 1040, Small Business,
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The most comprehensive fast-answer tax book on the market!
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 Coverage Highlights
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Front Cover
2008 Federal Tax Rate Schedule chart • 2008 Standard Deduction chart • 2008 Standard Mileage Rates chart • 2008 Personal Exemptions chart • 2008 Earned Income Credit chart • Other 2008 Phaseouts Based on Modified AGI chart •
Tab 1 What's New
2008 Federal Tax Rate Schedule chart • 2008 Standard Deduction chart • 2008 Personal Exemptions chart • Social Security/Medicare chart • 2008 Itemized Deduction Phase-Out chart • 2008 Section 179 Deduction chart • TheTaxBook™ - Real Answers. Real Fast! chart • Expiring Tax Provisions chart • New Forms and Line Items for 2008 chart • What's New chart • The Small Business and Work Opportunity Tax Act of 2007 • Minimum Wage • Credit for Employer FICA Taxes Paid on Tips • Section 179 Expense • Husband and Wife Business • Kiddie Tax • Taxpayer Penalties • Income Tax Return Preparer Penalties • S Corporation Taxes • S Corporations - Bank Director Stock • S Corporations - Qualified Subchapter S Subsidiary (QSub) • S Corporations - Electing Small Business Trust (ESBT) • Estimated Tax for Corporations • Work Opportunity Tax Credit • Low-Income Housing Credit • Alternative Minimum Tax • Health and Medical Benefits • Other Provisions • Tax Relief and Health Care Act of 2006 • Extension of Expired Tax Provisions • Health Savings Accounts (HSA) • AMT Credit Relief • Mortgage Insurance Premiums • Other Provisions • The Pension Protection Act of 2006 • Pension Rules Made Permanent • Rollovers and Transfers • 10% Penalty on Early Distributions From Qualified Retirement Plans and IRAs • Retirement Savings Contribution Credit • Credit for Pension Plan Start-Up Costs • Indexing of Phase-Out Ranges for Traditional IRAs and Roth IRAs Based on Modified AGI • Inherited Retirement Plans • Charitable Contributions of IRA Distributions • Additional IRA Contributions for Employees with Employers in Bankruptcy • Diversification Rules for Defined Contribution Plans • Vesting Rules • Deduction Limitations for Defined Benefit Pension Plans • Minimum Funding Standards for Defined Benefit Pension Plans • Age 62 Distributions During Working Retirement • Health and Medical Benefits • Form 5500 Filing Requirements • Capital Gain Property Donated to a 50% Limit Charitable Organization • Charitable Contribution of Taxidermy Property • Recapture of Tax Benefits for Charitable Contributions of Tax-Exempt Use Property • Charitable Deduction for Contributions of Clothing and Household Items • Recordkeeping and Substantiation Requirements for Charitable Contributions • Exempt Organizations Below the Filing Requirements • Qualified Tuition Programs • Heroes Earned Retirement Opportunities Act • Hurricane Relief Tax Acts for 2005 • Gulf Opportunity Zone • Special Depreciation Allowance • Section 179 Expense • Demolition and Clean-Up Costs • Net Operating Losses • Involuntary Conversions •
Tab 2 Federal Tax Table
2008 Federal Tax Table • 2008 Tax Computation Worksheet - Line 44 • Prior Year Tax Rate Schedules •
Tab 3 1040 Line Instructions
Form 1040 U.S. Individual Income Tax Return 2008 Line-by-Line Instructions chart • Filing Requirements • 2008 Filing Requirements • Filing Status • Single • Married Filing Joint (MFJ) • Married Filing Separately (MFS) • Head of Household (HOH) • Qualifying Widow(er) (QW) • Dependency Tests • Dependent Defined • Children of Divorced or Separated Parents • Qualifying Child of More Than One Person • Multiple Support Agreements • Other Dependency Rules • Taxable and Nontaxable Income • Taxable Income • Disability Payments and Sick Pay • Fees for Notaries, Fiduciaries, Election Workers, Corporate Directors • Gambling Winnings, Prizes and Awards, Treasure • Gifts and Inheritances • Imputed Interest on Below-Market Loans • Lawsuit Settlement and Awards • Life Insurance • Nominee Income • Recoveries • Repayments • State and Local Income Tax Refund • Taxable Social Security Benefits • Tip Reporting • Workers Compensation •
Tab 4 Itemized Deductions
Average Itemized Deductions - 2005 Tax Returns chart • Itemized Deduction Phase-Out chart • Medical Expenses chart • Miscellaneous Deductions chart • Fair Market Value Guide for Used Items chart • Taxes Paid chart • Charitable Contributions chart • Casualty and Theft Loss chart • Interest Paid chart • Statutory Nondeductible Expenses chart • Medical Expenses • What Medical Expenses Are Deductible • When Medical Expenses Are Deductible • Whose Medical Expenses Are Deductible • Married Filing Separate Medical Expenses • Decedent's Medical Expenses • Capital Expenses Deductible as Medical Expenses • Disabled Dependent Care Expenses • Lifetime Care Advance Payments • Lodging Expenses for Medical Care • Long-Term Care • Medicines • Nursing Home • Nursing Services - Nonprofessional • Special Education • Transportation • Weight-Loss Program • Reimbursed Medical Expenses • Record Keeping for Medical Expenses • Business Expense or Medical Expense • Other Medical Rulings and Court Cases • Taxes Paid - Itemized Deductions • Taxes That Are Deductible as Itemized Deductions • Taxes That Are Not Deductible as Itemized Deductions • State and Local Income or General Sales Taxes • Real Estate Taxes • Personal Property Taxes • Other Taxes • Interest Paid - Itemized Deductions • Interest That Is Deductible as an Itemized Deduction • Interest That Is Not Deductible as Itemized Deductions • Home Mortgage Interest Paid • Election to Treat Home Mortgage Interest as Business Interest • Legal Liability to Make Payments • Form 1098 • Points and Loan Origination Fees • Other Mortgage Interest Special Situations • Investment Interest Paid • Carrying Charges - Election to Capitalize Interest and Taxes • Interest Tracing Rules • Charitable Contributions • Examples of Charitable Organizations • Examples of Organizations That Are Not Qualified Charities • Contributions Deductible as Itemized Deductions • Contributions Not Deductible as Itemized Deductions • Cash Contributions • Contributions That Benefit Taxpayer • Contributions of Property - Form 8283 • Out-of-Pocket Expenses/Auto Expenses • Future Interest in Property • When Contributions are Deductible • Charitable Contributions Deduction Limitation • Charitable Contributions of IRA Distributions • Record Keeping Rules for Charitable Contributions • Vehicles, Boats, and Airplanes • Casualty and Theft Losses • What Casualty and Theft Losses Are Deductible • How to Calculate a Casualty or Theft Loss • When to Deduct a Casualty or Theft Loss • Gain on Reimbursement • Gains Realized on Homes in Disaster Areas • Disaster Relief • Hurricane Disaster Areas • Miscellaneous Itemized Deductions • Miscellaneous Itemized Deductions Not Subject to the 2% AGI Limitation • Miscellaneous Itemized Deductions Subject to the 2% AGI Limitation • Job Expenses - Line 21, Schedule A • Education Expenses • Tax Preparation Fees • Investment Expenses • Loss on Traditional IRA or Roth IRA • Legal Expenses • Total Itemized Deductions •
Tab 5 Sole Proprietorships
Business Use of Home chart • Schedule C chart • Employer Identification Number (EIN) chart • Day Care Providers chart • Hobby Loss chart • Self-Employment Tax chart • Farming chart • Principal Business or Professional Activity Codes • 2008 Business Entity Comparison Chart • Schedule C - Profit or Loss from Business • Schedule C Filing Requirements • Schedule C-EZ Rules • Schedule C or Partnership • Schedule C Recordkeeping and Substantiation Rules • Planning Tips • Schedule C Line Instructions • Part I of Schedule C - Income • Part II of Schedule C - Expenses • Part III of Schedule C - Cost of Goods Sold • Part IV of Schedule C - Information on Vehicle • Part V of Schedule C - Other Expenses • Business Use of Home • Business Use of Home Tax Advantages • Qualification Rules - Business Use of Home • Exclusive Use Test - Business Use of Home • Storage of Inventory or Product Samples - Business Use of Home • Day Care Facilities - Business Use of Home • Regular Use Test - Business Use of Home • Trade or Business Use Test - Business Use of Home • Principal Place of Business Test - Business Use of Home • More Than One Trade or Business - Business Use of Home • Meeting Patients, Clients, or Customers - Business Use of Home • Separate Structure - Business Use of Home • Employee Business Use of Home • Deductible Business Use of Home Expenses • Calculating Business Use of Home Deduction • Form 8829 Reporting • Sole Proprietorships • Day Care Providers - Deducting Meals • Authors, Artists, and Musicians • Foster Parents • Kids in Business - Lemonade Stands, Paper Routes, and Babysitting • Family Businesses - Employing Family Members • Hobby Loss Rules • Relevant Factors - Hobby or Business? • Reporting Hobby Income and Expenses • Hobby Loss Example • Election to Postpone Determination of Hobby or Business Status • Independent Contractor vs. Employee • Worker Classifications • Factors Used to Determine Independent Contractor vs. Common Law Employee Status • Safe Harbor Rules for Independent Contractors • Section 3509 Relief • Wrong Treatment of Employees as Independent Contractors • Self-Employment Tax • Who Pays Self-Employment Tax • Self-Employment Tax Optional Methods • Schedule F - Profit or Loss From Farming • Schedules and Forms to File for Farming and Rental Activities Associated With Farming • Farming Activities • Farm Inventory and Accounting • Sale of Farm Products • Agricultural Program Payments • Patronage Dividends From Cooperatives • Per-Unit Retain Certificate From Cooperatives • Farm Debt Cancellation • Net Operating Losses on Farms • Income Averaging for Farmers and Fishermen • Prepaid Farm Supplies • Real Estate Taxes on Farm Land • Farm Truck and Car Expenses • Soil and Water Conservation Expenses • Uniform Capitalization Rules for Farmers • Timber • Postponing Gain on Weather Related Sales of Livestock •
Tab 6 Investment Income
Reporting Sales of Business Property - Form 4797 chart • Reporting Common Types of Investment Income chart • 2008 Tax Rates: Capital Gain and Dividend Income chart • Tax Treatment of Settlement Costs on Purchase or Sale of Real Estate chart • Tax Treatment of Stock Options chart • Basis and Holding Period Rules chart • Information Returns for Investment Income • 2008 Form 1099-INT Instructions for Recipient • 2008 Form 1099-DIV Instructions to Recipients • 2008 Form 1099-OID Instructions for Recipient • 2008 Form 1099-B Instructions for Recipient • Interest and Dividends - Schedule B • Taxable Interest • Accrued Interest • Original Issue Discount (OID) • Tax-Exempt Interest • Amortizable Bond Premium • U.S. Savings Bonds • U.S. Treasury Bills, Notes, and Bonds • Taxable Dividends • Qualified Dividends • Nondividend Distributions • Dividends Paid on Insurance • Capital Gains and Losses - Schedule D • Transactions Reported on Schedule D • Holding Periods • Capital Gain Tax Rates • Capital Gains Treatment for Self-Created Musical Works • 28% Rate Gain • Unrecaptured Section 1250 Gain • Capital Gain Distributions • Capital Loss Limitation/Carryover • Wash Sales (IRC §1091) • Demutualization of Life Insurance Companies • Calls and Puts • Mutual Funds • Classifying Investors and Traders • Sales of Business Property - Form 4797 • Reporting on Form 4797 • Section 1245 Property/Section 1250 Property chart • Section 1231 - Special Treatment for Gains and Losses on Sale of Business Assets • Depreciation Recapture - Sale of Business or Investment Property • Depreciation Recapture on Real Property Depreciated Under ACRS • Installment Sales - Form 6252 • Interest Income (from an Installment Sale) • Calculating Installment Sale Income (Gain on Sale) • Unrecaptured Section 1250 Gain • Installment Sale to a Related Party • Selling Price Adjustment in Subsequent Year • Electing Out of an Installment Sale • Installment Obligation as Security - Pledge Rule • Example - Reporting the Sale of Depreciable Property on Form 4797 • Like-Kind Exchanges - Form 8824 • Like-Kind Exchanges • Like-Kind Property • Deferred Exchanges • Related Parties • Qualified Intermediaries • Employee Stock Options • Employee Stock Options • Nonstatutory Stock Options • Statutory Stock Options • Employee Stock Purchase Plan (ESPPs) • Sale of Principal Residence • Determining Basis in a Residence • Adjusted Basis of a Residence • Exclusion of Gain • Sale of Vacant Land Adjacent to Residence • Reduced Maximum Exclusion • Business Use or Rental of Home - Application of Exclusion Rules • Reporting Sale of Residence •
Tab 7 Rental, Passive, and At-Risk
Rental Activity Income chart • Self Employment Tax-Rental Activities • Fast Facts • Partnerships chart • Partnership K-1 Codes • S Corporation K-1 Codes • Schedule E (Form 1040) Supplemental Income and Loss • Schedule E • Depletion - Partners and S Corporation Shareholders • Rental of Personal Property • Rental Real Estate • Rental Income • Rental Expenses • Repairs vs. Improvements chart • Repair Allowance Percentages chart • Personal Use of Rental Property - Roommates and Boarders • Mixed-Use Property - Vacation Homes (IRC §280A) • Personal Use of Rental Property chart • Allocating Expenses: Personal vs. Rental • Interest on Rental - Second Home? • Sale of Rental Property • Condominiums • Cooperatives • Farm Rentals • Passive Activity Losses • Income and Deduction Categories • Activities That Are Not Passive Activities • Passive Activity Loss Limits • Low-Income Housing Credit • Self-Rental Rule • Material Participation • Grouping Activities [Reg. §1.469-4(c)] • Partners, LLC Members, Corporation Shareholders • Rental Activities • Special $25,000 Allowance for Rental Real Estate • Real Estate Professionals • Form 8582, Passive Activity Loss Limitations • Form 8810, Corporate Passive Activity Loss and Credit Limitations • At-Risk Rules • At-Risk Limits • At-Risk Basis • Form 6198, At-Risk Limitations •
Tab 8 Business Deductions
Amortization chart • Substantiation for Travel, Meals, and Entertainment [IRC §274(d)] chart • Meals and Entertainment chart • NOL Carry Back/Carry Forward Rules chart • Reporting Reimbursements chart • Cash or Accrual Method chart • Truckers/Transportation Industry Chart • Per Diem Rates chart • Per Diem Rates/High-Low Method chart • Business Deductions • Ordinary and Necessary Business Expenses • Limits on Business Deductions • Employee Business Expenses • Meals and Entertainment • Travel and Lodging • Accountable/Nonaccountable Plans • Per Diem • Paying Expenses of an Employer • Inventory/Cost of Goods Sold • Inventory • Cost of Goods Sold • Inventory Valuation Methods • Valuing Inventory Using FIFO or LIFO • Uniform Capitalization Rules (UNICAP) • Net Operating Loss (NOL) • What is a Net Operating Loss (NOL)? • How to Calculate an NOL • How to Use an NOL • How to Calculate an NOL Carry Forward • Organization/Start-Up Costs • Business Start-Up Costs • Corporation Organizational Costs • Partnership Organizational Costs • Amortization Election • What if the Business Never Starts? • Domestic Production Activities Deduction (Manufacturer's Deduction) • Deduction Percentage • Who Qualifies for the Deduction? • Terminology and Definitions • Construction Activities • Farm Activities • Partnerships and S Corporations • Estates and Trusts • Coordination With Other Deductions • Form 8903 Example • Accounting Periods and Methods • Accounting Methods • Cash • Accrual • Exceptions to the Accrual Method Rule for Inventory • Hybrid • Long-Term Construction Contracts • Prepaid Expenses • Change in Accounting Method • Accounting Periods • Required Tax Year for Partnerships • Required Tax Year for S Corporations and PSCs • Business Purpose Tax Year • Section 444 Election •
Tab 9 Depreciation
MACRS Recovery Periods for Commonly-Used Assets chart • 3-, 5-, 7-, 10-, 15-, and 20-Year Property Half-Year Convention Depreciation Rates chart • Maximum Section 179 Deduction and Investment Limit chart • MACRS Percentage Charts • MACRS 200% Declining-Balance charts • Short-Year Depreciation - Short Cut Percentage Method chart • Recovery Periods charts • Depreciation Methods chart • Form 4562, Depreciation and Amortization • Form 4562 chart • Basics of Depreciation • What Can Be Depreciated • Excluded Property • Placed in Service Date • Regular MACRS/Alternative Depreciation System • Regular MACRS • Alternative Depreciation System (ADS) • Conventions • Short Tax Year Depreciation • Short Tax Year Conventions • Computing Depreciation in a Short Tax Year • Section 179 Expense • Section 179 Election/Revocation • Section 179 Qualifying Property • Section 179 Nonqualifying Property • Section 179 Limitations • Section 179 Carryovers • Corporations and Partnerships - Section 179 • Section 179 Recapture • Special Depreciation Allowance (GO Zone and Liberty Zone Property) • Gulf Opportunity Zone (GO Zone) Disaster Areas • Gulf Opportunity Zone (GO Zone) Property • New York Liberty Zone Property (IRC §1400L) • Intangible Assets • Section 197 Intangibles • General Asset Accounts • Depreciation Adjustments for Alternative Minimum Tax • AMT Depreciation Adjustments • Correcting Depreciation Errors • Correcting Depreciation on an Amended Return • Form 3115, Application for Change in Accounting Method • Section 481 Adjustment • Miscellaneous Depreciation Issues • Income Forecast Method [IRC §167(g)] • Abandonment • Qualified Leasehold Improvement Property • Qualified Restaurant Property • Idle Property • Cooperative Apartments • Depletion • Depletion Allowance • Depreciation for Like-Kind Exchanges and Involuntary Conversions • Depreciating Replacement Property • Expensing Policy •
Tab 10 Automobiles and Listed Property
Standard Mileage Rate Per Mile chart • Vehicle Depreciation Limitations - Section 280F chart • Business Auto Trade-In Worksheet • Maximizing Section 179 - Autos worksheet • When Are Transportation Expenses Deductible? • Autos • Inclusion amounts for cars (other than trucks or vans) first leased in 2008 chart • Inclusion amounts for trucks and vans first leased in 2008 chart • Business Autos • What Qualifies as Business Use? • Standard Mileage Rate Method • Actual Expense Method • Section 280F Depreciation Limits • MACRS Depreciation on Business Autos • Depreciation After End of Recovery Period • Depreciation Recapture • Leased Autos • Converting Personal Use Auto to Business Use • Business Auto Trade-In Rules • Sale of Business Auto • Other Listed Property •
Tab 11 Tax Credits
Form 2441, Child and Dependent Care Expenses Credit Percentages chart • Earned Income Credit chart • Tax Credit Chart • Child Tax Credit • Summary of the Child Tax Credit • Qualifying Child • Additional Child Tax Credit • Child and Dependent Care Expenses • Exclusion or Credit • Requirements • Earned Income • Qualified Expenses • Earned Income Credit • Basics of the Earned Income Credit (EIC) • Qualifying Taxpayer • Qualifying Child • Uniform Definition Rules • Investment Income Limit • Earned Income • Enforcement • Advance Payment of EIC • Miscellaneous EIC Issues • Retirement Savings Contribution Credit • Credit Amount • Adoption Expenses • Adoption Credit and Exclusion • When to Claim Credit and Exclusion • Children With Special Needs • Credit for Elderly or the Disabled • Foreign Tax Credit • Tax Paid to a Foreign Country • Health Coverage Tax Credit • Eligibility • Who May Claim the Credit • Mortgage Interest Credit • Who May Claim the Credit • General Business Credit • Form 3800, General Business Credit • Form 8826, Disabled Access Credit • Employer Credits • Work Opportunity Credit and Welfare-to-Work Credit Extended and Expanded • Form 8874, New Markets Tax Credit • Form 3468, Investment Credit • Form 8586, Low-Income Housing Credit • Form 6765, Credit for Increasing Research Activities • Form 8847, Credit for Contributions to Selected Community Development Corporations • Form 4136, Credit for Tax Paid on Fuels • Manufacturer Energy Credits • Residential Energy Credits • Nonbusiness Energy Property Credit • Residential Energy Efficient Property Credit • Vehicle Credits • Alternative Motor Vehicle Credit • Alternative Fuel Vehicle Refueling Property • Qualified Electric Vehicle Credit •
Tab 12 Children, College, and Family
Comparison of Education Credits chart • Qualified Education Expenses chart • No Benefit if Modified AGI is Over chart • Hope Credit/Lifetime Learning Credit/Tuition and Fees Deduction chart • Education Credits/Tuition and Fees Deduction • Claiming a Credit or Deduction • Qualified Education Expenses • Payment Rules • Determining Who Paid • Expenses Paid by a Dependent • Expenses Paid by Parents • Hope Credit Requirements • Choosing Not to Claim an Exemption for a Dependent Student • Education Credit Recapture • Qualified Tuition Programs (QTPs)/Education Savings Accounts (ESAs) • QTP and ESA Contributions chart • Contributions and Tax Benefit • Qualified Expenses • Distributions and Form 1099-Q • Deducting Losses • Rollovers and Transfers • Excess Contributions - ESAs Only • Scholarships, Fellowships, and Grants • Tax-Free Scholarships • Coordination with Other Education Benefits • Reporting • Payment for Services • Special Support Test for Students • Qualified Tuition Reductions • Savings Bond Interest Exclusion • Exclusion Rules • Qualified Savings Bonds • Qualified Education Expenses • Dependents • Other Definitions • Penalty-Free IRA Distributions • Penalty Exception • Qualified Education Expenses • Coordination With Other Education Benefits • Other Definitions • Student Loan Interest Deduction • Deduction • Qualified Student Loan • Qualified Education Expenses • Other Definitions • Education Benefits Generally • Definitions • Coordinating Benefits • Modified Adjusted Gross Income (MAGI) • Modified AGI for Computing Education Tax Benefits chart • Children and Taxes • Filing Tax Returns for Children • Custodial Accounts (UTMA and UGMA) • Kiddie Tax - Form 8615 • Parents' Election to Report Interest and Dividends of Child Under 18 - Form 8814 • Divorce • Property Settlements and Transfers • Deducting Costs of Divorce • Definitions • Alimony • Other Alimony Requirements • Child Support • Underpayment of Alimony or Child Support •
Tab 13 Retirement and Employee Benefits
HSA Limitations chart • Archer MSA Limitations chart • Pension Plan Limitations chart • 10% Penalty on Early Distributions from Qualified Retirement Plans and IRAs chart • Pension Plan Characteristics chart • Pension Plan Advantages/Disadvantages chart • Who Qualifies as Employees? chart • Joint Life and Last Survivor Expectancy Table • Single Lifetime Table • Uniform Lifetime Table • Individual Retirement Arrangements (IRAs) • Who Can Set Up a Traditional IRA? • Compensation for IRA Contribution Purposes • IRA Investment • Prohibited Transactions Involving IRAs • Excess IRA Contributions • Excess Contribution Penalty • How to Correct an Excess Contribution • Excess Contribution Withdrawn After Due Date for the Return • Deducting an Excess Contribution in a Later Year • Reduced IRA Deduction • Phase-Out Based on Modified AGI (MAGI) • Modified Adjusted Gross Income (MAGI) • Active Participant in an Employer Sponsored Pension Plan • Nondeductible Contributions to IRAs • Roth IRAs • What is a Roth IRA? • Conversion Rules • 5-Year Rules for Roth IRAs • Recharacterization Rules • Reconversion Rules • Reporting for Roth Contributions, Distributions, Conversions, and Recharacterizations • Roth 401(k) and Roth 403(b) Plans • Simplified Employee Pension (SEP) • SEP-IRAs • Savings Incentive Match Plans for Employees (SIMPLE) • SIMPLE IRAs • SIMPLE IRA Contributions • Distributions From SIMPLE IRAs • Other Retirement Plans • What Makes a Retirement Plan a Qualified Plan? • Defined Contribution Plans • Defined Benefit Plans • Section 401(k) Plans • Tax-Sheltered Annuity Plans, or Section 403(b) Plans • Employee Stock Ownership Plan (ESOP) • Vesting Rules • Deemed IRA • Railroad Retirement • Cost Basis in a Retirement Plan • Nonqualified Plans • Lump-Sum Distributions • Rollovers and Transfers • Tax-Free Rollovers and Transfers • Rollover • Trustee to Trustee Transfer • Transfers Incident to a Divorce • Required Minimum Distributions (RMD) • Required Minimum Distribution Rules • 50% Penalty Tax on Excess Accumulations • Inherited IRAs • Inherited Retirement Plans • Other RMD Rules • Contributions After Age 70˝ • Employee Fringe Benefits • Tax Treatment of Fringe Benefits • Who Are Considered Employees for Tax-Favored Fringe Benefit Purposes? • Nondiscrimination Rules for Fringe Benefits • No-Additional-Cost Services [IRC §132(b)] • Employee Discounts [IRC §132(c)] • Working Condition Fringe Benefits [IRC §132(d)] • De Minimis Fringe Benefits [IRC §132(e)] • On-Premises Athletic Facilities [IRC §132(j)(4)] • Transportation Benefits [IRC §132(f)] • Moving Expense Reimbursements [IRC §132(g)] • Retirement Planning Services [IRC §132(m)] • Dependent Care Assistance Program (IRC §129) • Educational Assistance Program (IRC §127) • Employee Achievement Awards [IRC §74(c)] • Meals and Lodging (IRC §119) • Health Benefits (IRC §105 and §106) • Health Savings Accounts (HSAs) (IRC §223) • Archer MSAs (IRC §220) • Group Term Life Insurance (IRC §79) • Cafeteria Plans (IRC §125) • Employer-Provided Vehicles •
Tab 14 Other 1040 Topics
2008 Household Employment Tax Thresholds chart • Household Employees • Schedule H, Household Employment Taxes • 2008 Filing Requirements • 2008 Withholding Requirements • Alternative Minimum Tax • Form 6251, Alternative Minimum Tax - Individuals, Comparison Chart • Form 6251, Alternative Minimum Tax - Individuals • AMT Exemption - Individuals • AMT Rates • Incentive Stock Options - AMT • Personal Credits and AMT • AMT Credits • Corporations • Partners and S Corporation Shareholders • Community Property • Filing Separately • Spouses Living Apart for the Entire Year • Clergy and Religious Workers • Ministers • Parsonage Allowance • Exemptions From Self-Employment Tax and Social Security Tax • Church Employees Other Than Ministers • Involuntary Conversions • Involuntary Conversion Defined • U.S. Armed Forces Personnel • Armed Forces Income • Moving Expenses • Sale of Residence • Extensions of Deadlines • Armed Forces Taxable and Nontaxable Items chart • Canceled Debts • Cancellation of Debt Income and Exceptions • Bankruptcy and Insolvency Exceptions • Foreclosures and Repossessions • Income From Foreclosure and Repossession • Recourse vs. Nonrecourse Debt • Property Secured by Nonrecourse Debt • Property Secured by Recourse Debt • Short Sales and Deed in Lieu of Foreclosure • Repossessions • Bankruptcy • Repossession of Real Property • Seller's Gain on Repossession • Foreign Income • Taxation of Worldwide Income • Foreign Earned Income Exclusion and Housing Exclusion and Deduction • Tax Home in a Foreign Country • Foreign Country • Bona Fide Resident • Physical Presence Test • Foreign Earned Income Exclusion • Foreign Housing Exclusion and Deduction • Binational Social Security Agreements (Totalization) •
Tab 15 IRS, Penalties, and Audits
IRS Contact Information • Taxpayer Advocate Service • Refund Inquiries • Treasury Inspector General for Tax Administration • Form 9465, Installment Agreement Request • Filing and Extended Due Dates chart • Taxpayer Penalties chart • Individuals Underpayments and Overpayments chart • Income Tax Return Preparer Penalties chart • Preparer Tax Identification Number • Statutes of Limitations chart • Statutes of Limitations • Military Exceptions • Date Considered Filed • Assessment • Collection • Claim for Refund • Penalty for Underpayment of Estimated Tax • Estimated Tax Penalty for 2008 • Waiver of Penalty • How to Reduce Potential Underpayment Penalty • Joint Return to Separate • Form 2210, Underpayment of Estimated Tax by Individuals, Estates, and Trusts • Directing Payments • Amended Returns • Filing Claim for Refund • Form 1040X, Amended U.S. Individual Income Tax Return • Form 1045, Application for Tentative Refund • IRS Audits • Selection of Returns for Examination • Compliance Research Examination • IRS Audits • Bank Deposit Analysis • Audit Strategy • Requesting a Different Agent • Repeat Examinations • Appeals Process • Going to Court • IRS Representation • IRS Collection Process • Options to Pay Tax • Extension of Time for Payment of Tax - Form 1127 • Federal Tax Liens • IRS Levies • Offer in Compromise (OIC) • Summary of an Offer in Compromise (OIC) • Conditions for Compromise • Ability to Process OIC • Additional Filing Requirements • Relief from Joint and Several Liability on Joint Returns • Innocent Spouse • Injured Spouse • Electronic Filing • Electronic Return Originators (EROs) • Applying to Become an e-File Provider • Individual Returns Eligible for e-File • Individual Returns Not Eligible for e-File • Timely Filing • Signing an Electronic Return - Individuals • Electronic Return Originator Responsibilities • e-Services • C and S Corporations - Forms 1120 and 1120S • Rejected Electronic Returns • Signing an Electronic Return - Corporations • Partnerships (LLCs) - Form 1065 • Estates and Trusts - Form 1041 • Penalties • Filing Information Returns Electronically (FIRE) • Employment Tax e-File System • IRS Advice to Taxpayers • Letter Ruling • Closing Agreement • Determination Letter • Information Letter • Rules of Practice - Ethics • Rules for Giving Written Tax Advice • Definitions • Requirements for Covered Opinions • Ethics • Performance as a Notary •
Tab 16 Worksheets and Where to File
Where to File Form 1040, 1040-ES, and 4868 - 2008 Tax Year chart • Earned Income Credit (EIC) Table • Bank Deposit Analysis • Social Security Benefits Worksheet - Lines 20a and 20b, Form 1040 • Itemized Deductions Worksheet - Line 29, Schedule A • Deduction for Exemptions Worksheet - Line 42, Form 1040 • Child Tax Credit Worksheet - Line 52, Form 1040 • Student Loan Interest Deduction Worksheet - Line 33, Form 1040 • 2008 Earned Income Credit (EIC) Worksheet - Lines 66a and 66b • Capital Loss Carryover Worksheet - Lines 6 and 14, Schedule D • 28% Rate Gain Worksheet - Line 18, Schedule D • Qualified Dividends and Capital Gain Tax Worksheet - Line 44, Form 1040 • Unrecaptured Section 1250 Gain Worksheet - Line 19, Schedule D • Schedule D Tax Worksheet - Line 44, Form 1040 • W-2 Codes • 1099-R Codes • 2008 Optional State and Certain Local Sales Tax Tables • Which Optional Local Sales Tax Table Should You Use? • 2008 Optional Local Sales Tax Tables for Certain Local Jurisdictions (Based on a Local Sales Tax Rate of 1%) •
Tab 17 States
Filing Requirements • Tax Rate Schedules • State Web Sites • Contact Information • Return Mailing Addresses • Extension Information • Federal Attachments • State e-File Information •
Tab 18 C Corporations
C Corporation Income Tax Rate Schedule, Form 1120 chart • Filing Deadline - Corporations • Extension of Time to File • Penalties • Filing Requirements • Schedules Attached to Form 1120 • Special Returns for Certain Organizations chart • Short Form - Corporation Return • Form 8886 - Reportable Transaction Disclosure Statement • Corporations • Businesses Taxed as Corporations • Legal Aspects of Corporations • Employee/Shareholders • C Corporation Taxation • Estimated Tax • Depositing Taxes • Quick Refund of Overpayment of Estimated Tax • Amended C Corporation Return • Change of Name or Address • C vs. S Corporation Comparison • Capital Contributions • IRC Section 351 - Nontaxable Transfers • Use Caution When Transferring Personal Assets • Stock • C Corporation Advantages • Fringe Benefits • Rents and Royalty Payments • Employer-Provided Living Expenses (§119) • Loans • Losses on Small Business Stock (§1244) • Gains on Small Business Stock (§1045 and §1202) • Income and Expenses of a Corporation • Capital Losses • Capital Gains • Charitable Contributions • Dividends Received Deduction • Corporate Net Operating Loss (NOL) • Corporate Alternative Minimum Tax (AMT) • Shareholder Wages • Employee-Shareholder • Distributions to Shareholders • Dividends • Constructive Dividends (Taxable Distributions) • Form 1099-DIV • Form 5452, Corporate Report of Nondividend Distributions • Earnings and Profits (E&P) • Earnings and Profits Defined • Check the Box Rules - Entity Classification Election • Basic Classification Rules • Accumulated Earnings Tax • Personal Service Corporations (PSCs) • Personal Service Corporations Defined • Personal Service Corporations chart • Personal Holding Companies (PHCs) • Personal Holding Companies Income Defined • Homeowners' Associations Form 1120, 1120-H, or 990 Series • Homeowners' Associations - IRC §528 • Types of Homeowners' Associations • Choice of Tax Form • Stock Redemptions (IRC §302) • Tax Planning with Stock Redemptions and Liquidations • Corporate Reorganizations • Qualifications for Tax-Free Reorganization • Distributions of Stock Under Reorganization • Corporate Liquidations • Complete Liquidation - C or S Corporations • Liquidation of Subsidiary Corporation • Election to Treat Stock Purchase as Asset Acquisition • C Corporation Example • Scenario • Organizational Costs and Start-Up Costs • Purchase of Assets • Payroll Report for Year chart • 2008 Depreciation Schedule chart • Balance Sheet chart • Income Statement chart • Cash Flow Statement • Other Expenses - Line 26, Form 1120 • Form 1120 • Line-by-Line Explanation of C Corporation Example - Page 1, Form 1120 • Income • Deductions • Schedule L, Balance Sheet per Books • Schedule M-1, Reconciliation of Income (Loss) per Books With Income per Return • Depreciation Worksheet •
Tab 19 S Corporations
Filing Requirements • Schedule K-1 Due Date • Filing Deadline • Amended Form 1120S • Penalties • Income and Taxation Summary - Corporations and Partnerships • S Corporation Advantages/Disadvantages • Relief from Late S Corporation Elections - Revenue Procedures • Number of Form 1120 Series Returns, 1993 - 2003 • Basics of S Corporations • S Corporation Formation • S Corporation Qualifications • Ineligible Corporations • One-Class-of-Stock Rule • Form 2553, Election by a Small Business Corporation • Relief for Late S Elections • Termination of S Corporation Status • Inadvertent Termination • Five-Year Waiting Period for Reinstatement • Treatment of S Corporation Termination Year • Flow-Through to S Corporation Shareholders • Ordinary Business Income • Pro-Rata Allocation/Per-Share/Per-Day • Separately Stated Items • Shareholder Basis • S Corporation Shareholder's Basis • S Corporation Shareholder's Basis Adjustments • Loans • Basis of S Corporation Stock Upon Conversion from C Corporation • Discharge of Indebtedness • Distributions • S Corporations With No Earnings and Profits • S Corporations With Earnings and Profits • Accumulated Adjustments Account (AAA) • Other Adjustments Account (OAA) • Ordering Rules • Election to Distribute Earnings and Profits First • Deemed Dividends • Making the Elections • Previously Taxed Income (PTI) • Post Termination Transition Period (PTTP) • S Corporation Taxes • S Corporation Pass Through • Excess Net Passive Income Tax (§1375) • Built-In Gains Tax (BIG) (§1374) • Investment Credit Recapture Tax • Last-In-First-Out (LIFO) Recapture Tax • Tax Payments • Miscellaneous S Corporation Issues • Employee Business Expense for S Corporation Shareholder • Shareholder's Use of Home • Reasonable Compensation • No Carryovers Between C and S Year • Fringe Benefits for S Corporation Shareholders • S Corporation Conversion to LLC • S Corporation Example • Scenario • Organizational and Start-Up Costs • Purchase of Assets • Other Expenses - Line 20, Form 1065 • Cash Flow Statement • Payroll Report for Year • 2008 Depreciation Schedule • Balance Sheet • Income Statement • Form 1120S • Line-by-Line Instructions - Form 1120S • Trade or Business Income • Deductions • Cost of Goods Sold - Schedule A • Schedule K - Shareholders Shares of Income, Deductions, Credits, etc. • Deductions • Schedule L - Balance Sheet per Books • Schedule M-1 - Reconciliation of Income (Loss) per Books with Income (Loss) per Return • Schedule M-2 •
Tab 20 Partnerships and LLCs
Penalties • Electronic Filing • Limited Liability Companies (LLCs) • Filing Deadlines • Filing Requirements • Treatment of Self-Employment for State Taxation of Retirement Income • Partnership Advantages/Disadvantages • Partnerships • Partnership Defined • Husband-Wife Partnerships • Family Partnerships • Exclusion From Partnership Treatment • General and Limited Partners • Fundamentals of Partnership Taxation • Partnership Tax Year • Partnership Income and Expenses • Elections • Trade or Business Income (Loss) • Distributive Share • Guaranteed Payments • Separately Stated Items • Limit on Losses • Fiscal Year Issues • Change in Partnership Interest • Unreimbursed Partnership Expenses • Basis • Partner's Basis (Outside Basis) • Effect of Partnership Liabilities • Services in Exchange for Partnership Interest • Alternative Rule for Computing Partner's Basis • Partnership's Basis (Inside Basis) • Partnership Capital Account • Built-in Gain or Loss [§704(c)] • Code Section 754 Election to Adjust Basis of Partnership Property • Section 754 Election - Example • Partnership Distributions • Tax Effects of Distributions • Current Distributions • Liquidating Distributions • Sale of Partnership Interest • Disguised Sale Rules [Reg. §1.707-3(b)] • Certain Distributions Treated as Sales or Exchanges • Payments for Unrealized Receivables and Inventory Items • Liquidation at Partner's Retirement or Death • Distribution of Inventory • Form 8308, Report of a Sale or Exchange of Certain Partnership Interests • Terminating a Partnership • Limited Liability Companies (LLCs) • Conversion of Single-Member LLC to Multiple-Member LLC (Rev. Rul. 99-5) • Conversion of Multiple-Member LLC to Single-Member LLC (Rev. Rul. 99-6) • Limited Liability Partnerships (LLPs) • Publicly Traded Partnership (PTPs) • Partnership Example • Scenario • Organizational Costs and Start-Up Costs • Purchase of Assets • 2008 Depreciation Schedule • Balance Sheet • Income Statement • Payroll Report for Year • Other Expenses • Cash Flow Statement • Form 1065 • Line-by-Line Explanations - Form 1065 • Income • Deductions • Schedules K and K-1 - Form 1065 • Analysis of Net Income (Loss) • Schedule L - Balance Sheets per Books • Schedule M-1 • Schedule M-2 - Analysis of Partners' Capital Accounts •
Tab 21 Estates, Trusts, and Fiduciaries
Annual Exclusion for Gifts chart • Form 1041 Projected Federal Tax Rate Schedules • Form 1041 chart • Form 706, Estate Tax Return chart • 2007 - 2009 Estate and Gift Tax Rate Schedule • Estate Tax Exclusion chart • Gift Tax Exclusion • Form 709, Gift Tax Return • Form 709 chart • State Estate and Inheritance Tax • States with Estate or Inheritance Tax • Form 1041, Schedule K-1 Code Sheet • Death of Taxpayer • Property Passing at Death • Probate • Wills and Intestacy • Personal Representatives • Revocable Trusts at Death • Income in the Year of Death • Income in Respect of Decedent (IRD) • Wages • U.S. Savings Bonds at Death • Decedent's Final Form 1040 • Who Files and Signs • Filing • Income • Deductions • Credits • Form 1041 Income Tax Return for Estates and Trusts • Accounting Income • Simple and Complex Trusts • Other Entities • Estate Year • Income • Capital Gains and Losses • Tax-Exempt Income • Deductions • AGI and AMID Calculation • Termination Year • Charitable Deductions • Income Distribution Deduction - Schedule B • Distributable Net Income (DNI) • Distributions • Schedule K-1 • Grantor Trusts • Grantor Trust Filing Methods • Grantor Trust Form 1041 • Estate and Gift Tax • Summary • Estate Tax Repeal • Generation-Skipping Transfer Tax (GST) • Marital Deduction • Marital Estate Tax Planning • Charitable Deduction • Valuation • Gifts • Gifts Subject to Gift Tax • Loans • Joint Tenancies • Not Gifts • Gift Tax Exclusion • Annual Exclusion • Gifts - Think Twice Before Giving • Gifts of Joint Tenancies • Gift Splitting • Form 706 Estate Tax Return • Gross Estate • Deductions • Deduction for Estate Tax Paid on IRD • Basis • Basis of Inherited Property (IRC §1014) • Basis of Gifts (IRC §1015) • Types of Trusts and Terms • Types of Trusts •
Tab 22 Partnerships and LLCs
Victims of Credit Card Fraud or Identity Theft • Social Security and Medicare Highlights chart • Social Security • Social Security Basics • How Benefits Are Calculated • Full Retirement Age • Early Retirement Reduced Benefits • How Work Affects Retirement Benefits • Work Incentives for Disabled Workers • Medicare • Part A Premiums • Part B Premiums • Medicare Part C Coverage • Medicare Prescription Drug Plan (MPDP) - Part D • Coverage Gap ("Donut Hole") • Medigap (Medicare Supplemental Insurance) • Medicare Medical Savings Account (MSA) • Low Income Help for MPDP • Medicare Card • Medicare Appeals and Grievances • Tax-Exempt Organizations • Tax-Exempt Qualifications • Which Form to Complete • Filing Requirements • New Form 990-N • Filing Deadline and Extensions • Penalties • Common Types of Non-Profits • Nonprofit Components • Advantages • Nonprofit Responsibilities • Applying for Exempt Status • New User Fees • New Form 990 for 2008 • Unrelated Business Income Tax (UBIT) • Private Foundations • Financial Planning • Buy-Sell Agreements • Beat Inflation • Financial Planning Tips • Start Early • 10% Interest Rate chart •
Tab 23 Payroll and Labor Laws
Form 941 - Payroll Deposit Schedule chart • Payroll Deposit Penalties chart • 2008 Employer's Payroll Tax Calendar chart • 2008 Federal Withholding - Percentage Method chart • Payroll Tax Deposit Rules • Deposit Requirements • Deposit Penalties • Form W-4 • Form 941 • FICA Tax • Employer's Quarterly Return (Form 941) • Forms W-2 and W-3 • Form 940 • FUTA Tax • Form 940-EZ • Special Rules for Various Types of Employment • Trust Fund Recovery Penalty • Non-Employee Payments for Work Performed by Outside Workers • Form 1099-MISC • Other Payroll Issues • Payroll Record Keeping • Advanced Earned Income Credit • Fringe Benefits • Gross-Up Computation • Supplemental Wages • Labor Laws • Fair Labor Standards Act (FLSA) • Family and Medical Leave Act • Equal Employment Opportunity (EEO) • Occupational Safety and Health Act of 1970 (OSHA) • New Hire Reporting Requirements •
Tab 24 Business Tools and Worksheets
Business Agreements chart • Section 351 Statements • Principal Business Activity Codes for Corporations and Partnerships • S Corporation Shareholder's Adjusted Basis Worksheet • Partner's Adjusted Basis Worksheet (Outside Basis) • 2008 W-4 and Estimated Tax Worksheet • NOL Business/Nonbusiness Allocation Worksheet • Depreciation Worksheet • Organizational and Start-Up Costs Amortization Election Statement • Simplified Production Method under Section 263A • Worksheet to Reconcile Amounts Reported in Name of Decedent on Information Returns (Forms W - 2, 1099 - INT, 1099 - DIV, etc.) •
Tab 25 Other Business Topics
Where to File Business Returns • Sale of a Business • Asset Acquisition Statement • Classes of Assets • Sale of Business Planning Issues • Self Employment Tax - Sale of Business • S Corporation - Sale of Business • Book to Tax Adjustments • Income per Books vs. Taxable Income • Contributed Property Depreciation • Book to Tax Adjustments - Schedule M-1 chart • Are You Smarter Than a 5th Grader? • IRS Publications Index •
