TERM LOANS STUFF

DEMAND LOAN

PAYABLE IN FULL ON DEMAND OR HAVE INDEFINITE MATURITY DATES. TERM LOAN IS ANY LOAN OTHER THAN A DEMAND LOAN.

WHEN DOES IMPUTED INTEREST APPLY TO BML

GIFT LOAN, LOAN BETWEEN SHAREHOLDER AND CORP, COMPENSATION RELATED LOAN BETWEEN AN EMPLOYER AND EMPLOYEE, LOAN THAT HAS TAX AVOIDANCE AS ONE OF ITS PRINCIPAL PURPOSES

IMPUTED INTEREST EXCEPTS, BML (GIFT LOAN AND CORP-SHAREHOLDERS)

GIFT LOAN - 10K OR LESS, UNLESS THE LOAN WAS MADE TO ACQUIRE INCOME PRODUCING ASSETS

GIFT LOAN - IF LESS THAN 100K, THE IMPUTED INTEREST IS LIMITED TO THE BORROWERS NET INVESTMENT INCOME. INCOME IS TREATED AS $0 UNLESS IT IS OVER 1K.

CORP AND SHAREHOLDER - 10K OR LESS, UNLESS PRINCIPAL PURPOSE WAS TAX AVOIDANCE

OID

EXCESS AMOUNT OF STATED REDEMPTION PRICE AT MATURITY OVER THE ISSUE PRICE AND IS INCLUDED IN INCOME BASED ON THE EFFECTIVE INTEREST RATE METHOD OF AMORTIZATION.

TERM LOAN

TERM = TIME

HAS A SET TIME TO PAY IT OFF

GIFT TERM LOAN

LOAN MADE BECAUSE OF A GIFT RELATIONSHIP. BETWEEN FAMILY OR FRIENDS.

NONGIFT TERM LOAN

REAL LOAN MADE FOR BIZ/INVESTMENT REASONS, NOT BECAUSE YOURE GIVING THE BORROWER A BENEFIT. TREATED AS OID

OID FILING REQ

OID OF AT LEAST $10 FOR THE CALENDAR YEAR AND THE TERM OF OBLIGATION IS MORE THAN 365 DAYS, INTEREST MUST BE REPORTED

REDEMPTION OF US SAVINGS BONDS TO PAY EDUCATIONAL EXPENSES REQ

1. TP, SPOUSE OR DEPENDENT INCURS FEES TO ATTEND AN ELIGIBLE EDUCATIONAL INSTITUTION.

2. TP MODIFIED AGI PHASEOUT: MFJ- 149,250-179,250. SINGLE, HOH - 99,500-114,500

3. PURCHASER OF BONDS MUST BE SOLE OWNER OF THE BONDS OR JOINT OWNER WITH SPOUSE

4. MUST BE 24 WHEN YOU BUY THE BONDS

5. IF MARRIED, MUST FILE MFJ

INTEREST ON MUNICIPAL BONDS. IS IT EXEMPT? WHAT IF ITS NOT IN THE FORM OF A BOND? WHAT OBLIGATIONS DOES THIS APPLY TO?

EXEMPT FROM FEDERAL INCOME TAX.

CAN EXEMPT EVEN IF INTEREST IS NOT A FORM OF A BOND.

ONLY APPLIES TO OBLIGATIONS FROM US, US POSSESSIONS, DISTRICT OF COLUMBIA, AND POLITICAL SUBDIVISIONS OF EACH OF THEM

INTEREST ON PAB (PRIVATE ACTIVITY BONDS) AND ARBITRAGE BONDS

NOT EXCLUDED FROM GROSS INCOME. TAXABLE.

HOW TO DETERMINE IF A BOND IS A PRIVATE ACTIVITY BOND

TOO MUCH OF THE MONEY BENEFITS A PRIVATE BIZ OR PRIVATE BORROWERS.

TO DETERMINE:

10/10/5

>10% OF PROCEEDS IS USED BY A PRIV BIZ

>10% OF PRINCIPAL/INTEREST IS SECURED OR PAID BY A PRIV BIZ PROP

WHICHEVER IS LESS: BOND PROCEEDS OR 5 MILLION. TAKE 5% OF THE AMOUNT AND WHATEVER THE AMOUNT IS THAT IS THE LIMIT USED FOR PRIVATE LOANS.

QUALIFIED PABS

CAN BE EXCLUDED FROM GROSS INCOME IF

FIDUCIARY INCOME TAX RETURN

FORM 1041. REPORTS INCOME FROM A TRUST OR ESTATE, INCLUDING ONGOING INCOME FROM AN ESTATE AFTER THE DECEDENT DIES

ESTATE TAX RETURN

FORM 706. INFORMATIONAL RETURN ON THE FINANCES OF EVERYTHING A PERSON OWNED WHEN THEY DIED. DOES NOT INCLUDE ONGOING INCOME UNLESS RIGHT TO RECEIVE

DECEDENTS ESTATE

ALL REAL PROPERTY, PERSONAL PROPERTY AND OTHER ASSETS OWNED BY A PERSON AT THE TIME OF THEIR DEATH

INCOME IN RESPECT OF DECEDENT

INCOME THAT A DECEDENT HAD A RIGHT TO RECEIVE PRIOR TO DEATH BUT WAS NOT INCLUDED ON THEIR FINAL 1040 IS INCOME IN RESPECT OF A DECEDENT

UNDISTRIBUTED CAPITAL GAINS FROM A MUTUAL FUND OWNED BY A SHAREHOLDER MUST BE INCLUDED IN THE INCOME REPORTED BUT

THEY ARE ALLOWED A CREDIT FOR THEIR PROPORTIONATE SHARE OF ANY TAX ON THE CAPITAL GAIN PAID BY THE MUTUAL FUND

MUTUAL FUND

REGULATED INVESTMENT COMPANY. DIVIDENDS RECEIVED ARE CAPITAL GAIN DIVIDENDS.

RETURN OF CAPITAL

TAX FREE DISTRIBUTION THAT IS NOT MADE FROM THE CORPORATIONS EARNINGS AND PROFITS. IT REDUCES THE STOCKHOLDERS BASIS BY THE AMOUNT OF DISTRIBUTION. IT IS NOT TAXED UNTIL STOCKHOLDERS BASIS IS REDUCED TO $0. ONCE BASIS REACHES $0 ADDITIONAL DISTRIBUTIONS ARE TAXED.

DIVIDEND REINVESTMENT PLAN

PLAN THAT USES DIVIDENDS TO PURCHASE ADDITIONAL SHARES OF THE STOCK INSTEAD OF PAYING THE DIVIDENDS IN CASH. THE REINVESTED DIVIDENDS ARE STILL TAXABLE AND THE AMOUNT IS ADDED TO BASIS OF NEW SHARES.

ORDINARY INCOME EXAMPLES. BIRDSW

1. BUSINESS INCOME.

2. INTEREST INCOME

3. RENTAL INCOME

4. DIVIDEND INCOME

5. SALARY INCOME

6. WAGE INCOME

SHORT TERM CAPITAL GAIN

INVESTMENT HELD FOR 1 YEAR OR LESS. ONLY RECEIVE CAPITAL GAIN INCOME WHEN YOU SELL A STOCK.

LONG TERM CAPITAL GAIN

INVESTMENT OWNED FOR MORE THAN 1 YEAR. ONLY RECEIVE CAPITAL GAIN INCOME WHEN YOU SELL A STOCK.

CAPITAL GAIN DIVIDENDS

RECEIVED FROM MUTUAL FUNDS. THEY ARE LONG TERM CAPITAL GAINS NO MATTER HOW LONG SHAREHOLDER HAS OWNED THE STOCK OF THE RIC. ONLY RECEIVE CAPITAL GAIN INCOME WHEN YOU SELL A STOCK.

QUALIFIED DIVIDENDS

DIVIDENDS FROM DOMESTIC CORPORATIONS OR A QUALIFIED FOREIGN CORPORATION. MUST HOLD COMMON STOCK FOR MORE THAN 60 DAYS OR 90 DAYS FOR PREFERRED STOCK. DIVIDENDS PAID OR CREDITED BY A CREDIT UNION OR SAVINGS AND LOAN ARE NOT QUALIFIED DIVIDENDS

TAX RATE FOR QUALIFIED DIVIDENDS

0%, 15%, 20%

RETURN OF CAPITAL

DIVIDEND THAT EXCEEDS THE CORPORATIONS PROFIT AND EARNINGS FROM THE STOCK. EXCESS AMOUNT IS USED TO REDUCE YOUR BASIS IN THE SAME STOCK. ONCE STOCK IS $0 IN BASIS ANY ADDITIONAL DISTRIBUTIONS / DIVIDENDS ARE TAXED AS CAPITAL GAINS INSTEAD OF DIVIDENDS

FOR STOCKS WHEN DO YOU RECEIVE DIVIDENDS?

WHEN YOU OWN THE STOCK. YOU DO NOT RECEIVE DIVIDENDS WHEN THE STOCK IS SOLD.

FOR STOCKS, WHEN DO YOU RECEIVE CAPITAL GAIN OR LOSS INCOME?

WHEN YOU SELL THE STOCK

TAX RATE FOR LONG TERM CAPITAL GAIN

0%, 15%, 20%, 25%, 28%

MUTUAL FUND OR REIT CAN KEEP THE CAPITAL GAIN INSTEAD OF GIVING THE MONEY TO SHAREHOLDER TO PAY TAX

YOU ARE STILL TAXED ON CAPITAL GAIN

BASIS OF STOCK PURCHASED AT DISCOUNT PRICE (DIVIDEND REINVESTMENT PLAN)

BASIS OF STOCK WILL BE FMV OF THE STOCK

If the dividend reinvestment plan lets you buy additional stock at fair market value:

THE FMV OF DIVIDEND IS TAXABLE DIVIDEND INCOME

(DIVIDEND REINVESTMENT PLAN) IF YOU BUY ADDITIONAL STOCK AT A DISCOUNT PRICE

THE FMV OF THE STOCK ON THE DIVIDEND PAYMENT DATE IS DIVIDEND INCOME

WHEN IS IMPUTED INTEREST APPLIED TO DEMAND LOANS

IT IS BASED ON THE APPLICABLE FEDERAL RATE ANNUALLY. SO IT CHANGES EVERY YEAR.

WHEN IS IMPUTED INTEREST APPLIED TO GIFT TERM LOANS

IT IS BASED ON THE APPLICABLE FEDERAL RATE ANNUALLY. SO IT CHANGES EVERY YEAR.

WHEN IS IMPUTED INTEREST APPLIED TO NON GIFT TERM LOANS

IT IS BASED ON THE APPLICABLE FEDERAL RATE THAT DAY YOU SIGN THE LOAN AND IS SPREAD OUT THROUGHOUT THE DURATION OF THE LOAN.