Basic Income Tax 2018-2019
sixth Edition

Basic Income Tax 2018-2019

by William P. Kratzke

This is the sixth edition of this casebook, updated May 01, 2018 and incorporating the Tax Cuts and Jobs Act. Visit for the latest version and for revision history. This book is a basic income tax text. I intend this text to be suitable for a three-hour course for a class comprised of law students with widely different backgrounds.


Basic Income Tax 2016-2017
About the Author
About CALI eLangdell Press
1. The Government Raises Money: Introduction to Some Basic Concepts of Taxes and Taxing Income
1.1. Some Income Tax Policy and Some Income Tax Principles
1.2. Sources of Tax Law and the Role of Courts
1.3. Illustration of the Tax Formula:
1.4. Not All Income Is Taxed Alike
1.5. Layout of the Code
1.6. Some Definitions
1.7. Taxing Income
1.8. Introduction to Some Basic Concepts
1.9. What We Tax: What Is Income?
2. What Is Gross Income: Section 61 and the Sixteenth Amendment
2.1. The Constitutional and Statutory Definitions of “Gross Income”
2.2. The Constitutional and Statutory Definitions of “Gross Income:” Accessions to Wealth
2.3. The Constitutional and Statutory Definitions of “Gross Income:” Realization
2.4. The Constitutional and Statutory Definitions of “Gross Income:” Dominion and Control
3. Exclusions from Gross Income
3.1. Employment-Based Exclusions from Gross Income
3.2. The Society and Government that We Want
3.3. Social Benefits
4. Loans and Cancellation of Indebtedness
4.1. VI. Transactions Treated as Loans
4.2. Transactions Involving Property Subject to a Loan
4.3. Section 108(a)'s Other Provisions
4.4. Is It a Loan? Is There an Accession to Wealth?
4.5. Cancellation of Indebtedness
4.6. Tax Consequences of Borrowing Money
5. Progressivity and Assignment of Income
5.1. Interest Free Loans and Unstated Interest
5.2. Income Derived from Property
5.3. Income Splitting and the Joint Return
5.4. Compensation for Services
6. Deductions: Business Expenses
6.1. Depreciation, Amortization, and Cost Recovery
6.2. Deductibility Under §§ 162 or 212
6.3. Expense or Capital
7. Personal Deductions
7.1. “Tax Expenditures”
7.2. Denial of Discretion in Choosing How or What to Consume
7.3. Creating a More Efficient and Productive Economy
7.4. Deferral Until Consumption
8. Tax Consequences of Divorce and Intra-Family Transactions
8.1. After Marriage: Tax Consequences of Divorce
8.2. During Marriage
8.3. Before Marriage
8.4. Introduction
9. Timing of Income and Deductions: Annual Accounting and Ac-counting Principles
9.1. Basic Accounting Rules
9.2. Annual Accounting
9.3. Deferral Mechanisms
10. Character of Income and Computation of Tax
10.1. More Matching
10.2. Section 1231: Some Limited Mismatching
10.3. Sections 1245 and 1250: Depreciation Recapture
10.4. Capital Gain

Professor William Kratzke is a Cecil C. Humphreys Professor of Law at the University of Memphis. He received his B.A. in Political Science and the Far Eastern & Russian Institute from the University of Washington in 1971. This naturally caused him to be interested in attending law school. He received his J.D. from Valparaiso University in 1974 and was a member of the Valparaiso University Law Review’s editorial board. He received his LL.M. from Georgetown University in 1977.

Professor William Kratzke teaches tax law courses at the University of Memphis. He has been a faculty member there since 1979. He has taught courses across the curriculum. In addition to tax courses, he has taught trademarks, torts, civil procedure, world trade law, economic analysis, and other courses. He visited Santa Clara University and the University of Mississippi. He received Fulbright Teaching Awards in 1997 (Moldova) and 2001-2002 (Russia).

Professor Kratzke has written in the areas of tax law, trademark law, tort law, and antitrust law.

William Kratzke, Basic Income Tax 2018-2019 Edition, Published by CALI eLangdell Press. Available under a Creative Commons BY-NC-SA 3.0 License. CALI® and eLangdell® are United States federally registered trademarks owned by the Center for Computer-Assisted Legal Instruction. The cover art design is a copyrighted work of CALI, all rights reserved. The CALI graphical logo is a trademark and may not be used without permission.

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