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Hello there. My name is Michael Donohoe,
and I'm an Associate Professor in PwC Faculty Fellow in the Department of Accountancy.
Welcome to the Taxation of Business Entities I: Corporations.
As the title implies,
this course provides an introduction to
the US federal income tax treatment of corporations and their shareholders.
If you did not know that,
then you likely clicked on the wrong videos.
But stay a while anyhow,
you might like what you hear.
I feel sure that you already know many things about corporations.
For example, you are likely aware that a corporation is
a separate legal entity formed under state law.
You probably know that a corporation has the same rights and
responsibilities as individuals and that it can enter into contracts,
own assets, incur debt and even litigate.
You are also likely aware that
the management responsibilities of a corporation are vested in the Board of
Directors and nearly all publicly-traded companies are organized as corporations.
You might even know a few things about corporate tax.
For instance, you might know that the income of
a corporation is taxed twice. I know, right?
Income that has already been taxed at the corporate level is taxed a
second time at the shareholder level when it is distributed to them as dividends.
So the big important question is,
what can you expect to learn from this course that you don't already know?
It seems like I better have a good answer. Don't worry, I do.
In an introductory tax course,
you likely learned that income taxes,
as well as some other types of taxes,
are determined by a simple formula with two components: tax base and tax rate.
The tax base reflects what is subject to
taxation and is typically expressed in monetary terms.
The tax rate represents the level of tax imposed on
the tax base and is often expressed as a percentage.
Thus, income tax liability is the product of these two components.
Much of what you already know about corporate taxation
very likely relates to tax liability.
That is, you might know about double taxation and
the tax cost of operating as a corporation.
You may even know something about corporate tax rates,
which are a frequent topic in the news lately,
but you probably know relatively less about the corporate tax base.
That's where this course comes in, and this course,
you will learn about many intriguing issues that affect the corporate tax base.
In particular, you will examine and apply
relevant provisions of the Internal Revenue Code,
as well as related Treasury Regulations and judicial opinions
governing common tax issues that arise during the corporate life cycle.
That is the formation, operation,
liquidation and reorganization of a U. corporation.
Before continuing, I want to describe how this course is structured.
In the first module, you will review
the most essential concepts of business entity taxation.
Then the second module will guide you through the structure of the corporate income tax,
focusing on the derivation of tax liability.
Going forward, however, subsequent modules will shift focus
to the derivation of the corporate income tax base,
more on this shift and what you can expect a little later.
One last thing, it is important to consider that like individuals,
corporations routinely acquire, hold,
sell and exchange items of property.
Consequently, a solid understanding of property transactions and key concepts such as
amount realized and basis are essential
for you to learn the concepts covered in this course.
A review will be provided later but I still highly recommend that you review
the taxation of property transactions on your own before continuing.
Michael P Donohoe, PhD, CPAAssociate Professor of Accountancy and PwC Faculty Fellow
