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Study sets matching "income tax planning"

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Study sets matching "income tax planning"

CFP - Income Tax Planning
What are the itemized deduction medica…
How is a casualty loss calculated?
Itemized Mortgage Interest
Itemized deductions - investment inter…
What are the itemized deduction medica…
How is a casualty loss calculated?
110 terms
Income Tax Planning
16th Amendment
Accuracy Related Penalty
Determination Letter
Discriminant Inventory Function System
Adopted Feb 25, 1913 and gave Congress the power to lay and c…
20% penalty of the underpayment amount imposed on taxpayers w…
Letter issued by the IRS district director, advising a taxpay…
A computer program used by the IRS to identify tax returns fo…
16th Amendment
Adopted Feb 25, 1913 and gave Congress the power to lay and c…
Accuracy Related Penalty
20% penalty of the underpayment amount imposed on taxpayers w…
17 terms
Income tax planning
MEC
capital gains on home
tax penalty file late
Tax penalty for gross negligence
tax sheltered insurance life, do not intend to make pre death…
250k or 500k for married
5% for each month or part of month late no more than 25% if y…
20% of net understated amount
MEC
tax sheltered insurance life, do not intend to make pre death…
capital gains on home
250k or 500k for married
75 terms
Financial Planning : Income & Taxes
Income
Earned income
wages
salary
is money that you earn or receive
is income that you receive for work you've done
income paid by the hour for your work
If you are paid the same amount of money on a regular basis,…
Income
is money that you earn or receive
Earned income
is income that you receive for work you've done
18 terms
CFP - Income Tax Planning
Nonviatical sale of life insurance pol…
Modified Endowment Contract (MEC)
7-Pay Test
Compensation for Injuries/Illness
- Sold to unrelated person who will not suffer an economic lo…
- Life insurance policy issued after June 21, 1988 that fails…
if the premiums paid during the first seven years of the cont…
Damages received = includable in gross income... Worker's comp i…
Nonviatical sale of life insurance pol…
- Sold to unrelated person who will not suffer an economic lo…
Modified Endowment Contract (MEC)
- Life insurance policy issued after June 21, 1988 that fails…
14 terms
Income Tax Planning
Above-the-Line Deductions
Adjusted Gross Income (AGI)
Basis
Below-the-Line Deductions
Also called adjustments to income
Gross income less above-the-line deductions
Represents the total capital (after tax income) used by a tax…
Also called itemized deduction
Above-the-Line Deductions
Also called adjustments to income
Adjusted Gross Income (AGI)
Gross income less above-the-line deductions
35 terms
Income tax planning
Sources of Federal Tax Law/Authority
Step Transaction
Sham Transaction
Substance Over Form
Intrnal Revenue Code: Primary source of all tax law... Treasury…
Ignore the individual transactions and instead tax the ultima…
A transaction that lacks a business purpose and economic subs…
The substance of a transaction and not merely its form govern…
Sources of Federal Tax Law/Authority
Intrnal Revenue Code: Primary source of all tax law... Treasury…
Step Transaction
Ignore the individual transactions and instead tax the ultima…
35 terms
CFP Income Tax Planning
5 Filing Statuses
Order of 1040 Calculation (6)
What Part of the 1040 is Gross Income?
What part of the 1040 is Adjustments (…
Single... Married Filing Jointly... Married Filing Separately... Head…
Gross Income... Adjusted Gross Income... Taxable Income... Taxable Cal…
Top Front
Bottom Front
5 Filing Statuses
Single... Married Filing Jointly... Married Filing Separately... Head…
Order of 1040 Calculation (6)
Gross Income... Adjusted Gross Income... Taxable Income... Taxable Cal…
23 terms
CFP Review Income Tax Planning
Partnership: amount at risk
Medicare Contribution tax
Section 1245 Recapture
Section 1231 Gain
The amount at-risk is measured by the amount of cash contribu…
The medicare contribution tax is the lesser of net investment…
Generally treated as ordinary income
generally receives long-term capital gain treatment. If there…
Partnership: amount at risk
The amount at-risk is measured by the amount of cash contribu…
Medicare Contribution tax
The medicare contribution tax is the lesser of net investment…
18 terms
CFP - Income Tax Planning AR
Nonviatical sale of life insurance pol…
Modified Endowment Contract (MEC)
7-Pay Test
Compensation for Injuries/Illness
- Sold to unrelated person who will not suffer an economic lo…
- Life insurance policy issued after June 21, 1988 that fails…
if the premiums paid during the first seven years of the cont…
Damages received = includable in gross income... Worker's comp i…
Nonviatical sale of life insurance pol…
- Sold to unrelated person who will not suffer an economic lo…
Modified Endowment Contract (MEC)
- Life insurance policy issued after June 21, 1988 that fails…
87 terms
CFP - Income Tax Planning (pmf)
4 Important considerations to allow an…
A 1040A can be used with the following…
true or false: a qualifying child coul…
interest from ____ _____ muni bonds, e…
income soley from wages, salaries or tips... taxable income les…
only deductions are for IRA contributions & student loan inte…
true, but he/she must be younger than the filer
private activity... 2009 & 2010
4 Important considerations to allow an…
income soley from wages, salaries or tips... taxable income les…
A 1040A can be used with the following…
only deductions are for IRA contributions & student loan inte…
13 terms
Income Tax Planning - South Africa
What is the annual interest exemption…
What is the annual interest exemption…
What is the maximum Subsistence allowa…
Formula for calculating travel allowan…
R23,800 p.a.
R34,500 p.a.
R115 / day for incidental costs... R372 / day for food and incid…
*Only if record of costs were not kept*... 1) (fixed cost per…
What is the annual interest exemption…
R23,800 p.a.
What is the annual interest exemption…
R34,500 p.a.
11 terms
CFP 3: Income Tax Planning
Wages
Phaseout
Floor
Deduction of IRA contributions
Compensation earned by the taxpayer AFTER reduction for amoun…
As income increases throughout the range, the amount of the d…
Amount that must be exceeded for any of the deduction to be a…
Full deduction if individual is not an active participant in…
Wages
Compensation earned by the taxpayer AFTER reduction for amoun…
Phaseout
As income increases throughout the range, the amount of the d…
19 terms
CFPE 503 Income Tax Planning
9 steps in the income tax calculation
Qualifying Dividends
Qualifying Dividends (what does not qu…
Taxability of Social Security Benefits
Step 1: Start with total (gross) income. This is the number a…
stock dividends receive favorable tax treatment at long-term…
dividends received from credit unions, mutual insurance compa…
The taxability of Social Security benefits is a... function of t…
9 steps in the income tax calculation
Step 1: Start with total (gross) income. This is the number a…
Qualifying Dividends
stock dividends receive favorable tax treatment at long-term…
15 terms
Tax Module: Deferred Income Plans
Deferred Income Plans - Registered Ret…
Deferred Income Plans - Registered Ret…
Deferred Income Plans - Registered Ret…
Deferred Income Plans - Registered Ret…
Contribs deductible (w/in limits) - tax deferred on income ea…
must be terminated in yr taxpayer turns 71: 1. deregistration…
- individ unused RRSP deduction room CFWD PLUS 18% * "earned…
incl employment inco, biz inco which individ is actively invo…
Deferred Income Plans - Registered Ret…
Contribs deductible (w/in limits) - tax deferred on income ea…
Deferred Income Plans - Registered Ret…
must be terminated in yr taxpayer turns 71: 1. deregistration…
16 terms
Pre-Study Income Tax Planning
Child care credit for expenses
Calculate credit amount based on margi…
How is minor unearned income taxed?
How is minor deduction calculated if t…
$3,000 for 1 child... $6,000 for 2+ ... 20% of either number
($ Child Care Credit) / (Tax Bracket)
First $1,050 = Free... Next $1,050 = 10%... Rest = Parent's tax rate
Greater of:... $1,050 unearned ... or... Earned income + $350... *Has to…
Child care credit for expenses
$3,000 for 1 child... $6,000 for 2+ ... 20% of either number
Calculate credit amount based on margi…
($ Child Care Credit) / (Tax Bracket)
49 terms
Financial Planning Chapter 4: Managing Income Tax
Tax Planning
Taxable Income
Taxes
Progressive Tax
Seeking legal ways to reduce, eliminate, or defer income taxes
income upon which income taxes are levied
Compulsory government-imposed charges levied on citizens and…
A tax that progressively increases as a taxpayer's taxable in…
Tax Planning
Seeking legal ways to reduce, eliminate, or defer income taxes
Taxable Income
income upon which income taxes are levied
12 terms
CFP Income Tax Planning 2015
What are not considered Capital Assets?
What is the only way to have a 1231 ga…
What is a 1231 Gain?
What does the Kiddie Tax apply to?
ACID:... -Accounts/ note receivable ... -Copyrights and Creative wo…
To sell it for more than it was originally purchased for.
Any sale amount in excess of the original purchase price of a…
"Unearned income" in excess of $2,100... -Interest... -Dividends... -C…
What are not considered Capital Assets?
ACID:... -Accounts/ note receivable ... -Copyrights and Creative wo…
What is the only way to have a 1231 ga…
To sell it for more than it was originally purchased for.
50 terms
Income Tax
Real Estate Tax
Vehicle/Property Tax
Tax Rate
Tax Bracket
A tax assessed by the local government. The tax is usually ba…
Taxes usually assessed as a percentage of the value of items…
The percentage at which taxes are paid on a dollar of income.
A range of income amounts that are taxed at a particular rate.
Real Estate Tax
A tax assessed by the local government. The tax is usually ba…
Vehicle/Property Tax
Taxes usually assessed as a percentage of the value of items…
20 terms
Chapter 4 - Maxims of Income Tax Planning
tax planning
tax avoidance
tax evasion
four variables of tax planning
structuring of transactions to reduce tax costs or increase t…
legitimate means of reducing taxes
illegal means of avoiding taxes
entity, time period, jurisdiction, character
tax planning
structuring of transactions to reduce tax costs or increase t…
tax avoidance
legitimate means of reducing taxes
47 terms
Chapter 4: Maxims of Income Tax Planning
Tax Avoidance
Tax Evasion
Tax consequences of a transaction depe…
Effective planning requires
consists of legitimate means of reducing taxes = legal tax mi…
the willful attempt to defraud the government of tax revenue.…
time period... entity... jurisdiction... character
consideration for both tax and non-tax factors... consideration…
Tax Avoidance
consists of legitimate means of reducing taxes = legal tax mi…
Tax Evasion
the willful attempt to defraud the government of tax revenue.…
11 terms
Chapter 4: Basic maxims of income tax planning
tax avoidence
tax evasion
4 variables of the tax consequences of…
entity
legal way of minimizing amount of tax paid
federal crime
1. entity... 2. time period... 3. jurisdiction... 4. character
taxable income computed the same for different entities, amou…
tax avoidence
legal way of minimizing amount of tax paid
tax evasion
federal crime
57 terms
Class 2 - Tax Planning & Individual Income Tax Overview
maximize the taxpayer's after-tax weal…
taxpayer, other party, the government
WHEN we recognize
taking taxable income to a taxpayer in…
what is the basic tax planning goal?
what the 3 parties to every transaction?
what is the timing strategy?
what is income shifting strategy?
maximize the taxpayer's after-tax weal…
what is the basic tax planning goal?
taxpayer, other party, the government
what the 3 parties to every transaction?
16 terms
Chapter 4 Maxims of Income Tax Planning
Tax Planning
Tax Avoidance
Tax Evasion
The Entity Variable
Structuring of transactions to reduce tax costs or increase t…
Legitimate means of reducing taxes
Illegal means of reducing taxes
What entity undertakes the transaction?
Tax Planning
Structuring of transactions to reduce tax costs or increase t…
Tax Avoidance
Legitimate means of reducing taxes
144 terms
Income Tax Planning- Lesson 1 Property Taxation
Property uses
property classifications
capital assets
depreciable property used in trade or…
-personal use... -investment or production of income... -trade/busi…
-capital asset... -ordinary income asset... -section 1231 asset
-most personal use/investment assets are considered capital a…
1231 asset. Not capital asset
Property uses
-personal use... -investment or production of income... -trade/busi…
property classifications
-capital asset... -ordinary income asset... -section 1231 asset
12 terms
Chapter 4: Maxims of Income Tax Planning
tax planning
tax avoidance
tax evasion
assignment of income doctrine
the structuring of transactions to reduce tax costs or increa…
legitimate means of reducing taxes...entirely legal...questio…
illegal means of reducing taxes...a federal crime-a felony of…
income must be taxed to the entity that renders the service o…
tax planning
the structuring of transactions to reduce tax costs or increa…
tax avoidance
legitimate means of reducing taxes...entirely legal...questio…
25 terms
CH 4: Maxims of Income Tax Planning
Tax Evasion
Tax Avoidance
4 variables that determine tax consequ…
Entity Variable
illegal means to reduce taxes-- federal crime punishable byt…
legitimate means of reducing taxes
1) entity variable... 2) time period variable... 3) Jurisdiction va…
Which entity undertakes the transaction?
Tax Evasion
illegal means to reduce taxes-- federal crime punishable byt…
Tax Avoidance
legitimate means of reducing taxes
12 terms
Personal Financial Planning_Ch 7 Income Tax Planning
Income Deferral
Constructive Receipt
Realized
Pension Plan
Counting income as taxable income at a future date, and so de…
Receipt of income that can be utilized for consumption purposes
No tax is payable on capital gains or dividends received in a…
An investment vehicle by which employers can defer income to…
Income Deferral
Counting income as taxable income at a future date, and so de…
Constructive Receipt
Receipt of income that can be utilized for consumption purposes
28 terms
Income & Taxes/Financial Planning Key Terms
Salary
Wages
Piecework
Commission
a set amount of money earned by an employee per year or other…
employee earnings that are paid by the hour, day, or item
work for which wages are based on the number of items or piec…
a fixed percentage or amount of profit given to an employee i…
Salary
a set amount of money earned by an employee per year or other…
Wages
employee earnings that are paid by the hour, day, or item
15 terms
Income Tax
Taxable income
Passive Income
Capital Gains Tax
Tax Credit
Pertinent items of gross income, less the deductions and/or b…
Income derived from allowing other to use one's rights, or ga…
Taxes imposed on sales or exchanges of properties not used in…
Tax that was withheld by source shall be applied as a reducti…
Taxable income
Pertinent items of gross income, less the deductions and/or b…
Passive Income
Income derived from allowing other to use one's rights, or ga…
9 terms
Income Tax
Gross pay
Income
Income tax
Net pay
An employee's pay before any deductions are taken
A financial gain from capital or labor
A tax on the net income of an individual or business
​The amount that remains after all deductions are taken from…
Gross pay
An employee's pay before any deductions are taken
Income
A financial gain from capital or labor
5 terms
Income Tax
Income Tax
Gross Income
Exemption
Standard Deduction
Percentage of your income collected by the government to fund…
Total income from the year
Fixed amount on your return for each person supported by your…
Subtracted from one's adjusted gross income
Income Tax
Percentage of your income collected by the government to fund…
Gross Income
Total income from the year
17 terms
Income Tax
Adjusted Gross Income
Audit
Dependent
Exemption
Gross income less adjustments.
An examination of your tax return and records by the IRS.
A person who lives with you and for whom you pay more than ha…
An amount you may subtract from your income for each person w…
Adjusted Gross Income
Gross income less adjustments.
Audit
An examination of your tax return and records by the IRS.
14 terms
Income Tax
1 point equals
14 days
short-term gain
long-term gain
1% interest
how much you can rent a second home without reporting income…
less than a year
more than a year
1 point equals
1% interest
14 days
how much you can rent a second home without reporting income…
37 terms
Income Tax
Abatement
Activity-based tax
Ad valorem tax
Bracket
A property tax exemption granted by a government for a limite…
A tax imposed on the results of an ongoing actrivity in which…
A tax based on the value of property
the portion of a tax base subject to a given percentage rate…
Abatement
A property tax exemption granted by a government for a limite…
Activity-based tax
A tax imposed on the results of an ongoing actrivity in which…
58 terms
income tax
gross income - deductions - standard (…
gross income - deductions
taxable income x tax rates
tax liability - credits/ payments
formula for taxable income
formula for adjusted gross income (AGI)
formula for tax liability
formula for tax due or refund
gross income - deductions - standard (…
formula for taxable income
gross income - deductions
formula for adjusted gross income (AGI)
52 terms
Income Tax
Determining tax liability
Gross income
Realization
Non-cash receipts
Gross income ... - Above the line deductions ... = Adjusted gross i…
All income from whatever source derived. Includes any economi…
The increased or decreased value of an asset is not taken int…
Gross income includes fmv of any property received and the fm…
Determining tax liability
Gross income ... - Above the line deductions ... = Adjusted gross i…
Gross income
All income from whatever source derived. Includes any economi…
34 terms
Con Ed Ch. 8-9 Income, Taxes & Financial Planning
salary
wages
piecework
commission
a set amount of money earned by an employee per year or other…
employee earnings that are paid by the hour, day or item
work for which wages are based on the number of items or piec…
a fixed percentage or amount of profit given to an employee i…
salary
a set amount of money earned by an employee per year or other…
wages
employee earnings that are paid by the hour, day or item
21 terms
Income Tax
Interest on National savings certifica…
Income from NISA
Betting, competition and lottery winni…
Premium bond winnings
Exempt from IT
Exempt from IT
Exempt from IT
Exempt from IT
Interest on National savings certifica…
Exempt from IT
Income from NISA
Exempt from IT
46 terms
Income Tax
Ability to pay doctrine
Assignment of Income Doctrine
Business Purpose Doctrine
Return of Capital Doctrine
...
prohibits shifting of income from property UNLESS the propert…
must have a business purpose other than tax avoidance
Return of original investment made with after tax dollars not…
Ability to pay doctrine
...
Assignment of Income Doctrine
prohibits shifting of income from property UNLESS the propert…
9 terms
ECON - Ch12.2- Planning Your Tax Strategy - Section 2 - Preparing an Income Tax Return
Extension
Who must file income tax returns? Unit…
Why is it beneficial to file income ta…
What are the five income tax filing ca…
is an extended period of time to file an income tax return.
and if you income is above a certain amount.
They may be able to get income tax refund.
Single, Married and filing a joint return, married and filing…
Extension
is an extended period of time to file an income tax return.
Who must file income tax returns? Unit…
and if you income is above a certain amount.
66 terms
Income Tax
U.S. v. Kovel
U.S. v. Frederick
Macro Structure: Income Items
Macro Structure: Deduction Items
Protecting client communications... Holding: The attorney-clien…
Dual purpose doctrine... Holding: Dual purpose doctrine is not…
Included as income: 71-90... Excluded from income: 101-39
Business: 161-98... Personal: 211-22... Restrictions: 261-80G (evil…
U.S. v. Kovel
Protecting client communications... Holding: The attorney-clien…
U.S. v. Frederick
Dual purpose doctrine... Holding: Dual purpose doctrine is not…
Income Tax
444 election
General rules for selecting the tax ye…
What is a principal partner?
IRS taxes any entity or business forme…
Allows a partnership to elect for a different tax year than i…
If majority interest is present then use the same tax year as…
Any partner that has a minimum interest of 5% in the profits…
Joint-stock... Insurance companies... Wholly owned by a state or lo…
444 election
Allows a partnership to elect for a different tax year than i…
General rules for selecting the tax ye…
If majority interest is present then use the same tax year as…
201 terms
Income Tax
What kinds of deductions are "above th…
What is adjusted gross income?
What is taxable income?
What are "below the line" or itemized…
- trade or business deductions... - reimbursed employee trade or…
adjusted gross income = gross income - above the line deducti…
taxable income = adjusted gross income - below the line (item…
Itemized: ... - real property taxes... - home mortgage interest ded…
What kinds of deductions are "above th…
- trade or business deductions... - reimbursed employee trade or…
What is adjusted gross income?
adjusted gross income = gross income - above the line deducti…
23 terms
Income & Taxes
Earned Income
Social Security
Income Tax
Passive Income
Any income (wages/salary) that is generated by working.
A federal insurance program funded by taxpayer dollars that p…
Taxes paid out by anyone who earns an income.
Money you get from assets you purchased or created. Examples…
Earned Income
Any income (wages/salary) that is generated by working.
Social Security
A federal insurance program funded by taxpayer dollars that p…
17 terms
Income Tax
Adjusted Gross Income
Audit
Dependent
Exemption
Gross income less adjustments.
An examination of your tax return and records by the IRS.
A person who lives with you and for whom you pay more than ha…
An amount you may subtract from your income for each person w…
Adjusted Gross Income
Gross income less adjustments.
Audit
An examination of your tax return and records by the IRS.
Income & Taxes
Earned Income
Social Security
Income Tax
Federal Income Tax
Any income (wages/salary) that is generated by working.
A federal insurance program funded by taxpayer dollars that p…
Taxes paid out by anyone who earns an income.
Used to support government programs; this is where the federa…
Earned Income
Any income (wages/salary) that is generated by working.
Social Security
A federal insurance program funded by taxpayer dollars that p…
61 terms
Income Tax Test One
Tax revenue equation
Supply side economics
Base may change in response to changes…
Transaction (event) based taxes are al…
Tax revenue = rate x base
Rate goes down Base goes up therefore Revenue goes up
• Disposable Income goes up... • Demand goes up... • GDP goes up…
Sales or excise tax... Estate or gift tax
Tax revenue equation
Tax revenue = rate x base
Supply side economics
Rate goes down Base goes up therefore Revenue goes up
18 terms
Income Tax
Haig-Simons Income
Components of the Federal Paid Income…
Taxable Income
Tax Base
Consumption plus change in net wealth... Cash and in-kind consum…
Gross income, Adjusted gross income
Taxable income = tax liability - tax credits
the total amount of assets or revenue that a government can t…
Haig-Simons Income
Consumption plus change in net wealth... Cash and in-kind consum…
Components of the Federal Paid Income…
Gross income, Adjusted gross income
25 terms
Consumer Math - Income, Taxes, and Financial Planning Test Review
Salary
Commission
Minimum Wage
Benefits
A set amount of money earned by an employee over a set amount…
A fixed percentage or amount of the profit given to an employ…
The lowest hourly rate an employer may legally pay most worke…
Things like vacation, sick leave, and paid holidays.
Salary
A set amount of money earned by an employee over a set amount…
Commission
A fixed percentage or amount of the profit given to an employ…
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