Adjustments For Adjusted
Student Loan Interest Deduction
Taxpayers may deduct up to $2,500 each year as an
above-the-line deduction for interest paid on student loans.
No deduction is allowed for person who is claimed as a
Gross Income Inclusions and
When and How to Record Income
for Tax Purposes
Income Recognition for Tax Purposes
Similar to the recognition for accounting
Income must be realized and earned
However, three additional condition
Introduction to Taxation
Income Tax Objectives
Main Purpose: To
raise revenue for the
Authorizes congress to
levy and collect taxes
Standard Deduction, Filing Status,
Personal Exemptions, and More.
A two-page form, with a few supporting
schedules, which is more complicated than
the 1040EZ, but less complicated than the
I never use this form.
What Are Itemized
deductions are certain
government says you
Not all personal
Medical Expenses Qualificati
Property: Basis and Sale
of Capital Assets
Realized Gain/Loss = amount realized
less adjusted basis.
Recognized Gain/Loss = amount of
realized gain/loss that gets reported on
the current years tax return.
Deferred Gain/Loss = r
Tax Ethics Cases
Tim Trying, who is single, purchased a house on a lake in southern Wisconsin 35 years ago. He is
now retiring and is moving to Hawaii. Tim sold his house for $1,000,000 this year. Tim has been
a client of yours for the
Individual Retirement Accounts
- A Little History
Individual retirement accounts began in
the early 1970s.
From their inception up to 1986, IRA
contributions were fully tax deductible
(above the line).
Cash vs. Accrual
Cash method taxpayer income
Accrual method reportsdeducts when it
expenses when paid, and reports
is earned and expenses when they
income when cash is actually or
Rental Property, Royalties and
Schedule E - Rentals
Schedule E is used for taxpayers who
Its just another profit/loss statements.
If rental activity shows a profit - it is
fully taxable as ordinary income.