), 3801274(c)(1), 3801274(d), 383, 385, 3861274A, 121274A(a), 380, 3841274A(b), 3801274A(d)(2), 3801275(a)(1)(A), 3791276–1278, 3821278(a)(2)(B), 3821281–1283, 3821286, 3821287, 3821288, 3831341, 329, 330, 3311341(a), 330, 3311341(a)(1)–(3), 3291341(a)(4)–(5), 3301341(b)(1), 3311361(b), 181

xxxviii TABLE OF STATUTES

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1361(c)(1), 1811362, 1811366, 1811378, 3161398, 1861401(b)(2), 71402, 1841402(a)(13), 1841411, 73101(b)(2), 73401, 113402, 116012(a)(1)(A), 166013(a), 96013(d)(2), 96013(d)(3), 86015, 86201, 176203, 186303, 186315, 116321, 216322, 216323, 216323(f), 216325(a), 216331(k), 216334, 216401(b), 106501, 19

6511(a), 196532(a)(1), 206621(a)(2), 3786654, 117422, 197602, 177701(a)(25), 204, 3177701(a)(43), 837702, 947702B(c), 957703(a), 97703(b), 97805, 147805(e), 147872, 29, 236, 384, 385, 386, 3877872(a), 386, 3877872(b), 3867872(c)(1)(B), 3867872(c)(1)(C), 3877872(c)(2), 3857872(c)(3), 3867872(d)(1), 3857872(e)(1), 3857872(e)(2), 3857872(f)(2), 3867872(f)(3), 3847872(f)(5), 3847872(f)(6), 3847872(f)(10), 385, 386

TABLE OF STATUTES xxxix

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Table of Regulations

xli

Treasury Regulations

1.25A-2(d), 2351.61-1, 23, 271.61-2(a)(1), 611.61-2(d), 27, 801.61-3(a), 287, 3221.61-14, 25, 271.72-1(b), 1011.72-1(e), 1001.72-2(b)(2), 1011.72-2(b)(3), 1031.72-4(b), 1021.72-4(d)(3), 1031.72-9, 101, 1021.72-9, Table V, 1021.72-9, Table VI, 102–031.74-1(a)(1), 661.74-1(a)(2), 661.79-1(a), 411.79-3, 411.83-1(a)(1), 3871.83-1(b)(1), 3901.83-1(b)(2), 3901.83-1(b)(3), 3901.83-1(c), 231.83-1(d), 3901.83-1(e), 3911.83-1(f), Example 2, 3891.83-2(a), 3911.83-3(a)(1)–(7), 387

1.83-3(b), 3881.83-3(c)(1), 3881.83-3(c)(2), 388, 3891.83-3(h), 389, 3901.83-3(i), 3891.83-4(a), 3911.83-5(c), 3901.83-6(a)(4), 3921.83-6(b), 3921.83-6(c), 3921.101-4(a)(1)(ii), 981.102-1(a), 341.102-1(e), 361.104-1(b), 1231.104-1(c)(2), 1231.107-1(a), 481.107-1(b), 481.107-1(c), 481.117-2(a)(2), 691.117-3(a), 681.117-3(c), 681.119-1(a)(2), 461.119-1(a)(2)(ii)(a)–(c), 471.119-1(a)(3), 471.119-1(b), 471.119-1(c), 461.121-1(b)(1), 1501.121-1(b)(2), 1501.121-1(b)(3), 1511.121-1(c)(2), 150

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1.121-1(c)(4), Example 3, 1501.121-1(d), 3671.121-1(e), 156, 367, 4121.121-3, 1521.121-3(c), 1521.121-3(e)(2)(iii)(C), 1521.121-3(g)(1), 1521.121-4(d), 4191.121-4(g), 1511.132-1(e), 561.132-1(f), 431.132-2(a)(2), 501.132-2(a)(5)(ii), 501.132-2(c), 501.132-3(a)(2)(ii), 521.132-3(b)(2), 511.132-3(c)(1)(ii), 521.132-4(a)(1)(iv), 501.132-5, 531.132-5(a)(1)(ii), 531.132-5(a)(1)(v), 531.132-5(a)(2), 531.132-6, 541.132-6(c), 541.132-6(e), 541.132-6(f), 541.132-7(a), 491.132-7(b), 491.132-8(a)(2)(i), 521.132-8(c)(2), 511.132-8(d), 511.132-9(b), Q&A-1(b), 551.132-9(b), Q&A-16(b), 551.132-9(b), Q&A-16(c), 541.152-1(a)(2), 2601.152-1(b), 2601.152-4, 2611.162-2(b), 2081.162-2(e), 210

1.162-5, 53, 2121.162-7, 2051.162-21(a), 2851.162-21(b)(1), 2851.162-21(b)(2), 2861.162-21(c), 2861.164-1(a), 2401.164-3(b), 2391.164-4(a), 2391.164-6(d), 2411.165-1(d), 2751.165-2, 2731.165-7(a)(1), 271, 2751.165-7(a)(2), 2701.165-7(a)(3), 2741.165-7(b)(1), 270, 2751.165-8(d), 2721.166-1(c), 2791.166-1(f), 2821.166-2(a), 2801.166-2(b), 2801.166-2(c), 2801.166-5, 2811.170A-1(c)(1), 2451.170A-1(g), 2451.172-3(a), 3321.179-1(e), 218, 3651.183-1(b), 2971.183-1(d)(1), 2961.183-2(a), 2951.183-2(b), 279, 2951.212-1(b), 2251.212-1(f), 2251.212-1(g), 2251.213-1(a)(1), 2521.213-1(e)(1)(ii), 253, 2551.213-1(e)(1)(iii), 2541.213-1(e)(1)(v), 2541.217-2(b), 221

xlii TABLE OF REGULATIONS

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1.217-2(d)(2)(ii), 2211.248-1, 2201.262-1(b)(5), 56, 2101.263(a)-3, 76, 2021.263(a)-4, 2031.263(a)-4(b), 2031.263(a)-4(d)(3), 3191.263(a)-4(f)(1), 3191.263(a)-4(l), Example 7, 2031.267(c)-1(a)(4), 3061.267(c)-1(b), 3071.267(d)-1(a)(2), 3091.267(d)-1(a)(3), 3101.267(d)-1(c)(1), 3091.267(d)-1(c)(2), 3111.267(d)-1(c)(3), 3091.274-2, 2131.274-4, 2091.446-1(c)(1)(i), 3181.451-2(a), 3181.451-5, 3211.451-5(c), 3211.453-12(a), 3751.453-12(d), 3751.469-5(f)(1), 3011.471-8, 3231.704-1(e)(1)(iii), 1831.704-1(e)(1)(iv), 1841.911-2(h), 1621.911-3, 1621.911-6, 1621.1001-1(e), 85, 86, 1451.1001-2(a)(1), 781.1001-2(a)(2), 79, 1191.1001-2(a)(4), 781.1001-2(a)(4)(ii), 791.1001-2(b), 1191.1001-2(c), Example 7, 79, 1191.1001-2(c), Example 8, 79, 119

1.1012-1(c)(1), 751.1012-1(e), 751.1015-1(a)(2), 841.1015-4, 85, 1451.1015-4(a), 861.1017-1, 1141.1031(a)-1(a)(1), 3961.1031(a)-1(b), 4001.1031(a)-1(c), 4001.1031(a)-1(d), 4001.1031(a)-2, 4001.1031(a)-2(b)(1), 4011.1031(a)-2(b)(2), 4011.1031(a)-2(b)(3), 4011.1031(a)-2(b)(5), 4011.1031(a)-2(b)(7), Example 1, 4011.1031(a)-2(b)(7), Example 3, 4011.1031(a)-2(b)(7), Example 4, 4011.1031(a)-2(c), 4011.1031(b)-1(c), 4031.1031(c)-1, 4021.1031(d)-1(e), 4041.1031(d)-2, Example 1, 4031.1031(d)-2, Example 2, 403, 4041.1031(j)-1, 4081.1031(j)-1(c), 4091.1031(k)-1(b)(1)–(2), 4101.1031(k)-1(c)(4), 4111.1031(k)-1(g), 4111.1031(k)-1(g)(4), 4091.1032-1(a), 3921.1033(a)-2(c)(1), 4151.1033(a)-2(c)(3), 4161.1033(a)-2(c)(9), 4151.1033(b)-1(b), 4201.1038-1, 4231.1038-1(h), 4241.1038-2, 4241.1041-2, 145

TABLE OF REGULATIONS xliii

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1.1091-1(h), 4231.1091-2(a), 4221.1221-1(b), 3491.1221-3(a), 3501.1245-1(d), 3621.1245-2(a)(7), 3641.1245-4(d)(2), Example 2, 4141.1250-1(a)(5)(i), 3621.1341-1(a)(2), 3301.1341-1(b)(1)(i)–(ii), 3301.1341-1(d)(4)(ii), 33115a.453-1(b)(2)(i), 37215a.453-1(b)(2)(iii), 37215a.453-1(b)(2)(v), 37215a.453-1(c)(1), 37315a.453-1(c)(2), 37315a.453-1(c)(3), 37415a.453-1(c)(4), 37415a.453-1(c)(6), 37415a.453-1(c)(7), 37415a.453-1(d)(3)(i), 37815a.453-1(d)(3)(ii), 378301.7701-3, 180, 185601.105(d), 17

Proposed TreasuryRegulations

1.74-1(b), 621.74-1(d), 621.74-1(f), 621.74-2(c), Example 2, 641.102-1(f)(2), 331.117-6(c)(1), 681.117-6(c)(2), 681.117-6(c)(3), 681.117-6(c)(4), 69

1.117-6(c)(6), Example 1, 681.117-6(d)(1), 691.117-6(e), 681.125-1(a)(2), 571.125-1(a)(3), 581.125-1(e), 581.125-5(h), 44, 45, 581.125-5(i), 441.125-5(j), 451.274-8(d)(3), 641.280A-1(c)(1), 2881.280A-2(i)(3), 2941.280A-2(i)(5), 2941.280A-3(d)(3), 2911.465-22, 2991.7872-4(d)(1), 387

Temporary TreasuryRegulations

1.62-1T(d), 2411.71-1T(b), Q&A–5, 1341.71-1T(b), Q&A–6, 1341.71-1T(b), Q&A–9, 1361.71-1T(c), Q&A–17, 1411.71-1T(c), Q&A–18, 1421.163-10T(p)(5), 2371.469-2T(d)(6), 3041.469-5T(a), 300, 3011.469-5T(c), 3001.469-5T(d), 3011.469-5T(e)(2), 3011.469-5T(f)(2), 3011.1041-1T(a), Q&A–5, 1451.1041-1T(b), 1441.1041-1T(c), Q&A–9, 1451.1041-1T(d), Q&A–12, 87

xliv TABLE OF REGULATIONS

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Table of Cases

xlv

Alderson v. United States, 351Alice Phelan Sullivan Corp. v.

United States, 329Allen v. Commissioner, 275AmerGen Energy Co. LLC v.

United States, 321American Automobile Association

v. United States, 320Amos v. Commissioner, 128Andrews v. Commissioner, 208Arkansas Best Corp. v. Commis-

sioner, 351Armstrong v. Commissioner, 146,

261Arnett v. Commissioner, 162Arrowsmith v. Commissioner,

351–52Austin v. Commissioner, 388Automobile Club of Michigan v.

Commissioner, 320Bell Lines, Inc. v. United States, 399Benaglia v. Commissioner, 46Biedenharn Realty Co. v. United

States, 348Bishop v. Shaughnessy, 172Blackman v. Commissioner, 274Bolton v. Commissioner, 290–91Bowers v. Kerbaugh-Empire Co., 109Bowers v. Lumpkin, 225Boyter v. Commissioner, 146

Bresler v. Commissioner, 352Bugbee v. Commissioner, 280Bulas v. Commissioner, 292Burnet v. Logan, 83, 374Burnet v. Sanford & Brooks Co.,

316Bynum v. Commissioner, 348Californians Helping to Alleviate

Medical Problems, Inc. v. Com-missioner, 287

Campbell v. Commissioner, 61Carlebach v. Commissioner, 259Carlson v. Commissioner, 110–11Carpenter v. Commissioner, 274Cathcart v. Commissioner, 239Cesarini v. United States, 24–25Chamales v. Commissioner, 274Charley v. Commissioner, 27Chow v. Commissioner, 279Clark v. Commissioner, 162Cohen v. Commissioner, 296Coleman v. Commissioner, 274Collins v. Commissioner, 108–09Commissioner v. Anderson, 46Commissioner v. Banks, 222–23Commissioner v. Bilder, 255Commissioner v. Boylston Market

Association, 319Commissioner v. Culbertson, 184Commissioner v. Driscoll, 48

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Commissioner v. Duberstein,31–32, 33

Commissioner v. Flowers, 207Commissioner v. Giannini, 170Commissioner v. Glenshaw Glass

Co., 24, 122Commissioner v. Groetzinger, 203Commissioner v. Indianapolis

Power & Light Co., 108Commissioner v. Kowalski, 47Commissioner v. Lincoln Savings &

Loan Association, 202Commissioner v. P. G. Lake, Inc.,

351Commissioner v. People’s-Pitts-

burgh Trust Co., 200Commissioner v. Soliman, 293Commissioner v. Sullivan, 199,

283–84Commissioner v. Tellier, 284, 286Commissioner v. Tufts, 79, 298Commissioner v. Wilcox, 108Corn Products Refining Co. v.

Commissioner, 351Cowles v. Commissioner, 226Crane v. Commissioner, 79, 298Cremona v. Commissioner, 224Dallas Transfer & Terminal Ware-

house Co. v. Commissioner, 109David E. Watson, PC v. United

States, 182Davis v. United States, 244Daya v. Commissioner, 240Dean v. Commissioner, 28Dean v. Commissioner, 384Dickerson v. Commissioner, 184Dickman v. Commissioner, 384Eberl’s Claim Service, Inc. v. Com-

missioner, 205

Estate of Franklin v. Commissioner,78, 298

Estate of Rockefeller v. Commis-sioner, 224

Estate of Starr v. Commissioner,211

Estate of Stranahan v. Commis-sioner, 173–74

Estate of Winkler v. Commissioner,184

Estate of Witt v. Fahs, 318Ewell v. Commissioner, 135Exacto Spring Corp. v. Commis-

sioner, 205Farid-Es-Sultaneh v. Commissioner,

83Fleischman v. Commissioner,

225–26Fox v. Commissioner, 315Frank v. Commissioner, 203Frankel v. Commissioner, 293Freda v. Commissioner, 351Freedom from Religion Foundation,

Inc. v. Lew, 49Garnett v. Commissioner, 301Gates v. Commissioner, 150Gehl v. Commissioner, 119Gilbert v. Commissioner, 108–09Gilmore v. United States, 146Golsen v. Commissioner, 19Goodwin v. United States, 33Green v. Commissioner, 35Green v. Commissioner, 293Haffner’s Service Stations, Inc. v.

Commissioner, 205Harolds Club v. Commissioner, 205Haslam v. Commissioner, 281Haverly v. United States, 26Heidt v. Commissioner, 222

xlvi TABLE OF CASES

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Helvering v. Horst, 171, 172Helvering v. Independent Life In-

surance Co., 28Helvering v. Le Gierse, 94Helvering v. Stockholms Enskilda

Bank, 161Henderson v. Commissioner, 207Henry v. Commissioner, 200Hernandez v. Commissioner, 244Higgins v. Commissioner, 224Highland Farms, Inc. v. Commis-

sioner, 108Hornung v. Commissioner, 62Hort v. Commissioner, 350Huntsman v. Commissioner, 239INDOPCO, Inc. v. Commissioner,

202–03International Freighting Corp. v.

Commissioner, 80International Shoe Machine Corp.

v. United States, 353Jacob v. United States, 47James v. United States, 27, 108Jenkins v. Commissioner, 200Kahler v. Commissioner, 318Keenan v. Bowers, 274Keener v. Commissioner, 221Kochansky v. Commissioner, 169LabelGraphics, Inc. v. Commis-

sioner, 205Lakeland Grocery Co. v. Commis-

sioner, 109LeTourneau v. Commissioner, 162Liant Record, Inc. v. Commis-

sioner, 415–16Liddy v. Commissioner, 171Lindeman v. Commissioner, 46Lowry v. United States, 226Lucas v. Earl, 168–69, 170

Lyddan v. United States, 136Lyeth v. Hoey, 34M. L. Eakes Co., Inc. v. Commis-

sioner, 201Magneson v. Commissioner, 398–99Malat v. Riddell, 347Mayo v. Commissioner, 279Mayo Foundation for Medical Edu-

cation and Research v. UnitedStates, 14

Mazzei v. Commissioner, 287McCann v. United States, 66McCoy v. Commissioner, 67McDonell v. Commissioner, 66McKinney v. Commissioner, 290,

291McKinney v. United States, 330McWilliams v. Commissioner,

305–06Menard, Inc. v. Commissioner, 206Merkel v. Commissioner, 111Metro Leasing and Development

Corp. v. Commissioner, 205Midland Empire Packing Co. v.

Commissioner, 202Miller v. Commissioner, 305Monk v. Commissioner, 173Montgomery v. Commissioner, 255Mt. Morris Drive-In Theatre Co. v.

Commissioner, 202National Federation of Independent

Business v. Sebelius, 13–14Newcombe v. Commissioner, 226North American Oil Consolidated

v. Burnet, 329Ocmulgee Fields, Inc. v. Commis-

sioner, 411O’Donnabhain v. Commissioner,

256

TABLE OF CASES xlvii

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Old Colony Trust Co. v. Commis-sioner, 25–26

Olk v. United States, 32Pau v. Commissioner, 238Payne v. Commissioner, 116Pevsner v. Commissioner, 214Philadelphia Park Amusement Co.

v. Commissioner, 81, 82–83Pike v. Commissioner, 330Poe v. Seaborn, 168, 169Popa v. Commissioner, 275Powell v. Commissioner, 240Powers v. Commissioner, 275Prebola v. Commissioner, 351Preslar v. Commissioner, 118Primuth v. Commissioner, 223Pulvers v. Commissioner, 274Randolph v. Commissioner, 255Raytheon Production Corp. v.

Commissioner, 122Redwing Carriers, Inc. v. Tomlin-

son, 399Regan v. Taxation with Representa-

tion, 243Renkemeyer, Campbell & Weaver,

LLP v. Commissioner, 184Rice v. Commissioner, 348Rockefeller v. Commissioner, 243Rosenspan v. United States, 207Salvatore v. Commissioner, 173Schlude v. Commissioner, 320, 321Sherman v. Commissioner, 212Simon v. Commissioner, 214Sklar v. Commissioner, 244Smith v. Commissioner, 44Sophy v. Commissioner, 237

Starker v. United States, 410Stevens v. Commissioner, 135Stromme v. Commissioner, 163Surasky v. United States, 225Tank Truck Rentals, Inc. v. Com-

missioner, 284Teruya Brothers, Ltd. v. Commis-

sioner, 411Thompson v. United States, 301Topping v. Commissioner, 296United States v. Burke, 123United States v. Correll, 207United States v. Generes, 281United States v. Gilmore, 146, 226United States v. Kirby Lumber Co.,

109United States v. Lewis, 329United States v. Powell, 17United States v. Windsor, 14, 146,

174–75U.S. Freightways Corp. v. Commis-

sioner, 319Van Cleave v. United States, 330W.W. Windle Co. v. Commissioner,

351Walker v. Commissioner, 185Wallace v. Commissioner, 164Welch v. Helvering 200–01Westphal v. Commissioner, 296Whipple v. Commissioner, 281White v. Commissioner, 274Williams v. Commissioner, 318Wolder v. Commissioner, 35Wood v. United States, 286, 287Zaninovich v. Commissioner, 319Zarin v. Commissioner, 117–18

xlviii TABLE OF CASES

NOTE: The two Dean cases are different cases (and different taxpayers). Oneis in Chapter 2; the other is in Chapter 23. The same is true for the two Greencases, which appear in Chapters 3 and 18.

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Table of Administrative Authorities

xlix

Actions on Decisions

AOD 1979-66, 255AOD 1991-02, 239AOD 2010-02, 301AOD 2011-06, 279

Announcements

Announcement 2002-18, 27

Chief Counsel Advice

CCA 200809001, 124CCA 200911006, 402CCA 201021050, 174CCA 201238027, 402

IRS Publications

Publication 527, 290Publication 4681, 110

Notices

Notice 97-59, 356Notice 2004-27, 272Notice 2011-14, 164Notice 2011-72, 53Notice 2012-12, 164Notice 2012-75, 164

Notice 2013-13, 294Notice 2013-71, 59Notice 2013-72, 11Notice 2014-21, 74

Pre-1954 Code Rulings

O.D. 514, 46, 54

Private Letter Rulings

PLR 8719007, 363PLR 9126063, 48PLR 200041022, 123PLR 200805012, 402PLR 200834016, 286PLR 200912004, 401PLR 200937007, 375PLR 200942017, 125, 126PLR 201232024, 172

Revenue Procedures

Rev. Proc. 87-56, 401Rev. Proc. 87-57, 216Rev. Proc. 90-12, 244Rev. Proc. 92-71, 319Rev. Proc. 2000-37, 411Rev. Proc. 2002-28, 317Rev. Proc. 2004-34, 321

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Rev. Proc. 2005-14, 157, 412Rev. Proc. 2008-16, 398Rev. Proc. 2013-13, 294Rev. Proc. 2013-25, 12Rev. Proc. 2013-35, 12

Revenue Rulings

Rev. Rul. 55-261, 255Rev. Rul. 55-278, 172Rev. Rul. 57-125, 135Rev. Rul. 58-66, 175Rev. Rul. 61-119, 399Rev. Rul. 63-91, 255Rev. Rul. 63-232, 274Rev. Rul. 64-104, 172Rev. Rul. 64-236, 225Rev. Rul. 64-237, 416Rev. Rul. 66-167, 170Rev. Rul. 66-334, 414Rev. Rul. 67-48, 330Rev. Rul. 67-246, 244Rev. Rul. 67-420, 135Rev. Rul. 67-442, 146Rev. Rul. 69-154, 130Rev. Rul. 69-188, 236Rev. Rul. 69-487, 365Rev. Rul. 70-254, 95Rev. Rul. 70-474, 214Rev. Rul. 70-477, 245Rev. Rul. 70-598, 344Rev. Rul. 72-151, 311Rev. Rul. 72-163, 62Rev. Rul. 74-581, 170Rev. Rul. 75-230, 127Rev. Rul. 75-232, 124Rev. Rul. 75-316, 256Rev. Rul. 75-342, 350

Rev. Rul. 76-255, 146Rev. Rul. 76-479, 171Rev. Rul. 77-110, 298Rev. Rul. 77-201, 422Rev. Rul. 77-290, 171Rev. Rul. 78-38, 244Rev. Rul. 78-39, 253Rev. Rul. 78-301, 48Rev. Rul. 79-132, 171Rev. Rul. 79-261, 416Rev. Rul. 79-313, 126Rev. Rul. 80-335, 318–19Rev. Rul. 82-74, 330Rev. Rul. 83-104, 244Rev. Rul. 84-13, 171Rev. Rul. 87-112, 172Rev. Rul. 89-2, 417Rev. Rul. 92-29, 242Rev. Rul. 93-75, 328Rev. Rul. 97-9, 253Rev. Rul. 99-7, 207, 210Rev. Rul. 99-28, 253Rev. Rul. 2002-22, 172Rev. Rul. 2007-69, 164Rev. Rul. 2008-5, 421Rev. Rul. 2008-34, 117Rev. Rul. 2009-9, 272Rev. Rul. 2009-13, 99Rev. Rul. 2009-14, 99Rev. Rul. 2010-25, 238Rev. Rul. 2013-17, 146, 174Rev. Rul. 2013-23, 12Rev. Rul. 2014-2, 149

Technical AdviceMemoranda

TAM 200437030, 54

l TABLE OF ADMINISTRATIVE AUTHORITIES

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Series Editor’s ForewordThe Carolina Academic Press Mastering Series is designed to provide you with

a tool that will enable you to easily and efficiently “master” the substance andcontent of law school courses. Throughout the series, the focus is on qualitywriting that makes legal concepts understandable. As a result, the series is de-signed to be easy to read and is not unduly cluttered with footnotes or cites tosecondary sources.

In order to facilitate student mastery of topics, the Mastering Series includesa number of pedagogical features designed to improve learning and retention.At the beginning of each chapter, you will find a “Roadmap” that tells youabout the chapter and provides you with a sense of the material that you willcover. A “Checkpoint” at the end of each chapter encourages you to stop andreview the key concepts, reiterating what you have learned. Throughout the book,key terms are explained and emphasized. Finally, a “Master Checklist” at theend of each book reinforces what you have learned and helps you identify anyareas that need review or further study.

We hope that you will enjoy studying with, and learning from, the Master-ing Series.

Russell L. WeaverProfessor of Law & Distinguished University ScholarUniversity of Louisville, Louis D. Brandeis School of Law

li

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PrefaceThe income tax affects individuals in a many ways. First, of course, they

must compute the amount they owe (or any refund due to them) on an annualbasis. Second, they confront tax consequences when they sell property or makegifts to family members. The attorneys who advise them encounter tax issuesin every practice area. If they represent businesses accused of civil or criminalwrongdoing, they try to structure damages and other payments to preservetheir deductibility. If they practice matrimonial law, they must understand thetax consequences of alimony and child support. If they specialize in real prop-erty transactions, they regularly encounter the tax consequences of debt re-structuring, eminent domain, and like- kind exchanges.

This book covers concepts you are likely to encounter in a basic federal in-come tax course. These range from the components of taxable income— grossincome, exclusions, deductions, and credits— to the rules that govern timingand character of income and deductions. Recognizing that tax must be con-sidered in context, we focus on the most common income and deduction pro-visions and indicate how they affect taxpayers in various settings. We includenumerous examples to illustrate the concepts in addition to citations to rele-vant authority.

Because it may appear that you must know everything about the incometax to understand any of its provisions, we begin with an overview of how theparts fit together. But our primary focus is on the material in Chapters 2 through24. We hope you find this book and its structure a useful guide to learningfederal income tax.

liii

Christopher M. PietruszkiewiczStetson University College of LawGulfport, FloridaApril 2014

Gail Levin RichmondShepard Broad Law CenterNova Southeastern UniversityDavie, FloridaApril 2014

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lv

AcknowledgmentsDean Pietruszkiewicz is very grateful to Laralee Garvin, Brian Howsare,

Kelly Kromer, Todd Taranto, Erik Vigen, Melissa Grand, Kristen Bell, SharonTsai, Emily Brouillette, and Jessica Fehr for their work in checking, updating,and revising the manuscript.

Professor Richmond thanks Amy Rojas for her assistance in proofreading por-tions of the manuscript.

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