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James E. Smith, William A. Raabe, David D. Maloney, and Eugene Willis, eds., West Federal Taxation: Taxation of Business Entities.

JAMES E. SMITH, WILLIAM A. RAABE, DAVID D. MALONEY, AND EUGENE WILLIS, eds., West Federal Taxation: Taxation of Business Entities, 2004 edition (Mason, OH: South-Western Publishing, 2004, pp. xxix, 731, $109.95).

Designed with the AICPA's model tax curriculum in mind, West Federal Taxation: Taxation of Business Entities, 2004 edition, is intended for use in a first tax course that uses a business entities approach. Despite a name change, the design and content of the book closely follows its predecessor, West Federal Taxation: An Introduction to Business Entities, 2003 edition. One significant improvement in the 2004 edition is a new tax-planning framework that is introduced in Chapter 1 and incorporated throughout the remainder of the book. The examples provided by this framework effectively demonstrate tax-planning techniques in a variety of business situations.

Chapter 1 provides an introduction to taxation, a basic description of the income taxation of business entities, and an overview of tax-planning fundamentals. Chapter 2 covers sources of tax law and tax research. The publisher continues to offer purchasers six-month's access to RIA's Checkpoint Student Edition online tax research database. A wide variety of tax research problems are provided at the end of each chapter. These end-of-chapter research problems can be effectively used in conjunction with the online research database by instructors wishing to incorporate significant coverage of tax research into the first tax course.

Chapters 3 through 5 cover basic concepts in taxation, including gross income, business deductions, and losses and loss limitations. The chapter on accounting periods and methods contained in previous editions has been eliminated. This is not a significant drawback, as the 2004 edition covers the basic rules of tax accounting in Chapters 3 and 4. Chapters 6 and 7 address property transactions and adequately cover the most important property transactions, including the basic rules for determining gain and loss, basis considerations, nontaxable exchanges, capital gains, [section] 1231 transactions, and depreciation recapture.

Comprehensive coverage of business entities begins in Chapter 8. Two chapters are devoted to C corporations. Chapter 8 covers the organization, capital structure, and operation of C corporations. This chapter includes a review of deductions available only to corporations, determining corporate income tax liability (including controlled groups), and procedural matters. It also provides a comprehensive example of schedules M-1 and M-2. Chapter 9 reviews the basic rules for corporate distributions. Chapter 10 provides an overview of partnership taxation, the tax effects of partnership formation, partnership operations (including partnership allocation and basis of a partnership interest), and transactions between a partner and the partnership. Although the more complex partnership issues usually covered in a second tax course (e.g., liquidating and nonliquidating distributions, unrealized receivables, sale of a partnership interest, and termination of the partnership) are not addressed, the coverage of partnerships is more than adequate for a first course in taxation. Chapter 10 also contains a brief discussion of limited liability entities. Chapter 11 provides an overview of S corporations, including operational rules, the tax treatment of distributions, shareholder basis, and loss limitations. The built-in gains and passive investment income penalty taxes are also briefly reviewed.

Chapter 12 on multijurisdictional taxation is new to the 2004 edition. It is a stand-alone chapter that can be used by instructors wishing to incorporate multijurisdictional issues into the first tax course. Chapter 13 covers business tax credits and the corporate alternative minimum tax. Chapter 14 provides a comparison of the different forms of doing business. It is an effective chapter in helping students to understand the tax consequences of conducting business in various forms.

Consistent with the AICPA's model tax curriculum for the first tax course, Chapters 15 and 16 address individual taxation. Chapter 15 covers most items taught in a traditional individual tax course, including the individual tax formula, personal and dependency exemptions, tax determination, filing status, income inclusions and exclusions specific to individuals, itemized deductions, and individual tax credits. Chapter 16 discusses tax provisions specific to individuals as employees and proprietors. Chapters 15 and 16 are not dependent on any material covered in Chapters 3 through 14. Thus, instructors who prefer to address individuals and proprietorships before covering business entities can cover Chapters 15 and 16 first.

Tax facts, global tax issues, bridge-discipline boxes, and tax in the news inserts are provided in each chapter. The bridge-discipline boxes are designed to bridge the gap between taxation and courses such as economics, financial accounting, and finance. Each chapter also contains a comprehensive set of end-of-chapter problems that provide excellent illustrations of the material covered in the text. There are 20 to 30 percent new or revised end-of-chapter problems. Comprehensive tax return problems for C corporations, partnerships, S corporations, and individuals are provided in the appropriate chapters. Crosslink tax preparation software can be packaged with the textbook for $9.99.

The book comes with a complete line of ancillaries for both the instructor and student. An instructor's resource CD-ROM includes a solutions manual, test bank, and PowerPoint[R] presentation slides. The test bank files are provided in ExamView[R] format and can be easily edited by the instructor. Instructors can also create and administer tests online. The solutions manual and PowerPoint[R] presentation slides are also available online. Teaching transparency acetates containing key charts and tables from the PowerPoint[R] presentation slides are also available. Enhanced WebTutor on both Blackboard and WebCT are available. Consistent with other titles in the WFT series, cases from the Deloitte & Touche Tax Case Study Competition are available online.

For students, an Interactive Study Center, featuring online tutorials and interactive quizzes, is available online. A student study guide is available for purchase. The book also comes with four free hours of the Becker CPA Tax Review Course.

In conclusion, this book meets the AICPA's model tax curriculum content objectives for a first course in taxation. It has many attractive features and is a good alternative for a first tax course emphasizing business entities.


Associate Professor

Middle Tennessee State University
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Author:Koski, Timothy R.
Publication:Journal of the American Taxation Association
Date:Mar 22, 2004
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