Becker REG 1: Individual Taxation Flashcards

Comprehensive vocabulary flashcards covering individual taxation, filing statuses, gross income inclusions and exclusions, business deductions, itemized deductions, adjustments, QBI, tax credits, and specialized taxes from REG 1 Unit Outline.

Qualifying Surviving Spouse

A filing status available to a surviving spouse with a dependent child that requires the child to live with the taxpayer for the entire taxable year.

Head-of-Household

A filing status requiring the taxpayer to maintain as their home a household that serves as the principal residence of a qualifying person for more than half the taxable year.

CARES Mnemonic

A mnemonic summarizing the dependency tests for a qualifying child: Close relative, Age limit, Residency and filing requirements, Eliminate gross income test, and Support test.

SUPORT Mnemonic

A mnemonic summarizing the dependency tests for a qualifying relative: Support test, Under a specific amount of (taxable) gross income test, Precludes dependent filing a joint tax return test, Only citizens, Relative test, or Taxpayer lives with individual for the whole year test.

Multiple Support Agreement

An arrangement where two or more taxpayers together provide more than $50\%$ of a person's support (none individually contributing over $50\%$), allowing any contributor providing more than $10\%$ of support to be designated to claim the dependent.

Realized Amount

The total consideration received upon the sale or disposition of property, consisting of cash, the fair market value of property and services received, and debt assumed by the buyer.

HIM DEAD TED Mnemonic

A mnemonic for exceptions to the $10\%$ penalty tax on early IRA distributions: Homebuyer, Insurance, Medical expenses, Disability, Education, Adoption or birth, Disaster, Terminal illness or death, Emergency, and Domestic abuse victims.

Life Annuity Taxability Rule

The rule providing that annuity payments are partially taxable and partially nontaxable until an annuitant outlives their life expectancy, after which $100\%$ of all subsequent payments become taxable.

Pre-2019 Alimony

Payments pursuant to a divorce or legal separation agreement executed on or before December $31$, $2018$, which are deductible by the payer spouse as an adjustment to gross income and taxable to the recipient spouse.

Business Interest Expense Limitation

A deduction limitation on Schedule C business loan interest capped at business interest income plus $30\%$ of adjusted taxable income (ATI) plus floor plan financing interest, applicable if prior three-year average gross receipts exceed $\$32\text{ million}$ ($2026$).

Three-of-Five-Year Presumption

A hobby loss provision where an activity is presumed to be a profit-seeking business if profitable in three of the past five years, shifting the burden of proof to the IRS.

Excess Business Loss Limitation

A loss cap limiting combined business loss deductions to $\$512,000$ for married filing jointly and $\$256,000$ for all other taxpayers ($2026$), with disallowed amounts carried forward as a net operating loss (NOL).

Tax Basis Limitation

A flow-through loss limitation where business losses exceeding an owner's tax basis are suspended until basis is restored; any remaining suspended losses are lost upon disposal of the interest.

Educator Expenses Adjustment

An above-the-line deduction for K–$12$th grade educators allowing up to $\$350$ ($2026$) of qualified out-of-pocket expenses to arrive at AGI.

Health Savings Account (HSA)

A tax-advantaged account used in tandem with a high-deductible health plan allowing pretax contributions up to $\$4,400$ for individuals or $\$8,750$ for families ($2026$), where nonqualified distributions face ordinary tax plus a $20\%$ penalty.

FIB Mnemonic

A mnemonic identifying taxes that are nondeductible as itemized deductions: Federal taxes, Inheritance taxes, and Business and rental property taxes.

HIPPE Mnemonic

A mnemonic summarizing the tax treatment of interest expense categories: Home Mortgage, Investment Interest Expense, Personal Interest, Prepaid Interest, and Educational Loan Interest.

Section 199A QBI Deduction

A deduction of up to $20\%$ of qualified business income (QBI) available to eligible sole proprietorships and flow-through entity owners, subject to taxable income and business type limitations.

American Opportunity Tax Credit (AOTC)

An education credit providing a maximum of $\$2,500$ per eligible student ($100\%$ of the first $\$2,000$ and $25\%$ of the next $\$2,000$ of tuition, fees, and course materials) for up to four years of undergraduate college, with up to $40\%$ ($\$1,000$) being refundable.

Lifetime Learning Credit

A nonrefundable education credit offering up to $\$2,000$ per taxpayer, calculated as $20\%$ of the first $\$10,000$ of tuition and fees (excluding course materials).

Child Tax Credit (CTC)

A tax credit of $\$2,200$ ($2026$) per qualifying child under age $17$ at the end of the tax year, which is partially refundable and phases out for high-income earners.

General Business Credit (GBC) Limitation

A statutory restriction allowing the GBC to offset up to $100\%$ of the first $\$25,000$ of regular income tax liability, but only up to $75\%$ of any tax liability remaining above $\$25,000$.

Self-Employment (SE) Tax

A tax consisting of Social Security and Medicare totaling $15.3\%$ applied to net Schedule C income multiplied by $92.35\%$, with one-half allowed as an adjustment to arrive at AGI.

Additional Medicare Tax

A $0.9\%$ surtax on wages and compensation exceeding statutory thresholds: $\$250,000$ for married filing jointly, $\$125,000$ for married filing separately, and $\$200,000$ for all other taxpayers.

Net Investment Income (NII) Tax

A $3.8\%$ surtax imposed on the lesser of net investment income or modified adjusted gross income in excess of statutory threshold amounts ($\$250,000$ for married filing jointly, $\$200,000$ for single or head of household).

Kiddie Tax

Tax rules applied to the unearned income of a dependent child where the first $\$1,350$ is tax-free, the next $\$1,350$ is taxed at the child's rate, and any unearned income in excess of $\$2,700$ ($2026$) is taxed at the parent's marginal rate.