Adjustments to AGI

Interest on student loans & tuition
Employment tax (50% SE tax & 100% of medical premiums)
Moving expenses
Business expenses (1099)
Rent/Royalty & flow through entities
Alimony
Contributions to retirement
Early withdrawal penalty
Duty jury pay

Education
HSA
Farm income

Tax Schedules

A - Itemized deductions
B - Interest and dividend income
C - P&L from a business (1099)
D - Capital gains/losses
E - Supplementary income/loss (passive income)
F - P&L from farming

1040X - Amended return
1116 - Foreign tax credit
4562 - Depreciation and amortization
4797 - Sale of LT business property

Property Taxation

General formula:

Amount Realized
<Adjusted Basis of Asset Sold>
Gain/(Loss)

Amount Realized includes: 

1. Cash received = boot (taxable if gain)
2. Assumption of debt by buyer (Excess = boot; taxable if gain)
3. Property received at FMV
4. Services received at FMV
5. <Amount realized reduced by any selling expenses (broker's commissions)>

Adjusted Basis of Asset Sold

1. Purchased property basis = cost
1. add basis: capital improvements
2. <reduce basis: accumulated depreciation>
2. Gift property basis = donor's rollover cost basis = rollover cost/NBV
1. Exception: Lower FMV at date of gift --> Sell lower (future selling price will determine basis)
3. Inherited property basis: Step up/down to FMV
1. Date of death FMV = basis
2. Alternative valuation date for FMV = earlier of distribution date of asset or 6 months after death/distribution
3. Long term property 

Gains that are not recognized/taxable:

1. Homeowners exclusion 
2. Involuntary conversion 
3. Divorce property settlement
4. Exchange of like kind (business)
5. Installment sale
6. Treasury capital & stock

Losses that are not recognized/deducted:

1. Wash sale losses
2. Related party losses
3. Personal losses 

C Corporation Corporate Distributions

Dividends = distribution of property by a corporation out of its earnings & profits (E&P):

Current E&P (by year-end): Taxable dividend

Accumulated E&P (as of distribution date): Taxable dividend

No E&P = Return of Capital: Tax free & reduces basis of common stock

No E&P/No basis = capital gain distribution: Taxable income as capital gain

S Corporation

Shareholder Basis in S Corp Stock:

Initial basis
+ Income items (separately & non-separately stated items - includes tax free income)
+ Additional shareholder investments in corp. stock
- Distribution to shareholders
- Loss or expense items
= Ending basis

Casualty and Theft Losses (Individual)

10% AGI Test

Smaller loss basis (lost cost or decreased FMV)

<Insurance Recovery>

Taxpayer's Loss

<$100> (IRS Tax)

Eligible Loss

<10% AGI>

Deductible Loss

Typically the smallest # in choices because:

• Insurance recovery usually eliminates the majority of the loss basis
• 10% AGI will also wipe out the majority of the loss #

Itemized Deductions

Schedule A

Charity: 50% AGI forward 5 years
Other misc: 100% gambling
Misc. expense: 2% [Business expenses, investment cost, tax prep/attorney]
Medical (not cosmetic): 10% AGI (65 yrs old + 7.5%); must exceed AGI %
Interest paid
Taxes: state
Theft/casualty: 10% AGI less $100

Items that will not phase out 
Gambling loss
Investment costs
Medical
Theft/Casualty