ACCT 417: Federal Income Tax II

ACCT 417, Federal Income Tax II, is a 3-credit undergraduate course at University of Maryland Global Campus, and UMGC strongly recommends it for students seeking careers as CPAs.

The prerequisites are ACCT 311 and ACCT 323. UMGC describes it as a continuing study of federal income taxation as applied to different business entities, including corporations, flow-through entities, estates and trusts.

The aim is to analyze tax planning and compliance issues, conduct tax research, and analyze, evaluate and communicate tax implications and data.

Discussion covers tax research, planning, procedure, compliance, ethics and professional responsibility, and the tax implications of entities' financial and business decisions. The jump from individual tax is significant: you now compare entities, track basis and think about how income flows through to owners.

What ACCT 417 Covers

Key Concepts Explained

Double Taxation Versus Flow-Through

A C corporation pays tax on its income, and shareholders pay tax again when profits are distributed as dividends. Partnerships and S corporations generally pay no entity-level income tax; income flows through to owners' returns.

Partner Basis

A partner's basis starts with contributions, rises with the partner's share of income and liabilities, and falls with distributions, losses and reductions in liabilities. Basis limits deductible losses and decides whether distributions are taxable.

Book-Tax Differences

Corporate returns reconcile book income to taxable income. Items such as tax-exempt interest, the nondeductible portion of meals and differences in depreciation explain the gap, and ACCT 311's deferred tax knowledge becomes useful here.

Estates and Trusts

Estates and most trusts file Form 1041. The key concept is distributable net income (DNI), which limits the deduction the entity takes for distributions and the amount beneficiaries must report. Income kept in the trust is taxed to the trust; income distributed is generally taxed to the beneficiaries.

Because trust tax brackets are compressed, retaining income in a trust can be costly, which often makes distribution decisions a planning question in their own right.

Entity Choice and Planning

Planning questions ask which structure or transaction gives the best after-tax result while meeting the owners' goals. Compare options on the same facts: entity-level tax, owner-level tax, treatment of losses, flexibility in allocating income, and practical limits such as S corporation eligibility rules.

Non-tax factors, including liability protection and plans to raise capital, belong in the recommendation too. Always use the rates and rules for the tax year in your assignment, since tax law changes frequently.

Typical Assignments and How to Approach Them

Where Students Get Stuck

• Basis tracking. Small omissions, such as liability changes, throw off later years.
• Mixing entity rules. Keep separate notes for C corporations, S corporations and partnerships.
• Outdated rates. Confirm figures for the assignment's tax year.
• Trusts and estates. Distribution rules decide who pays the tax; learn them carefully.

Study Tips for ACCT 417

• Make a comparison table of entity types and their tax treatment.
• Practice basis schedules until they are routine.
• Review ACCT 323 research methods before the first memo.
• Use IRS instructions for Forms 1120, 1065, 1120-S and 1041 as references.

How We Help with ACCT 417

Send the instructions, facts and your workings. A tax tutor can explain the rules, prepare a model computation or memo for reference, or review your draft. See our accounting assignment help guide for more.

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