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) TAMS (8) Determ.Letters (6) (area director) US Supreme (highest) US Courts of Appeal ( next highest appellate) Tax Court – Regular Decisions ( highest trial court) T.C. Memorandum US Fed. Claims US District (lowest trial court) Small Cases 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 care provide by employer (max $5,000), education assistance provided by employer (max $5,250), adoption expenses (up to $12,150), cafeteria plans, no-additional cost benefits ( no excl. for higher paid employees if discriminatory), qualified discounts (max. of cost for goods, 20% services—discriminatory rule ), working condition & de minimis fringes , qual. Transportation (max $230 for parking, $230 for transit & CHV), qual. Moving expenses, qual. Retirement planning (discriminatory rule), military benefits, foreign earned income (up to $91,400 and between 16-30%($91,400) for foreign housing; must be resident for 330 days, or pro-rate), CHAPTER 3: GI includes embezzled funds, prizes, punitive damages, treasure trove SD for child = greater of $950 or $300 + earned income; 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 (exceptions) To be head-of-household, dependent must meet relationship test
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