Federal Tax Law Outline-BT

Federal Tax Law Outline-BT - I. FMV is value reached by...

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I. G ROSS I NCOME § 61 1. Broadly Defined - All Inclusive 2. Income from whatever source 3. Source does not have to be cash – look at value of property or services received 4. TP must point to a specific exclusion 5. Glenshaw Glass – an undeniable ascension to wealth, clearly realized over which the tax payer has complete dominion 6. main exception: A . COMPENSATION PRIMARILY FOR THE BENEFIT OF EMPLOYER G OTCHER - LOOK TO DOMINANT INTENT FROM STANDPOINT OF PAYOR H OWEVER T O GET DEDUCTION FOR SPOUSE 1. SPOUSE MUST BE EMPLOYEE OF TP 2. BONA FIDE BUSINESS TRIP 3. EXPENSE WOULD HAVE BEEN DEDUCTIBLE IF PAID DIRECTLY BY TP OR SPOUSE AS BUS . EXP . 7. Taxable (realization) a. Illegal payments ( james) b. Treble damages c. Treasure Trove d. Tax liability if paid for by third party e. Sale of body part taxable – what if it does not regenerate? f. Frequent flyer mile if from employer?????? g. Bonus for future compensation is taxable h. Discharge of debt ( Old Colony ) i. §86 –social security - depends on income level 8. Not Taxable (no realization) a. Incurring a debt is not income – will pay back b. Benefits of bargain c. Welfare d. Victims crime fund e. Imputed income (i.e. eating own cherries) f. Increase in value of property without selling (no realization) II. Gifts & Inheritances FMV is value reached by willing B&S not under compulsion and knowledgable of all facts
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1. 102(a) General Rule a. Gifts, bequest, devise, inheritance are EXCLUDABLE 2. Duberstein Test for Gift – intent of donor should not be for compensation, expected economic return, but for what most would consider a gift no legal or moral duty – a detached disinterested generosity our of respect admiration, charity or like impulses a. Look at donor’s subjective intent through objective eyes 3. EXCEPTIONS FOR GIFTS a. 102 (b) – income from property or gift of income from property b. 102(c) – (a) Does not apply to Employer for benefit of employees i. Possible Exceptions 1. Retirees 2. Coworkers 3. Ministers 4. Widow ii. Note: under §274(b)(1) – employer may deduct up to $25 per employee per year for gifts c. §132(e) De Minimus Fringe under $25 and can not be cash 4. Inheritance Excludable a. You can sue and settle and still fall under the section b/c right to sue premised on you being an heir – Lythe Case 5. Exceptions for Inheritance (WHEN IT IS GI) a. Inheritance in Lieu of Compensation ( Wolder ) b. Income from inheritance (reg 1.102-1(a)) i. §691 even if income was earned prior to death 1. Fringe Benefits – exclusionary provisions in 132 (a)
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a. No–Additional cost Service 132 (a)(1), (b) i. Requirements 1. Service offered to employer’s customers in normal course of business which EE is in as well. a.
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Federal Tax Law Outline-BT - I. FMV is value reached by...

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