Tax Test 1 Essential Info

Front 1

Where does most of the revenue come from?

Back 1

Individual tax

Front 2

Of what importance is the date March 1, 1913?

Back 2

The Revenue Act of 1913 was retroactive to March 1, 1913. This date is important for tax purposes because this is the date which is sometimes used as a basis for computing gains and losses.

Front 3

The Sixteenth Amendment (1913) granted Congress the right to

Back 3

Tax income from whatever source derived

Front 4

Distinction between workers comp and unemployment

Back 4

Workers comp is not taxable, unemployment is taxable

Front 5

Requirements to be considered alimony post 1984

Back 5

1) Payments must be in cash 2) Payments under divorce or separation agreement 3) Parties live in separate households 4) Alimony ends on payee’s death 5) Parties do not file joint return 6) Payment is not for child support

Front 6

2 conditions for alimony recapture

Back 6

1) Payments made in the second post-separation year exceed the payments in the third post separation year by more than $15,000 and/or 2) Payments made in the first post separation year exceed the average of the alimony payments of the second post separation year and the third post separation year less the year 2 recapture by more than $15,000.

Front 7

When does recapture occur

Back 7

Year 3

Front 8

Y2 Recapture Calculation

Back 8

Payments in Y2 - Payments in Y3 - $15,000 = Amount of Y2 payments subject to recapture in Y3

Front 9

Y1 Recapture Calculation

Back 9

Payments in Y1 - Average of payments in Y2 and Y3 - $15,000 = Amount of Y1 payment subject to recapture in Y3.

Front 10

Exceptions to the Recapture Rule

Back 10

1) Payments cease due to death or remarriage prior to end of Y3 2) Payments received under temporary support oder before divorce or separation 3) Payments pursuant to a continuing liability to pay a fixed part of income from a business or property or from compensation for employment or self employment