ACIS 3314 Tax Impact on Decisions
Spring, 2014 Hicks
Course Description:
This course examines the impact of taxation on business and investment decisions, and
the importance of effective tax planning. The course develops a conceptual framework
that integrates tax and non-tax factors into decision models. The course focuses on tax
planning concepts and the effect of taxes on business decisions, rather than detailed tax
rules and legal research. Topics to be covered include tax policy, basic tax planning
strategies, an overview of basic tax concepts and terminology, implicit taxes and tax
clientele theory, choosing the optimal organizational form, multilateral tax planning in
various contexts, and multi-jurisdictional tax issues.
COURSE OBJECTIVES:
The overall objective of this course is to help students develop a conceptual framework
for understanding taxation that provides a foundation for life-long learning. After
completing this course, students will be able to:
1. Explain the primary objectives of tax policy and identify constraints faced by policy
makers;
2. Identify and explain basic measurement concepts underlying income taxation;
3. Quantify the effect of tax planning forces (deferral, deductibility, and exclusion) on
the after-tax rates of return for various investments;
4. Explain how taxation affects asset prices (i.e. implicit taxes) and the implications of tax
clientele theory for investment decisions;
5. Identify frictions that limit the use of tax planning strategies (e.g. transactions costs,
contractual restrictions, imperfect information, and financial reporting
considerations);
6. Identify and explain various tax avoidance concepts underlying various legislative
and judicial restrictions on tax planning; and
7. Apply basic tax planning strategies in common business contexts (e.g. investment
choices, choosing the optimal organizational form for a business Project, multijurisdictional planning, corporate mergers and acquisitions).
Instructor:
Sam A. Hicks, PhD CPA
Associate Professor
Office and Hours: 3011 Pamplin, Tuesday and Thursday 2 - 4 PM
Also by Appointment
Contact:
shicks@vt.edu or 540-231-6577
Textbook: Spilker, et al, Taxation of Individuals and Business Entities, 2014 Edition,
McGraw-Hill. A custom publishing version of the textbook is available that includes
only those chapters that we will use in this course.
Course Activities:
You will be required to complete a variety of activities during the semester. These
activities are summarized and grade weights assigned below:
Exams
Homework
Project
Class discussion
75%
15%
5%
5%
Exams: Four exams will be given. I will drop the lowest of the four. One of the four
will be the final exam. The exams will be short answers, short essay, problems, multiple
choice and true false. The exams will taken in the classroom as scheduled. The exams
will be closed book. The final exam is scheduled for May 10 at 1:05 PM.
Readings:
Most of the reading will be from the textbook. Some will be posted on
Scholars and you may want to download and print these.
Class Discussion: One of the major purposes of this course is for you to be able to
discuss tax issues. We want you to be able to explain how and why taxes impact
decisions made by individuals and businesses. Thus, you will have several opportunities
to discuss tax issues during the semester. Be there to take advantage of these
opportunities.
Homework: The homework will be short cases that you will have to determine the
income tax impact. Several of the homework assignments will be in the form of a quiz
on Scholars. In addition we will have in class quizzes that will count as a homework
assignment.
ACIS 3314 Tax Impact on Decisions, Spring 2014
Date
Jan
21
Jan
23
Jan
28
Jan
30
Feb
4
Feb
6
Feb
11
Feb
13
Feb
18
Feb
20
Feb
25
Feb
27
Mar
4
Mar
6
Mar
1014
Mar
18
Topic
Overview of Course
A Story of Taxes
What is a Tax?
What is a Good Tax?
What is tax policy?
Decision Making –
Tax Benefit/Cost
Analysis
Concepts of
Equity/Fairness
Distribution of tax
burden
Incidence of tax
Implicit tax
Business Horizons
We will have class,
but no quiz
Sources of Tax Law
Apply criteria to
taxes
Tax Planning
Strategies
Tax Planning
Strategies
Individual Tax
Formula
Tax Computation
Tax Impact on
Marriage & Divorce
Gross Income
Readings and Assignments
William Raby’s “Chronicles of Sexet” Posted to SCHOLARS
AICPA’s Tax Policy concept Statement “Guiding Principles of
Good Tax Policy: A Framework for Evaluating Tax Proposals”
Posted to SCHOLARS
Chapter 1 An Introduction to Tax
HW 1 Questions on Raby’s Chronicles
Wikipedia “Tax Incidence” Posted to SCHOLARS
Susan Combs “The Nature of Tax Incidence”, Texas Comptroller Posted
to SCHOLARS
HW 2 Questions on Statistics of Income, Spreadsheet with
selected data in Scholars Resources
2011 Deficit Commission Report –“The National Commission on
Fiscal Responsibility and Reform” Posted to SCHOLARS
Slides based upon report also posted as a resource to SCHOLARS
Chapter 2 Tax Compliance, the IRS, and Tax Authorities
Project 1: Cloydtown Tax Analysis, An assignment posted to
SCHOLARS
Chapter 3 Tax Planning Strategies and Related Limitations
“Tax Concepts” Posted to Scholars
HW 3 Tax Concepts Posted to SCHOLARS as an assignment
Chapter 4 Individual Income Tax Overview
HW 4 Determining Entity, Deductions, Credits, Deferrals,
Exclusions, and Reduced Rates SCHOLARS Quiz
Chapter 5 Gross Income and Exclusions
Exam 1
Chapter 5
HW 5 Gross Income and Exclusions SCHOLARS Quiz
Short answers and essay exam, Chapters 1 - 5 and other
Deductions
Chapter 6 Deductions
HW 6 Questions on Individual Deductions SCHOLARS Quiz
Tax Credits
Chapter 7 Tax Credits
Spring Break
Energy Tax Policy
Chapter 7 Tax Credits
HW 7 Questions on Tax Credits SCHOLARS Quiz
Mar
20
Mar
25
Mar
27
Apr
1
Overview of
Investments
Annuities, Life
Insurance
Investments in Real
Estate; Tax Shelters,
Passive Losses, At
Risk rules
Chapter 11 [8] Investments – entire chapter
Basis of Property posted on SCHOLARS
Project 2 – Trader v Investor Research Problem Posted to
SCHOLARS
HW 8 – Questions on Investments SCHOLARS Quiz
Executive
Compensation
Chapter 12 [9] Compensation
Microsoft’s Deferred Compensation Plan and employment offer to
Frank Brod, Chief Accounting Officer
Apr
3
Apr
8
Apr
10
Apr
15
Retirement Funds
Chapter 13 [10] Retirement Savings and Deferred Compensation
Apr
17
Nexus and State
Taxes
Apr
22
Apr
24
Apr
29
May
1
May
6
May
10
Alternative
Minimum Tax
Federal Unified
Transfer Tax
Homework 9, A Scholars Assignment
Exam 2
Multiple choice and true/false exam
Multi-jurisdictional
Tax Issues
Chapter 23 [11] State and Local Taxes
”U_S_ Companies Seek New Tax Havens BusinessWeek.mht”
Posted to SCHOLARS
Joan E. Putney, Division of Legislative Services, Virginia, “Joint
Subcommittee Studying the Single Sales Factor for Corporate
income Apportionment Purposes”, August, 2008 Posted to
SCHOLARS
Michael Mazerov, Center on Budget and Policy Priorities, “The
‘Single Sales Factor’ Formulas for State Corporate Taxes”,
September 2005. Posted to SCHOLARS
Homework 10 SALT Problems
Chapter 7 pages 7-9 – 7-15
Homework 11 AMT Problems
“Overview of Estate Tax” Posted to SCHOLARS
Homework 12 Estate and Gift Problems
Exam 3
Multiple Choice or True False exam
Review for Final
1:05 -3:05 PM
Final Exam covers the entire course. The exam will be Multiple
Choice or True False.