CHAPTER TWO
The United States Tax System: An Overview
p. 32, note 1. Delete and substitute:
Portions of this chapter are based on Congressional Research Service, Overview of the Federal Tax System in 2019 (R45145 (Nov. 20, 2019)).
p. 32, note 2, lines 4 and 5. Delete No. 13‐05061 (D.C. Cir., Feb. 11, 2014) and substitute 742 F.3d 1013, 1014 (D.C. Cir. 2014).
§ 2.5 DEDUCTIONS
(b) Personal Expense Deductions
p. 38, note 18. Insert following existing text:
This section provides an income tax charitable contribution deduction for individuals and corporations; it does not, however, apply with respect to charitable contributions made by estates or certain trusts (Reg. § 1.170A‐1(j)(1)). Estates and certain trusts are, however, afforded an income tax charitable deduction for amounts actually paid during a tax year for charitable purposes (IRC § 642(c)(1)) and for amounts permanently set aside for charitable purposes (IRC § 642(c)(2)). Cf. §§ 9.22, 9.22A. Charitable deductions are also available in the gift tax and estate tax contexts (see § 8.2(k), text accompanied by notes 48–72; § 8.3(b), text accompanied by notes 104–120).
(c) Itemized Deduction Limitation
p. 39, first paragraph. Delete (including footnote) and insert:
For tax years beginning in 2018, the overall limitation on itemized deductions20 is suspended for tax years beginning after December 31, 2017, and before January 1, 2026.20.1
§ 2.6 STANDARD DEDUCTION
p. 39, note 21. Delete text and substitute:
IRC § 63(c). For tax years beginning after December 31, 2017, the standard deduction is increased to $24,000 (for joint filers and surviving spouses), $18,000 (for unmarried individuals with at least one qualifying child), and $12,000 (for single filers) (Tax Cuts and Jobs Act, Pub. L. No. 115‐97, 115th Cong., 1st Sess. (2017) § 11021; Rev. Proc. 2018‐18, 2018‐10 I.R.B. 392 §§ 2.04, 3.14). This deduction will be indexed for inflation in tax years beginning after December 31, 2018. The increased standard deduction amounts are scheduled to expire after December 31, 2025. For tax years beginning in 2019, the standard deduction is $24,400 (for joint filers and surviving spouses), $18,350 (for unmarried individuals with at least one qualifying child), and $12,200 (for single filers and married individuals filing separately) (Rev. Proc. 2018‐57, 2018‐49 I.R.B. 827 § 3.16).
p. 39. Insert as fourth paragraph:
Charitable organizations are distressed over the projected loss of contributions, expected by reason of the near‐doubling of the standard deduction, beginning in 2018 and the marginal tax rate reductions. Some economists are predicting that charitable giving will decline by $13 to $20 billion annually as a consequence of this law change.21.1 On August 13, 2018, the Department of the Treasury and the IRS issued proposed regulations providing rules stating the lack of availability of federal income tax charitable contribution deductions when the transferors of money or other property to one or more charitable organizations receive or expect to receive a state or local tax credit;21.2 the government, in the preamble accompanying this proposal, observed that the increase in the standard deduction will result in 90 percent of taxpayers not claiming any itemized deductions.
§ 2.7 CONCEPT OF TAXABLE INCOME
(a) Personal Exemption
p. 40, note 23. Delete text following first period and substitute:
A temporary dollar amount of $0 has been set for the personal exemption deduction for tax years beginning after December 31, 2017, and before January 1, 2026. Rev. Proc. 2018‐18, 2018‐10 I.R.B. 392 §§ 2.05, 3.24. Tax Cuts and Jobs Act, Pub. L. No. 115‐97, 115th Cong., 1st Sess. (2017) § 11041.
§ 2.15 TAXATION OF INCOME
(a) General Rules
p. 54. Delete heading and insert:
There is a temporary modification to the tax rate tables for tax years beginning after December 31, 2017, and before January 1, 2026. The beginning and ending dollar amounts for the brackets have been changed. The new rates are 10 percent, 12 percent, 22 percent, 24 percent, 32 percent, 35 percent, and 37 percent.67.1
The income tax rates for individuals for 201867.2 are:
If taxable income is … The tax is:
| Is over: | But not over: | Then regular income tax equals:a |
| Married individuals filing jointly |
| Not over $19,050 | | 10% of taxable income |
| $19,050 | $77,400 | $1,905 plus 12% of the excess over $19,050 |
| $77,400 | $165,000 | $8,907 plus 22% of the excess over $77,400 |
| $165,000 | $315,000 | $28,179 plus 24% of the excess over $165,000 |
| $315,000 | $400,000 | $64,179 plus 32% of the excess over $315,000 |
| $400,000 | $600,000 | $91,379 plus 35% of the excess over $400,000 |
| $600,000 | | $161,379 plus 37% of the excess over $600,000 |
| Not over $13,600 | | 10% of taxable income |
| $13,600 | $51,850 | $1,360 plus 12% of the excess over $13,600 |
| $51,850 | $82,500 | $5,944 plus 22% of the excess over $51,800 |
| $82,500 | $157,500 | $12,698 plus 24% of the excess over $82,500 |
| $157,500 | $200,000 | $30,698 plus $32% of the excess over $157,500 |
| $200,000 | $500,000 | $44,298 plus 35% of the excess over $200,000 |
| $500,000 | | $149,298 plus 37% of the excess over $500,000 |
| Unmarried individuals (other) |
| Not over $9,525 | | 10% of taxable income |
| $9,525 | $38,700 | $952.50 plus 12% of the excess over $9,525 |
| $38,700 | $82,500 | $4,453.50 plus 22% of the excess over $38,700 |
| $82,500 | $157,500 | $14,089.50 plus 24% of the excess over $82,500 |
| $157,500 | $200,000 | $32,089.50 plus 32% of the excess over $157,500 |
| $200,000 | $500,000 | $45,689.50 plus 35% of the excess over $200,000 |
| $500,000 | | $150,689.50 plus 37% of the excess over $500,000 |
| Married individuals filing separately |
| Not over $9,525 | | 10% of the taxable income |
| $9,525 | $38,700 | $952.50 plus 12% of the excess over $9,525 |
| $38,700 | $82,500 | $4,453.50 plus 22% of the excess over $38,700 |
| $82,500 | $157,500 | $14,089.50 plus 24% of the excess over $82,500 |
| $157,500 | $200,000 | $32,089.50 plus 32% of the excess over $157,500 |
| $200,000 | $300,000 | $45,689.50 plus 35% of the excess over $200,000 |
| $300,000 | | $80,689.50 plus 37% of the excess over $300,000 |
aRev. Proc. 2017‐58, 2017‐45 I.R.B. 489 § 3.01, tables 1–3. Table 4 contains the tax rates for married individuals filing separate returns.
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p. 57. Delete first two paragraphs and insert:
For‐profit corporations are taxed at the flat rate of 21 percent,68 effective for tax years beginning after 2017.69
p. 57, third paragraph. Delete text following first sentence and insert:
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