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Section 1
Classify taxable and nontaxable income
Preview
Preview: 2. Income and Assets (17 of 85 scored questions)
Preview includes- 4 of 12 lesson topics
- 1 overview segment
- 3 core concepts
- 2 exam tips
Lesson Topics
- Gross Income and the Section 61 Default Rule
- Wages, Tips, Bonuses, Severance, and Fringe Benefits
- Interest, Dividends, State Refunds, and Recoveries
- Scholarships and Fellowships
Overview
Start with the broad rule: accessions to wealth are generally included in gross income unless the Internal Revenue Code provides an exclusion.
Core Concepts
- Wages, salaries, bonuses, commissions, tips, severance, back pay, and most taxable fringe benefits are compensation unless a specific exclusion applies.
- Employer-provided health coverage and other qualifying fringe benefits may be excluded when statutory requirements are met.
- Tax-exempt municipal-bond interest is generally excluded from federal gross income but still appears as tax-exempt interest on Form 1040 and may affect other calculations.
Exam Tips
- Ask: What was received? When was it received? What is its FMV? Is there a specific exclusion?
- Never assume a Form 1099 is automatically correct or complete; use the governing tax rule.
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Section 2
Classify and substantiate itemized deductions
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Section 3
Identify alternative, employment-related, investment, and Medicare taxes
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Section 4
Review prior returns and collect complete taxpayer data
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Section 5
Advise on reporting, property, education, retirement, and estate planning
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Section 6
Distinguish final individual, estate-income, and estate-tax returns
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Section 7
Analyze retirement income and IRA distributions
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Section 8
Apply medical and charitable deduction principles
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Section 9
Evaluate underpayment penalties, interest, and tax payments
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Section 10
Determine filing status, dependency, and filing requirements
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Section 11
Plan estimates, carryovers, filing status, and refund claims
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Section 12
Apply gift-tax return concepts
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Section 13
Determine basis, gain, loss, and character for property and investments
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Section 14
Coordinate education, family, EITC, foreign, and other credits
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Section 15
Inventory income, adjustments, deductions, credits, payments, and special filings
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Section 16
Handle pass-through, passive, foreign, and adjustment items
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Section 17
Distinguish Form 8938 and FBAR reporting
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