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65 Cards in this Set

  • Front
  • Back
What categories fall under the summary of pricipal exlusions from gross income
Donative Items
Personal and Welfare Items
Wage and Salary Supplements
Investor Items
Benefits for the Elderly
Other benefits
What items fall under the summary of pricipal exlusions from gross income under the donative items category
Life Insurance
Accelarated death benefits
survivor benefits
What items fall under the summary of pricipal exlusions from gross income under the Personal and welfare items category
injury or sickness payments
public assistance payments
amounts received under insurance contracts for certain living expenses
reimbursement for the costs of caring for a foster child
disaster relief payments
What three categories fall under the summary of pricipal exlusions from gross income under the Wage and salary supplements category
fringe benefits
military benefits
foreign earned income
What items fall under the summary of pricipal exlusions from gross income under the Wage and Salary Supplements/fringe benefits category
accident and health benefits
health savings accounts
lodging and meals furnished for the convenience of the employer
Rental value of parsonages
employee achievement awards
employer contributions to employee group term life insurance
cafeteria plans
educational assistance payments
child or dependent care
services provided to employees at no additional cost to the employer
employee discounts
working condidion and de minimis fringes
athletic facilities provided ot employees
qualified transportation fringe
qulauifed moving expense reimbursement
qualified retirement planning services
Tuition reductions granted to employees of educational institutions
child adoption expenses
long term care insurance
What items fall under the summary of pricipal exlusions from gross income under the WAge and salary supplements/military benefits category
Combat pay
housing, uniforms and other benefits
What items fall under the summary of pricipal exlusions from gross income under the Investor items category
interest on state and local government obligaitons
Improvements by tenant to landlord's property
fifty percent exclusion for gain from the sale of certain small business stock
What items fall under the summary of pricipal exlusions from gross income under the Benefits for the elderly category
social security benefits, except in the case of certain higher income taxpayers
What items fall under the summary of pricipal exlusions from gross income under the Other category
Income from discarge of indebtedness
REcovery of a prior years deduction that yeilded no tax benefit
gain from the sale of personal residence
educational savings bonds
qualified tuition program
coverdell education savings account
Lessee construction allowances for short term leases
Sections ___ through___ providce the authority for excluding specific items from gross income
101 through 150
the courts have defined a gift as a
voluntary transfer of property by one to another without adequate consideration or compensation therefrom
a gift must be made
out of affection respect admiration charity or like impulses
transfers from an employer to an employee must be considered
NOT A GIFT, always
______ can exclude payments from an employer when employers pay for _____
victims of a qualified disaster, living expenses, funeral expenses, and property damage
Payments to an employees surviving spouse or other beneficiaries are gifts if the following are true
the payments were made to the surviving spouse and childrent rather than to an estate
the employer derived no benefit from the payments
the surviving spouse and children performed no services for the employer
the decednt had been fully compensated for services rendered
payments were made pursuant to a BOD resolution that followed a general company policy of providing payments for families of deceased employees (but not exclusively for shareholder-employees)
_____ paid to the benficiary because of the death of the insured are ____ from tax
life insurance; exempt
If an owner of a life insurance policy cancells the policy and receives the cash surrender value, he must ___
recognize a gain equal to the EXCESS of the amount received over premiums paid on the policy- A LOSS IS NOT DEDUCTIBLE
In limited circumstance, the holder of a life insurance policy is allowed to cash out the policy w/o including the gain in gross income, this would be when
the insured is terminally or chronically ill
a person is determined to be chronically ill if he or she is certified as being
unable to perform without the assistance of certain activities of daily living AVAILABLE ONLY IF THE LIFE INSURANCE POLICY IS NOT PURCHASED BY ANOTHER PERSON
If a life insurance policy is transfered to another for valuable consideration, those proceeds are ____ to the extent ____
includable ; proceeds recieved exceed the amount paid for the policy + any subsequent premiums paid
There are four exceptions to the rule of Transfer of a life insurance policy for valuable consideration these are
Permission of exclusion treatment applies to the following
1. A partner of the insured
2. A partnership in which the insured is a partner
3. A corporation in which the insured is an officer or shareholder
4. A transferee whose basis in the policy is determined by reference to the transferor's basis
Investment earnings arising from the reinvestment of life insurance proceeds are generally
subject to income tax
If a beneficary elects to collect the insurance proceeds in installments then the ___ apply
annuity rules
Payments received by a student at an educational instutuition may be either
payment for services
if they are received as compensation they are TAXABLE
A student may exclude from gross income portions of a scholarship that pay for
tuition and related expenses
supplies and
a student must include in gross income portions of a scholarship recieved for
room and board
When employees make scholarships available solely to the children of key employees, these payments are
generally includible in the gross income of the parent-employee
Employees of ____ are allowed to exclude a tuition waiver from gross income when the waiver is pursuant to a ____
nonprofit educational institutions
Tution reduction exclusion is limited to
the excess of the value of the benefit over the employees reasonable compensation
the insurance payment for damaged or destroyed property is treated as an
amount received in a sale or exchange of property
The types of damages a taxpayer seeks recovery for are
loss of income
expenses incurred
property destroyed
personal injury
in case of a person who suffers harm caused by another, recovery of an expense is ____, unless the expense was ____.
not income; deducted previously
Under certain circumstances ___ damages may be excluded from gross income. Under no circumstances may ___ damages be excluded from gross income
compensatory, punative
Only those damages intended to compnesate the taxpayer for the damages incurred on account of______ may be excluded
physical personal injury or physical sickness
Congres has required that workman's comp payments are ____ from inclusion in gross income
Type of claim
Breach of contract, generally loss of income is
Type of claim
Property damages
Recovery of cost, gain to the extent of the excess over basis.
Type of claim
Personal injury physical
all compensatory amounts are excluded unless previously deducted
punative damages are included in gross income
Type of claim
Personal injury nonphysical
compensatory damages and punitave damages are included in gross income
The income tax treatment of accident and health insurance benefits depnds on whether
the policy providing benefits was purchased by the taxpayer of the taxpayer's employer
benefits collected under accident and health insurance purchased by the taxpayer are
excludable; even though payments were included as a substitute for income
When health and accident plans are purchased by the employer, the premiums are _____
excluded from employees income
The general rule is that the employee has includible income when ollecting insurance benefits from plans where the premium was paid by the employer, these exclusions apply
payment for the medica care of the employee, spouse and benefits, unless the payments are for expenses that do not meet the code's definition of care
also exclueds payments for the permanent loss of use of function of body parts and disfigurements. Payments that are a substitute for salary are INCLUDABLE
The benefits received under a self-insured plan can be ___ from income if ___
excluded, does not discriminate in favor of highly compensated employees
the employee does not recognize income when the employer pays the premiums on long term care insureance. The exlusion from gross income is limited to the greater fo the following amounts
250 for each day the patient receives long term care, OR the cost of the care
long term care exclusion is not available IF
it is provided as part of a cafeteria or flexible spending plan
Meals and lodging are provided to the employee are exempt from income if they are provided under the following conditions
If the employee has the option of being compensated with either cash or lodging then the cash is ___ and the lodging is ___
counted as income
Ministers of the gospel can exclude
the rental value of a home furnished as compensation
rental allowance paid to them as compensation to the extent the allowance is used to pay rent
3) the rental value of a home owned by the minister
the employee does not have to include in gross income the value of child and dependent care services paid for by the employer under
5,000 per year
thqualified employer provided educational assistance up to
$5250 a year
The expenses incurred to adopt a child up to ___ and in the case if special needs up to___ the exclusion is phased out as AGI increases from
10,960 a year
10,960 a year even if expenses are less than that amount
congress established seven broad classes of non taxable employee benefits
no additional cost services
qualified employee discounts
working condition fringes
de minimis fringes
qualified transportation fringes
qualified moving expense reimbursemtns
qualified retirement planning services
no additional cost services will be nontaxable if all the following conditions are met
the employee receives services as opposed to property
the employer does not incur substantail additional cost including forgone revenue
the services are offered to customers in the ordinary course of the business
the no additional cost exclusion extends to the employees-
spouse, and dependent children, retired and disabled former employees
the qualified employee discount can be excluded from the gross income of the employee if the folowing conditions and limitations are met
the exclusion is not available for real property or for personal property commonly held for investment

the property or services must be from the same line of busines in which the employee works

in the case of property, the exclusion is limieted to the gross profit component of the price to customers

in the case services, the exclusion is limited to 20 percent of the customer price
de minimis means __ when applied to benefits
that the benefits are so small that accounting for theme is impractical
qualified transportation fringes include
tranportation in a commuter highway vehicle between the employees residence and the place of employment
a transit pass
qualified parkin
-parking proviced to an employee near the place of business
-parking provided to an employee on or near a location from which the employee commutes to work via mass trnasit
the limit on qualified parking exclusion from gross income is
205 a month
the limit on mass transportation or transit pass exclusion from income is
105 a month
benefits that are excluded from inclusion of income regardless of discrimination are
working condition fringes
de minimis fringes
qualified transportation fringes
qualified moving expenses reimbursements
When a taxpayer has foreign earned income he can either
include the foreign income in his income and claim a credit for taxes paid,
exclude the foreign ernains from his or her US gross income
to qualify for foreign earned income exclusion a taxpayer must
be a bona fide resident of the other country
present in a foreign country for at least 330 days in any 12 consecutive months
the foreign imcome exclusion is limited to
if all the days in the taxpayer year are not qualified days then they must compute the maximum exclusion on a daily basis which is calculated by
(Income excluded(max 80,000)/365) X number of qualifying days