LH SU2 GROSS INCOME 1

FACTOR DETERMINING SOURCE IF ITS DOMESTIC VS FOREIGN INCOME FOR SALARIES, WAGES AND OTHER COMPENSATION

WHERE SERVICES PERFORMED

FACTOR DETERMINING SOURCE IF ITS DOMESTIC VS FOREIGN INCOME FOR BUSINESS INCOME:

1) PERSONAL SERVICES

2) SALE OF INVENTORY - PURCHASED

3) SALE OF INVENTORY - PRODUCED

1) WHERE SERVICES PERFORMED

2) WHERE SOLD

3) ALLOCATION

FACTOR DETERMINING SOURCE IF ITS DOMESTIC VS FOREIGN INCOME FOR INTEREST

RESIDENCE OF PAYOR

FACTOR DETERMINING SOURCE IF ITS DOMESTIC VS FOREIGN INCOME FOR DIVIDENDS

WHETHER A US OR FOREIGN CORPORATION

FACTOR DETERMINING SOURCE IF ITS DOMESTIC VS FOREIGN INCOME FOR RENTS

LOCATION OF PROPERTY

FACTOR DETERMINING SOURCE IF ITS DOMESTIC VS FOREIGN INCOME FOR ROYALTIES

1) NATURAL RESOURCES

2) PATENTS, COPYRIGHTS ECT

1) LOCATION OF PROPERTY

2) WHERE PROPERTY IS USED

FACTOR DETERMINING SOURCE IF ITS DOMESTIC VS FOREIGN INCOME FOR SALE OF REAL PROPERTY

LOCATION OF PROPERTY

FACTOR DETERMINING SOURCE IF ITS DOMESTIC VS FOREIGN INCOME FOR SALE OF PERSONAL PROPERTY

SELLER’S TAX HOME

FACTOR DETERMINING SOURCE IF ITS DOMESTIC VS FOREIGN INCOME FOR PENSION DISTRIBUTIONS ATTRIBUTABLE TO CONTRIBUTIONS

WHEN SERVICES WERE PERFORMED THAT EARNED THE PENSION

FACTOR DETERMINING SOURCE IF ITS DOMESTIC VS FOREIGN INCOME FOR INVESTMENT EARNINGS ON PENSION CONTRIBUTIONS

LOCATION OF PENSION TRUST

FACTOR DETERMINING SOURCE IF ITS DOMESTIC VS FOREIGN INCOME FOR SALE OF NATURAL RESOURCES

ALLOCATION BASED ON FMV OF PRODUCT AT EXPORT TERMINAL

WHEN DOES CASH METHOD OF ACCOUNTING TAX PAYER INCLUDE INCOME IN RETURN

WHEN INCOME IS CONTRUCTIVELY RECEIVED

WHEN DOES ACCRUAL METHOD OF ACCOUNTING TAX PAYER INCLUDE INCOME IN RETURN

1) ALL EVENTS HAVE OCCURED FIXING THE RIGHT TO RECEIVE THE INCOME

2) THE AMOUNTS CAN BE DETERMINED WITH REASONABLE ACCURACY

WHEN IS THE ACCRUAL METHOD OF ACCOUNTING REQUIRED

WHEN THERE ARE INVENTORIES

HYBRID METHOD

ALLOWS A BUSINESS TO USE THE CASH METHOD FOR THE PORTION OF THE BUSINESS THAT IS NOT REQUIRED TO BE ON THE ACCRUAL METHOD

CAN THERE BE ADJUSTMENTS MADE TO ACCRUAL METHOD?

YES, THEY ARE MADE IN A LATER YEAR FOR ANY DIFFERENCES BETWEEN THE ACTUAL AMOUNT AND THE PREVIOUSLY REPORTED AMOUNT

CONSTRUCTIVE RECEIPT

income is credited to your account or set aside for you without any restrictions, you are taxed on it in that specific tax year. You cannot delay paying taxes simply by waiting to cash a check or choosing not to access the funds.

WHAT METHOD OF ACCOUNTING DOES CONSTRUCTIVE RECEIPT APPLY TO

CASH METHOD OF ACCOUNTING. UNDER THE ACCRUAL METHOD, INCOME IS REPORTED IN THE YEAR EARNED

CLAIM OF RIGHT DOCTRINE

A principle stating that income must be reported in the year it is received if the taxpayer has an unrestricted right to it, regardless of whether it must be repaid later. IF PAYMENT IS NOT RECEIVED, THEN THE PAYMENT IS NOT INCLUDED IN INCOMEand the taxpayer is not taxed on it until it is received.

ASSIGNMENT OF INCOME

DOCTRINE THAT IMPOSES TAX ON INCOME ON THOSE WHO EARN IT, PRODUCE THE RIGHT TO RECEIVE IT, ENJOY THE BENEFIT OF IT WHEN PAID, OR CONTROL PROPERTY THAT IS ITS SOURCE

HOW TO EFFECTIVELY ASSIGN INCOME

REQUIRED THAT THE TRANSFER OF PROPERTY BE COMPLETE AND BONA FIDE, WITH ORIGINAL TP HAVING NO CONTROL RETAINED OVER EITHER THE PROPERTY OR INCOME IT PRODUCES AND THAT THE TRANSFER TAKE PLACE BEFORE THE INCOME IS ACTUALLY EARNED. This ensures that the taxpayer relinquishes all rights to the income generated from the property and is not subject to tax on it.

COMPENSATION FOR SERVICES: IF SERVICES ARE PAID FOR IN PROPERTY

FMV AT THE TIME OF RECEIPT IS GROSS INCOME. THE AMOUNT INCLUDED IN INCOME BECOMES THE BASIS IN THE PROPERTY

COMPENSATION FOR SERVICES: OF SERVICE PERFORMED FOR A PRICE AGREED ON BEFOREHAND, THE PRICE WILL BE

ACCEPTED AS THE FMV OF PROPERTY ONLY IF THERE IS NO EVIDENCE TO THE CONTRARY

COMPENSATION FOR SERVICES: GROSS INCOME OF AN EMPLOYEE INCLUDES:

ANY AMOUNT PAID BY AN EMPLOYER FOR A LIABILITY (INCLUDING TAXES) OR EXPENSE OF THE EMPLOYEE

COMPENSATION FOR SERVICES: INCOME FROM SELF EMPLOYMENT IS INCLUDED IN GROSS INCOME. THE DIRECTOR OF A CORPORATION IS

CONSIDERED SELF EMPLOYED AND ALL FEES ARE INCLUDED IN GROSS INCOME

COMPENSATION FOR SERVICES: FOOD SERVICE EMPLOYERS REQUIRED TO

ALLOCATE TIP INCOME. (FOOD / DRINK SALES x 8%) MINUS ALL EMPLOYEE’S REPORTED TIPS = AMOUNT TO BE ALLOCATED

FOR FEDERAL TAX PURPOSES WHAT IS VIRTUAL CURRENCY TREATED AS

PROPERTY

VIRTUAL CURRENCY : WHAT IF AN EMPLOYEE IS PAID USING VIRTUAL CURRENCY

WAGES PAID TO EMPLOYEES USING VIRTUAL CURRENCY ARE TAXABLE TO THE EMPLOYEE AND MUST BE REPORTED BY AN EMPLOYER ON W2.

VIRTUAL CURRENCY : THE CHARACTER OF GAIN OR LOSS FROM THE SALE OR EXCHANGE OF VIRTUAL CURRENCY

DEPENDS ON WHETHER THE VIRTUAL CURRENCY IS A CAPITAL ASSET IN THE HANDS OF THE TAXPAYER

VIRTUAL CURRENCY : HOW TO USE IT IN GROSS INCOME

INCLUDE THE FMV OF THE CURRENCY IN US DOLLARS AS OF THE DATE THE CURRENCY WAS RECEIVED

PREPAID INCOME

TAXABLE IN THE YEAR RECEIVED WHETHER THE TAXPAYER IS ON THE CASH OR ACCRUAL METHOD OF ACCOUNTING.

PREPAID INCOME: PREPAYMENTS FOR MERCHANDISE INVENTORY

NOT INCOME UNTIL MERCHANDISE IS SHIPPED

BARTERING

INCLUDED IN GROSS INCOME AT FMV OF ITEMS RECEIVED

ROYALTIES

PAYMENTS TO AN OWNER FROM PEOPLE WHO USE A RIGHT BELONGING TO THAT OWNER

WHAT KIND OF INCOME IS ROYALTIES

ORDINARY GROSS INCOME AND NOT A RETURN OF CAPITAL

PERSONAL RENTAL INCOME - CASH OR FMV OF PROP OR SERVICES RECEIVED FOR

THE USE OF PERSONAL PROPERTY IS TAXABLE AS RENTAL INCOME

SCHEDULE C FOR RENTAL OF REAL ESTATE

IS REQUIRED IF TAXPAYER IS IN THE BUSINESS OF RENTING PERSONAL PROPERTY. IF THE PRIMARY PURPOSE FOR RENTING THE PROPERTY IS INCOME OR PROFIT AND THE TAXPAYER IS INVOLVED IN THE RENTAL ACTIVITY WITH CONTINUITY AND REGULARITY.

SCHEDULE E

INCOME THAT COMES FROM RENTAL PROPERTY, PARTNERSHIPS, S CORPS, ESTATES, TRUSTS AND ROYALTIES. EARNINGS FROM PROPERTIES / INTEREST I OWN AN INTEREST IN. WHEN YOU RENT OUT PROPERTY AND YOURE ACTING AS A LANDLORD USE SCHEDULE E

NOT FOR PROFIT RENTAL INCOME

UNDER HOBBY LOSS RULES, TAXPAYERS CANNOT DEDUCT THEIR EXPENSES.

TAXPAYERS CAN INCLUDE THEIR CASUALTY LOSSES ON THE APPROPRIATE LINES OF SCHEDULE A IF THEY ITEMIZE THEIR DEDUCTIONS

FOR CERTAIN FEDERALLY DECLARED CASUALTY LOSSES, THE LOSS MAY BE TAKEN IN ADDITION TO THE STANDARD DEDUCTION

NOT FOR PROFIT RENTAL INCOME: WHEN IS IT PRESUMED TO BE RENTING PROPERTY TO MAKE A PROFIT

IF RENTAL INCOME IS MORE THAN RENTAL EXPENSES FOR AT LEAST 3 YEARS OUT OF 5 CONSECUTIVE YEARS

FORM 5213. ELECTION TO POSTPONE DETERMINATION AS TO WHETHER THE PRESUMPTION APPLIES THAT AN ACTIVITY IS ENGAGED IN FOR PROFIT

TAXPAYERS ARE STARTING A RENTAL ACTIVITY AND DO NOT HAVE 3 YEARS SHOWING A PROFIT, THEY CAN ELECT TO HAVE THE PRESUMPTION MADE AFTER THEY HAVE THE 5 YEARS OF EXPERIENCE REQUIRED BY THE TEST

WHEN MUST 5213 RENTAL ACVITY INCOME MUST BE FILED

WITHIN 3 YEARS AFTER THE DUE DATE OF RETURN FOR THE YEAR IN WHICH THE TP FIRST CARRIED ON THE ACTIVITY OR WITHIN 60 DAYS AFTER RECEIVING A NOTICE FROM IRS PROPOSING TO DISALLOW DEDUCTIONS ATTRIBUTABLE TO ACTIVITY

ALIMONY PRIOR TO 2019

ALIMONY AND SEPARATE MAINTENANCE PAYMENTS ARE INCLUDED IN GROSS INCOME AND ARE TAXABLE TO RECIPIENT IF DIVORCE DECREES EXECUTED PRIOR TO 2019. PAYMENTS FROM PAYOR TO PAYEE ARE DEDUCTIBLE

ALIMONY AFTER 2018

NON TAXABLE AND NON DEDUCTIBLE

PAYMENT CONSIDERED ALIMONY EVEN IF PAID TO A THIRD PARTY (EX MORTGAGE) WHEN IT IS

1. PAID IN CASH

2. PAID PURSUANT TO DIVORCE

3. NOT DESIGNATED AS OTHER THAN ALIMONY

4. TERMINATED AT DEATH OF RECIPIENT

5. NOT PAID TO A MEMBER OF SAME HOUSEHOLD

6. NOT PAID TO SPOUSE WITH WHOM TP IS FILING MFJ

CHILD SUPPORT

EXCLUDED FROM GROSS INCOME AND ARE NOT DEDUCTIBLE. IF DIVORCE SPECIFIES PAYMENTS OF BOTH ALIMONY AND CHILD SUPPORT AND ONLY PARTIAL PAYMENTS ARE MADE, THEN PARTIAL PAYMENTS ARE CONSIDERED CHILD SUPPORT UNTIL OBLIGATION IS FULLY PAID THEN EXCESS IS CONSIDERED ALIMONY. IF PAYMENT AMOUNT IS TO BE REDUCED BASED ON CONTINGENCY RELATING TO CHILD THE AMOUNT OF THE REDUCTION WILL BE TREATED AS CHILD SUPPORT

PROPERY SETTLEMENTS

DIVISION OF PROPERTY IS NOT TREATED AS ALIMONY

PROPERY SETTLEMENTS: WHEN TRANSFERRED TO A SPOUSE OR FORMER INCIDENT TO A DIVORCE IS TREATED AS A

TRANSFER BY GIFT WHICH IS SPECIFICALLY EXCLUDED FROM GROSS INCOME. EXCLUSION DOES NOT APPLY IF SPOUSE OR FORMER IS NRA

INCIDENT TO A DIVORCE

MEANS TRANSFER OF PROPERTY WITHIN 1 YEAR AFTER THE DATE THE MARRIAGE CEASES OR A TRANSFER OF PROPERTY RELATED TO CESSATION OF MARRIAGE.

ANNUITY CONTRACTS FOR GROSS INCOME

PORTION OF AMOUNT RECEIVED UNDER AN ANNUITY CONTRACT IN WHICH A STATUTE DOES NOT PROVIDE AN EXCLUSION IS GROSS INCOME. TAXPAYERS ARE PERMITTED TO RECOVER THE COST OF THE ANNUITY (PRICE PAID) TAX FREE

HOW TO CALCULATE RECOVERING THE COST OF AN ANNUITY

PRICE OF ANNUITY DIVIDED BY TOTAL INCOME RECEIVED FROM ANNUITY. USE THAT PERCENT AND MULTIPLY IT BY TOTAL INCOME RECEIVED FROM ANNUITY TO DETERMINE THE NON-TAXABLE PORTION.

401K PLANS EMPLOYER CONTRIBUTIONS

GENERALLY NOT INCLUDED IN INCOME OF PARTICIPANT

INCOME FROM LIFE INSURANCE AND ENDOWMENT CONTRACTS

PROCEEDS FROM LIFE INSURANCE ARE GENERALLY EXCLUDED FROM GROSS INCOME. BUT THE INTEREST PAID ON THE PROCEEDS OF A POLICY THAT IS PAID OUT OVER TIME IS GROSS INCOME TO BENEFICIARY

RESPECT TO AN EMPLOYER OWNED LIFE INSURANCE CONTRACT

LIFE INSURANCE POLICY EMPLOYER OWNS ON AN EMPLOYEE. COMPANY RECEIVED DEATH BENEFIT WHEN EMPLOYEE DIES

RESPECT TO AN EMPLOYER OWNED LIFE INSURANCE: AMOUNT EXCLUDED FROM GROSS INCOME

NOT TO EXCEED THE PREMIUMS AND OTHER AMOUNTS PAID BY THE POLICYHOLDER FOR THE LIFE INSURANCE POLICY. INCOME INCLUSION RULE DOES NOT APPLY TO A MEMBER OF THE INSURED’S FAMILY TO ANY INDIVIDUAL WHO IS THE DESIGNATED BENEFICIARY OF THE INSURED UNDER THE CONTRACT (OTHER THAN AN APPLICABLE POLICY HOLDER) TO A TRUST ESTABLISHED FOR THE BENEFIT OF THE INSURED’S FAMILY OR A DESIGNATED BENEFICIARY OR TO THE ESTATE OF THE INSURED

RESPECT TO AN EMPLOYER OWNED LIFE INSURANCE CONTRACT: IF OWNER OF A POLICY TRANSFERS THE POLICY TO ANOTHER PERSON FOR CONSIDERATION

THE PROCEEDS ARE TAXABLE. HOWEVER THE AMOUNTS PAID TO ACQUIRE THE POLICY AND SUBSEQUENT PREMIUM PAYMENTS ARE TREATED A RETURN OF INVESTMENT CAPITAL

DISCHARGE OF INDEBTEDNESS CAN RESULT

IN GROSS INCOME

WHEN DOES CANCELLATION OF DEBT GET INCLUDED IN GROSS INCOME

WHEN A DEBT IS CANCELED IN WHOLE OR IN PART FOR CONSIDERATION.

IF CREDITOR CANCELS A DEBT (1099C) IN CONSIDERATION FOR SERVICES PERFORMED BY THE DEBTOR

THE DEBTOR MUST RECOGNIZE INCOME IN THE AMOUNT OF THE DEBT AS COMPENSATION FOR THEIR SERVICES (TAXED AND INCLUDED IN GROSS INCOME)

Creditor

Lender

Debtor

Borrower

CORPORATION HAS GROSS INCOME FROM CANCELLATION OF DEBT IF

IT SATISFIES A DEBT BY TRANSFERRING ITS OWN CORPORATE STOCK TO THE CREDITOR

WHEN A CORPORATION SATISFIES A DEBT BY TRANSFERRING ITS OWN CORPORATE STOCK THE AMOUNT OF GROSS INCOME IS

THE AMOUNT BY WHICH THE PRINCIPAL OF THE DEBT EXCEEDS THE FMV OF THE TRANSFERRED STOCK, PLUS THE VALUE OF ANY OTHER PROPERTY TRANSFERRED. IF THERE IS NO EXCESS THEN THERE IS NO CANCELLATION OF DEBT INCOME

WHAT IF CREDITOR GRATUITOUSLY CANCELS A DEBT

THE AMOUNT FORIGVEN IS TREATED AS A GIFT AND IS EXCLUDED FROM INCOME

WHAT DOES GROSS INCOME NOT INCLUDE WHEN CANCELLATION OF DEBT IS CANCELLED FOR:

1. BANKRUPTCY EXCEPT THE STOCK FOR DEBT TRANSFER FOR CORPORATIONS

2. WHEN DEBTOR IS INSOLVENT BUT NOT IN BANKRUPTCY

3. RELATED TO A QUALIFIED FARM INDEBTEDNESS

4. QUALIFIED REAL PROPERTY BUSINESS INDEBTEDNESS

5. RELATED TO PRINCIPAL RESIDENCE INDEBTNESS

WHEN DEBTOR IS INSOLVENT BUT NOT IN BANKRUPTCY WHAT IS EXCLUDED

THE AMOUNT EXCLUDED IS THE SMALLER OF THE DEBT CANCELED OR THE AMOUNT OF INSOLVENCY

THE 7 STEP ORDER ON REDUCING TAX DUE TO CANCELLATION OF DEBT

1. NOLs and NOL carryovers

2. General business credit

3. Minimum tax credit

4. Capital loss carryovers

5. Basis of the taxpayer’s property

6. Passive activity loss and passive activity credit carryovers

7. Foreign tax credit carryovers

THE TAXPAYER MAY FIRST ELECT TO DECREASE THE BASIS OF DEPRECIABLE PROPERTY

WHEN THERE IS A DISCHARGE IN DEBT INVOLVING REAL PROPERTY, THERE ARE TYPICALLY 2 SEPARATE TRANSACTIONS

1. PROPERTY IS SOLD TO LENDER WHEN THE PROPERTY IS ACQUIRED BY THE LENDER FOR THE DEBT. FORM 1099-A MAY BE ISSUED. GAIN OR LOSS MAY BE REQUIRED TO BE REPORTED ON THE TRANSACTION

2. THE LENDER CANCELS THE DEBT. FORM 1099-C MAY BE ISSUED. INCOME MAY HAVE TO BE REPORTED.

WHEN THERE IS A DISCHARGE IN DEBT INVOLVING REAL PROPERTY THE SALE OF PROPERTY AND CANCELLATION OF DEBT

DO NOT HAVE TO OCCUR IN THE SAME YEAR. IF THEY OCCURIN THE SAME YEAR THE LENDER WILL ONLY ISSUE A 1099-C

WHEN A CANCELED DEBT IS A NONBUSINESS DEBT: GIVE EXAMPLE AND WHERE IT IS TO BE REPORTED

EXAMPLE - DISCOUNT FOR EARLY PAYMENT OF A MORTGAGE LOAN

TO BE REPORTED AS A CANCELLATION OF DEBT UNDER OTHER INCOME ON SCHEDULE 1

MORTGAGE FORGIVENESS DEBT RELIEF ACT

EXCLUDES DISCHARGES OF UP TO $750K OR 375K IF MFS OF INDEBTNESS

MORTGAGE FORGIVENESS DEBT RELIEF ACT: HOW IS IT SECURED

PRINCIPAL OF RESIDENCE AND WHICH IS INCURRED IN THE ACQUISITION, CONSTRUCTION OR SUBSTANTIAL IMPROVEMENT OF THE PRINCIPAL RESIDENT

MORTGAGE FORGIVENESS DEBT RELIEF ACT: WHAT HAPPENS TO THE AMOUNT EXCLUDED FROM GROSS INCOME

REDUCES THE BASIS OF THE RESIDENCE BUT NOT BELOW ZERO AND ONLY WHEN THE TAXPAYER RETAINS THE RESIDENCE

WHEN DOES THE MORTGAGE FORGIVENESS DEBT RELIEF ACT EXCLUSION NOT APPLY

IF DISCHARGE IS DUE TO ANY REASON NOT RELATED TO A DECLINE IN HOME VALUE OR TAXPAYERS FINANCIAL CONDITION

STUDENT LOAN CANCELLATION

FEDERAL, STATE OR LOCAL GOV STUDENT LOAN DEBT MAY BE DISCHARGED AND EXCLUDED FROM INCOME UNTIL 2026.

STUDENT LOAN CANCELLATION: WHAT IS THE EXCEPTION FOR IT TO NOT BE TAX EXEMPT

LOAN IS A PRIVATE EDUCATION LOAN OR MADE BY A TAX-EXEMPT ORGANIZATION.

STUDENT LOAN CANCELLATION: IF THE DEBT IS DISCHARGED AND THE FORMER STUDENT ENGAGES IN CERTAIN EMPLOYMENT

EXAMPLE; CANCELLED IN A SPECIFIED PERIOD, LOCATION OR FOR A SPECIFIED EMPLOYER THE DISCHARGE IS ACTUALLY COMPENSATION FOR WORK PROVIDED DIRECTLY TO A LENDER

STUDENT LOAN CANCELLATION: DISCHARGE DUE TO DEATH OR TOTAL AND PERMANENT DISABILITY OF THE STUDENT

MAY BE EXCLUDED FROM INCOME

BASE AMOUNT THRESHOLD

MFJ - 32K

MFS - 0

OTHERS - 25K

ABA ADDITIONAL AMOUNT

MFJ - 12K

MFS- 0

OTHERS - 9K

COMPARING PROVISIONAL INCOME TO BA AND ABA. GIVE PERCENTAGES FOR EACH

IF PI IS LESS THAN OR EQUAL TO BA, 0% IS TAXABLE.

IF PI IS MORE THAN BA BUT LESS THAN OR EQUAL TO ABA, 50% IS TAXABLE

IF PI IS GREATER THAN ABA, 85% IS TAXABLE

HOW TO CALCULATE TAXABLE SS

DETERMINE THE PI THRESHOLD FOR ABA AND BA.

PROVISIONAL INCOME MINUS ADJUSTED BASE AMOUNT. THEN MULTIPLY THAT BY THE TAXABLE PERCENTAGE OF SS.

SEPARATELY:

MULTIPLY THE TAXABLE PERCENTAGE OF SS TO THE FULL AMOUNT OF SOCIAL SECURITY YOU RECEIVED

COMPARE BOTH VALUES AND PICK WHICHEVER IS LESSER

RAILROAD RETIREMENT

YOU CAN RECEIVE RETIREMENT ANNUITIES AT AGE 60 WITH 30 OR MORE YEARS OF SERVICE. SOCIAL SECURITY BENEFICIARIES ARE NOT ELIGIBLE UNTIL AGE 62.

REQUIREMENTS FOR SCHOLARSHIPS TO BE EXCLUDED FROM GROSS INCOME

1. INDIVIDUAL IS A CANDIDATE FOR A DEGREE FROM A QUALIFIED EDUCATIONAL INSTITUTION

2. AMOUNTS ARE USED FOR REQUIRED TUITION OR FEES, BOOKS, SUPPLIES ECT

3. CANNOT BE USED FOR ROOM OR BOARD

GROSS INCOME FOR SCHOLARSHIPS INCLUDES ANY AMOUNT RECEIVED

AS TUITION REDUCTION FOR EXAMPLE IN EXCHANGE FOR THE PERFORMANCE OF SERVICES SUCH AS TEACHING OR RESEARCH.

A REDUCTION IN UNDERGRADUATE TUITION FOR AN EMPLOYEE OF A QUALIFIED EDUCATIONAL ORGANIZATION

DOES NOT CONSTITUTE AS GROSS INCOME

SUBSTISTENCE PAYMENTS ADMINISTERED BY VA

ARE EXCLUDED FROM GROSS INCOME

PRIZE OR AWARD IS IN A FORM OTHER THAN MONEY

THE AMOUNT OF GROSS INCOME IS THE FMV OF PROPERTY. IF YOU REJECT THE PRIZE OR AWARD, YOU CAN AVOID INCLUSION

AN AWARD RECIPIENT MAY EXCLUDE THE FMV OF THE PRIZE OR AWARD FROM THEIR GROSS INCOME IF

1. THE AMOUNT RECEIVED IS FOR RELIGIOUS, SCIENTIFIC, CHARITABLE OR SIMILAR MERITORIOUS ACHIEVEMENT

2. THE RECIPIENT IS SELECTED WITHOUT ACTION ON THEIR PART

3. THE RECEIPT OF AWARD IS NOT CONDITIONED ON SUBSTANTIAL FUTURE SERVICES

4. AMOUNT IS PAID BY THE ORGANIZATION MAKING THE AWARD TO A TAX EXEMPT ORGANIZATION DESIGNATED BY RECIPIENT

WHAT IF PRIZE OR AWARD IS A SCHOLARSHIP

MAY QUALIFY FOR EXCLUSION

EMPLOYEE ACHIEVEMENT AWARDS CAN QUALIFY FOR EXCLUSION AS A

DE MINIMIS FRINGE BENEFIT

EMPLOYEE ACHIEVEMENT AWARDS MAY QUALIFY FOR EXCLUSION IF

AWARDED AS PART OF A MEANINGFUL PRESENTATION FOR SAFETY ACHIEVEMENT OR LENGTH OF SERVICE

AWARDS ARE TANGIBLE PERSONAL PROPERTY. CASH AND EQUIVALENTS ARE NOT TANGIBLE PERSONAL PROPERTY.

EMPLOYEE ACHIEVEMENT AWARDS MAXIMUM VALUE

NONQUALIFIED PLAN AWARDS - $400 (COST TO EMPLOYER)

QUALIFIED PLAN AWARDS - $1600 (COST TO EMPLOYER)

QUALIFIED PLAN AWARD

EMPLOYEE ACHIEVEMENT AWARD PROVIDED UNDER AN ESTABLISHED WRITTEN PROGRAM THAT DOES NOT DISCRIMINATE IN FAVOR OF HIGHLY COMPENSATED EMPLOYEES

FOR EMPLOYEE ACHIEVEMENT AWARDS WHAT IS CONSIDERED GROSS INCOME

THE EXCESS OF THE COST LIMITATIONS FOR THE AWARD WILL BE REPORTED ON THE EMPLOYEES GROSS INCOME

WHAT IF EMPLOYEE RECEIVES NON QUALIFIED AND QUALIFIED EMPLOYEE ACHIEVEMENT AWARD

COST LIMITATION IS $1600 REGARDLESS OF QUALIFIED OR NONQUALIFIED. EXCESS WILL BE COUNTED AS GROSS INCOME TO EMPLOYEE

UNEMPLOYMENT AND STRIKE BENEFITS

BOTH ARE TAXABLE

COMPENSATION FOR INJURY OR SICKNESS: BENEFITS RECEIVED IN THE FORM OF

DISABILITY PAY, HEALTH OR ACCIDENT INSURANCE PROCEEDS, WORKERS COMP AWARDS OR OTHER DAMAGES FOR PERSONAL PHYSICAL INJURY OR PHYSICAL SICKNESS IS EXCLUDED FROM GROSS INCOME

SPECIFICALLY EXCLUDED FROM GROSS INCOME ARE

1. WORKERS COMP AS COMPENSATION FOR PERSONAL INJURIES OR SICKNESS

2. ACCIDENT AND HEALTH INSURANCE POLICY PURCHASED BY THE TAXPAYER EVEN IF THE BENEFITS ARE A SUBSTITUTE FOR LOST INCOME

3. RECEIVED BY EMPLOYEES AS REIMBURSEMENT FOR MEDICAL CARE AND PAYMENTS FOR PERMANENT INJURY OR LOSS OF BODILY FUNCTION UNDER AN EMPLOYER FINANCED ACCIDENT OR HEALTH PLAN

4. AS A PENSION, ANNUITY OR SIMILAR ALLOWANCE FOR PERSONAL INJURIES OR SICKNESS RESULTING FROM ACTIVE SERVICE IN THE ARMED FORCES OF ANY COUNTRY

EXCLUDED FROM GROSS INCOME REGARDLESS OF WHETHER THE DAMAGES ARE RECEIVED BY

LAWSUITS

AGREEMENTS

AS LUMP SUMS

PERIODIC PAYMENTS:

1. DAMAGES RECEIVED FOR PERSONAL PHYSICAL INJURY/SICKNESS

2. PAYMENTS RECEIVED FOR EMOTIONAL DISTRESS IF ITS CAUSED BY A PHYSICAL INJURY/SICKNESS