Regulation 1 Individual Tax---Income

Front 1

Adjusted Gross Income

Back 1

Gross Income - Adjustments

Front 2

Adjustments

Back 2

Educator Expenses; IRA; Student Loan Interest Expense; Tuition & Fees Deduction; HSA; Moving Expenses; 1/2 Self-Employment FICA; Self-employed Health Ins; Self-Employed Retirement; Interest Withdrawal Penalty; Alimony Paid

Front 3

Itemized Deductions

Back 3

Medical >10% AGI; State & Local income/sales/property taxes; Interest Expense home/investments; Charity up to 50% AGI; Casualty/Theft >10% AGI; Miscellaneous >2% AGI; Other Miscellaneous

Front 4

Filing Deadline

Back 4

April 15th---payment & file;
6 month extension available for filing ONLY

Front 5

Surviving Spouse

Back 5

Dependent child living with for ENTIRE year

---son/daughter; stepchildren; adopted children

Front 6

Qualifying Widow

Back 6

Joint return for 2 taxable years following death of spouse

Front 7

Head of Household

Back 7

Dependent children, parents, relatives
NOT freeloading friends, cousins, foster parents, unrelated dependents
Must live with taxpayer half of the year

Front 8

CARES

Back 8

Close Relative
Age--19/24
Resident > 1/2 year
Eliminate Gross Income Test
Support--Dependent doesn't provided >50% support

Front 9

SUPORT

Back 9

Support Test--Provide > 50% support
Under exemption amount $3,900
Precludes dependent filing joint
Only US/Mex/Canada
Relative OR
Taxpayer lives with for WHOLE year

Front 10

Taxable Income Basis

Back 10

Fair Market Value

Front 11

Nontaxable Income Basis

Back 11

Net Book Value

Front 12

Realized

Back 12

What happened in real world

Front 13

Recognized

Back 13

Record & included on tax return

Front 14

Life Insurance Proceeds

Back 14

Interest Income element of deferred payout is taxable

Front 15

Life Insurance Premiums

Back 15

Partially Taxable- life insurance premiums for coverage > $50,000

Front 16

Meals & Lodging

Back 16

not taxable if for benefit of employer & furnished on the employer's premises
lodging must be condition of the employment

Front 17

Education Expenses

Back 17

Up to $5,250 may be excluded

Front 18

Interest Income

Back 18

General Rule: All interest income is taxable
State & Local obligations are Nontaxable
Federal obligations & interest on state & federal refunds are taxable

Front 19

Tax Exempt Interest

Back 19

State & Local bond obligations
US Bonds
Series EE bonds when used for higher edu & MAGI < $74,700
Veteran's Administration Insurance

Front 20

Kiddie Tax

Back 20

$0-$1,000---0%
$1,001-$2,000---Child's tax rate
$2,001 and up---Parent's tax rate

Front 21

Flexible Spending Account

Back 21

$2,500 Pretax

Front 22

State Tax Refunds

Back 22

taxable only if itemized in prior year; interest income is always taxable

Front 23

Alimony Income

Back 23

Must be legally required; Cash/cash equivalent; cannot extend beyond death of spouse

Payment applies to child support first
Property Settlements- nontaxable (HIDE IT)

Front 24

Schedule C

Back 24

Sole Proprietor (Self-Employed)
-Meals & Entertainment--50% deductible
-Bad Debts actually written off deducted if on accrual

Front 25

Sole Proprietor---Nondeductible expenses

Back 25

Personal expenses, federal taxes, salaries paid to sole proprietor; self-employment taxes (adjustment to AGI, not deduction on schedule C)

Front 26

Sole Proprietor- Net Operating Losses

Back 26

Carryback 2; Carry forward 20 years

Front 27

Uniform Capitalization Rules

Back 27

Capitalize direct materials, direct labor, and factory overhead

Expense- selling & research; inventory when sold

Front 28

IRA Income

Back 28

Withdrawing funds
Traditional, Roth, Nondeductible
10% penalty tax rate for early withdrawals (59.5) except for HIMDEAD & contributions to Roth

Front 29

Traditional IRA

Back 29

Taxed as ordinary income when withdrawn

Front 30

Roth IRA

Back 30

Nontaxable withdrawals

Front 31

Nondeductible IRA

Back 31

principal nontaxable; interest earnings are taxable

Front 32

HIMDEAD

Back 32

IRA Penalty Exemptions
Homebuyer, Medical Insurance, Medical Expenses > 10% AGI, Disability, Education, Death

Front 33

Schedule E

Back 33

Rental Property Income; Partnerships & S-Corps

Front 34

Prepaid Rent & Nonrefundable deposits

Back 34

taxable when received

Front 35

Passive Activity Losses

Back 35

only deducted to extent of passive income
Carryforward unlimited
Fully deductible in year property is sold

Front 36

Mom & Pop Exception

Back 36

Deduct up to $25,000/year of net passive losses
Must be actively managing
Phase out- reduced by 50% for excess of AGI > $100,000

Front 37

Social Security

Back 37

Max of 85% taxable

Front 38

Unemployment vs Workers Comp

Back 38

Unemployment = taxable;
Workers Comp = nontaxable

Front 39

Gambling winnings/losses

Back 39

Only deduct to extent of gambling winnings

Front 40

Scholarships

Back 40

Exclude for degree-seeking individuals---does not include room & board

Front 41

Gifts & Inheritances

Back 41

Not taxable to beneficiary
---interest on life insurance proceeds---taxable

Front 42

Long-term Contracts

Back 42

Use % Completion
Start date = date costs are incurred

Front 43

Cost to Cost

Back 43

Total cumulative cost incurred to date divided by total expected costs

Front 44

Gross Income Received Method

Back 44

(Cost to Cost * Total Contract Price) - Prior income recorded

Front 45

Nonqualified Stock Options

Back 45

Taxed when granted if readily ascertainable value as ordinary income
No tax on date of exercise
Basis = exercise price + amt previously taxed
Lapse = capital loss
No ascertainable value = taxed at exercise FMV-amt paid; no tax consequences for lapse

Front 46

Qualified Stock Options

Back 46

incentive Stock Options (ISO)
Employee Stock Purchase Plans (ESPP)

Front 47

Incentive Stock Options

Back 47

Granted to key employee- right to purchase stock at discount--w/in 10yrs of earlier of date plan adopted or approved
Exercise price not less than FMV at date of grant
Employee owns <10% of combined voting power at date of grant
Must be held at least 2yrs after grant and 1 yr after exercise

Front 48

ISO Employee Taxation

Back 48

No taxation of option as compensation
Basis = exercise price + amt paid for option
G/L on subsequent sale ---capital
Lapse- no deduction
May exercise up to $100,000/yr
Excess of FMV on exercise date over purchase price = preference item for AMT

Front 49

Employee Stock Purchase Plan

Back 49

Employees <5% combined voting power
Plan must include all full-time employees other than highly compensated
Option exercise price may not be less than lesser of 85% of FMV stock when granted/exercised
Up to $25,000/year

Front 50

Capital Loss Deduction

Back 50

Maximum of $3,000; 0 carryback, unlimited carryforward