tax exam 1 outline

tax exam 1 outline - Authority of Federal Tax System...

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Authority of Federal Tax System Judicial Rev Rulings (3) Procedures (3) Letter Rulings (5) US Supreme (highest) US Courts of Appeal ( next highest appellate) Tax Court – Regular Decisions ( highest trial court) T.C. Memorandum Income (broadly conceived) Less: Exclusions Gross Income Less: Deductions for AGI Adjusted Gross Income Less: > of SD or total itemized Less: P&D Exemptions Taxable Income EXCLUSIONS FROM GI: DONATIVE : gifts, life insurance proceeds (post-death only; if transferred and gain occurs, gain is taxed except if between partners/ officers), acc. death benefits, scholarships (tuition & rel. expenses...for employee’s children, included in taxable income of parent), PERSONAL: personal injury payments (not punitive) & related loss of income, health benefits purchased by employee, long-term care (limited to > of $280/day or actual cost, regardless of who purchases it) EMPLOYEE: fringe benefits, accident & health benefits (premiums), HSA (employer can contribute up to 1/12($3000), or 5,950 for families per month), group term life insurance (only first $50,000— this does not apply to partners, only to employees ), child CHAPTER 3: GI includes embezzled funds, prizes, punitive damages, treasure trove SD for child = greater of $950 or $300 + cannot exceed regular SD for single of $5,700 Prop tax deduction (in addition to SD)- lesser of paid or $500 ($1000 for joint) Qualifying relative GI test- must be less than exemption amt to qualify Joint Return test- no dep. Exemp. Child is married filing jointly must meet relationship Surviving spouse- can filed married jointly for 2 yrs post-spouse Child Tax Credit- $1,000/yr for child under 17 Kiddie Tax- for child under 19 w/ UI >$1900, Net UI taxed at parent’s rate—UI less $950 less > of 950 of SD or amt itemized Net Capital Loss can be used to offset ordinary income ST = 35%, LT: collectibles=28%, some Net Capital gain occurs when NLTCG exceeds NSTCL Phaseout of Exemptions: 1. AGI-threshold = excess amt; 2.
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