Gross Income- Exclusions Flashcards
Are prizes and awards included in income?
-Yes. FMV of prizes and awards included in income.
When can prizes and awards be excluded?
If for civic, artistic, educational, scientific, or literary achievement and:
-Selected without action on his/her part
-Not required to perform services
-Amount paid directly to tax exempt or governmental
organization
Are scholarships included in income?
- Excluded if used for tuition, fees, books, supplies, and requirements for course
- Included if in exchange for services
- Included if for room + board (treated as earned income)
Are proceeds from life insurance due to death of insured included in income?
- No, excluded.
- Generally subject to estate tax at time of death
Is exchange/sale of life insurance policy for cash surrender value included in income?
-Proceeds in excess of cost are unless by a terminally ill taxpayer
How is life insurance policy purchased from owner of policy treated?
-As an asset and proceeds in excess of costs are income
Are gifts and inheritances included in income?
-No. These are taxed under Federal Estate and Gift Tax law
What is a requirement for gifts to be excluded from income? Who is taxed on income accrued on a gift?
- It be detached generosity
- Up to time of gift taxable to donor after to donee
Is debt forgiveness taxable?
- If taxpayer is bankrupt or insolvent, debt forgiveness is not taxable
- If insolvent, but not bankrupt can only exclude debt forgiveness to extent of insolvency
Are Social Security Benefits included in income?
How do you calculate Provisional Income?
What is the 0, 50%, 85% tax table?
-Generally not unless provisional income exceeds specified amounts
-PI = AGI + Tax Exempt Interest + 50% of SSB
MFJ: 32,000 44,000
MFS: 0 0
Others: 25,000 34,000
Are foster child payments included in income?
-Excluded if reimbursements for foster child expenses
Are welfare payments included in income?
No
