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65 Cards in this Set
- Front
- Back
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What categories fall under the summary of pricipal exlusions from gross income
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Donative Items
Personal and Welfare Items Wage and Salary Supplements Investor Items Benefits for the Elderly Other benefits |
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What items fall under the summary of pricipal exlusions from gross income under the donative items category
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Gifts
Life Insurance Accelarated death benefits survivor benefits scholarships |
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What items fall under the summary of pricipal exlusions from gross income under the Personal and welfare items category
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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 |
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What three categories fall under the summary of pricipal exlusions from gross income under the Wage and salary supplements category
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fringe benefits
military benefits foreign earned income |
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What items fall under the summary of pricipal exlusions from gross income under the Wage and Salary Supplements/fringe benefits category
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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 |
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What items fall under the summary of pricipal exlusions from gross income under the WAge and salary supplements/military benefits category
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Combat pay
housing, uniforms and other benefits |
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What items fall under the summary of pricipal exlusions from gross income under the Investor items category
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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 |
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What items fall under the summary of pricipal exlusions from gross income under the Benefits for the elderly category
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social security benefits, except in the case of certain higher income taxpayers
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What items fall under the summary of pricipal exlusions from gross income under the Other category
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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 |
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Sections ___ through___ providce the authority for excluding specific items from gross income
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101 through 150
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the courts have defined a gift as a
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voluntary transfer of property by one to another without adequate consideration or compensation therefrom
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a gift must be made
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out of affection respect admiration charity or like impulses
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transfers from an employer to an employee must be considered
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NOT A GIFT, always
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______ can exclude payments from an employer when employers pay for _____
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victims of a qualified disaster, living expenses, funeral expenses, and property damage
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Payments to an employees surviving spouse or other beneficiaries are gifts if the following are true
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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) |
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_____ paid to the benficiary because of the death of the insured are ____ from tax
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life insurance; exempt
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If an owner of a life insurance policy cancells the policy and receives the cash surrender value, he must ___
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recognize a gain equal to the EXCESS of the amount received over premiums paid on the policy- A LOSS IS NOT DEDUCTIBLE
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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
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the insured is terminally or chronically ill
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a person is determined to be chronically ill if he or she is certified as being
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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
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If a life insurance policy is transfered to another for valuable consideration, those proceeds are ____ to the extent ____
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includable ; proceeds recieved exceed the amount paid for the policy + any subsequent premiums paid
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There are four exceptions to the rule of Transfer of a life insurance policy for valuable consideration these are
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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 |
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Investment earnings arising from the reinvestment of life insurance proceeds are generally
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subject to income tax
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If a beneficary elects to collect the insurance proceeds in installments then the ___ apply
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annuity rules
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Payments received by a student at an educational instutuition may be either
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payment for services
gift scholarship if they are received as compensation they are TAXABLE |
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A student may exclude from gross income portions of a scholarship that pay for
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tuition and related expenses
fees books supplies and equipment |
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a student must include in gross income portions of a scholarship recieved for
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room and board
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When employees make scholarships available solely to the children of key employees, these payments are
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generally includible in the gross income of the parent-employee
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Employees of ____ are allowed to exclude a tuition waiver from gross income when the waiver is pursuant to a ____
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nonprofit educational institutions
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Tution reduction exclusion is limited to
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the excess of the value of the benefit over the employees reasonable compensation
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the insurance payment for damaged or destroyed property is treated as an
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amount received in a sale or exchange of property
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The types of damages a taxpayer seeks recovery for are
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loss of income
expenses incurred property destroyed personal injury |
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in case of a person who suffers harm caused by another, recovery of an expense is ____, unless the expense was ____.
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not income; deducted previously
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Under certain circumstances ___ damages may be excluded from gross income. Under no circumstances may ___ damages be excluded from gross income
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compensatory, punative
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Only those damages intended to compnesate the taxpayer for the damages incurred on account of______ may be excluded
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physical personal injury or physical sickness
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Congres has required that workman's comp payments are ____ from inclusion in gross income
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exempt
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Type of claim
Breach of contract, generally loss of income is |
taxable
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Type of claim
Property damages |
Recovery of cost, gain to the extent of the excess over basis.
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Type of claim
Personal injury physical |
all compensatory amounts are excluded unless previously deducted
punative damages are included in gross income |
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Type of claim
Personal injury nonphysical |
compensatory damages and punitave damages are included in gross income
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The income tax treatment of accident and health insurance benefits depnds on whether
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the policy providing benefits was purchased by the taxpayer of the taxpayer's employer
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benefits collected under accident and health insurance purchased by the taxpayer are
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excludable; even though payments were included as a substitute for income
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When health and accident plans are purchased by the employer, the premiums are _____
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excluded from employees income
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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
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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 |
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The benefits received under a self-insured plan can be ___ from income if ___
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excluded, does not discriminate in favor of highly compensated employees
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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
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250 for each day the patient receives long term care, OR the cost of the care
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long term care exclusion is not available IF
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it is provided as part of a cafeteria or flexible spending plan
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Meals and lodging are provided to the employee are exempt from income if they are provided under the following conditions
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they are FURNISHED by the employeron THE EMPLOYERS BUSINESS PREMISIS for the CONVENIENCE OF THE EMPLOYER, and in the case of lodging, they must be REQUIRED TO ACCEPT THE LODGING AS A CONDITION OF EMPLOYMENT
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If the employee has the option of being compensated with either cash or lodging then the cash is ___ and the lodging is ___
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counted as income
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Ministers of the gospel can exclude
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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 |
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the employee does not have to include in gross income the value of child and dependent care services paid for by the employer under
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5,000 per year
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thqualified employer provided educational assistance up to
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$5250 a year
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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
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10,960 a year
10,960 a year even if expenses are less than that amount 164,410-204,410 |
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congress established seven broad classes of non taxable employee benefits
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no additional cost services
qualified employee discounts working condition fringes de minimis fringes qualified transportation fringes qualified moving expense reimbursemtns qualified retirement planning services |
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no additional cost services will be nontaxable if all the following conditions are met
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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 |
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the no additional cost exclusion extends to the employees-
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spouse, and dependent children, retired and disabled former employees
PARTNERS WHO PERFORM SERVICES FOR THE PARTNERSHIP ARE EMPLOYEES FOR THE PURPOSE OF THE NO ADDITIONAL COST EXCLUSION |
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the qualified employee discount can be excluded from the gross income of the employee if the folowing conditions and limitations are met
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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 |
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de minimis means __ when applied to benefits
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that the benefits are so small that accounting for theme is impractical
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qualified transportation fringes include
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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 |
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the limit on qualified parking exclusion from gross income is
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205 a month
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the limit on mass transportation or transit pass exclusion from income is
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105 a month
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benefits that are excluded from inclusion of income regardless of discrimination are
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working condition fringes
de minimis fringes qualified transportation fringes qualified moving expenses reimbursements |
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When a taxpayer has foreign earned income he can either
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include the foreign income in his income and claim a credit for taxes paid,
or exclude the foreign ernains from his or her US gross income |
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to qualify for foreign earned income exclusion a taxpayer must
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be a bona fide resident of the other country
\ present in a foreign country for at least 330 days in any 12 consecutive months |
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the foreign imcome exclusion is limited to
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80,000
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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
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(Income excluded(max 80,000)/365) X number of qualifying days
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