Corporate tax in the United States is a tax on the taxable income of a C corporation or an entity taxed as a C corporation. The corporate tax is the default tax levied on a business entity unless the entity qualifies to be taxed under different tax rules such as those for non-profit organizations and S corporations. The corporation is taxed under 26 U.S.C. § 11 and Subchapter C (26 U.S.C. § 301 et seq.) of Chapter 1 of the Internal Revenue Code.
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LEGAL AUTHORITY
Legal authority is always relevant to tax practitioners. So long as there is "substantial authority" for a court's position, a court could still agree with a taxpayer regardless of the IRS's stance on that position. Further, the 20% penalty for substantial understatement of income tax liability is waived if the taxpayer relies on "substantial authority". § 6662.
Primary sources carry more weight than secondary sources. Primary sources have varying levels of authority which stems in great part to whether that authority was generated from executive, legislative or judicial branches.
Not surprisingly, Regulations are an important source from which "substantial authority" can be derived. Regulation § 1.6662-4(d)(3)(iii). In particular, the IRC carries the most weight with final, with temporary and proposed Regulations following. IRS Revenue Rulings and Revenue Procedures are next with tax treaties and relevant regulations. Court cases then follow, with legislative history, private letter rulings, TAMs and IRS actions and information. Secondary sources do not constitute authority for avoiding penalties.
© 2008 Jay Bettinger, Esq. All Rights Reserved.
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