Econ 138A Ch. 17 (Tax Consequences Of Personal Activities)

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Alimony received is income (Payer allowed to deduct it above-the-line in AGI)

Child support payments are not taxable income (Nondeductible by the payer)

Injury income nontaxable income (punitive damages not)

People who receive need-based payments from a local, state, or federal government agency may exclude the payments from income.

Unemployed workers must pay federal income tax on unemployment compensation.

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Answers

Front 2

What are creative assets?

Back 2

Copyrights: literary, musical, or artistic compositions; letters or memoranda; or similar assets.

-Not a capital asset

Front 3

Can an individual deduct medical expenses?

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Individuals may claim an itemized deduction from the unreimbursed cost of medical care for themselves and their family.

-Deductible expenses include payments to health care practitioners (doctors, dentists) and treatment facilities)

-Limited to the excess of total unreimbursed expenses over 7.5 percent of AGI

Front 4

Gift and estate taxes, employee payroll taxes, and employment taxes paid for household employees?

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Nondeductible personal expenses

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What are education savings bonds?

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Individuals can exclude the interest earned on the redemption of qualified series EE savings bonds to the extent of tuition and fees paid to a post-secondary educational institution.

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What are qualified tuition expenses?

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Above the line deduction

-Qualified tuition expenses include tuition and fees paid for post-secondary education.

-Limited to 4,000 and is phased out for high-income tax payers

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What are qualified education loans?

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Above-the line deduction

A loan is qualified if the proceeds were used to pay for the cost of postsecondary education, such as college tuition, room and board.

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Can individuals claim an itemized deduction for personal property arising from casualty or theft?

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Yes

The loss is the lesser of the tax basis in the property or the decrease in value from the casualty or theft.

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What is the imputed income from owner-occupied housing?

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The nontaxable economic benefit (fair rental value) derived by the owner of a home.

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What is qualified residence interest?

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Interest paid on acquisition debt or home equity debt allowed as an itemized deduction.

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What is qualified residence interest?

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Interest paid on acquisition debt or home equity debt allowed as an itemized deduction.