Taxation of Business Entities C16-1 Chapter 16 Introduction to the Taxation of Individuals Introduction to the Taxation of Individuals Copyright ©2010.

C16-2 Tax Formula (slide 1 of 2) Income (broadly conceived)$x,xxx Less:Exclusions (x,xxx) Gross Income$x,xxx Less:Deductions for AGI (x,xxx) Adjusted Gross Income (AGI)$x,xxx Less:The greater of- Total itemized deductions or the standard deduction (x,xxx) Personal & dependency exemptions(x,xxx) Taxable Income$x,xxx Income (broadly conceived)$x,xxx Less:Exclusions (x,xxx) Gross Income$x,xxx Less:Deductions for AGI (x,xxx) Adjusted Gross Income (AGI)$x,xxx Less:The greater of- Total itemized deductions or the standard deduction (x,xxx) Personal & dependency exemptions(x,xxx) Taxable Income$x,xxx FIGURE 16–1

Taxation of Business Entities C16-3 Tax Formula (slide 2 of 2) Tax on taxable income (see Tax Tables or Tax Rate Schedules) $ x,xxx Less: Tax credits (including income taxes withheld and prepaid) (xxx) Tax due (or refund) $ xxx Tax on taxable income (see Tax Tables or Tax Rate Schedules) $ x,xxx Less: Tax credits (including income taxes withheld and prepaid) (xxx) Tax due (or refund) $ xxx FIGURE 16.1

Taxation of Business Entities C16-4 Income -Broadly Conceived Includes all the taxpayer’s income, both taxable and nontaxable –Essentially equivalent to gross receipts It does not include a return of capital or receipt of borrowed funds Includes all the taxpayer’s income, both taxable and nontaxable –Essentially equivalent to gross receipts It does not include a return of capital or receipt of borrowed funds

Taxation of Business Entities C16-5 Partial List of Exclusions from Gross Income Accident insurance proceeds Annuities (cost element) Bequests Child support payments Cost-of-living allowance (for military) Damages for personal injury or sickness Gifts received Group term life insurance, premium paid by employer (for coverage up to $50,000) Inheritances Interest from state and local (i.e., municipal) bonds Life insurance paid on death Accident insurance proceeds Annuities (cost element) Bequests Child support payments Cost-of-living allowance (for military) Damages for personal injury or sickness Gifts received Group term life insurance, premium paid by employer (for coverage up to $50,000) Inheritances Interest from state and local (i.e., municipal) bonds Life insurance paid on death Meals and lodging (if furnished for employer’s convenience) Military allowances Minister’s dwelling rental value allowance Railroad retirement benefits (to a limited extent) Scholarship grants (to a limited extent) Social Security benefits (to a limited extent) Veterans’ benefits Welfare payments Workers’ compensation benefits Exhibit 16-1

Taxation of Business Entities C16-6 Gross Income The Internal Revenue Code defines gross income broadly as ‘‘except as otherwise provided..., all income from whatever source derived’’ Gross income does not include unrealized gains The Internal Revenue Code defines gross income broadly as ‘‘except as otherwise provided..., all income from whatever source derived’’ Gross income does not include unrealized gains

Taxation of Business Entities C16-7 Partial List of Gross Income Items (slide 1 of 2) Alimony Annuities (income element) Awards Back pay Bargain purchase from employer Bonuses Breach of contract damages Business income Clergy fees Commissions Compensation for services Death benefits Debts forgiven Director’s fees Alimony Annuities (income element) Awards Back pay Bargain purchase from employer Bonuses Breach of contract damages Business income Clergy fees Commissions Compensation for services Death benefits Debts forgiven Director’s fees Hobby income Interest Jury duty fees Living quarters, meals (unless furnished for employer’s convenience) Mileage allowance Military pay (unless combat pay) Notary fees Partnership income Pensions Prizes Professional fees Punitive damages Exhibit 16-2

Taxation of Business Entities C16-8 Partial List of Gross Income Items (slide 2 of 2) Dividends Embezzled funds Employee awards (in certain cases) Employee benefits (except certain fringe benefits) Estate and trust income Farm income Fees Gains from illegal activities Gains from sale of property Gambling winnings Group term life insurance, premium paid by employer (for coverage over $50,000) Dividends Embezzled funds Employee awards (in certain cases) Employee benefits (except certain fringe benefits) Estate and trust income Farm income Fees Gains from illegal activities Gains from sale of property Gambling winnings Group term life insurance, premium paid by employer (for coverage over $50,000) Rents Rewards Royalties Salaries Severance pay Strike and lockout benefits Supplemental unemployment benefits Tips and gratuities Travel allowance (in certain cases) Wages Exhibit 16-2

Taxation of Business Entities C16-9 Deductions - Individual Taxpayers Individual taxpayers have two categories of deductions: –Deductions for adjusted gross income (AGI) –Deductions from adjusted gross income Individual taxpayers have two categories of deductions: –Deductions for adjusted gross income (AGI) –Deductions from adjusted gross income

Taxation of Business Entities C16-10 Deductions For AGI (slide 1 of 2) Sometimes known as above-the-line deductions –On the tax return, they are taken before the ‘‘line’’ designating AGI Sometimes known as above-the-line deductions –On the tax return, they are taken before the ‘‘line’’ designating AGI

Taxation of Business Entities C16-11 Deductions For AGI (slide 2 of 2) Deductions for AGI include: –Ordinary and necessary expenses incurred in a trade or business –One-half of self-employment tax paid –Alimony paid –Certain payments to an IRA and Health Savings Account –Moving expenses –Forfeited interest penalty for premature withdrawal of time deposits –The capital loss deduction, and –Others Deductions for AGI include: –Ordinary and necessary expenses incurred in a trade or business –One-half of self-employment tax paid –Alimony paid –Certain payments to an IRA and Health Savings Account –Moving expenses –Forfeited interest penalty for premature withdrawal of time deposits –The capital loss deduction, and –Others

Taxation of Business Entities C16-12 Adjusted Gross Income (AGI) AGI is an important subtotal –Serves as the basis for computing percentage limitations on certain itemized deductions such as Medical expenses Charitable contributions Certain casualty losses –e.g., Medical expenses are deductible only to the extent they exceed 7.5% of AGI This limitation might be described as a 7.5% “floor” under the medical expense deduction AGI is an important subtotal –Serves as the basis for computing percentage limitations on certain itemized deductions such as Medical expenses Charitable contributions Certain casualty losses –e.g., Medical expenses are deductible only to the extent they exceed 7.5% of AGI This limitation might be described as a 7.5% “floor” under the medical expense deduction

Taxation of Business Entities C16-13 Deductions From AGI (slide 1 of 3) Deductions from AGI include: –The greater of: Itemized deductions, or The standard deduction –Personal and dependency exemptions Deductions from AGI include: –The greater of: Itemized deductions, or The standard deduction –Personal and dependency exemptions

Taxation of Business Entities C16-14 Deductions From AGI (slide 2 of 3) A partial list of itemized deductions includes: –Medical expenses (in excess of 7.5% of AGI) –Certain taxes and interest –Charitable contributions –Deductions for expenses related to The production or collection of income, and The management of property held for the production of income A partial list of itemized deductions includes: –Medical expenses (in excess of 7.5% of AGI) –Certain taxes and interest –Charitable contributions –Deductions for expenses related to The production or collection of income, and The management of property held for the production of income

Taxation of Business Entities C16-15 Deductions From AGI (slide 3 of 3) The standard deduction is the sum of two components: –Basic standard deduction Amount allowed is based on taxpayer’s filing status –Additional standard deductions Available for taxpayers who are –Age 65 or over, and –Blind Two additional standard deductions are allowed for a taxpayer who is age 65 or over and blind Amount allowed depends on filing status The standard deduction is the sum of two components: –Basic standard deduction Amount allowed is based on taxpayer’s filing status –Additional standard deductions Available for taxpayers who are –Age 65 or over, and –Blind Two additional standard deductions are allowed for a taxpayer who is age 65 or over and blind Amount allowed depends on filing status

Taxation of Business Entities C16-16 Standard Deduction (slide 1 of 2) The basic standard deduction (BSD) amount depends on filing status of taxpayer Filing status 2008 2009. Single $5,450 $5,700 MFJ, SS 10,900 11,400 HH 8,000 8,350 MFS 5,450 5,700

Taxation of Business Entities C16-17 Standard Deduction (slide 2 of 2) Additional standard deduction (ASD) –For taxpayers age 65 or older and/or legally blind Additional standard deduction (ASD) –For taxpayers age 65 or older and/or legally blind Filing Status 2008 2009. Single $1,350 $1,400 MFJ, SS 1,050 1,100 HH 1,350 1,400 MFS 1,050 1,100 TABLE 3–2

Taxation of Business Entities C16-18 Determining Standard Deduction Examples (2009 tax year): –Taxpayer is single, blind, and age 65 or older SD = $5,700 (BSD) + $1,400 (ASD) + $1,400 (ASD) = $8,500 –Taxpayers are married, filing jointly, one blind, and both age 65 or older SD = $11,400 (BSD) + $1,100 (ASD) + $1,100 (ASD) + $1,100 (ASD) = $14,700 Examples (2009 tax year): –Taxpayer is single, blind, and age 65 or older SD = $5,700 (BSD) + $1,400 (ASD) + $1,400 (ASD) = $8,500 –Taxpayers are married, filing jointly, one blind, and both age 65 or older SD = $11,400 (BSD) + $1,100 (ASD) + $1,100 (ASD) + $1,100 (ASD) = $14,700

Taxation of Business Entities C16-19 ARRTA of 2009 - Two New Standard Deductions ARRTA of 2009 provides two new tax incentives to stimulate home ownership and sale of autos –Provisions allow nonitemizers to deduct real property taxes and sales tax paid on purchase of autos as special standard deduction –Property taxes on a personal residence and sales taxes on a personal auto normally are deductions from AGI Thus, the standard deductions alternative is a tax windfall for taxpayers who do not itemize ARRTA of 2009 provides two new tax incentives to stimulate home ownership and sale of autos –Provisions allow nonitemizers to deduct real property taxes and sales tax paid on purchase of autos as special standard deduction –Property taxes on a personal residence and sales taxes on a personal auto normally are deductions from AGI Thus, the standard deductions alternative is a tax windfall for taxpayers who do not itemize

Taxation of Business Entities C16-20 ARRTA of 2009 - Standard Deduction For Real Property Taxes This temporary standard deduction for real property taxes is available for 2008 and 2009 tax returns –The amount allowed is the lesser of The amount paid, or $500 ($1,000 on a joint return) This temporary standard deduction for real property taxes is available for 2008 and 2009 tax returns –The amount allowed is the lesser of The amount paid, or $500 ($1,000 on a joint return)

Taxation of Business Entities C16-21 ARRTA of 2009 - Sales Tax Paid On The Purchase Of Autos This temporary standard deduction is available for auto sales tax paid on purchases that occur from Feb. 17 through Dec. 31, 2009 –Deduction cannot exceed tax on first $49,500 of purchase price –Deduction is phased-out when taxpayer’s AGI exceeds $125,000 ($250,000 on a joint return) –Purchased vehicle (e.g., cars, SUVs, light trucks, motorcycles) cannot exceed gross weight of 8,500 lbs. –Original use must commence with the taxpayer This temporary standard deduction is available for auto sales tax paid on purchases that occur from Feb. 17 through Dec. 31, 2009 –Deduction cannot exceed tax on first $49,500 of purchase price –Deduction is phased-out when taxpayer’s AGI exceeds $125,000 ($250,000 on a joint return) –Purchased vehicle (e.g., cars, SUVs, light trucks, motorcycles) cannot exceed gross weight of 8,500 lbs. –Original use must commence with the taxpayer

Taxation of Business Entities C16-22 Taxpayers Ineligible For Standard Deduction Certain taxpayers cannot use the SD: –Married, filing separately, when either spouse itemizes deductions –Nonresident aliens –Individual filing return for tax year of less than 12 months because of change in annual accounting period Certain taxpayers cannot use the SD: –Married, filing separately, when either spouse itemizes deductions –Nonresident aliens –Individual filing return for tax year of less than 12 months because of change in annual accounting period

Taxation of Business Entities C16-23 SD Limit For Person Claimed as Dependent Individual claimed as dependent has a BSD in 2009 limited to the greater of: – $950 or – $300 plus earned income (but not exceeding normal BSD) ASD amount(s) still available Individual claimed as dependent has a BSD in 2009 limited to the greater of: – $950 or – $300 plus earned income (but not exceeding normal BSD) ASD amount(s) still available

Taxation of Business Entities C16-24 Examples of SD Limit (slide 1 of 2) Dependent’s SD (2009 tax year): –A blind child who earns $200 and is claimed by parents as a dependency exemption SD = $950 (BSD) + $1,400 (ASD) = $2,350 –A child who earns $1,500 and is claimed by parents as a dependency exemption SD = $1,800 [BSD equal to greater of $950 or ($300 + $1,500 earned income)] Dependent’s SD (2009 tax year): –A blind child who earns $200 and is claimed by parents as a dependency exemption SD = $950 (BSD) + $1,400 (ASD) = $2,350 –A child who earns $1,500 and is claimed by parents as a dependency exemption SD = $1,800 [BSD equal to greater of $950 or ($300 + $1,500 earned income)]

Taxation of Business Entities C16-25 Examples of SD Limit (slide 2 of 2) Examples of dependent’s SD (2009 tax year) –A child who earns $6,000 and is claimed by parents as a dependency exemption SD = $5,700 [BSD limited to normal amount] Examples of dependent’s SD (2009 tax year) –A child who earns $6,000 and is claimed by parents as a dependency exemption SD = $5,700 [BSD limited to normal amount]

Taxation of Business Entities C16-26 Personal and Dependency Exemption Amounts Amounts –2008: $3,500 per exemption –2009: $3,650 per exemption Personal and dependency exemptions –One per taxpayer (two personal exemptions when married, filing jointly) and for each dependent Exception: Individual claimed as dependent by another taxpayer does not receive a personal exemption Amounts –2008: $3,500 per exemption –2009: $3,650 per exemption Personal and dependency exemptions –One per taxpayer (two personal exemptions when married, filing jointly) and for each dependent Exception: Individual claimed as dependent by another taxpayer does not receive a personal exemption

Taxation of Business Entities C16-27 Personal and Dependency Exemptions In Year Of Death Personal exemption allowed on joint return for spouse who dies during the year –Example: Tom and Betty were married in 1990. Tom dies on February 1, 2008. A personal exemption may be claimed for Tom on the taxpayers’ 2008 joint return. Personal exemption allowed on joint return for spouse who dies during the year –Example: Tom and Betty were married in 1990. Tom dies on February 1, 2008. A personal exemption may be claimed for Tom on the taxpayers’ 2008 joint return.

Taxation of Business Entities C16-28 Dependency Exemptions (slide 1 of 2) A dependency exemption is available for one who is either a qualifying child or a qualifying relative –A qualifying child must meet the following tests: Relationship Abode Age, and Support A dependency exemption is available for one who is either a qualifying child or a qualifying relative –A qualifying child must meet the following tests: Relationship Abode Age, and Support

Taxation of Business Entities C16-29 Dependency Exemptions (slide 2 of 2) One objective of the Working Families Tax Relief Act of 2004 (WFTRA of 2004) –Establish a uniform definition of qualifying child for purposes of the: Dependency exemption Head-of-household filing status Earned income tax credit Child tax credit Credit for child and dependent care expenses One objective of the Working Families Tax Relief Act of 2004 (WFTRA of 2004) –Establish a uniform definition of qualifying child for purposes of the: Dependency exemption Head-of-household filing status Earned income tax credit Child tax credit Credit for child and dependent care expenses

Taxation of Business Entities C16-30 Relationship Test The child must be the taxpayer’s: –Son or daughter –Stepson or stepdaughter –Brother or sister –Stepbrother or stepsister –Half brother or half sister, or –A descendant of such individual (e.g., grandchildren, nephews, nieces) A child who has been adopted, or whose adoption is pending, qualifies A foster child may also qualify The child must be the taxpayer’s: –Son or daughter –Stepson or stepdaughter –Brother or sister –Stepbrother or stepsister –Half brother or half sister, or –A descendant of such individual (e.g., grandchildren, nephews, nieces) A child who has been adopted, or whose adoption is pending, qualifies A foster child may also qualify

Taxation of Business Entities C16-31 Abode Test A qualifying child must live with the taxpayer for more than half of the year –Temporary absences from the household due to special circumstances (e.g., illness, education) are not considered A qualifying child must live with the taxpayer for more than half of the year –Temporary absences from the household due to special circumstances (e.g., illness, education) are not considered

Taxation of Business Entities C16-32 Age Test The child must be under age 19 or under age 24 in the case of a student –A student is a child who, during any part of five months of the year, is enrolled full time at a school or government-sponsored on-farm training course –Individuals who are disabled are not subject to the age test The child must be under age 19 or under age 24 in the case of a student –A student is a child who, during any part of five months of the year, is enrolled full time at a school or government-sponsored on-farm training course –Individuals who are disabled are not subject to the age test

Taxation of Business Entities C16-33 Support To be a qualifying child, the individual must not be self-supporting –Cannot provide more than one-half of his or her own support –In the case of a full-time student, scholarships are not considered to be support To be a qualifying child, the individual must not be self-supporting –Cannot provide more than one-half of his or her own support –In the case of a full-time student, scholarships are not considered to be support

Taxation of Business Entities C16-34 Tiebreaker Rules In situations where a child may be a qualifying child for more than one person –Tiebreaker rules specify which person has priority in claiming the dependency exemption In situations where a child may be a qualifying child for more than one person –Tiebreaker rules specify which person has priority in claiming the dependency exemption

Taxation of Business Entities C16-35 Qualifying Relative In order to claim a dependency exemption for a qualifying relative, the following tests must be met: –Relationship –Gross income –Support In order to claim a dependency exemption for a qualifying relative, the following tests must be met: –Relationship –Gross income –Support

Taxation of Business Entities C16-36 Relationship Test The relationship test for a qualifying relative is more expansive than for a qualifying child. Also included are the following relatives: –Lineal ascendants (e.g., parents, grandparents) –Collateral ascendants (e.g., uncles, aunts) –Certain in-laws (e.g., son-, daughter-, father-, mother-, brother-, and sister-in-law) The relationship test also includes unrelated parties who live with the taxpayer The relationship test for a qualifying relative is more expansive than for a qualifying child. Also included are the following relatives: –Lineal ascendants (e.g., parents, grandparents) –Collateral ascendants (e.g., uncles, aunts) –Certain in-laws (e.g., son-, daughter-, father-, mother-, brother-, and sister-in-law) The relationship test also includes unrelated parties who live with the taxpayer

Taxation of Business Entities C16-37 Gross Income Test Dependent’s gross income must be less than the exemption amount ($3,650 for 2009)

Taxation of Business Entities C16-38 Support Test Taxpayer must provide more than 50% of the qualifying relative’s support –Only amounts expended are considered in the support test –Scholarships are not considered in the support test Two exceptions to the support test: –Multiple support agreements –Children of divorced parents Taxpayer must provide more than 50% of the qualifying relative’s support –Only amounts expended are considered in the support test –Scholarships are not considered in the support test Two exceptions to the support test: –Multiple support agreements –Children of divorced parents

Taxation of Business Entities C16-39 Multiple Support Agreements Allows one member of a group providing > 50% of support to claim individual even though no one person provides > 50% support –Eligible parties must provide > 10% of support –Each eligible party must meet all other dependency requirements Example - Allows children of elderly parent to claim exemption for parent when none individually meets the 50% support test Allows one member of a group providing > 50% of support to claim individual even though no one person provides > 50% support –Eligible parties must provide > 10% of support –Each eligible party must meet all other dependency requirements Example - Allows children of elderly parent to claim exemption for parent when none individually meets the 50% support test

Taxation of Business Entities C16-40 Children of Divorced Parents Special rules apply if the parents meet the following conditions: –They would have been entitled to the dependency exemption had they been married and filed a joint return –They have custody (either jointly or singly) of the child for more than half of the year Under the general rule, the parent having custody of the child for the greater part of the year (i.e., the custodial parent) is entitled to the dependency exemption –General rule does not apply if A multiple support agreement is in effect Custodial parent issues a waiver in favor of the noncustodial parent Special rules apply if the parents meet the following conditions: –They would have been entitled to the dependency exemption had they been married and filed a joint return –They have custody (either jointly or singly) of the child for more than half of the year Under the general rule, the parent having custody of the child for the greater part of the year (i.e., the custodial parent) is entitled to the dependency exemption –General rule does not apply if A multiple support agreement is in effect Custodial parent issues a waiver in favor of the noncustodial parent

Taxation of Business Entities C16-41 Other Rules for Dependency Exemptions In addition to fitting into either the qualifying child or the qualifying relative category, a dependent must also meet: –The joint return, and –The citizenship or residency tests In addition to fitting into either the qualifying child or the qualifying relative category, a dependent must also meet: –The joint return, and –The citizenship or residency tests

Taxation of Business Entities C16-42 Joint Return Test Dependent cannot file a joint return with spouse unless: –Filing solely for refund of tax withheld –No tax liability exists for either spouse –Neither spouse required to file return Dependent cannot file a joint return with spouse unless: –Filing solely for refund of tax withheld –No tax liability exists for either spouse –Neither spouse required to file return

Taxation of Business Entities C16-43 Citizen or Residency Test Dependent must be a U.S. citizen or a resident of U.S., Canada, or Mexico for some part of the calendar year in which the taxpayer’s tax year begins –An exception provides that an adopted child need not be a citizen or resident of the U.S. (or a contiguous country) as long as his or her principal abode is with a U.S. citizen Dependent must be a U.S. citizen or a resident of U.S., Canada, or Mexico for some part of the calendar year in which the taxpayer’s tax year begins –An exception provides that an adopted child need not be a citizen or resident of the U.S. (or a contiguous country) as long as his or her principal abode is with a U.S. citizen

Taxation of Business Entities C16-44 Phase-out of Exemptions (slide 1 of 2) Applies when taxpayer’s AGI in 2009 exceeds: $250,200 for married, filing jointly, or surviving spouse $208,500 for head of household $166,800 for single $125,100 for married, filing separately The phase-out of exemptions is being repealed in two stages and will not be complete until 2010 –The exemption phaseout remains at two-thirds for 2006 and 2007 and at one-third for 2008 and 2009 Applies when taxpayer’s AGI in 2009 exceeds: $250,200 for married, filing jointly, or surviving spouse $208,500 for head of household $166,800 for single $125,100 for married, filing separately The phase-out of exemptions is being repealed in two stages and will not be complete until 2010 –The exemption phaseout remains at two-thirds for 2006 and 2007 and at one-third for 2008 and 2009

Taxation of Business Entities C16-45 Phase-out of Exemptions (slide 2 of 2) Exemptions deduction is reduced by 2% for every $2,500 ($1,250 for MFS), or part thereof, that AGI exceeds threshold amounts –The amount of the phased-out exemptions is then multiplied by 1/3 (the reduction-of- phaseout fraction) for tax years 2008 and 2009 Exemptions deduction is reduced by 2% for every $2,500 ($1,250 for MFS), or part thereof, that AGI exceeds threshold amounts –The amount of the phased-out exemptions is then multiplied by 1/3 (the reduction-of- phaseout fraction) for tax years 2008 and 2009

Taxation of Business Entities C16-46 Filing Requirements (slide 1 of 2) General Rule: Tax return must be filed if gross income is ≥ the sum of the standard deduction and exemption amount ASD for blind does not apply for this determination –Special rules apply for dependents and self- employed taxpayers General Rule: Tax return must be filed if gross income is ≥ the sum of the standard deduction and exemption amount ASD for blind does not apply for this determination –Special rules apply for dependents and self- employed taxpayers

Taxation of Business Entities C16-47 Filing Requirements (slide 2 of 2) Tax return of an individual is due on or before the 15th day of the 4th month after taxpayer’s year end –Most individuals are calendar year taxpayers, thus, due date is April 15 May obtain a 6 month extension of time to file –Excuses a taxpayer from penalty for failure to file, not from penalty for failure to pay If more tax is owed, extension request (Form 4868) should be accompanied by check for balance of tax due Tax return of an individual is due on or before the 15th day of the 4th month after taxpayer’s year end –Most individuals are calendar year taxpayers, thus, due date is April 15 May obtain a 6 month extension of time to file –Excuses a taxpayer from penalty for failure to file, not from penalty for failure to pay If more tax is owed, extension request (Form 4868) should be accompanied by check for balance of tax due

Taxation of Business Entities C16-48 Filing Status There are 5 filing statuses –Single –Married, filing jointly –Surviving spouse (qualifying widow or widower) –Head of household –Married, filing separately Filing status affects tax rate brackets, standard deduction, and other amounts There are 5 filing statuses –Single –Married, filing jointly –Surviving spouse (qualifying widow or widower) –Head of household –Married, filing separately Filing status affects tax rate brackets, standard deduction, and other amounts

Taxation of Business Entities C16-49 Single Filing Status Includes a taxpayer who is unmarried or separated from spouse by a divorce decree or separate maintenance agreement and does not qualify for another filing status –Marital status is determined as of the last day of the tax year When a spouse dies during the year, marital status is determined as of the date of death Includes a taxpayer who is unmarried or separated from spouse by a divorce decree or separate maintenance agreement and does not qualify for another filing status –Marital status is determined as of the last day of the tax year When a spouse dies during the year, marital status is determined as of the date of death

Taxation of Business Entities C16-50 Married Filing Jointly (MFJ) Filing Status Married as of last day of taxable year, or Spouse dies during taxable year Married as of last day of taxable year, or Spouse dies during taxable year

Taxation of Business Entities C16-51 Surviving Spouse Filing Status Same tax rate brackets as married, filing jointly File as surviving spouse for 2 years after death of spouse if taxpayer maintains a home in which a dependent child lives Same tax rate brackets as married, filing jointly File as surviving spouse for 2 years after death of spouse if taxpayer maintains a home in which a dependent child lives

Taxation of Business Entities C16-52 Married Filing Separately Filing Status Married but not filing a return with spouse and not abandoned spouse

Taxation of Business Entities C16-53 Head of Household (HH) Filing Status Must be unmarried as of end of year or an abandoned spouse Must pay > half the cost of maintaining a household which is the principal home of a dependent for more than half of tax year Must be unmarried as of end of year or an abandoned spouse Must pay > half the cost of maintaining a household which is the principal home of a dependent for more than half of tax year

Taxation of Business Entities C16-54 Abandoned Spouse Allows married taxpayer to file as Head of Household if taxpayer: –Does not file a joint return –Paid > half the cost of maintaining a home –Spouse did not live in home during last 6 months of tax year –Home was principal residence of taxpayer’s child for > half of year –Can claim child as a dependent Allows married taxpayer to file as Head of Household if taxpayer: –Does not file a joint return –Paid > half the cost of maintaining a home –Spouse did not live in home during last 6 months of tax year –Home was principal residence of taxpayer’s child for > half of year –Can claim child as a dependent

Taxation of Business Entities C16-55 Tax Rates Prior to recent legislation, tax rates were 15%, 28%, 31%, 36%, and 39.6% Effective January 1, 2003 –Tax rates are 10%, 15%, 25%, 28%, 33%, and 35% Prior to recent legislation, tax rates were 15%, 28%, 31%, 36%, and 39.6% Effective January 1, 2003 –Tax rates are 10%, 15%, 25%, 28%, 33%, and 35%

Taxation of Business Entities C16-56 Kiddie Tax (slide 1 of 4) Net unearned income (NUI) of child is taxed at parents’ rate –Child must be under age 18 at end of year –NUI generally equals unearned income less $1,900 (2009 tax year) Net unearned income (NUI) of child is taxed at parents’ rate –Child must be under age 18 at end of year –NUI generally equals unearned income less $1,900 (2009 tax year)

Taxation of Business Entities C16-57 Kiddie Tax (slide 2 of 4) Unearned income includes: –Taxable interest –Dividends –Capital gains –Rents –Royalties –Pension and annuity income, and –Unearned income from trusts Unearned income includes: –Taxable interest –Dividends –Capital gains –Rents –Royalties –Pension and annuity income, and –Unearned income from trusts

Taxation of Business Entities C16-58 Kiddie Tax (slide 3 of 4) Computing NUI for Kiddie Tax for 2009: Unearned income Less: $950 Less: The greater of: i) $950, or ii) Allowable itemized deductions connected with production of unearned income Equals: net unearned income Computing NUI for Kiddie Tax for 2009: Unearned income Less: $950 Less: The greater of: i) $950, or ii) Allowable itemized deductions connected with production of unearned income Equals: net unearned income

Taxation of Business Entities C16-59 Kiddie Tax (slide 4 of 4) Net unearned income taxed at parents’ rate –Remainder of taxable income taxed at child’s rate Two options for computing the tax –A separate return may be filed for the child The tax on net unearned income (referred to as the allocable parental tax) is computed as though the income had been included on the parents’ return – Form 8615 is used to compute the tax –The parents may elect to report child’s income on their own return Certain requirements must be met Net unearned income taxed at parents’ rate –Remainder of taxable income taxed at child’s rate Two options for computing the tax –A separate return may be filed for the child The tax on net unearned income (referred to as the allocable parental tax) is computed as though the income had been included on the parents’ return – Form 8615 is used to compute the tax –The parents may elect to report child’s income on their own return Certain requirements must be met

Taxation of Business Entities C16-60 Alimony and Separate Maintenance Payments (slide 1 of 3) Alimony is: –Deductible by payor –Includible in gross income of recipient Alimony is: –Deductible by payor –Includible in gross income of recipient

Taxation of Business Entities C16-61 Alimony and Separate Maintenance Payments (slide 2 of 3) Property settlements –Transfer of property to former spouse –No deduction or recognized gain or loss for payor –No gross income and carryover of payor’s basis for recipient Property settlements –Transfer of property to former spouse –No deduction or recognized gain or loss for payor –No gross income and carryover of payor’s basis for recipient

Taxation of Business Entities C16-62 Alimony and Separate Maintenance Payments (slide 3 of 3) Child support payments –Payments made to satisfy legal obligation to support child of taxpayer –Nondeductible by payor and not taxed to recipient (or child) May be difficult to determine whether an amount received is alimony or child support –If amount of payment would be reduced due to some future event related to the child (e.g., child reaches age 21), such reduction is deemed child support Child support payments –Payments made to satisfy legal obligation to support child of taxpayer –Nondeductible by payor and not taxed to recipient (or child) May be difficult to determine whether an amount received is alimony or child support –If amount of payment would be reduced due to some future event related to the child (e.g., child reaches age 21), such reduction is deemed child support

Taxation of Business Entities C16-63 Prizes and Awards General rule: FMV of item is included in income Exceptions: Taxpayer designates qualified organization to receive prize or award (subject to other requirements) Employee achievement awards of tangible personal property made in recognition of length of service or safety achievement General rule: FMV of item is included in income Exceptions: Taxpayer designates qualified organization to receive prize or award (subject to other requirements) Employee achievement awards of tangible personal property made in recognition of length of service or safety achievement

Taxation of Business Entities C16-64 Unemployment Compensation Prior to 2009, unemployment compensation was taxable in full Under ARRTA of 2009 the first $2,400 of unemployment compensation is excluded from gross income –This relief from taxation is limited to 2009 Prior to 2009, unemployment compensation was taxable in full Under ARRTA of 2009 the first $2,400 of unemployment compensation is excluded from gross income –This relief from taxation is limited to 2009

Taxation of Business Entities C16-65 Social Security Benefits 50% to 85% of benefits may be taxable Taxability is based on taxpayer’s modified adjusted gross income (MAGI) 50% to 85% of benefits may be taxable Taxability is based on taxpayer’s modified adjusted gross income (MAGI)

Taxation of Business Entities C16-66 Gifts and Inheritances (slide 1 of 3) Gifts are nontaxable to donee if: –Transfer is voluntary without adequate consideration, and –Made because of affection, respect, admiration, charity, or donative intent Gifts are nontaxable to donee if: –Transfer is voluntary without adequate consideration, and –Made because of affection, respect, admiration, charity, or donative intent

Taxation of Business Entities C16-67 Gifts and Inheritances (slide 2 of 3) Inheritances are nontaxable to beneficiary Income earned on gifts or inheritances is taxable under normal rules –Example: Father gifts corporate bond to daughter. Gift is excluded from daughter’s gross income, but interest income earned after gift date is taxable to her. Inheritances are nontaxable to beneficiary Income earned on gifts or inheritances is taxable under normal rules –Example: Father gifts corporate bond to daughter. Gift is excluded from daughter’s gross income, but interest income earned after gift date is taxable to her.

Taxation of Business Entities C16-68 Gifts and Inheritances (slide 3 of 3) Transfers by employers to employees do not qualify as excludible gifts –May be excludible under other provisions, e.g., employee achievement awards Transfers by employers to employees do not qualify as excludible gifts –May be excludible under other provisions, e.g., employee achievement awards

Taxation of Business Entities C16-69 Scholarships and Fellowships An amount paid to or for the benefit of a student to aid in pursuing a degree at an educational institution –Nontaxable to extent of tuition and related expenses (e.g., fees, books, supplies, and equipment required for courses) Amounts received for room and board are taxable An amount paid to or for the benefit of a student to aid in pursuing a degree at an educational institution –Nontaxable to extent of tuition and related expenses (e.g., fees, books, supplies, and equipment required for courses) Amounts received for room and board are taxable

Taxation of Business Entities C16-70 Damages (slide 1 of 3) Tax consequences of receipt of damages –Depends on type of harm taxpayer experienced –The taxpayer may seek damages for: Loss of income Expenses incurred Property destroyed Personal injury Tax consequences of receipt of damages –Depends on type of harm taxpayer experienced –The taxpayer may seek damages for: Loss of income Expenses incurred Property destroyed Personal injury

Taxation of Business Entities C16-71 Damages (slide 2 of 3) Tax treatment of damages received for: –Loss of income Generally, taxed the same as the income replaced –Exceptions exist related to personal injury –Reimbursement for expenses incurred Not income, unless the expense was deducted –Damages that are a recovery of the taxpayer’s previously deducted expenses are generally taxable under the tax benefit rule Tax treatment of damages received for: –Loss of income Generally, taxed the same as the income replaced –Exceptions exist related to personal injury –Reimbursement for expenses incurred Not income, unless the expense was deducted –Damages that are a recovery of the taxpayer’s previously deducted expenses are generally taxable under the tax benefit rule

Taxation of Business Entities C16-72 Damages (slide 3 of 3) Tax treatment of damages received for: –Property destroyed Treated as an amount received in a sale or exchange of the property – Thus, taxpayer has realized gain if damage payments exceed property’s basis –Personal injury Receives special treatment Tax treatment of damages received for: –Property destroyed Treated as an amount received in a sale or exchange of the property – Thus, taxpayer has realized gain if damage payments exceed property’s basis –Personal injury Receives special treatment

Taxation of Business Entities C16-73 Compensation for Injuries and Sickness (slide 1 of 3) Personal injury damages –Compensatory damages received on account of physical personal injury or physical illness are excludible Includes amounts received for loss of income associated with the physical personal injury or physical sickness –All other personal injury damages are taxable Compensatory damages for nonphysical injury All punitive damages Personal injury damages –Compensatory damages received on account of physical personal injury or physical illness are excludible Includes amounts received for loss of income associated with the physical personal injury or physical sickness –All other personal injury damages are taxable Compensatory damages for nonphysical injury All punitive damages

Taxation of Business Entities C16-74 Compensation for Injuries and Sickness (slide 2 of 3) Workers’ compensation –Although may be payment for loss of wages, workers’ compensation is specifically excluded from gross income Workers’ compensation –Although may be payment for loss of wages, workers’ compensation is specifically excluded from gross income

Taxation of Business Entities C16-75 Compensation for Injuries and Sickness (slide 3 of 3) Accident and health insurance benefits –Benefits received under policy purchased by taxpayer are excludible Even if benefits are substitute for income –Different rules apply if the accident and health insurance protection was purchased by the individual’s employer Accident and health insurance benefits –Benefits received under policy purchased by taxpayer are excludible Even if benefits are substitute for income –Different rules apply if the accident and health insurance protection was purchased by the individual’s employer

Taxation of Business Entities C16-76 Educational Savings Bonds Interest on Series EE U.S. Savings Bonds may be excluded from income if: –Proceeds used to pay for qualified higher educational expenses –Bonds issued after 12/31/89, and –Bonds issued to person at least 24 years old Exclusion is phased-out once modified AGI exceeds threshold amount Interest on Series EE U.S. Savings Bonds may be excluded from income if: –Proceeds used to pay for qualified higher educational expenses –Bonds issued after 12/31/89, and –Bonds issued to person at least 24 years old Exclusion is phased-out once modified AGI exceeds threshold amount

Taxation of Business Entities C16-77 Itemized Deductions (slide 1 of 2) Personal expenditures that are deductible from AGI as itemized deductions include: –Medical expenses –Taxes –Interest –Charitable Contributions –Miscellaneous itemized deductions Personal expenditures that are deductible from AGI as itemized deductions include: –Medical expenses –Taxes –Interest –Charitable Contributions –Miscellaneous itemized deductions

Taxation of Business Entities C16-78 Itemized Deductions (slide 2 of 2) Itemized deductions provide a tax benefit only to extent that, in total, they exceed the standard deduction amount for the taxpayer

Taxation of Business Entities C16-79 Medical Expenses (slide 1 of 6) Expenditures for the diagnosis, cure, mitigation, treatment, prevention of disease, or for purpose of affecting any structure or function of the body of the taxpayer, spouse, or dependents –Includes prescription drugs and insulin Expenditures for the diagnosis, cure, mitigation, treatment, prevention of disease, or for purpose of affecting any structure or function of the body of the taxpayer, spouse, or dependents –Includes prescription drugs and insulin

Taxation of Business Entities C16-80 Medical Expenses (slide 2 of 6) Does not include the cost of items such as : –Elective cosmetic surgery –General health items –Nonprescription drugs Does not include the cost of items such as : –Elective cosmetic surgery –General health items –Nonprescription drugs

Taxation of Business Entities C16-81 Medical Expenses (slide 3 of 6) Medical expenditures are deductible in year paid –Includes payment by check or credit card Medical expenditures are deductible in year paid –Includes payment by check or credit card

Taxation of Business Entities C16-82 Medical Expenses (slide 4 of 6) Medical expenses are deductible to the extent unreimbursed medical expenses, in total, exceed 7.5% of AGI

Taxation of Business Entities C16-83 Medical Expenses (slide 5 of 6) Example of medical expense deduction limitation: –Amy has AGI of $10,000 and medical expenses of $1,000 –Amy’s medical expense deduction = $250 [$1,000 – ($10,000 × 7.5%)] Example of medical expense deduction limitation: –Amy has AGI of $10,000 and medical expenses of $1,000 –Amy’s medical expense deduction = $250 [$1,000 – ($10,000 × 7.5%)]

Taxation of Business Entities C16-84 Medical Expenses (slide 6 of 6) Example of medical expense deduction limitation: –Bob has AGI of $4,000 and medical expenses of $1,000 –Bob’s medical expense deduction = $700 [$1,000 – ($4,000 × 7.5%)] Example of medical expense deduction limitation: –Bob has AGI of $4,000 and medical expenses of $1,000 –Bob’s medical expense deduction = $700 [$1,000 – ($4,000 × 7.5%)]

Taxation of Business Entities C16-85 Nursing Home Expenditures If primary reason for being in nursing home is medical, costs (including meals and lodging) qualify If primary purpose of placement in home is personal, only specific medical costs qualify (no meals or lodging) If primary reason for being in nursing home is medical, costs (including meals and lodging) qualify If primary purpose of placement in home is personal, only specific medical costs qualify (no meals or lodging)

Taxation of Business Entities C16-86 Capital Medical Expenditures May include a pool, air conditioners if they do not become permanent improvements, dust elimination systems, elevators, etc. Must be medical necessity, advised by a physician, used primarily by patient, and expense is reasonable Full amount of cost is medical expense in year paid Maintenance on capital expenditures also medical expense May include a pool, air conditioners if they do not become permanent improvements, dust elimination systems, elevators, etc. Must be medical necessity, advised by a physician, used primarily by patient, and expense is reasonable Full amount of cost is medical expense in year paid Maintenance on capital expenditures also medical expense

Taxation of Business Entities C16-87 Capital Improvement to Home Deductible medical expense only to extent that cost of improvement exceeds increase in value of home –Exception: removal of structural barriers to home of handicapped are deemed to add no value to home. Thus, full amount is a medical expense. Deductible medical expense only to extent that cost of improvement exceeds increase in value of home –Exception: removal of structural barriers to home of handicapped are deemed to add no value to home. Thus, full amount is a medical expense.

Taxation of Business Entities C16-88 Medical Care of Spouse and Dependents Taxpayer may deduct cost of medical care for spouse and dependents –Dependents need not meet gross income or joint return tests –Medical expenses of children of divorced parents can be deducted by non-custodial parent even though child is dependent of custodial parent Taxpayer may deduct cost of medical care for spouse and dependents –Dependents need not meet gross income or joint return tests –Medical expenses of children of divorced parents can be deducted by non-custodial parent even though child is dependent of custodial parent

Taxation of Business Entities C16-89 Health Insurance Premiums Premiums paid for medical care insurance are deductible medical expenses For self-employed, 100% of insurance premiums are deductible for AGI Premiums paid for medical care insurance are deductible medical expenses For self-employed, 100% of insurance premiums are deductible for AGI

Taxation of Business Entities C16-90 Health Savings Accounts Used in conjunction with a high deductible medical insurance policy –Employee contributions to HSA are deductible for AGI and earnings on funds in account are not taxable –Deductible contributions are limited to the sum of the monthly limitations. The monthly deductible amount is limited to the lesser of one twelfth of: The annual deductible under a high deductible plan or $3,000 for self-only ($5,950 for family coverage) in 2009 –Withdrawals from HSA are excludible to the extent used for qualified medical expenses Used in conjunction with a high deductible medical insurance policy –Employee contributions to HSA are deductible for AGI and earnings on funds in account are not taxable –Deductible contributions are limited to the sum of the monthly limitations. The monthly deductible amount is limited to the lesser of one twelfth of: The annual deductible under a high deductible plan or $3,000 for self-only ($5,950 for family coverage) in 2009 –Withdrawals from HSA are excludible to the extent used for qualified medical expenses

Taxation of Business Entities C16-91 Taxes (slide 1 of 4) State, local, and foreign income and real property taxes are deductible in the year paid State and local personal property taxes based on value (ad valorem) are deductible in the year paid State, local, and foreign income and real property taxes are deductible in the year paid State and local personal property taxes based on value (ad valorem) are deductible in the year paid

Taxation of Business Entities C16-92 Taxes (slide 2 of 4) Other taxes such as FICA, excise, etc., are not deductible –May be deductible if incurred in business or production of income activity Fees are not deductible as tax Other taxes such as FICA, excise, etc., are not deductible –May be deductible if incurred in business or production of income activity Fees are not deductible as tax

Taxation of Business Entities C16-93 Taxes (slide 3 of 4) A new provision allows homeowners to deduct their real estate taxes even if they do not itemize –Applies to 2008 and 2009 income tax returns –Property tax paid is treated as an additional standard deduction amount Limited to $1,000 for married couples filing jointly and $500 for other filers Real estate taxes for year property is sold must be apportioned between the buyer and the seller –Failure to correctly apportion requires offsetting adjustments to seller’s amount realized and buyer’s adjusted basis A new provision allows homeowners to deduct their real estate taxes even if they do not itemize –Applies to 2008 and 2009 income tax returns –Property tax paid is treated as an additional standard deduction amount Limited to $1,000 for married couples filing jointly and $500 for other filers Real estate taxes for year property is sold must be apportioned between the buyer and the seller –Failure to correctly apportion requires offsetting adjustments to seller’s amount realized and buyer’s adjusted basis

Taxation of Business Entities C16-94 Taxes (slide 4 of 4) Can elect to deduct either state & local income taxes or sales/use taxes –For state and local income taxes, deduct amounts paid during year: Amounts withheld Estimated tax payments Amounts paid in current year for prior year’s liability –For sales/use taxes, deduct either: Actual sales/use tax payments or Amount from an IRS table –Table amount may be increased by sales tax paid on certain specific items (e.g., Purchase of motor vehicles, boats, etc.) If deduction is taken for sales/use taxes paid rather than state income taxes, the new standard deduction for qualified motor vehicle taxes allowed under ARRTA of 2009 may not also be taken Can elect to deduct either state & local income taxes or sales/use taxes –For state and local income taxes, deduct amounts paid during year: Amounts withheld Estimated tax payments Amounts paid in current year for prior year’s liability –For sales/use taxes, deduct either: Actual sales/use tax payments or Amount from an IRS table –Table amount may be increased by sales tax paid on certain specific items (e.g., Purchase of motor vehicles, boats, etc.) If deduction is taken for sales/use taxes paid rather than state income taxes, the new standard deduction for qualified motor vehicle taxes allowed under ARRTA of 2009 may not also be taken

Taxation of Business Entities C16-95 Interest Expense Deduction of interest expense is limited to: –Interest on qualified student loans –Investment interest –Qualified residence (home mortgage) interest –Business interest Personal interest expense is not deductible Deduction of interest expense is limited to: –Interest on qualified student loans –Investment interest –Qualified residence (home mortgage) interest –Business interest Personal interest expense is not deductible

Taxation of Business Entities C16-96 Interest on Qualified Education Loans Deductible for AGI, subject to limits –Maximum deduction is $2,500 per year –Deduction is phased out for taxpayers with modified AGI (MAGI) between $60,000 and $75,000 ($120,000 and $150,000 on joint returns) –Not allowed for those claimed as a dependent or for married filing separate returns Deductible for AGI, subject to limits –Maximum deduction is $2,500 per year –Deduction is phased out for taxpayers with modified AGI (MAGI) between $60,000 and $75,000 ($120,000 and $150,000 on joint returns) –Not allowed for those claimed as a dependent or for married filing separate returns

Taxation of Business Entities C16-97 Investment Interest (slide 1 of 5) Investment interest on loans whose proceeds are used to purchase investment property may be deductible –e.g., Investment property may include stock, bonds, and land held for investment Deduction of investment interest expense is limited to net investment income Investment interest on loans whose proceeds are used to purchase investment property may be deductible –e.g., Investment property may include stock, bonds, and land held for investment Deduction of investment interest expense is limited to net investment income

Taxation of Business Entities C16-98 Investment Interest (slide 2 of 5) Net investment income: –Investment income less investment expenses Net investment income: –Investment income less investment expenses

Taxation of Business Entities C16-99 Investment Interest (slide 3 of 5) Investment income: –Gross income from interest, dividends, annuities, and royalties not derived from business –Net capital gains and qualified dividends are treated as investment income only if elected Amount elected as investment income is not eligible for the 15%/0% rates that otherwise apply to net capital gain and qualifying dividends Investment income: –Gross income from interest, dividends, annuities, and royalties not derived from business –Net capital gains and qualified dividends are treated as investment income only if elected Amount elected as investment income is not eligible for the 15%/0% rates that otherwise apply to net capital gain and qualifying dividends

Taxation of Business Entities C16-100 Investment Interest (slide 4 of 5) Investment expenses: –All expenses (other than interest) directly related to investment income that are allowed as a deduction –Application of 2% AGI floor for some investment expenses must be considered in computing amount of net investment income Investment expenses: –All expenses (other than interest) directly related to investment income that are allowed as a deduction –Application of 2% AGI floor for some investment expenses must be considered in computing amount of net investment income

Taxation of Business Entities C16-101 Investment Interest (slide 5 of 5) Investment interest not used in current year due to limitation is carried forward to future years until ultimately used –Deductibility subject to net investment income limitation in carryover years Investment interest not used in current year due to limitation is carried forward to future years until ultimately used –Deductibility subject to net investment income limitation in carryover years

Taxation of Business Entities C16-102 Qualified Residence Interest (slide 1 of 4) Interest on indebtedness secured by the principal residence and one other residence (qualified residences) Interest must be on acquisition or home equity indebtedness Interest on indebtedness secured by the principal residence and one other residence (qualified residences) Interest must be on acquisition or home equity indebtedness

Taxation of Business Entities C16-103 Qualified Residence Interest (slide 2 of 4) Acquisition indebtedness: amounts incurred to acquire, construct, or substantially improve the qualified residences –Interest paid on aggregate acquisition indebtedness of $1 million or less ($500,000 for married filing separate) is deductible as qualified residence interest Acquisition indebtedness: amounts incurred to acquire, construct, or substantially improve the qualified residences –Interest paid on aggregate acquisition indebtedness of $1 million or less ($500,000 for married filing separate) is deductible as qualified residence interest

Taxation of Business Entities C16-104 Qualified Residence Interest (slide 3 of 4) Home equity indebtedness: loans secured by qualified residences Interest is deductible only on portion of home equity loan that does not exceed the lesser of: –$100,000 ($50,000 for married, filing separate), or –FMV of home - acquisition indebtedness Home equity indebtedness: loans secured by qualified residences Interest is deductible only on portion of home equity loan that does not exceed the lesser of: –$100,000 ($50,000 for married, filing separate), or –FMV of home - acquisition indebtedness

Taxation of Business Entities C16-105 Qualified Residence Interest (slide 4 of 4) Thus, maximum loans on qualified residences that will produce qualified residence interest is $1.1 million Interest on mortgage debt exceeding $1.1 million or on mortgage debt relating to nonqualified residence (e.g., second vacation home) is nondeductible personal interest Thus, maximum loans on qualified residences that will produce qualified residence interest is $1.1 million Interest on mortgage debt exceeding $1.1 million or on mortgage debt relating to nonqualified residence (e.g., second vacation home) is nondeductible personal interest

Taxation of Business Entities C16-106 Interest Paid for Services (slide 1 of 2) “Points” paid for the use or forbearance of money qualify as deductible interest –Cannot be a service charge if they are to qualify as deductible interest Points generally must be capitalized and amortized over the life of loan “Points” paid for the use or forbearance of money qualify as deductible interest –Cannot be a service charge if they are to qualify as deductible interest Points generally must be capitalized and amortized over the life of loan

Taxation of Business Entities C16-107 Interest Paid for Services (slide 2 of 2) Exception: Points paid in the acquisition or improvement of personal residence –Entire amount of such points are deductible in the year paid –Points paid to refinance an existing home mortgage must be capitalized and amortized over the life of the new loan Exception: Points paid in the acquisition or improvement of personal residence –Entire amount of such points are deductible in the year paid –Points paid to refinance an existing home mortgage must be capitalized and amortized over the life of the new loan

Taxation of Business Entities C16-108 Mortgage Insurance Payments Mortgage insurance premiums are deductible as interest if they relate to a qualified residence of the taxpayer –The deduction begins to phase out for taxpayers with AGI in excess of $100,000 ($50,000 for married taxpayers filing separately) Mortgage insurance premiums are deductible as interest if they relate to a qualified residence of the taxpayer –The deduction begins to phase out for taxpayers with AGI in excess of $100,000 ($50,000 for married taxpayers filing separately)

Taxation of Business Entities C16-109 Classification of Interest Expense Whether interest is deductible for AGI or as an itemized deduction (from AGI) depends on purpose of indebtedness –If related to a business or the production of rent or royalty income Interest is deductible for AGI –If incurred for personal use, such as qualified residence interest Deduction is reported on Schedule A, Form 1040 if taxpayer itemizes However, interest on a student loan is a deduction for AGI –If the taxpayer incurs debt in relation to his or her employment Interest is considered to be personal, or consumer, interest Whether interest is deductible for AGI or as an itemized deduction (from AGI) depends on purpose of indebtedness –If related to a business or the production of rent or royalty income Interest is deductible for AGI –If incurred for personal use, such as qualified residence interest Deduction is reported on Schedule A, Form 1040 if taxpayer itemizes However, interest on a student loan is a deduction for AGI –If the taxpayer incurs debt in relation to his or her employment Interest is considered to be personal, or consumer, interest

Taxation of Business Entities C16-110 Charitable Contributions (slide 1 of 3) Individuals and corporations may deduct contributions made to qualified domestic organizations Contributor must have donative intent and expect nothing in return –If contributor receives tangible benefit, the FMV of such benefit must be deducted from the amount of the contribution Individuals and corporations may deduct contributions made to qualified domestic organizations Contributor must have donative intent and expect nothing in return –If contributor receives tangible benefit, the FMV of such benefit must be deducted from the amount of the contribution

Taxation of Business Entities C16-111 Charitable Contributions (slide 2 of 3) Exception to tangible benefit rule –Allows deduction of 80% of amount paid for the right to purchase athletic tickets from colleges and universities Exception to tangible benefit rule –Allows deduction of 80% of amount paid for the right to purchase athletic tickets from colleges and universities

Taxation of Business Entities C16-112 Charitable Contributions (slide 3 of 3) Contribution must be to qualified domestic nonprofit organization or state or possession of U.S. or any subdivisions thereof –Many(but not all) qualified domestic charities are listed in IRS Publication #78 Contribution must be to qualified domestic nonprofit organization or state or possession of U.S. or any subdivisions thereof –Many(but not all) qualified domestic charities are listed in IRS Publication #78

Taxation of Business Entities C16-113 Contribution of Services No deduction is allowed for the contribution of services –Unreimbursed expenses related to the services are deductible –Out-of-pocket transportation costs or a standard mileage rate of 14 cents per mile are deductible –Deductions are also permitted for transportation, reasonable expenses for lodging, and the cost of meals while away from home incurred in performing the donated services No deduction is allowed for the contribution of services –Unreimbursed expenses related to the services are deductible –Out-of-pocket transportation costs or a standard mileage rate of 14 cents per mile are deductible –Deductions are also permitted for transportation, reasonable expenses for lodging, and the cost of meals while away from home incurred in performing the donated services

Taxation of Business Entities C16-114 Nondeductible Items The following items may not be deducted as charitable contributions: –Dues, fees, or bills paid to country clubs, lodges, fraternal orders, or similar groups –Cost of raffle, bingo, or lottery tickets –Cost of tuition –Value of blood given to a blood bank –Donations to homeowners associations –Gifts to individuals –Rental value of property used by a qualified charity The following items may not be deducted as charitable contributions: –Dues, fees, or bills paid to country clubs, lodges, fraternal orders, or similar groups –Cost of raffle, bingo, or lottery tickets –Cost of tuition –Value of blood given to a blood bank –Donations to homeowners associations –Gifts to individuals –Rental value of property used by a qualified charity

Taxation of Business Entities C16-115 Record-Keeping Requirements No deduction is allowed for charitable contributions unless the taxpayer has appropriate documentation and substantiation –The specific type of documentation required depends on the amount of the contribution and whether the contribution is made in cash or noncash property –Special rules may apply to gifts of certain types of property (e.g., used automobiles) where Congress has noted taxpayer abuse in the past No deduction is allowed for charitable contributions unless the taxpayer has appropriate documentation and substantiation –The specific type of documentation required depends on the amount of the contribution and whether the contribution is made in cash or noncash property –Special rules may apply to gifts of certain types of property (e.g., used automobiles) where Congress has noted taxpayer abuse in the past

Taxation of Business Entities C16-116 Ordinary Income Property Defined: assets that would produce ordinary income or short-term capital gain if sold Contribution amount –FMV of asset less ordinary income (or STCG) potential; generally the lower of adjusted basis or FMV Defined: assets that would produce ordinary income or short-term capital gain if sold Contribution amount –FMV of asset less ordinary income (or STCG) potential; generally the lower of adjusted basis or FMV

Taxation of Business Entities C16-117 Capital Gain Property Defined: assets that would produce long- term capital gain or Section 1231 gain if sold Contribution amount –Generally FMV of asset Defined: assets that would produce long- term capital gain or Section 1231 gain if sold Contribution amount –Generally FMV of asset

Taxation of Business Entities C16-118 Charitable Contribution Limitations (slide 1 of 4) 50% limit –In no case can the charitable contribution deduction for a year exceed 50% of the taxpayer’s AGI –Contributions of cash, ordinary income property, and certain capital gain property (where the contribution amount is adjusted basis) are subject to the 50% limit (50% assets) 50% limit –In no case can the charitable contribution deduction for a year exceed 50% of the taxpayer’s AGI –Contributions of cash, ordinary income property, and certain capital gain property (where the contribution amount is adjusted basis) are subject to the 50% limit (50% assets)

Taxation of Business Entities C16-119 Charitable Contribution Limitations (slide 2 of 4) 30% limit –Charitable contribution deduction for certain assets cannot exceed 30% of the taxpayer’s AGI Applies to 30% assets which are: –Capital gain property for which the contribution amount is FMV –Certain contributions to private nonoperating foundations 30% limit –Charitable contribution deduction for certain assets cannot exceed 30% of the taxpayer’s AGI Applies to 30% assets which are: –Capital gain property for which the contribution amount is FMV –Certain contributions to private nonoperating foundations

Taxation of Business Entities C16-120 Charitable Contribution Limitations (slide 3 of 4) 30% limit –Taxpayer can elect to treat capital gain property as 50% assets by limiting the amount of such contributions to their adjusted bases –Referred to as the reduced deduction election Enables the taxpayer to move from the 30% limitation to the 50% limitation 30% limit –Taxpayer can elect to treat capital gain property as 50% assets by limiting the amount of such contributions to their adjusted bases –Referred to as the reduced deduction election Enables the taxpayer to move from the 30% limitation to the 50% limitation

Taxation of Business Entities C16-121 Charitable Contribution Limitations (slide 4 of 4) 20% limit –Certain contributions of capital gain property to private nonoperating foundations 20% limit –Certain contributions of capital gain property to private nonoperating foundations

Taxation of Business Entities C16-122 Charitable Contributions Carryover Contributions that cannot be taken in current year due to limitations may be carried forward for 5 years –When using carryovers, current contributions are used first, then carryovers used on a FIFO basis Contributions that cannot be taken in current year due to limitations may be carried forward for 5 years –When using carryovers, current contributions are used first, then carryovers used on a FIFO basis

Taxation of Business Entities C16-123 Example of Charitable Contribution AGI Limits Taxpayer, AGI $100,000, contributed $40,000 cash and long-term stocks with a FMV of $35,000 and a basis of $8,000 to a University 50% limit = $50,000 30% limit = $30,000 –Amount of deduction = $50,000 (40,000 cash + 10,000 stock) –Contribution carryforward = $25,000 stock (as 30% asset) Taxpayer, AGI $100,000, contributed $40,000 cash and long-term stocks with a FMV of $35,000 and a basis of $8,000 to a University 50% limit = $50,000 30% limit = $30,000 –Amount of deduction = $50,000 (40,000 cash + 10,000 stock) –Contribution carryforward = $25,000 stock (as 30% asset)

Taxation of Business Entities C16-124 Miscellaneous Itemized Deductions Some expenditures are deductible only to the extent they exceed 2% of AGI Examples include: –Professional dues –Uniforms –Tax return prep fees –Job-hunting costs –Certain investment expenses –Hobby losses –Unreimbursed employee expenses Some expenditures are deductible only to the extent they exceed 2% of AGI Examples include: –Professional dues –Uniforms –Tax return prep fees –Job-hunting costs –Certain investment expenses –Hobby losses –Unreimbursed employee expenses

Taxation of Business Entities C16-125 Misc. Itemized Deductions Not Subject to 2% of AGI Floor Examples include: –Gambling losses to the extent of gambling winnings –Impairment-related work expenses of a handicapped person –Deduction for repayment of amounts under a claim of right if more than $3,000 –Unrecovered investment in a annuity contract when annuity ceases by reason of death Examples include: –Gambling losses to the extent of gambling winnings –Impairment-related work expenses of a handicapped person –Deduction for repayment of amounts under a claim of right if more than $3,000 –Unrecovered investment in a annuity contract when annuity ceases by reason of death

Taxation of Business Entities C16-126 Overall Limitation on Itemized Deductions (slide 1 of 3) Taxpayers with AGI in excess of the specified threshold will lose part of their benefits from certain itemized deductions –Threshold amount in 2009 is $166,800 ($83,400 if married, filing separately) Taxpayers with AGI in excess of the specified threshold will lose part of their benefits from certain itemized deductions –Threshold amount in 2009 is $166,800 ($83,400 if married, filing separately)

Taxation of Business Entities C16-127 Overall Limitation on Itemized Deductions (slide 2 of 3) Itemized deductions subject to possible reduction include: –Taxes, home mortgage interest, charitable contributions, and miscellaneous itemized deductions subject to the 2% of AGI floor Medical, investment interest, casualty & theft losses, and gambling losses are not subject to reduction Itemized deductions subject to possible reduction include: –Taxes, home mortgage interest, charitable contributions, and miscellaneous itemized deductions subject to the 2% of AGI floor Medical, investment interest, casualty & theft losses, and gambling losses are not subject to reduction

Taxation of Business Entities C16-128 Overall Limitation on Itemized Deductions (slide 3 of 3) This overall limitation is being phased out over a four-year period, beginning in 2006 Limitation is calculated using a 2-step process Step 1: Amount of reduction is lesser of: (AGI – threshold) × 3%, or 80% × total itemized deductions subject to reduction Step 2: Multiply the amount computed in Step 1 by the fraction that applies to the tax year involved –For 2006 and 2007: phaseout equals 2/3 of the Step 1 amount –For 2008 and 2009: phaseout equals 1/3 of the Step 1 amount This overall limitation is being phased out over a four-year period, beginning in 2006 Limitation is calculated using a 2-step process Step 1: Amount of reduction is lesser of: (AGI – threshold) × 3%, or 80% × total itemized deductions subject to reduction Step 2: Multiply the amount computed in Step 1 by the fraction that applies to the tax year involved –For 2006 and 2007: phaseout equals 2/3 of the Step 1 amount –For 2008 and 2009: phaseout equals 1/3 of the Step 1 amount

Taxation of Business Entities C16-129 Adoption Expenses Credit (slide 1 of 2) Credit for qualified adoption expenses incurred in adoption of eligible child –Examples of expenses: adoption fees, court costs, attorney fees Maximum credit is $12,150 (in 2009) –Credit is phased-out ratably for modified AGI between $182,180 and $222,180 Credit for qualified adoption expenses incurred in adoption of eligible child –Examples of expenses: adoption fees, court costs, attorney fees Maximum credit is $12,150 (in 2009) –Credit is phased-out ratably for modified AGI between $182,180 and $222,180

Taxation of Business Entities C16-130 Adoption Expenses Credit (slide 2 of 2) Eligible child is one that is –Less than 18 years of age, or –Physically or mentally handicapped Nonrefundable credit –Excess may be carried forward for five years Married taxpayers must file jointly to claim Eligible child is one that is –Less than 18 years of age, or –Physically or mentally handicapped Nonrefundable credit –Excess may be carried forward for five years Married taxpayers must file jointly to claim

Taxation of Business Entities C16-131 Child Tax Credit (slide 1 of 2) Credit amount is $1,000 per child Eligible children are: –Under age 17, –US citizen, and –Claimed as dependent on taxpayer’s tax return Credit amount is $1,000 per child Eligible children are: –Under age 17, –US citizen, and –Claimed as dependent on taxpayer’s tax return

Taxation of Business Entities C16-132 Child Tax Credit (slide 2 of 2) Credit is phased out by $50 for each $1,000 of AGI above specified levels –$110,000 for joint filers –$55,000 for married filing separately –$75,000 for single Credit is phased out by $50 for each $1,000 of AGI above specified levels –$110,000 for joint filers –$55,000 for married filing separately –$75,000 for single

Taxation of Business Entities C16-133 Child and Dependent Care Credit (slide 1 of 4) General qualifications for credit –Must have employment related care costs for a Dependent under age 13, or Dependent or spouse who is physically or mentally incapacitated and who lives with the taxpayer for more than one-half of the year General qualifications for credit –Must have employment related care costs for a Dependent under age 13, or Dependent or spouse who is physically or mentally incapacitated and who lives with the taxpayer for more than one-half of the year

Taxation of Business Entities C16-134 Child and Dependent Care Credit (slide 2 of 4) Credit amount –Eligible care costs x applicable percentage –Applicable percentage ranges from 20% to 35% depending on AGI Married taxpayers must file a joint return to obtain credit Credit amount –Eligible care costs x applicable percentage –Applicable percentage ranges from 20% to 35% depending on AGI Married taxpayers must file a joint return to obtain credit

Taxation of Business Entities C16-135 Child and Dependent Care Credit (slide 3 of 4) Eligible care costs defined –Costs for care of qualified individual within taxpayer’s home or outside home If outside home, handicapped dependent or spouse must spend at least 8 hours a day within taxpayer’s home –Amount of costs that qualify is the lesser of actual costs or $3,000 for one qualified individual, and $6,000 for two or more qualified individuals Eligible care costs defined –Costs for care of qualified individual within taxpayer’s home or outside home If outside home, handicapped dependent or spouse must spend at least 8 hours a day within taxpayer’s home –Amount of costs that qualify is the lesser of actual costs or $3,000 for one qualified individual, and $6,000 for two or more qualified individuals

Taxation of Business Entities C16-136 Child and Dependent Care Credit (slide 4 of 4) Earned income limitation –Amount of eligible care costs cannot exceed lower of taxpayer’s or spouse’s earned income –Full-time student or disabled taxpayer or spouse are deemed to have earned income up to maximum per month limits Earned income limitation –Amount of eligible care costs cannot exceed lower of taxpayer’s or spouse’s earned income –Full-time student or disabled taxpayer or spouse are deemed to have earned income up to maximum per month limits

Taxation of Business Entities C16-137 Education Tax Credits (slide 1 of 5) 2 education tax credits are available –American Opportunity credit (previously known as the Hope scholarship credit) –Lifetime learning credit Both nonrefundable credits are available for qualifying tuition and related expenses –Books and other course materials are eligible for the American Opportunity credit (but not the lifetime learning credit) –Room and board are ineligible for both credits 2 education tax credits are available –American Opportunity credit (previously known as the Hope scholarship credit) –Lifetime learning credit Both nonrefundable credits are available for qualifying tuition and related expenses –Books and other course materials are eligible for the American Opportunity credit (but not the lifetime learning credit) –Room and board are ineligible for both credits

Taxation of Business Entities C16-138 Education Tax Credits (slide 2 of 5) Maximum credits –American Opportunity credit maximum per eligible student is $2,500 per year for first 4 years of postsecondary education 100% of the first $2,000 of tuition expenses plus 25% of the next $2,000 of tuition expenses –Lifetime learning credit maximum per taxpayer is 20% of qualifying expenses (up to $10,000 per year in 2009) Cannot be claimed in same year the American Opportunity credit is claimed Maximum credits –American Opportunity credit maximum per eligible student is $2,500 per year for first 4 years of postsecondary education 100% of the first $2,000 of tuition expenses plus 25% of the next $2,000 of tuition expenses –Lifetime learning credit maximum per taxpayer is 20% of qualifying expenses (up to $10,000 per year in 2009) Cannot be claimed in same year the American Opportunity credit is claimed

Taxation of Business Entities C16-139 Education Tax Credits (slide 3 of 5) Eligible individuals include taxpayer, spouse, and taxpayer’s dependents To be eligible for American Opportunity credit, student must take at least 1/2 of full- time course load –No such requirement for lifetime learning credit Eligible individuals include taxpayer, spouse, and taxpayer’s dependents To be eligible for American Opportunity credit, student must take at least 1/2 of full- time course load –No such requirement for lifetime learning credit

Taxation of Business Entities C16-140 Education Tax Credits (slide 4 of 5) Both education credits are subject to income limitations, which differ for 2009 and 2010 –In addition, 40% of the American Opportunity credit is refundable and the entire credit allowed may be used to offset a taxpayer’s AMT liability The lifetime learning credit is neither refundable nor an AMT liability offset The American Opportunity credit is phased out, beginning when the taxpayer’s modified AGI reaches $80,000 ($160,000 for married taxpayers filing jointly) –The credit is completely eliminated when modified AGI reaches $90,000 ($180,000 for married taxpayers filing jointly) Both education credits are subject to income limitations, which differ for 2009 and 2010 –In addition, 40% of the American Opportunity credit is refundable and the entire credit allowed may be used to offset a taxpayer’s AMT liability The lifetime learning credit is neither refundable nor an AMT liability offset The American Opportunity credit is phased out, beginning when the taxpayer’s modified AGI reaches $80,000 ($160,000 for married taxpayers filing jointly) –The credit is completely eliminated when modified AGI reaches $90,000 ($180,000 for married taxpayers filing jointly)

Taxation of Business Entities C16-141 Education Tax Credits (slide 5 of 5) The lifetime learning credit amount is phased out when modified AGI reaches $50,000 ($100,000 for MFJ) –The credit is completely eliminated when AGI reaches $60,000($120,000 for MFJ) Taxpayers are prohibited from receiving a double tax benefit associated with qualifying educational expenses –Can’t claim education credit and deduct the same expenses –Can’t claim the credit for amounts that are excluded from income e.g., scholarships, employer-paid educational assistance –May claim an education tax credit and exclude from gross income amounts distributed from a Coverdell Education Savings Account as long as the distribution is not used for the same expenses for which the credit is claimed The lifetime learning credit amount is phased out when modified AGI reaches $50,000 ($100,000 for MFJ) –The credit is completely eliminated when AGI reaches $60,000($120,000 for MFJ) Taxpayers are prohibited from receiving a double tax benefit associated with qualifying educational expenses –Can’t claim education credit and deduct the same expenses –Can’t claim the credit for amounts that are excluded from income e.g., scholarships, employer-paid educational assistance –May claim an education tax credit and exclude from gross income amounts distributed from a Coverdell Education Savings Account as long as the distribution is not used for the same expenses for which the credit is claimed

Taxation of Business Entities C16-142 Earned Income Credit (slide 1 of 3) General qualifications for credit –Must have earned income from being an employee or self-employed –For 2009 and 2010, ARRTA of 2009 increases Credit percentage for families with three or more children, and Increases the phaseout threshold amounts for married taxpayers filing joint returns General qualifications for credit –Must have earned income from being an employee or self-employed –For 2009 and 2010, ARRTA of 2009 increases Credit percentage for families with three or more children, and Increases the phaseout threshold amounts for married taxpayers filing joint returns

Taxation of Business Entities C16-143 Earned Income Credit (slide 2 of 3) Credit amount (2009 tax year) –Applicable percentage rate × earned income Rate and maximum amount of earned income determined by number of qualifying children Phase-out of credit begins when earned income (or AGI) exceeds $21,420 for MFJ with qualifying child ($16,420 for other taxpayers) Use IRS tables to calculate exact credit amount Credit amount (2009 tax year) –Applicable percentage rate × earned income Rate and maximum amount of earned income determined by number of qualifying children Phase-out of credit begins when earned income (or AGI) exceeds $21,420 for MFJ with qualifying child ($16,420 for other taxpayers) Use IRS tables to calculate exact credit amount

Taxation of Business Entities C16-144 Earned Income Credit (slide 3 of 3) Credit for taxpayers having no children –Taxpayers aged 25 through 64 Credit amount for couple filing jointly with no qualifying children (2009 tax year) –7.65% × earned income (up to $5,970) –Phase-out of credit begins when earned income (or AGI) exceeds $12,470 for MFJ ($7,470 for others) Credit for taxpayers having no children –Taxpayers aged 25 through 64 Credit amount for couple filing jointly with no qualifying children (2009 tax year) –7.65% × earned income (up to $5,970) –Phase-out of credit begins when earned income (or AGI) exceeds $12,470 for MFJ ($7,470 for others)

Taxation of Business Entities C16-145 Recovery Rebate Credit (slide 1 of 2) The Economic Stimulus Act of 2008 provides a refundable tax credit for certain taxpayers –The Treasury Department issued rebate checks to taxpayers in the spring of 2008 to help stimulate the economy The credit includes two components—a basic credit and a qualifying child credit The Economic Stimulus Act of 2008 provides a refundable tax credit for certain taxpayers –The Treasury Department issued rebate checks to taxpayers in the spring of 2008 to help stimulate the economy The credit includes two components—a basic credit and a qualifying child credit

Taxation of Business Entities C16-146 Recovery Rebate Credit (slide 2 of 2) Eligible individuals received a basic credit equal to the greater of: –The taxpayer’s net income tax liability up to a maximum of $600 ($1,200 in the case of a joint return), or –$300 ($600 for joint returns) if the individual had: At least $3,000 of earned income (plus Social Security benefits), or Net income tax liability of at least $1 and gross income greater than the sum of the applicable basic standard deduction amount and one personal exemption (two personal exemptions for a joint return) If an individual is eligible for any amount of the basic credit, the individual also may have received a qualifying child credit of $300 for each qualifying child (defined in the same manner as for the child tax credit) Eligible individuals received a basic credit equal to the greater of: –The taxpayer’s net income tax liability up to a maximum of $600 ($1,200 in the case of a joint return), or –$300 ($600 for joint returns) if the individual had: At least $3,000 of earned income (plus Social Security benefits), or Net income tax liability of at least $1 and gross income greater than the sum of the applicable basic standard deduction amount and one personal exemption (two personal exemptions for a joint return) If an individual is eligible for any amount of the basic credit, the individual also may have received a qualifying child credit of $300 for each qualifying child (defined in the same manner as for the child tax credit)

Taxation of Business Entities C16-147 Making Work Pay Credit In 2009 and 2010, the ARRTA of 2009 includes a refundable income tax credit of up to $400 ($800 for MFJ) –Calculated at a rate of 6.2% of earned income –Phases out at a rate of 2% of modified AGI above $75,000 ($150,000 for MFJ) Most receive this refundable credit in their paychecks as a reduction in withholding In 2009 and 2010, the ARRTA of 2009 includes a refundable income tax credit of up to $400 ($800 for MFJ) –Calculated at a rate of 6.2% of earned income –Phases out at a rate of 2% of modified AGI above $75,000 ($150,000 for MFJ) Most receive this refundable credit in their paychecks as a reduction in withholding

Taxation of Business Entities C16-148 If you have any comments or suggestions concerning this PowerPoint Presentation for South-Western Federal Taxation, please contact: Dr. Donald R. Trippeer, CPA trippedr@oneonta.edu SUNY Oneonta If you have any comments or suggestions concerning this PowerPoint Presentation for South-Western Federal Taxation, please contact: Dr. Donald R. Trippeer, CPA trippedr@oneonta.edu SUNY Oneonta

Taxation of Business Entities C16-1 Chapter 16 Introduction to the Taxation of Individuals Introduction to the Taxation of Individuals Copyright ©2010.

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Taxation of Business Entities C16-1 Chapter 16 Introduction to the Taxation of Individuals Introduction to the Taxation of Individuals Copyright ©2010.

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Presentation on theme: "Taxation of Business Entities C16-1 Chapter 16 Introduction to the Taxation of Individuals Introduction to the Taxation of Individuals Copyright ©2010."— Presentation transcript:

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