Chapter 11 Investments 05 14 2013 Investment Overview Portfolio Income Interest and Dividends Interest Corporate and US treasury bonds US savings bonds Dividends Portfolio Income Capital gains and capital losses Types of Capital Gains and Losses o Unrecaptured 1250 Gain o Collectibles and 1202 Gain Netting Process for Gains and Losses o Reporting capital gains o Netting gains and Losses from 15 25 and 28 capital assets Limitations on Capital Losses o Losses on sale of personal use Assets o Capital Losses on sale of related parties o Wash Sales Balancing Tax planning strategies for capital assets with other goals Portfolio Income Tax Exempt Municipal Bonds Life Insurance Educational Savings Plans Portfolio Investment Expenses Investment Expenses o Net Investment Income Passive Activity income and Losses Passive Activity Definition Rental Real Estate Exception to Passive Activity Loss Rule Chapter 12 Compensation 05 14 2013 Salary and Wages Employee Considerations for salary and wages Withholding taxes Deductibility of salary payments o Limitations on salary deductibility Equity Based Compensation Stock options Employee considerations for stock options Employer considerations for stock options o Nonqualified options o Incentive stock options Restricted Stock o Employee considerations for restricted stock 83 b election o Employer considerations for restricted stock Fringe Benefits Taxable fringe benefits o Employee considerations for taxable fringe benefits o Employer consideration for taxable fringe benefits Nontaxable Fringe Benefits o Group term life insurance o Health and Accident Insurance and benefits o Meals and Lodging foe the Convenience of the Employer o Employee Educational Assistance o Dependent Cara Benefits o No Additional Cost Services o Qualified Employee Discounts o De Minimis Fringe Benefits o Qualified Transportations Fringe o Qualified Moving Expenses Reimbursement o Cafeteria Plans o Employee and Employer Considerations for nontaxable fringe benefits o Tax Planning with Fringe Benefits Chapter 13 Retirement Savings and Deferred Compensation 05 14 2013 Employer provided Qualified Plans Defined benefit Plans Vesting Funding Accounting and Plan maintenance Distributions Defined Contribution Plans Employer matching Contribution limits Vesting After Tax Cost of contributions Distributions After Tax rate of return Roth 401 k plans Comparing traditional defined contribution Non Qualified Deferred Compensation Nonqualified Plans vs Qualified Defined Contribution Plans Employee Considerations Employer Considerations Individually Managed Qualified Retirement Plans Individual Retirement Accounts Traditional IRAs o Contributions o Nondeductible Contributions o Distributions Roth IRAs o Contributions o Distributions o Rollover from traditional to Roth IRA o Comparing Traditional and Roth IRAs Self Employed Retirement Accounts Simplified Employee Pension SEP IRA Nontax Considerations Individual 401 k s o Nontax considerations Savers credit Tax Consequence of Home Ownership 05 14 2013 Personal use of the Home Exclusion of gain on sale of personal residence o Requirements General rule is that there is exceptions for nonqualified and for hardship circumstances o Exclusion of gain from debt forgiveness on foreclosure of home mortgage Interest Expense on Home Related Debt o Limitations on Home related Debt Limitation on amount of acquisition indebtedness Limitation on amount of home equity indebtedness o Points Real property Taxes First time home buyer tax credit Rental use of the home Residence with minimal Rental use Residence with significant rental use vacation Home Non Residence Rental Property o Losses on a Rental property Business use of the home Direct vs indirect Expenses Limitations on deductibility of Expenses Transfer Taxes and Wealth Planning 05 14 2013 Introduction to Federal Transfer Taxes Beginnings Common Features of integrated transfer taxes The federal Estate Tax The Gross Estate o Specific Inclusions Jointly owned property Transfers within three years of death o Valuations Valuation of remainder and other temporal interest o Gross Estate Summary The taxable Estate o Administrative Expenses debts losses and state death taxes o Marital ad Charitable Donations Computation of the estate o Adjusted taxable gifts o Unified credit The Federal Gift Tax