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Taxation of Business Entities I: Corporations

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University of Illinois at Urbana-Champaign

Taxation of Business Entities I: Corporations

22 ratings

Course 3 of 5 in the Specialization U.S. Federal Taxation

This course provides an introduction to the U.S. federal income taxation of corporations and their shareholders. The course focuses on the relevant provisions of Subchapter C of the Internal Revenue Code, as well as related Treasury Regulations and judicial opinions, governing corporate formation, operations, distributions, and liquidation. Practical in-class study problems facilitate self-discovery of technical tax knowledge along with the development of a variety of professional skills and attitudes.

From the lesson

Course Orientation

In this module, you will become familiar with the course, your instructor, your classmates, and our learning environment. This orientation will also help you obtain the technical skills required to navigate and be successful in this course.

Course Overview4:11

About Prof Donohoe2:41

Meet the Instructors

Michael P Donohoe, PhD, CPA
Associate Professor of Accountancy and PwC Faculty Fellow
Department of Accountancy, Gies College of Business

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[MUSIC]

Hello there, my name is Michael Donohoe.

And I'm an associate professor and

PWC faculty fellow in the Department of Accountancy.

Welcome to the Taxation of Business Entities 1, Corporations.

As the title implies, this course provides an introduction to the US federal income

tax treatment of corporations and their shareholders.

If that sounds odd, then maybe you're watching the wrong course.

Stay for a while anyhow, you might like what you hear.

I feel sure that you may already know some 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.

That's 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 very good answer.

Don't worry, I do.

In an introductory tax course, you'll likely learn 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 is determining the amount of corporate taxable income.

That's where this course comes in.

In 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, and liquidation of a US corporation.

More specifically, in the first module,

you'll 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.

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

adjusted basis, are essential for you to learn the concepts covered in this course.

A review will be provided later, but I highly recommend that you study

the taxation of property transactions on your own before continuing.

You'll thank me later, I promise.

One last thing, this course accommodates extensive changes made to corporate

tax laws on December 22nd,

2017, by HR1, and formerly known as the Tax Cuts and Jobs Act, or TCJA.

And officially known as, quote, an act to provide for

reconciliation pursuant to titles two and

five of the concurrent resolution on the budget for fiscal year 2018.

Thus, you can save yourself a lot of frustration by ensuring that any

supplemental materials you use during this course, such as textbooks,

tax statutes, and regulations and even news articles are up-to-date.

I'll see you soon.

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