Income & Assets

No not deductible by the payer not includible in the recipient's income

0% $48,350 15% $533,400 20% 3.8% NIIT

Loss disallowed if you buy substantially identical stock within 30 days before or after the sale. The disallowed loss is added to the basis of the replacement shares.

Up to $250,000 if owned and used as principal residence for at least 2 of the last 5 years

3.8% $200,000

10% up to $11,925 12% $11,926–$48,475 22% $48,476–$103,350 24% $103,351–$197,300 32% $197,301–$250,525 35% $250,526–$626,350 37% over $626,350

10% up to $23,850 12% $23,851–$96,950 22% $96,951–$206,700 24% $206,701–$394,600 32% $394,601–$501,050 35% $501,051–$751,600 37% over $751,600

10% up to $11,925 12% $11,926–$48,475 22% $48,476–$103,350 24% $103,351–$197,300 32% $197,301–$250,525 35% $250,526–$375,800 37% over $375,800

Each bracket only applies to income within that range, not all income. Moving into a higher bracket does NOT cause prior income to be taxed at the new rate.

W-2 wage SS tax is applied first against the $176,100 base. SE tax Social Security portion applies only to remaining base.

Form SS-8 (determination request) and Form 8919 (reports wages with unpaid FICA — computes employee's share of SS/Medicare)

The bargain element (FMV minus exercise price) at ISO exercise is an AMT preference — included in AMTI even though no cash was received and no stock sold. Can create surprise AMT liability.

Yes — tax-exempt interest from specified private activity bonds is ADDED BACK as an AMT preference item.

FMV at date of death (or alternate valuation date 6 months later). This is the step-up (or step-down). Holding period is automatically long-term.

If ≥2/3 of gross income from farming/fishing: file by March 1 AND pay all tax (no estimated tax needed), OR make a single estimated payment by January 15.

If sold at GAIN: basis = donor's adjusted basis (carryover basis) If sold at LOSS: basis = LOWER of donor's basis OR FMV at gift date If sale price between basis and FMV: no gain, no loss recognized

Basis for depreciation = LOWER of FMV or adjusted basis at conversion date. This prevents depreciating unrealized losses while held for personal use.

FIFO (first-in, first-out) — the earliest-purchased lot is deemed sold first unless taxpayer specifies which lot is sold (specific identification).

The mortgage amount is included in cost basis. Example: $200K down + $300K mortgage assumed = $500K basis.

New basis = Original basis − insurance reimbursement − deductible casualty loss + cost of restoration to pre-casualty condition

Transfer of property between spouses or incident to divorce is generally tax-free. Recipient takes transferor's basis. No gain/loss recognized.

Loss disallowed if substantially identical stock purchased 30 days before OR 30 days after the sale date (61-day window total). Disallowed loss is added to replacement shares' basis.

Gross profit percentage × payment received = gain recognized for that year. Gross profit % = (Sale price − Adjusted basis − Selling expenses) ÷ Contract price Depreciation recapture is recognized in year of sale regardless of payments.

27.5 years straight-line (mid-month convention). Land is never depreciated.

Taxable in the year received, regardless of which period the rent covers.

Repairs — fix leaks, repaint, replace broken window (deduct now) Improvements — replace all plumbing, replace entire roof, add new room (capitalize and depreciate)

If ≥80% of rental income from residential units → whole building = 27.5 year residential. If <80% residential → whole building = 39 year commercial.

If not a trade/business but profit-motivated: income on Schedule 1 Line 8l, expenses on Line 24b. Not Schedule E. If a trade/business → Schedule C.

NOLs are the FIRST attribute reduced when COD is excluded under bankruptcy or insolvency. A §108(b)(5) election (reduce basis first) exists precisely to save NOLs.

COD is generally taxable as ordinary income under §61(a)(12). When debt is canceled, forgiven, or discharged for less than the full amount owed, the canceled amount is included in gross income.

QPRI takes precedence over insolvency by default per §108(a)(2)(C). QPRI only reduces home basis (no NOL burn). Taxpayer must affirmatively elect insolvency to override QPRI — usually only if home basis is already zero.

3 years from filing date OR due date (whichever later). 6 years if >25% gross income omitted. 7 years for worthless securities/bad debts. Indefinitely for fraud or no return filed. Property records: until sold + 3 years.

Compensatory damages received on account of personal physical injuries or physical sickness are excluded from gross income. Punitive damages are ALWAYS taxable (even if underlying claim involved physical injury).

Civil damages, restitution, or other monetary awards received for wrongful imprisonment are NOT taxable (excluded from income).

Clergy may exclude designated housing allowance from income tax to the extent used for housing, limited to the SMALLEST of: (1) officially designated amount, (2) actual amount used to provide/rent home, or (3) fair rental value of home including furnishings, utilities, property tax, insurance.

Yes — although excluded from income tax, the housing allowance (plus wages and ministerial SE income) IS included in income for SE tax purposes. Example: $22K wages + $8K housing = $22K income tax base, $30K SE tax base.

Application for exemption from SE tax on religious-conscience grounds (objector to public insurance). Exemption is generally IRREVOCABLE. Exempt clergy pay no FICA/SE tax but still owe federal income tax, and receive no Social Security/Medicare benefits.

Death benefits paid to beneficiary are generally NOT taxable under §101. However, any interest paid with the proceeds (e.g., held by insurer) IS taxable as interest income.

Tax-free to the terminally-ill recipient when policyholder sells life insurance policy for cash. Surrender for cash by a non-terminally-ill policyholder: amount exceeding premiums paid is taxable income.

No — workers' compensation (job injury wage replacement and rehabilitation) is excluded from income.

Up to $50,000 of coverage is excluded. The cost of coverage in excess of $50,000 is taxable, valued using IRS Table I, and reported on Form W-2, Box 12, Code C.

Goods: limited to the employer's gross profit percentage. Services: limited to 20% of the customer price. Both are excluded from income as qualified employee discounts.

Up to $325 per month for transit passes and qualified parking is tax-free. Any amount exceeding $325 per month is taxable wages.

(1) Employee must incur expenses while performing duties, (2) must adequately account for expenses with documentation, (3) must return excess reimbursements within a reasonable time. If any requirement fails, all reimbursements are taxable wages.

Post-2018 divorces: alimony is NOT deductible by the payer and NOT taxable income to the recipient. Pre-2019 divorces: payer deducts, recipient reports as income.

Gambling losses are deductible on Schedule A but ONLY up to the amount of gambling winnings. A taxpayer cannot create a net loss. For 2025, 100% of losses are deductible up to winnings.

Physical injury/sickness damages are EXCLUDED under §104(a)(2). Punitive damages are ALWAYS taxable, even in a physical injury case. Emotional distress damages are taxable unless attributable to a physical injury.

The transfer is treated as a SALE — NOT COD income. Amount realized = the full outstanding debt. Gain or loss = debt discharged − adjusted basis. No Form 982 or §108 analysis is needed.

Two separate tax events: (1) sale of property — gain or loss = FMV − adjusted basis; and (2) COD income = debt discharged − FMV. The COD portion qualifies for §108 exclusions.

(1) Stock must be held more than 1 year from the exercise date, AND (2) Stock must be held more than 2 years from the grant date. Both must be met for all gain to be long-term capital gain.

A disqualifying disposition occurs when the stock is sold before BOTH holding periods are met (>1 year from exercise AND >2 years from grant). The result: treated like an NSO — the bargain element at exercise becomes ordinary compensation income.

The spread at exercise (FMV minus strike price) is an AMT preference item added to AMT income — even if the stock has not been sold. This can trigger significant AMT liability with no cash from a sale to pay the tax.

$2,800 in 2025. If any household employee is paid $2,800 or more, the employer must pay Social Security (6.2% each) up to $176,100, Medicare (1.45% each) on all wages, and FUTA on first $7,000. Reported on Schedule H.

Wages paid to your SPOUSE, your PARENTS, or your CHILDREN under age 21 are exempt. (Exception: parent caring for your child or disabled person MAY be subject if certain conditions apply.)

$2,000 per year per beneficiary. Phaseout: $95,000-$110,000 (single) / $190,000-$220,000 (MFJ). Must be used by age 30 (or rolled to a family member under age 30).

Single: $25,000 (50% taxable threshold) / $34,000 (85% taxable threshold). Combined income = MAGI + 50% of Social Security benefits + tax-exempt interest.

Applies to child under 24 who is a full-time student AND whose earned income does NOT provide more than half of their support. The child must have unearned income exceeding $2,700.

Form 8615: child files their own return with the form attached (most common). Form 8814: parent elects to include child's income on their return, ONLY allowed if child's income is solely interest/dividends/capital gain distributions AND total income is between $1,350 and $13,500.

Exclusion per payment = (lump sum that would have been payable at death) divided by (number of installments). Any amount in each payment above the exclusion is taxable as interest income. Example: $75,000 lump sum over 120 monthly payments → exclude $625/month; $375/month taxable.

Activity presumed a business if profitable 3 of 5 consecutive years (2 of 7 for horse breeding/training/racing). If hobby: expenses are NOT deductible (except COGS), and no self-employment tax applies. However, income is still taxable.

The earnings portion is taxable as ordinary income PLUS a 10% penalty. The contribution (basis) portion is not taxed.

Form 8814 allows a parent to include the child's income on the parent's return. Allowed ONLY if the child's total income is solely from interest, dividends, and capital gain distributions AND total income is between $1,350 and $13,500. Above $13,500, the child MUST file their own return.

$176,100 for 2025. Social Security tax applies only to wages/SE income up to this limit. Medicare tax (1.45% employee / 2.9% SE) applies to ALL earnings with no cap.

(1) Must be acquisition indebtedness (used to buy, build, or substantially improve the home). (2) Must be secured by the residence. (3) Must be the taxpayer's principal residence — not a vacation home, rental, or second home.

(1) Stock must be held more than 1 year from the EXERCISE date, AND (2) Stock must be held more than 2 years from the GRANT date. Both must be satisfied for all gain to be long-term capital gain.

The spread at exercise (FMV minus strike price) is an AMT preference item, added to AMT income even if the stock has not been sold. This can trigger significant AMT liability with NO cash from a sale to pay the tax.

$2,800 in 2025. If any household employee is paid $2,800 or more, the employer must pay Social Security (6.2% each up to $176,100) and Medicare (1.45% each on all wages), plus FUTA. Report on Schedule H.

Wages paid to your SPOUSE, your PARENTS, or your CHILDREN under age 21 are exempt. (Exception: a parent caring for your child or disabled person MAY be subject under certain conditions.)

2-year carryback, 20-year carryforward, and 100% offset of taxable income (no 80% cap). Do NOT mix pre-2018 NOLs with post-2017 NOL rules.

$2,000 per year per beneficiary. Phaseout: $95,000-$110,000 (single) / $190,000-$220,000 (MFJ). Must be used by age 30 (or rolled to a family member under age 30).

Single: $25,000 (up to 50% taxable) / $34,000 (up to 85% taxable). Combined income = MAGI + 50% of Social Security benefits + tax-exempt interest.

Form 8615: child files their own return with the form attached. Form 8814: parent elects to include child's income on the parent's return, ONLY if child's income is solely interest/dividends/capital gain distributions AND total income is between $1,350 and $13,500. Above $13,500, child MUST file own return.

Exclusion per payment = (lump sum payable at death) ÷ (number of installments). The excess over the exclusion is taxable INTEREST income. Example: $75,000 lump sum ÷ 120 monthly payments = $625/month excluded; $375/month taxable interest.

The EARNINGS portion is taxable as ordinary income PLUS a 10% penalty. The contribution (basis) portion is tax-free. Must prorate between contributions and earnings.

OID is generally reported as interest income as it accrues Form 1099-OID may report the annual taxable amount de minimis threshold = less than 0.25% of stated redemption price × full years to maturity a taxpayer may still have reportable OID without receiving Form 1099-OID

IRC §1400Z-2 may defer eligible capital gain invested in a QOF report the deferral election on Form 8949 attach Form 8997 for every year a qualified QOF investment is held

basic landlord services → Schedule E substantial tenant-convenience services → Schedule C examples include regular cleaning, changing linens, and maid service Schedule C net earnings may be subject to self-employment tax

creator's royalties from an active trade or business → Schedule C creator's net earnings may be subject to self-employment tax heir's royalties are generally reported on Schedule E inherited-property royalties are generally not subject to self-employment tax

renting the home fewer than 15 days → exclude the rent from income rental expenses are not deductible as rental expenses otherwise allowable mortgage interest and property taxes may remain deductible on Schedule A