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11 Cards in this Set

  • Front
  • Back
Elements for spousal support to be deductible
Must be in a written agreement (divorce decree)
must terminate upon death (or before death)
Must be to ex-spouse who no longer lives with paying spouse
Must be made in cash or cash or equivalent
Exceptions to cancellation of indebtness rule
- R - Reduction in purchase price (only for sale of goods)
- I - Insolvency of debtor
- G - Gift
Exclusions from gross income determination
Life insurance proceeds (but not interest)
Inheritance (but not income from property or bequest conditioned on services)
Gifts (detached and disenterested generosity)
Tort awards (compensatory not punitive)(not non-physical damages unless tacked onto physical damage award)
Qualified scholarship (for education expenses only, not living expenses)(not paid by employers)
Employee related exclusions
Employee related exclusions from taxable income
Health and accident insurance benefits (reimbursements and premiums)
Life insurance premiums (up to 50,000 in coverage)
Meals and lodging - if provided for convenience of employer, in kind, and on the premises of employer
Others (de minimus, offered at no additional cost to employer, employee discount programs, contributions to pension plans, employee safety or length of service award)
Above the line deductions
Ordinary and necessary business expenses (including salaries to employees, rent, supplies, interest payments on loans, payment of business taxes - but not federal)

Depreciation (only for business or investment related things take over a year to pay off)

Capital losses - up to $3,000

Moving expenses

Itemized deductions
Itemized (non business deductions)
Home mortgage interest (up to 1 million for 2 homes) + 100,000 for home equity b/c consumer interest is non-deductible

State and local taxes (except sales tax unless no state/local income tax)

Unreimbursed casualty losses - $100 deductible, loss must be unexpected, losses must be in the amount of 10% of AGI in the aggregate

Unreimbursed medical expenses exceeding 7.5% of AGI

Charitable contributions (subtract from any benefit received)

Miscellaneous deductions - that exceed 2% of AGI (include non-reimbursed employee business expenses and education but not for new profession)

Other business expenses (not personal expenses)

Fees/expenses for investments
rate of tax for ordinary income
rate of tax for capital gains (long term = > 1 year)
Who pays corporate tax
Corporation pays taxes on income

SH's pay tax on dividends
No gain or loss to shareholders during formation when
- SH contributes property
- receives stock in exchange
- and is in control when corporation formed (SH's as a group own at least 80% of stock upon formation)
Annual exclusion for gift tax
12,000 can be transferred tax free each year per donee