Term
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Definition
| requires a cash basis taxpayer to include the value of property in income in the period in which the right to (or control of) the property is acquired |
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Term
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Definition
| requires a taxpayer to include an expense reimbursement in income if the expense was deducted in a prior period and the deduction reduced the taxpayer's taxable income |
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Term
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Definition
| requires taxpayer to include property in income in the period in which an apparent claim to the property materializes |
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Term
| timing of interest income for cash basis |
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Definition
| included in income when received |
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Term
| timing of interest income for accrual basis |
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Definition
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Term
| timing of prepaid interest income |
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Definition
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Term
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Definition
| taxpayer may elect to amortize premium and claim amortization as the deduction |
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Term
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Definition
| individuals amortize bond discount as interest income |
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Term
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Definition
| loan made that requires a payment at maturity exceeding the amount of the original loan (must be amortized using the effective interest rate method) |
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Term
| short-term discounts for cash basis TP |
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Definition
| taxed at maturity as ordinary income |
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Term
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Definition
| interest paid when bond matures and can be excluded if used to pay higher education expenses if owner of bond is at least 24. (phased out for 2011 when modified AGI is more than 70,100/106,650 for single/married TP) |
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Term
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Definition
| interest on state or local bonds is excluded |
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Term
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Definition
| if interest charged for a loan is less than the current market rate then the borrower payes current market rate to the lender |
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Term
| 2 types of loans exempt from below market rules |
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Definition
| 1-loans less than $10,000 are excluded as long as proceeds aren't used to purchase investment materials 2-loans under $100,000 with no tax-avoidance motive: deemed interest paid by the borrower is limited to borrower's investment income on the loan proceeds. (if investment income is less than $1,000 than it is deemed to be 0) |
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Term
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Definition
| not taxed for TP in 0-15% tax bracket and taxed 15% for higher brackets (must be domestic corporation and stock must be held for 60 days of the 121 day period beginning 60 days before the ex-dividend date) |
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Term
| stock dividends or split on common stock |
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Definition
| excludible as long as it is proportionate. basis of stock must be adjusted |
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Term
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Definition
| taxed to recipient and deducted by payor (must meet 5 requirements) |
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Term
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Definition
| not taxable and non deductible |
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Term
| property transfers between former spouses |
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Definition
| other than cash to a former spouse under divorce decree are not taxable. basis transfers with property |
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Term
| special front loading rule |
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Definition
| recapture required of deductions and income if alimony payment decline more than $15,000 over the first 3 years after divorce |
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Term
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Definition
| consists of assets owned before marriage or acquired by gift or inheritance while married. income belongs to spouse that owns |
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Term
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Definition
| property acquired during marriage. each spouse is taxed on 50% of the income |
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Term
| physical injury or illness income |
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Definition
| not subject to income taxation |
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Term
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Definition
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Term
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Definition
| received for emotional distress, employment or age discrimination, or injury to reputation must be included in gross income |
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Term
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Definition
| must be included in income |
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Term
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Definition
| require an insurance company to make certain payments to a TP for a specified period of time. |
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Term
| income in respect of a decedent (IRD) |
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Definition
| income which decedent had earned before his death but had not yet recognized as income because of accounting method. must be included in income of person who receives it |
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Term
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Definition
| FMV must be included in income unless for civic, artistic, educational, scientific, or literary achievement and recipient is selected without action on his part and prize is paid directly to a tax-exempt or governmental organization) |
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Term
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Definition
| excludible if used for tuition, fees, books, supplies, or equipment required for classes |
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Term
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Definition
| excluded from income when received due to death |
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Term
| sale of life insurance plan |
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Definition
| proceeds received over cost are taxable unless patient is terminally or chronically ill |
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Term
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Definition
| excluded if the purpose of transfer was generosity. income accrued up to time of gift is taxed to donor and income accrues after the gift to donee |
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Term
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Definition
| results in income to the borrower unless its a gift or relates to a bankruptcy proceeding. |
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Term
| cancellation of debt on real property used in trade or business |
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Definition
| income is never recognized but basis of the property must be reduced by amount of forgiveness |
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Term
| discharge of indebtedness on TP principal residence from 2007-2012 |
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Definition
| excludible up to $2 million |
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Term
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Definition
| generally not included in income. if TP provisional income exceeds $25,000, then up to 85% of the benefits may be included income |
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Term
| provisional income equation |
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Definition
| PI= AGI + tax-exempt interest + 50% (SSB) |
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Term
| unemployment compensation |
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Definition
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Term
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Definition
| excluded from income if they are for reimbursement for expenses incurred to care for foster child |
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Term
| oddity with accrual method for tax purposes |
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Definition
| unearned income is recognized in year received, rather than earned |
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Term
| 3 entities that CAN'T use cash method of accounting |
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Definition
| 1-c corporations 2-partnerships that have c-corps as partners (unless gross receipts for past 3 years dont exceed $5 million) 3-tax shelters |
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Term
| business with inventory must use the... |
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Definition
| accrual method unless annual gross receipts are < $1,000,000. (delivery services with gross receipts between $1 million-$10 million can use cash method too) |
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Term
| Uniform capitalization method |
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Definition
| all manufacturers and wholesalers must capitalize all direct and indirect costs allocable to property that they produce |
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Term
| voluntary change in accounting method income |
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Definition
| spread over 4 years unless income is less then $25,000 (then in first year) |
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Term
| revenue from advanced payment for goods |
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Definition
| can be deferred until earned as long as the same accounting method is used for financial accounting |
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Term
| prepaid dues and subscriptions |
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Definition
| reported over the membership or subscription period |
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Term
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Definition
| income is reported with the percentage of completion method |
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Term
| completed contract method |
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Definition
| income recognized upon completion of project. permitted for home construction contracts, and contracts with contractors whose average gross receipts for the past 3 years do not exceed $10 million |
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Term
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Definition
| FMV is income to landlord if in lieu of rent |
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Term
| benefits from TP purchased insurance policies |
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Definition
| proceeds from health and disability insurance proceeds are excluded if the TP paid the premiums even if they are a substitute for lost wages |
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Term
| benefits from employer purchased DISABILITY policies |
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Definition
| if employer pays premiums, proceeds are taxed |
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Term
| benefits from employer purchased HEALTH insurance plans |
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Definition
| excludible if for qualified medical expenses or loss of (or use of) body part or permanent disfigurement |
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Term
| benefits received from long-term care policies |
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Definition
| excludible from income up to $300 per day in 2011 |
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Term
| life insurance premiums paid by employer on group-term |
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Definition
| excluded on group-term life insurance as long as policy is face value of $50,000 or less |
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Term
| life insurance premiums paid by employer on a whole-life policy |
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Definition
| premiums included in income |
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Term
| health insurance premiums paid by employer |
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Definition
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Term
| employer paid premiums for disability insurance plans |
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Definition
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Term
| employer paid premiums for long-term care insurance plans |
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Definition
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Term
| employer paid premiums for wage continuation insurance |
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Definition
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Term
| personal expenses paid by employer |
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Definition
| included in income because it is compensatory in nature. |
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Term
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Definition
| excluded if provided for employers convenience and a condition of employment. meals must be provided on the employer's premises. |
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Term
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Definition
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Term
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Definition
| excluded because small and infrequent |
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Term
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Definition
| excludible if not more than 20% for services, and average gross profit % for merchandise |
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Term
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Definition
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Term
| safety and length of service achievement awards |
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Definition
| excluded from income subject to limits of $400 if non-qualified plan and $1,600 if qualified plan (taxed if cash. can't be given more than once every 5 years) |
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Term
| transportation and parking |
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Definition
| employer reimbursements are excludible up to $230 a month for transportation and $230 a month for parking |
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Term
| child and dependent care services |
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Definition
| up to $2500/5000 can be excluded for single/married |
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Term
| Undergraduate and graduate tuition, fees, books, and supplies |
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Definition
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Term
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Definition
| excludible from gross income up to $13,360 (phased-out at AGI levels between $185,210-$285,210) |
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Term
| benefits paid to family of deceased |
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Definition
| included in income of family |
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Term
| Flexible Spending Accounts (FSAs) |
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Definition
| set up by employer to allow employees to contribute a portion of their salary to an account to pay medical expenses, dependent care expenses, or adoption expenses. |
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Term
| nonqualified stock options |
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Definition
| on date of exercize, employee recognizes income = to (FMV of stock - exercise price) x # of shares |
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Term
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Definition
| -no income is recognized when stock is exercised. -when later sold, gain on sale is LTCG if acquired stock is held more than one year and not sold until after two years from the date the option was granted. employer doesn't receive a deduction |
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Term
| if requirements are not met on sale date of incentive stock options, then... |
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Definition
| the option is treated like nonqualified stock except on sale date. -gain on sale is ordinary income and employer receives a deduction equal to stock's FMV on the exercise date over the exersize price -difference between FMV on sale date and exercise date is capital gain or loss |
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Term
| contributions made by an employer to a "qualified" retirement plan |
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Definition
| are not subject to tax until the contributions are withdrawn from the plan |
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Term
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Definition
| must meet nondiscriminatory, funding, vesting, and certain participation/coverage requirements. |
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Term
| early withdrawals (before age 59 1/2) from qualified pension plans |
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Definition
| trigger a penalty in addition to the taxation of the withdrawal |
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Term
| Traditional IRAs (individual retirement accounts) |
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Definition
| provide a deduction for eligible contributions |
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Term
| contributions to traditional IRAs |
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Definition
| -limited to $5000 ($6000 if over 50 years old) or compensation ($10000 for married) |
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Term
| Traditional IRA deductions |
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Definition
- If TP is not a participant in a qualified pension plan: contributions can be deducted for AGI
- if TP is active paticipant in qualified plan: deduction phased-out if AGI exceeds $90,000/$56,000
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Term
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Definition
- not deductible (same limits as traditional IRA contributions)
- covered contributions are phased-out if AGI > $107,000/169,000
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Term
| Coverdell Savings account (established to pay higher education costs for students under 18) contributions |
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Definition
| -not deductible but income may not be subject to tax. -limited to $2,000 per beneficiary (phased-out if AGI is >$95,000/$190,000 |
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Term
| withdrawals from a traditional IRS |
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Definition
| taxed as income in the year of withdrawal |
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Term
| withdrawals of INCOME from a Roth savings account |
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Definition
| tax exempt if distribution occurs five years or more from the date of the initial contribution and is made on or after an individual attains age 59 1/2, if due to death or disability of TP, if first-time homebuyer expenses, or certain education expenses |
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Term
| withdrawals of CONTRIBUTIONS from a Roth IRA account |
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Definition
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Term
| Withdrawals of CONTRIBUTIONS of income from a Coverdell savings account |
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Definition
| are not subject to tax if used to pay higher education expenses or rolled into a Coverdell saving account for member of family |
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Term
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Definition
-same limits as pension plans except the maximum percentage limit is based upon self-employment earnings.
-limit is lesser of $49,000 or 100% of earned income (earned income=net earnings from self-employment less 50% of the self-employment tax less allowable Keogh contribution) |
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Term
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Definition
| used to save for college expenses through a vehicle that allows earnings to be excluded from gross income |
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Term
| section 259 plan contributions |
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Definition
| not deductible and lifetime limit of $250,000 |
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Definition
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