Accy 312 Cheatsheet

C.3. Dependents – QC: relationship, age (<19; <24 & fulltime for 5months; disabled & younger), residence (>6months), support (>50%). QR: relationship (unrelated lives whole yr), GI (< 4k), support (>50%). Filing – MFJ: if spouse dies, still married at yr end. Surviving spouse: 2 yrs after spouse dies, maintain household for QC. HH: unmarried (>50% house cost for QC or QR, separate house allowed for mom and dad) OR abandoned spouse (spouse left 6months, >50% house cost for QC). Tax credit: 1k for QC <17 yrs old. Phase-out: Excess =AGI – threshold. RF (round up) =Excess/2,500. PhaseOut % = RF*2%. Allowed exemp=Total exemp * (1-PhaseOut%). Basic SD of dependent: greater of 1050 OR earned income+350 or 6300, smaller. Kiddie Tax: Net unearned inc =Unearned inc – 1050 – greater of 1050 or advisory fees. -> inc tax parent rate. Taxable inc – Net unearned income = inc tax at child rate.

C.4. Include in GI. Alimony. Annuity. Imputed interest. Accrual method: include when earned. Prepaid rent & interest include in GI in yr received. Prepaid inc for future services, include in yr performed. Alimony: Include. Child support or Property settlement: Not include. Imputed interest: compound semi-annually, reset next yr. Individual loans: ≤10k, exempt. ≤100k, include interest to extent of borrower net invest inc (net inv inc ≤1k, exempt) Corporation loans: ≤10k exempt. Annuity: Investment/expected yrs lived = recovered basis/yr. Prizes & Awards: include. Only exclude if: made for literary, scientific or charity achievement AND transferred to charity, Gambling: include winnings, deduc loss to extent of winnings (hobby). Professional gambling: deduc loss for AGI. Group term life insu: not include first 50k on premiums paid by employer. Include remainder. If discriminate, key employees include the greater of actual premiums or amount calculated on the table. Unemployment compensation: include. SSB: (income ≤25k if single; ≤32k if MFJ), not include SSB. (>34k if single, >44k if MFJ), include up to 85% SSB. Not in the bracket, include up to 50% SSB.

C.5. NOT include in GI. Municipal/state  bonds – Interest: not include. Gain on sale: include. Gifts & inheritance: not include. Life insu proceeds – Beneficiary not include in GI. If canceled to get cash, include gain, not deduc loss. Terminally ill: gain not include. Chronically ill: gain not include if used for long-term care. Scholarship – Tuition and related exp: not include. Room&board: include. If services required, include all. Except Athletic scholarship. Tuition waivers/reductions by nonprofit edu orgs: not include. Payment for damages – Loss of income: include. Property destroyed: include gain. Compensatory damages: not include for things related to physical injury (medical exp, loss of income, emotional distress). Punitive damages: include. Workers compensation: not include. Accidental & Health insurance benefits – If self-paid, benefits not include. If employer paid, premiums not include, benefits include, except benefits for employees medical exp or loss of body functions. Benefits for substitute of income: include. Meals & lodging – Meals: not include if (a) furnished by employer, (b) on employer premise, (c) at employer convenience. Lodging: all 3, AND (d) required as employment condition. Fringe benefits – Allow discrimination: working condition; de minimus; transport; moving exp; retirement planning. Dependent care: exclude up to 5k. Employee discount: must pay at least cost of property, or discount not exceed 20% price for services, no discount for realty or investment property, must from same bus line. Transport (either paid or reimbursed by employer) – Highway vehicle & transit pass: not include up to 130/month. Parking: not include up to 250/month. Bicycle reimburse: not include up to 20/month. Moving exp: if employer paid, not include. If self-paid, no deduc.  

C.6. Bus Deduc, Hobby, Vacation. For AGI: Business, rent, moving exp, health insu for self-employed, alimony. Not deduc: capital exp, exp on tax-exempt inc, fines, bribe, political contribution. Lobbying: Federal/state lobby if ≤2k; full amount local lobby. Exec compensation: base salary 1M per CEO & 4 highest officers. Cash method: required prepaid items 1-yr rule. Accrual method: all events test & economic performance test. Except: recurring item: all events test met & economic performance occurs no later than 8.5months after yr-end. Investigation exp – Same business type: deduc. Different type: if no entered-> no deduc, if entered-> capitalize, elect to immediate deduc 5k (reduce by X-50k), remainder amortize over 180months. Hobby: exp deduc to extent of income. FROM AGI. Tiers 2&3 subject to 2%AGI floor. Rule: profit for 3 of 5 yrs (2 of 7 yrs horses)-> business, not hobby. Vacation home – Personal use: rent ≤14 days, deduc estate tax & mort int FROM AGI. Rental use: rent >14 days, personal use not exceed the greater of 14 days or 10% rent days -> deduc all rent exp. Mixed use: rent exp deduc to extent of rent inc. Tier 1: either Bolton or IRS. Tiers 2&3: IRS. FOR AGI. Portion of tier 1 FROM AGI.