1. Taxation of property transaction
Like kind exchange sec1031
realproperty not for personal use, inventory stock bond, foreign real property
within 180 days
Involuntary conversion sec 1033
gain is not recognized if the same class of property is purchased within the replacement period
personal property within 2yrs, real property within 3yrs
losses from a related party
- 2촌이내, more than 50% SH
- losses not deductible
2. Tax Compliance and Planning for Individuals
Incentive stock option
Grant date, Exercise date, Sale date LTCG
Non-qualified stock option
Grant date, Exercise date(fmv-op, deduction by an ER), Sale date(sp-fmv)
Imputed interest
- gift loans bet two individuals
10K less: no imputed int,
10K-100K: limited to borrower's net investment income
100K over: applicable federal rate(AFR)
foreign earned income received for services performed in a foreign country
income exclusion 112K foreign earned income + 15.680 of housing costs excluded
Foreign tax credit
excess foreign taxes over limit: CB 1yr + CO 10 yrs
HSA
- taxpayer must have high deductible health plan with a deductible of at least 1400 for an individual and 2800 for a family
- contribute to HSA through pre-tax payroll deduction program
- distributions qualified medical expenses for taxpayer, spouse, dependents
- non qualified exp > 20% penalty
- can be used for non medical after age 65
FSA
- set aside from paycheck for the whole plan year to spend on IRS-qualified healthcare expenses
- reimbused for the costs
- can be contributed through payroll deduction
Losses incurred in a trade or biz in a production of income
- deduction in limited to the amount "at risk"
1) Cash+adjusted basis of property contributed
2) personally liable
3) Recourse liability
Losses from passive activities
not materially participated activity(s corp inc not materially participated) + rental activity + limited partnership int
- offset against income from passive activities only
- CF indefinitely
- deduct when passive activity is disposed
Active rental activity
25,000 - 50% ( X - 100,000)
100K이하는 25K 공제
100K 초과 150K이하는 위의 공식에 근거하여
150 초과는 공제불가
regular taxable income
1) tax exempt int on private activity bonds
2) 200-150 on personal property
3) exercise of inventive stock option
4) SD, state and local tax 10K
- exemption amount
26% on first 206, 28% on over 206
Estimated tax payments
- due by 4,6,9,1/15
- 90% of current, 100% of prior(if over 150>110%)
- no underpaid estimated tax penalty on tax due of less than 1K
Retirement plans
Traditional 401K
Contribution
- ER matching contributions
- lesser of 66K or 100% of EE's annual compensation, max contribution 22.5K
Distribution
1) taxed as ordinary inc
2) 10% penalty on early distribution(59,1/2)
3) lower tax rate at retirement
4) min distribution 73
Roth 401K
- contribution using after-tax dollar only
- non taxable distribution
- Expected higher marginal tax rate at reitrement
- min distribution not required
Defined benefit plan
- taxed as ordinary income
- 10% penalty on early distribution
- min distributions 73
Annuities
Tax planning for post-secondary education
1) US savings bond(series EE)
- int excluded
- taxpayer, spouse, dependents
- redemption by the original bond holder
- 20yrs, 기명식채권
2) Qualified tuition program( sec 529 )
- contribution up to annual gift tax exclusion(16K per donee)
- contribution not tax deductible, int not taxable
3) Coverdell education savings account (ESA)
- 2K per child, education savings account, under 18
- contributions not tax-deductible, int non taxable
4) Education credits
American Opportunity Tax Credit (AOTC)
- 2.5K per student
- undergraduate and graduate courses
Life time learning credit
- 2K per taxpayer
- Qualified tuition and expenses for unlimited number of years
Insurance
1) Terms life insurance: death > beneficiary
2) Whole life insurance: death > beneficiary, savings 본인이 환급받을 수 있음
3) Long term care insurance
- nursing, home-health care daycare individuals age 65
- deductible in Schedule A as a medical exp
4) Umbrella insurance policy( for other people not for the taxpayer)
Legal ownership of assets and beneficiary designations
Payable on death > bank account
transfer on death > stock, bond
Form of co-ownership
Tenancy by the entirety > spouse
Joint tenancy with rights of survivorship > directly to other owner
Tenancy in common > Estate
C corporation
Sec 351
property + transferors control 80% corporation
> no gain or loss
> gain recognized
1) not 80%: realized gain > recognize gain
2) Boot received: min(boot, gain realized)
3) liability relieved > basis: liability relieved-basis
~2017: cb2, co 20
2018, 2019, 2020: cb 5, co indefinite
2021~: no cb, co indefinite
capital loss of C corp
- capital losses offset capital gains only
- limitation, taxable income
- CB 3yrs, CO 5yrs
Earnings and Profits
+ Beg
+ Current
+ Gain on appreciation of property distribution
- Distribution
+ Liability assumed by SH
Stock-redemption
- treated as sale or exchange of stock(CG.CL)
- deduct only int exp on loans for redemption
section 1244, small business corporation stock
- ordinary loss up to 100K for MFJ(50K for single)
- small corp with captial of 1M or less
- sale by original SH
Controlle group
- Scorp parent가능, sub는 안되는듯. Taxation of property transaction
Like kind exchange sec1031
realproperty not for personal use, inventory stock bond, foreign real property
within 180 days
Involuntary conversion sec 1033
gain is not recognized if the same class of property is purchased within the replacement period
personal property within 2yrs, real property within 3yrs
losses from a related party
- 2촌이내, more than 50% SH
- losses not deductible
2. Tax Compliance and Planning for Individuals
Incentive stock option
Grant date, Exercise date, Sale date LTCG
Non-qualified stock option
Grant date, Exercise date(fmv-op, deduction by an ER), Sale date(sp-fmv)
Imputed interest
- gift loans bet two individuals
10K less: no imputed int,
10K-100K: limited to borrower's net investment income
100K over: applicable federal rate(AFR)
foreign earned income received for services performed in a foreign country
income exclusion 112K foreign earned income + 15.680 of housing costs excluded
Foreign tax credit
excess foreign taxes over limit: CB 1yr + CO 10 yrs
HSA
- taxpayer must have high deductible health plan with a deductible of at least 1400 for an individual and 2800 for a family
- contribute to HSA through pre-tax payroll deduction program
- distributions qualified medical expenses for taxpayer, spouse, dependents
- non qualified exp > 20% penalty
- can be used for non medical after age 65
FSA
- set aside from paycheck for the whole plan year to spend on IRS-qualified healthcare expenses
- reimbused for the costs
- can be contributed through payroll deduction
Losses incurred in a trade or biz in a production of income
- deduction in limited to the amount "at risk"
1) Cash+adjusted basis of property contributed
2) personally liable
3) Recourse liability
Losses from passive activities
not materially participated activity(s corp inc not materially participated) + rental activity + limited partnership int
- offset against income from passive activities only
- CF indefinitely
- deduct when passive activity is disposed
Active rental activity
25,000 - 50% ( X - 100,000)
100K이하는 25K 공제
100K 초과 150K이하는 위의 공식에 근거하여
150 초과는 공제불가
regular taxable income
1) tax exempt int on private activity bonds
2) 200-150 on personal property
3) exercise of inventive stock option
4) SD, state and local tax 10K
- exemption amount
26% on first 206, 28% on over 206
Estimated tax payments
- due by 4,6,9,1/15
- 90% of current, 100% of prior(if over 150>110%)
- no underpaid estimated tax penalty on tax due of less than 1K
Retirement plans
Traditional 401K
Contribution
- ER matching contributions
- lesser of 66K or 100% of EE's annual compensation, max contribution 22.5K
Distribution
1) taxed as ordinary inc
2) 10% penalty on early distribution(59,1/2)
3) lower tax rate at retirement
4) min distribution 73
Roth 401K
- contribution using after-tax dollar only
- non taxable distribution
- Expected higher marginal tax rate at reitrement
- min distribution not required
Defined benefit plan
- taxed as ordinary income
- 10% penalty on early distribution
- min distributions 73
Annuities
Tax planning for post-secondary education
1) US savings bond(series EE)
- int excluded
- taxpayer, spouse, dependents
- redemption by the original bond holder
- 20yrs, 기명식채권
2) Qualified tuition program( sec 529 )
- contribution up to annual gift tax exclusion(16K per donee)
- contribution not tax deductible, int not taxable
3) Coverdell education savings account (ESA)
- 2K per child, education savings account, under 18
- contributions not tax-deductible, int non taxable
4) Education credits
American Opportunity Tax Credit (AOTC)
- 2.5K per student
- undergraduate and graduate courses
Life time learning credit
- 2K per taxpayer
- Qualified tuition and expenses for unlimited number of years
Insurance
1) Terms life insurance: death > beneficiary
2) Whole life insurance: death > beneficiary, savings 본인이 환급받을 수 있음
3) Long term care insurance
- nursing, home-health care daycare individuals age 65
- deductible in Schedule A as a medical exp
4) Umbrella insurance policy( for other people not for the taxpayer)
Legal ownership of assets and beneficiary designations
Payable on death > bank account
transfer on death > stock, bond
Form of co-ownership
Tenancy by the entirety > spouse
Joint tenancy with rights of survivorship > directly to other owner
Tenancy in common > Estate
C corporation
Sec 351
property + transferors control 80% corporation
> no gain or loss
> gain recognized
1) not 80%: realized gain > recognize gain
2) Boot received: min(boot, gain realized)
3) liability relieved > basis: liability relieved-basis
~2017: cb2, co 20
2018, 2019, 2020: cb 5, co indefinite
2021~: no cb, co indefinite
capital loss of C corp
- capital losses offset capital gains only
- limitation, taxable income
- CB 3yrs, CO 5yrs
Earnings and Profits
+ Beg
+ Current
+ Gain on appreciation of property distribution
- Distribution
+ Liability assumed by SH
Stock-redemption
- treated as sale or exchange of stock(CG.CL)
- deduct only int exp on loans for redemption
section 1244, small business corporation stock
- ordinary loss up to 100K for MFJ(50K for single)
- small corp with captial of 1M or less
- sale by original SH
Controlle group
- Scorp parent가능, sub는 안되는듯
Source of income
US source income
- Gain from sale of personal property sold by US resident
Foreign source income
Gain from sale of personal property sold by non-resident
fixed and determinable annual or periodical income
- passive, non-business activities > 30% withholding tax
Foreign subsidiary
- legal entity in foreign country
- cannot file a consolidated US tax return w us parent company
- income is not taxed until profits are repatriated back to the US in the form of dividends
International tax provisions
1) Controlled Foreign Corporation
- 10%이상인 SH가 50% 이상의 외국회사 주식을 가지고 있는 경우
- US SH are taxed on subpart F income of CFC and GILTI(global intangible low-taxed income)
- Subpart F income: PHCI(충분히 배당하지 않은경우 내는 패널티 성격의 세금), Sales/ Service income
US SH 가 해외A회사에게 해외 B나라에 서비스를 하게하는경우
S corporation
Separately stated items
- not income from rental activity
- int, dividend, royalty income
- capital gains/losses
- sec 1231 gains
- charitable contribution
- sec 179 deductions 1080K
- int exp on investment indebtness
- foreign income taxes
- tax-exempt inc
- non-deductible exp
S corp distributions reduce in the following order
1) Accumulated adjustments account(AAA)
- non taxable distribution to the extent of AAA
2) Earnings and profits during C corp
- dividend income to SH
3) Other adjustments account(OAA)
- non taxable distribution to SH
4) any excess distribution over AAA, E&P, OAA
Fringe benefits paid to more than 2% SH-EE
- Shareholder-EE reports as compensation income
- Deductible expense by an S corporation
Built in gains tax
- excess of FMV of asset over its AB on the first day of an S corp
- 5yr period
- 21%
- big tax paid reduces the income passed through to the S corp SH
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