Individual Taxation Flashcards
Cash Basis. Note: This basis is NOT allowed for Corporations, Partnerships with a C-Corp partner, or for inventories.
Individual Taxation
*MSA/HSA contributions
*Investment penalties for early withdrawal
*Self-employed medical insurance premiums
*Self-Employment Tax (approx. 50%)
*IRA Contributions
*Student loan interest (can’t be another taxpayer’s dependent)
*Moving expenses
*Alimony
*Tuition - can’t take AOC/Lifetime Learning Credit for same expense
*Teacher expenses
*Attorney fees in discrimination lawsuit
Individual Taxation
Investment interest expense in excess of investment income
Charitable contributions
Excess Section 179
Capital losses
AMT Paid
Passive Activity Losses
Individual Taxation
No carryback
Can carry forward indefinitely
Individual Taxation
Carry forward to next year.
Use in any year is limited to taxable income.
Individual Taxation
Indefinitely.
Individual Taxation
Can be carried forward 5 years.
Individual Taxation
It can be carried forward indefinitely.
It may be applied against future regular income tax, but not against future AMT tax liability.
Individual Taxation
$3,000 net capital loss can be taken in each year, the rest is carried forward indefinitely.
The loss retains its character (STCL or LTCL).
Individual Taxation
Corporate capital loss carryovers may be carried back 3 years and forward 5 years. Individual capital losses are carried forward indefinitely.
Individual capital loss carryovers retain their character (STCL or LTCL). Corporate loss carryovers are carried forward as STCL only.
Individual Taxation
Gross Profit / Contract Price
Individual Taxation
Contract Price = Sales Price - Liability assumed by buyer
Individual Taxation
$1,000,000
Individual Taxation
$100,000
Individual Taxation
$25 per person for gifts
Service awards up to $400
Individual Taxation
They may only offset active business income.
Note: W2 wages are considered active business income.
Individual Taxation
Only passive income such as rental income or limited partnership income.
Note: Wages are ACTIVE (cannot be offset by passive) and Interest/Dividends are PORTFOLIO (cannot be offset by passive)
Individual Taxation
Neither. They are portfolio income.
Individual Taxation
Mid-year/Mid-quarter
Individual Taxation
For depreciation when 40% or more of all purchases occur in 4th quarter.
Individual Taxation
Mid-month
Individual Taxation
15 year straight line (S/L)
Individual Taxation
Up to $5,000
Amortized over 180 months
Reduced dollar-for-dollar by amount over $50,000
Individual Taxation
On Schedule A:
Amounts in excess of 10% of AGI may be deducted
Individual Taxation
Accident or disability insurance premiums are not deductible.
Individual Taxation
Must be a citizen of North America
Must live with you, or if they do not, must be mother/father or a relative closer than a cousin.
Benefactor must provide more than 50% support to the beneficiary.
Individual Taxation
Foreign INCOME and REAL ESTATE taxes are deductible.
Foreign personal property taxes are NOT deductible.
Foreign tax assessments are not deductible- they are added to the basis.
Individual Taxation
Gross investment income - investment expense in excess of 2% of AGI = net investment income
Investment interest expense in excess of net investment income is deductible.
Individual Taxation
Investment interest expense on tax-free securities is not deductible.
Individual Taxation
They are deductible if they represent prepaid interest on purchase of a new home or improving a home.
Refinance points are amortized over the life of the mortgage.
Individual Taxation
Deducted at fair market value (FMV), up to 30% of AGI
Individual Taxation
Deduction is taken for adjusted basis in the property, up to 50% of AGI.
Individual Taxation
No. It decreases the fair market value (FMV) of the property.
Individual Taxation
Take the lower of either A) Decrease in FMV or B) Basis in property (call this number GROSS LOSS)
GROSS LOSS - insurance proceeds received - $100 - 10% of AGI = Deductible casualty loss
Individual Taxation
Deductible in excess of 2% of AGI
Continuing Education - if required to keep your job
Business travel
50% Meals and entertainment
Union Dues
Tax prep fees
Legal fees to collect alimony
Appraisal fees to value casualty loss of charitable contributions
Individual Taxation
Medical
Casualty
Gambling
Investment Interest Expense
Individual Taxation
Must be resident of North America
Under age 19, or under age 24 if a student
Individual Taxation
Must be citizen of North America
Must live with you, unless mother/father or relative closer than a cousin
You must provide more than 50% support to the individual
Individual Taxation
Child’s unearned income
- early withdrawal penalties
- $1,000
- Greater than $1,000 or child’s itemized deduction related to unearned income
= Amount taxed at parents’ rate
Individual Taxation
Yes, if they each own a small business. All non-business income is cash basis.
Individual Taxation
15.3% of net earnings from self-employment
(Note: executor of an estate is NOT self-employment income)
Individual Taxation
A tax credit which takes the taxpayer’s tax owed on the return below zero, resulting in a refund to the taxpayer.
Earned Income Credit (EIC), American Opportunity Credit and the Additional Child Tax credit.
Note: the REGULAR child tax credit is NOT refundable.
Individual Taxation
American Opportunity Credit - per student
Lifetime Learning Credit - per taxpayer
Note: The American Opportunity Credit is refundable.
Individual Taxation
The lesser of:
90% of current year’s total tax
100% of prior year’s total tax
110% of prior year’s total tax (if AGI is $150,000 or more)
Individual Taxation
Deductible: Costs incurred to PRESERVE soil/water
Non-deductible: Costs incurred to drain wetlands or prep for irrigation (i.e. improve land)
Individual Taxation
MACRS 150
Individual Taxation
90 days
Individual Taxation
10 days
Individual Taxation
3 years, generally
6 years if 25% or more of gross income was omitted
The clock starts on the LATER of the due date or the filing date of the return.
There is NO STATUTE OF LIMITATIONS for either fraud or failure to file a required return.
Individual Taxation
It is treated as a STCL
Individual Taxation
Refunds must be claimed within 3 years of the return due date or within 2 years of being paid, whichever is later.
Individual Taxation
Premiums paid by an employer for coverage in excess of $50,000 per employee are includable in income.
Individual Taxation
When they are not in return for services rendered,
AND
The money is used only for tuition and books
Note: Scholarships for room and board are includable in income.
Individual Taxation
State & municipal bond interest
US EE Savings Bond interest (note: HH bond interest is taxable)
Individual Taxation
S-corporation (actually distributions)
Life insurance
Individual Taxation
Up to 85%
Individual Taxation
Yes.
Individual Taxation
Payments made to make you whole are NOT taxable (i.e. to pay for losses of property, body parts or earning ability)
Any payments for punitive damages ARE taxable.
Individual Taxation
No - similar to an award for damage to make a person whole.
Individual Taxation
Alimony IS taxable.
Child support and divorce property settlements are NOT taxable.
Individual Taxation
NO, they are not deductible. However tax benefits are available through the adoption CREDIT.
Individual Taxation
2nd Year: (3rd year - 2nd year - $15,000)
1st Year:
1st Year Alimony Paid
- Avg alimony paid in 2nd & 3rd years
- $15,000
- Recapture from 2nd year
=1st Year Alimony Recapture
Total Recapture = 1st Year Recapture + 2nd Year
Recapture
Individual Taxation
Can be carried back 2 years
If any left, can be carried forward 20 years.
Individual Taxation
Traditional IRA = deductible
Roth IRA = not deductible
Individual Taxation
They must be married at the end of the year.
If one spouse dies, they must be married at the end of the year.
Individual Taxation
Must have a dependent child
Must provide more than 50% of the child’s support
Must live with them more than 50% of the year
Individual Taxation
Must have a dependent child.
Essentially gets MFJ status for the year of death + 2 tax years
Individual Taxation
