I. General Information

1. Course Title:
Income Tax

2. Course Prefix & Number:
ACCT 2165

3. Course Credits and Contact Hours:

Credits: 4

Lecture Hours: 4

Lab Hours: 0

4. Course Description:

This is an introductory course covering the explanation, interpretations and application of individual income tax, partnership taxation and corporate taxation. The student will prepare 1040 tax returns with all appropriate schedules both manually and computerized with related tax planning strategies. The student will also prepare business tax returns with appropriate schedules and related tax planning. Preparation of returns through the VITA program will be encouraged, but not required.

5. Placement Tests Required:

6. Prerequisite Courses:

8. Prerequisite (Entry) Skills:
Understand the accounting terminology and basic accounting foundations.

9. Co-requisite Courses:

There are no corequisites for this course.

II. Transfer and Articulation

1. Course Equivalency - similar course from other regional institutions:

Name of Institution	Course Number and Title	Credits
St. Cloud State University	ACCT 483/583 – Personal Taxation	3
Bemidji State University	ACCT 3404 – Income Taxes I	3
North Dakota State University	ACCT 418 – Tax Accounting I	3

III. Course Purpose

1. Program-Applicable Courses – This course is required for the following program(s):

Name of Program(s)	Program Type
Accounting	AAS

IV. Learning Outcomes

1. College-Wide Outcomes

College-Wide Outcomes/Competencies	Students will be able to:
Apply abstract ideas to concrete situations	Calculate the correct tax position and prepare a Federal and Minnesota Income Tax return along with appropriate schedules in good form for various taxpayers.
Utilize appropriate technology	Access, research and use various internet tax resources.
Apply ethical principles in decision-making	Describe the rules that apply to tax practitioners and the Taxpayer Bill of Rights

2. Course Specific Outcomes - Students will be able to achieve the following measurable goals upon completion of the course:

Expected Outcome	MnTC Goal Area
Understand the history, objectives and application of US and MN tax law.
Calculate the correct tax position and prepare a Federal and Minnesota Income Tax return along with appropriate schedules in good form for various taxpayers.
Access, research and use various internet tax resources.
Identify and apply tax rules to different entities subject to tax and reporting requirements.
Describe the rules that apply to tax practitioners and the Taxpayer Bill of Rights.
Demonstrate an understanding of tax planning strategies.

V. Topical Outline

Listed below are major areas of content typically covered in this course.

1. Lecture Sessions

1.  The Individual Income Tax Return
   a. Understand the history and objectives of US tax law.
   b. Describe the different entities subject to tax and reporting requirements.
   c. Understand and apply the tax formula for individuals.
   d. Identify individuals who must file tax returns and select their correct filing status.
   e. Calculate number of and exemption amounts for taxpayers.
   f. Calculate the correct standard or itemized deduction amounts for taxpayers.
   g. Compute basic capital gains and losses.
   h. Access and use various Internet tax resources.
2. Gross Income and Exclusions
   a. Understand and apply the definition of gross income.
   b. Determine the tax treatment of significant elements of gross income such as interest, dividends, alimony and prizes.
   c. Understand the tax rules for significant exclusions from gross income including insurance benefits, inheritances, scholarships, health insurance benefits, meals and lodging, municipal bond interest and fringe benefits.
   d. Apply the rules governing inclusion of Social Security payments as income.
3. Business Income and Expenses
   a. Apply the tax rules for rental property and vacation homes.
   b. Explain the treatment of passive income and losses.
   c. Identify the tax treatment for various deductions for adjusted gross income, including bad debts, costs of goods sold and net operating losses.
   d. Understand the treatment of Individual Retirement Accounts (IRAs and ROTH IRA’s).
   e. Explain the general contribution rules of Keogh and Simplified Employee Pension (SEP) plans.
   f. Describe the general rules for qualified retirement plans and 401K plans.
   g. Explain the pension plan rollover rules.
   h. Classify self-employed and employee expense deductions for adjusted gross income and from adjusted gross income.
   i. Identify the requirements for deducting travel and transportation expenses and be able to complete Form 2106.
   j. Ascertain when a home office deduction may be claimed and how the deduction is computed.
   k. Determine the requirements for claiming other common business expenses such as entertainment, education, uniforms, and business gifts.
   l. Complete a basic Schedule C (Profit or Loss from Business).
   m. Understand the special rule applicable to moving expenses.
   n. Apply the factors used to determine whether an activity is a hobby, and understand the tax treatment of hobby losses.
4. Itemized Deductions and Other Incentives
   a. Understand the nature and treatment of medical expenses.
   b. Calculate the itemized deduction for taxes.
   c. Apply the rules for an individual taxpayer’s interest deduction.
   d. Determine the charitable contributions deduction.
   e. Compute the deduction for casualty and theft losses.
   f. Identify miscellaneous itemized deductions.
   g. Understand the basic theory behind the itemized deduction and exemption phase-outs for high-income taxpayers for years prior to and subsequent to 2010.
   h. Understand the tax implications of using educational savings vehicles.
5. Credits and Special Taxes
   a. Calculate the child tax credit.
   b. Determine the earned income credit (EIC).
   c. Compute the child and dependent care credit for an individual taxpayer.
   d. Apply the special rules applicable to the American Opportunity and lifetime learning credits.
   e. Understand the operation of the foreign tax credit, the adoption credit, and the energy credits.
   f. Understand the basic alternative minimum tax calculation.
   g. Apply the rules for computing tax on the unearned income of minor children and certain students.
6. Accounting Periods, Methods and Depreciation
   a. Determine the different accounting periods and methods allowed for tax purposes.
   b. Understand the concept of depreciation and be able to calculate depreciation expense using the MACRS tables.
   c. Identify when a Section 179 election to expense the cost of property may be used.
   d. Apply the limitations placed on depreciation of “listed property” and “luxury automobiles”.
   e. Understand the tax treatment for goodwill and certain other intangibles.
   f. Determine whether parties are considered related for tax purposes, and classify the tax treatment of certain related-party transactions.
7. Capital Gains and Losses
   a. Define the term “capital asset” and the holding period for long-term and short-term capital gains.
   b. Calculate the gain or loss on the disposition of an asset.
   c. Compute the tax on long-term and short-term capital assets.
   d. Understand the treatment of Section 1231 assets and the various recapture rules.
   e. Know the general treatment of casualty losses for both personal and business purposes.
   f. Understand the provisions allowing deferral of gain on installment sales, like-kind exchanges, involuntary conversions, and the gain exclusion for personal residences.
8. Withholding, Estimated Payments and Payroll Taxes
   a. Compute the income tax withholding from employee wages.
   b. Determine taxpayers’ quarterly estimated payments.
   c. Understand the FICA tax, the federal deposit system and employer payroll reporting.
   d. Calculate the self-employment tax (both Social Security and Medicare portions) for self-employed taxpayers.
   e. Compute the amount of FUTA tax for an employer.
   f. Apply the special tax and reporting requirements for household employees (the nanny tax).
9. Partnership Taxation
   a. Define a partnership for tax purposes.
   b. Understand the basic tax rules for partnership formation and operation.
   c. Describe the tax treatment of partnership distributions.
   d. Determine partnership tax years.
   e. Identify the tax treatment of transactions between partners and their partnerships.
   f. Understand the application of the at-risk rule to partnerships.
   g. Analyze the advantages and disadvantages of limited liability companies (LLCs).
10. The Corporate Income Tax
    a. Employ the corporate tax rates to calculate corporate tax liability.
    b. Understand in general how an S corporation is taxed and operates.
    c. Understand the basic tax rules for the formation of a corporation.
11. Tax Administration and Tax Planning
    a. Identify the organizational structure of the IRS.
    b. Understand the IRS audit process.
    c. Define the common penalties for taxpayers and tax preparers and be able to apply them to specific situations.
    d. Apply the general rule for the statute of limitations on tax returns and the important exceptions to the general rule.
    e. Describe the rules that apply to tax practitioners and the Taxpayer Bill of Rights.
    f. Understand the basic concepts of tax Planning
12. Minnesota Tax Returns
    a. Understand the relationship between the federal income tax returns and the State of Minnesota tax income tax returns.
    b. Compute Minnesota income tax liability.
    c. Research to keep updated on current tax laws and forms.
    d. Access and use various MN Department of Revenue resources.