Gilbert Law Summaries, Taxation of Individuals
Author:
Bank, Steven A.
Edition:
23rd
Copyright Date:
2020
11 chapters
have results for Tax
Capsule Summary v 140 results (showing 5 best matches)
- Federal income taxes, Social Security tax imposed on employees, excess profit taxes, federal estate and gift taxes, and state and local inheritance taxes are
- Start with AGI, less certain deductions, plus “tax preferences” to arrive at alternative minimum taxable income (“AMTI”). Then subtract an exemption ($111,700 on joint returns, $71,700 on single). The exemptions are phased out for higher income taxpayers. The balance is taxed at a rate of 26% or 28%. If the alternative minimum tax (“AMT”) exceeds the taxpayer’s regular income tax, she must pay the AMT instead of the regular tax.
- The Constitution provides that Congress has the power to tax; however, direct taxes must be apportioned, and historically this precluded the federal income tax.
- When the donor transfers income-producing property, income from the property is taxed to the donee. However, income accrued prior to the transfer is taxed to the donor. (Transfers of income-producing property are subject to gift tax.)
- The tax rate is structured so that single people are taxed more than a joint return for the same income. However, where married people have substantial income, they could pay less combined tax if they were single.
- Open Chapter
Chapter Six. Tax Accounting Problems 225 72 results (showing 5 best matches)
- Another major tax advantage is that income earned by such plans (interest, dividends, etc.) is not currently taxable to the employee. It is taxed only at the time of distribution. Moreover, the trust that holds and invests the money is a tax-exempt entity, so it pays no tax.
- A problem exists where an accrual basis taxpayer is paid in the current tax year for services to be rendered, or goods to be supplied, in future tax years. The issue is whether the income should all be taxable in the year of receipt or whether it can be spread out over the tax years in which the services or goods are to be provided.
- income becomes taxable (or a deductible item becomes deductible), and special rules governing how various items of income or deductions may be reported for best tax advantage. Accounting issues are frequently tested because timing questions are critical in tax law.
- The main purpose of this doctrine is to prevent cash basis taxpayers from avoiding taxes by putting off actual receipt of income until their tax circumstances are more favorable.
- contributions paid into the plan as a return of capital (tax free, of course); the part equal to her
- Open Chapter
Chapter Three. Is It Deductible or Is It a Credit? 65 136 results (showing 5 best matches)
- Certain taxes are not deductible under any circumstances: federal income taxes, Social Security tax imposed on employees, excess profits taxes, federal estate and gift taxes, and state and local inheritance taxes. [
- The income tax is a tax on
- to the taxes enumerated in the previous paragraphs, all other taxes incurred
- When the item in question is taxes, remember that
- —meaning that the item reduces the tax due
- Open Chapter
Chapter Five. What Kind of Income Is It? Capital Gains and Losses and Tax Preferences 195 45 results (showing 5 best matches)
- For any exam question that asks you to compute the amount of tax owed, consider whether the alternative minimum tax applies. The tax is arrived at by adding back certain tax preferences, making certain deductions, subtracting an exemption, and applying a 26% or 28% rate. If the result exceeds the taxpayer’s regular tax, he
- This section deals with items of income or deduction that are specially treated. Most of the chapter concerns capital gains and losses, which arise on the sale or exchange of certain kinds of property (“capital assets”). Capital gain is taxed at a lower rate than ordinary income, but the deduction of capital losses is restricted. The chapter also covers the alternative minimum tax on tax preferences, which imposes a special tax on certain deductions and items of income.
- Long-term capital gain is taxed at a maximum rate of 20%, while ordinary income can be taxed at rates up to 37% (plus a 3.8% tax on net investment income). Capital losses are fully deductible against capital gains, and deductible up to $3,000 against ordinary income. If a possible capital gain or loss issue arises on your exam, analyze it as follows:
- er December 31, 2000, is treated as a tax preference under the alternative minimum tax. [
- To compute alternative minimum tax (“AMT”), start by computing “alternative minimum taxable income” (“AMTI”). This consists of taxable income plus certain tax preferences and disallowed deductions. Then subtract an exemption. As of 2019, the exemption is $111,700 on a joint return and $71,700 on a single return. Then compute the AMT on the balance at the rate of 26% on AMTI up to $194,800 and 28% on AMTI in excess of $194,800. If the AMT exceeds the taxpayer’s regular income tax, the taxpayer must pay the AMT instead of the regular tax.
- Open Chapter
Chapter Two. To Whom Is the Income Taxable 39 107 results (showing 5 best matches)
- Although the regular trust taxation rules are not often tested in a personal income tax course, you should remember the basic rule that a trust is taxed on its income except to the extent the income is distributable to a beneficiary, in which case the beneficiary is taxed. Also,
- , the income is taxed to the donor at the time the donee collects it. For tax purposes, income is to be taxed to the person who bears the risks of
- There is a substantial (but by no means complete) correlation between the income tax rules and the estate and gift tax rules applicable to trusts. Broadly, the retention of powers and controls that cause the grantor to be taxed on trust income frequently results in the transfer’s being considered an “incomplete” gift so that it is
- All of a child’s income is taxed to the
- Dad gives Son an undivided one-quarter interest in an apartment house. One-quarter of the rental income is taxed to Son from that time onward. If the building is sold, Son is taxed on one-quarter of the gain (or deducts one-quarter of the loss).
- Open Chapter
Approach to Exams xlix 10 results (showing 5 best matches)
- In spite of the great complexity in the income tax field, you will find that tax issues can be broken down into a relatively small number of areas. In resolving tax problems on your exam, it may be helpful to focus on each issue within the following analytical framework:
- , is income taxed to the grantor, the beneficiary, or the trust?
- DOES THE ALTERNATIVE MINIMUM TAX (“AMT”) APPLY?
- Is the AMT greater than the taxpayer’s “regular” tax?
- Steps for determining Tax Liability
- Open Chapter
Chapter One. Is It Income? 1 76 results (showing 5 best matches)
- The Constitution provides that Congress “shall have power to lay and collect taxes. . . .” [Art. I, § 8, cl. 1] However, “[n]o capitation,
- An income tax statute was stru
- Rental income from a tax-exempt organization’s
- Hence, a particular transaction could be a taxable gift for gift tax purposes, but not a gift for income tax purposes. In such event, the donor would have to pay a gift tax and the reci
- for income tax purposes
- Open Chapter
Review Questions and Answers 259 92 results (showing 5 best matches)
- Assume that Jake claims $10,000 of percentage depletion and basis has been exhausted. Is the amount claimed included as a “tax preference” for purposes of the alternative minimum tax on tax preferences?
- Suppose instead that the property was held in joint tenancy. Under the applicable estate tax rules, one-half of the fair market value at the date of death is subject to estate tax in Herbert’s estate. What is the basis for income tax purposes of Wilma’s one-half?
- Miguel, an attorney, tells his clients to pay legal fees to his child, Rafael. In that tax year, Rafael receives $21,000. Is he taxed on the $21,000?
- Don is married and reported adjusted gross income of $800,000 on his joint return. He exercised an incentive stock option. The difference between the value of the stock and the amount he paid was $400,000. He paid income tax of $310,000. Does Don owe alternative minimum tax (“AMT”)?
- In Year 3, Mutt pays $25,000 to Jeff. Assume, however, that his Year 1 tax bracket was far higher than his Year 3 tax bracket. Is he allowed to amend his Year 1 return claiming a deduction for the payment to Jeff in that year?
- Open Chapter
Chapter Four. Gain or Loss on Sale or Exchange of Property 169 46 results (showing 5 best matches)
- (This material is discussed in the next chapter, along with the alternative minimum tax on tax preferences.)
- The donee can increase her basis by a portion of the gift tax paid by the donor. The portion of the gift tax that can be used to increase basis is the amount determined by a fraction—the net appreciation in value of the gift over the amount of the gift—multiplied by the total gift tax paid. In other words, “increase in basis” is t
- Gift taxes paid can never increase basis to an amount in excess of the property’s value at the date of the gift. Thus, there would be no increase in basis for the gift tax in the second and third examples above (
- Whoever receives income in respect of a decedent (decedent’s estate or legatee) is taxed on it to the same extent the decedent would have been taxed. If the item would have been capital gain to the decedent, it is capital gain in the hands of the recipient.
- If the donor makes the gift conditional on the donee’s payment of gift tax, the donor realizes a gain if the gift tax liability exceeds his basis. According to the Supreme Court, the donee’s payment of the donor’s gift tax produces an immediate economic benefit to the donor equal to the exces
- Open Chapter
Exam Questions and Answers 307 24 results (showing 5 best matches)
- Rick would ordinarily have to include $300 in income; under the tax benefit rule, when an item previously deducted has been returned, it produces income. The measure of the income is the amount deducted, not the value of the bike at the time it is returned. However, Rick received no tax benefit from the deduction in Year 2, so would not include anything in income in Year 3. [
- If Holmes deducted the $8,000 in the past, the unexpected recovery of $1,000 would be taxable income, unless he did not receive a tax benefit from the deduction. Presumably, however, there was a tax benefit (either in Year 3 or, by way of a net operating loss carryover or carryback, in some other year). Thus, the recovery is taxable.
- However, the transaction probably should be recharacterized as an outright transfer of the suit to Grunt, followed by an outright transfer to Ray—not as a lease by Grunt. The economics of the transfer suggest: the suit will be worthless at the end of the “lease” term, the transaction seems peculiar (nobody leases suits, they buy them), and there is at least the possibility of tax avoidance purpose here (
- If the transfer to Marc is given effect for tax purposes, Beth does not realize her loss because a gift is not a realizing transfer. Similarly, Marc does not include the value of Whiteacre in income since a gift is excluded under
- Assuming that Beth, and not Marc, is the owner of Whiteacre for tax purposes, any tax consequences should be attributed to Beth. Beth has a realized loss of $13,000 on the exchange ($74,000 basis less $61,000 value) but cannot recognize it because of
- Open Chapter
- Publication Date: January 13th, 2020
- ISBN: 9781684676170
- Subject: Taxation
- Series: Gilbert Law Summaries
- Type: Outlines
- Description: Comprehensive outline on Income Tax law with detailed explanations of relevant law, capsule summary, and exam tips.