Basic Income Tax 2021-2022 Edition William Kratzke Professor of Law The University of Memphis CALI eLangdell® Press 2021 About the Author 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. 3 Notices This is the 2021-2022 Edition of this casebook, updated May 30, 2021 (following the revised Eighth Edition for 2020-2021) and incorporating the Tax Cuts and Jobs Act. Visit http://elangdell.cali.org/ for the latest version and for revision history. This work by William Kratzke is licensed and published by CALI eLangdell Press under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 Unported License. CALI and CALI eLangdell Press reserve under copyright all rights not expressly granted by this Creative Commons license. CALI and CALI eLangdell Press do not assert copyright in US Government works or other public domain material included herein. Permissions beyond the scope of this license may be available through feedback@cali.org. In brief, the terms of that license are that you may copy, distribute, and display this work, or make derivative works, so long as  you give CALI eLangdell Press and the author credit;  you do not use this work for commercial purposes; and  you distribute any works derived from this one under the same licensing terms as this. Suggested attribution format for original work: William Kratzke, Basic Income Tax 2021-2022 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 only be used with this book or your version of the book, as permitted under the Creative Commons license. Please contact CALI for any other use. This material does not contain nor is intended to be legal advice. Users seeking legal advice should consult with a licensed attorney in their jurisdiction. The editors have endeavored to provide complete and accurate information in this book. However, CALI does not warrant that the information provided is complete and accurate. CALI disclaims all liability to any person for any loss caused by errors or omissions in this collection of information. The author wishes to express thanks to his research assistants, Magdalene Smith, Jay Clifton, Mary Kaitlyn Cornett, and Devon Spriddle. About CALI eLangdell Press The Center for Computer-Assisted Legal Instruction (CALI®) is: a nonprofit organization with over 200 member US law schools, an innovative force pushing legal education toward change for the better. There are benefits to CALI membership for your school, firm, or organization. ELangdell® is our electronic press with a mission to publish more open books for legal education. How do we define "open?"  Compatibility with devices like smartphones, tablets, and e-readers; as well as print.  The right for educators to remix the materials through more lenient copyright policies.  The ability for educators and students to adopt the materials for free. Find available and upcoming eLangdell titles at elangdell.cali.org. Show support for CALI by following us on Facebook and Twitter, and by telling your friends and colleagues where you received your free book. Preface This book is a basic income tax text. I intend this text to be suitable for a threehour course for a class comprised of law students with