[SOUND] [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.
