J.K. Lasser's your income tax, 2002

목차 (Table of Contents)

• CONTENTS
• What's New For 2001 = xxiv
• Looking Ahead to New Tax Law Changes = xxxii
• PART 1 FILING BASICS = 1
• Do You Have to File a 2001 Tax Return? = 2
• Filing Tests for Dependents = 3
• Where to File = 4
• Filing Deadlines = 5
• Choosing Which Tax From To File = 6
• 1 Filing Status = 7
• 1.1 Which Filing Status Should You Use? = 8
• 1.2 Tax Rates Based on Filing Status = 8
• 1.3 Filing Separately Instead of Jointly = 9
• 1.4 Filing a Joint Return = 11
• 1.5 Nonresident Alien Spouse = 12
• 1.6 Community Property Rules = 13
• 1.7 Innocent Spouse Rules = 14
• 1.8 Separate Liability Election for Former Spouses = 15
• 1.9 Equitable Relief = 18
• 1.10 Death of Your Spouse in 2001 = 19
• 1.11 Qualifying Widow(er) Statue If Spouse Died in 2000 or 1999 = 20
• 1.12 Qualifying as Head of Household = 20
• 1.13 Filing for Your Child = 23
• 1.14 Return for Deceased = 23
• 1.15 Return for an Incompetent Person = 25
• 1.16 How a Nonresident Alien Is Taxed = 25
• 1.17 How a Resident Alien Is Taxed = 26
• 1.18 Who Is a Resident Alien? = 26
• 1.19 When an Alien Leaves the United States = 28
• 1.20 Expatriation Tax = 28
• PART 2 REPORTING YOUR INCOME = 29
• 2 Taxable Wages, Salary, and Other Compensation = 31
• 2.1 Salary and Wage Income = 35
• 2.2 Constructive Receipt of Year-End Paychecks = 36
• 2.3 Pay Received in Property Is Taxed = 36
• 2.4 Gifts From Employers = 36
• 2.5 When Commissions Are Taxed = 37
• 2.6 Unemployment Benefits Are Taxable = 37
• 2.7 Strike Pay Benefits and Penalties = 38
• 2.8 Deferring Tax on Pay = 38
• 2.9 Did You Return Wages Received in a Prior Year? = 39
• 2.10 Waiver of Executor's and Trustee's Commissions = 39
• 2.11 Insurance Plans May Be Tax Free = 39
• 2.12 Educational Benefits for Employees' Children = 40
• 2.13 Sick Pay Is Taxable = 41
• 2.14 Workers' Compensation Is Tax Free = 41
• 2.15 Employer and Federal Government Disability Pensions = 43
• 2.16 Stock Appreciation Rights(SARs) = 43
• 2.17 Stock Options = 44
• 2.18 Restricted Stock = 46
• 3 Fringe Benefits = 48
• 3.1 Tax-Free Health and Accident Coverage Under Employer Plans = 50
• 3.2 Tax-Free Payments From Employer Health and Accident Plans = 52
• 3.3 Group-Term Life Insurance Premiums = 54
• 3.4 Dependent Care Assistance = 56
• 3.5 Adoption Benefits = 56
• 3.6 Education Assistance Plans = 57
• 3.7 Company Cars, Parking, and Transit Passes = 57
• 3.8 Working Condition Fringe Benefits = 59
• 3.9 De Minimis Fringe Benefits = 60
• 3.10 Employee Achievement Awards = 60
• 3.11 Employer-Furnished Meals or Lodging = 61
• 3.12 Minister's Rental Allowance = 63
• 3.13 Cafeteria Plans Provide Choice of Benefits = 64
• 3.14 Flexible Spending Arrangements = 64
• 3.15 Company Services Provided at No Additional Cost = 66
• 3.16 Discounts on Company Products or Services = 66
• 4 Dividend and Interest Income = 67
• 4.1 Reporting Corporate Dividends = 70
• 4.2 Dividends From a Partnership, S Corporation, Estate, or Trust = 70
• 4.3 How Mutual-Fund Distributions Are Taxed = 70
• 4.4 Real Estate Investment Trust(REIT) Dividends = 70
• 4.5 Taxable Dividends of Earnings and Profits = 70
• 4.6 Stock Dividends on Common Stock = 71
• 4.7 Dividends Paid in Property = 71
• 4.8 Taxable Stock Dividends = 72
• 4.9 Who Reports the Dividends = 72
• 4.10 Year Dividends Are Reported = 73
• 4.11 Distribution Not Out of Earnings : Return of Capital = 74
• 4.12 Reporting Interest on Your Tax Return = 74
• 4.13 Interest on Frozen Accounts Not Taxed = 75
• 4.14 Interest Income on Debts Owed to You = 75
• 4.15 Reporting Interest on Bonds Bought or Sold = 75
• 4.16 Forfeiture of Interest on Premature Withdrawals = 78
• 4.17 Amortization of Bond Premium = 78
• 4.18 Discount on Bonds = 80
• 4.19 How To Report Original Issue Discount(OID) on Your Return = 80
• 4.20 Reporting Income on Market Discount Bonds = 81
• 4.21 Discount on Short-Term Obligations = 83
• 4.22 Stripped Coupon Bonds and Stock = 84
• 4.23 Sale or Retirement of Bonds and Notes = 84
• 4.24 State and City Interest Generally Tax Exempt = 85
• 4.25 Taxable State and City Interest = 85
• 4.26 Tax-Exempt Bonds Bought at a Discount = 86
• 4.27 Treasury Bills, Notes, and Bonds = 86
• 4.28 Interest on U.S. Savings Bonds = 87
• 4.29 Deferring U.S. Savings Bond Interest = 88
• 4.30 Minimum Interest Rules = 90
• 4.31 Interest-Free or Below-Market-Interest Loans = 90
• 4.32 Minimum Interest on Seller-Financed Sales = 92
• 5 Reporting Property Sales = 94
• 5.1 Tax Pattern of Property Sales = 95
• 5.2 How Property Sales Are Classified and Taxed = 95
• 5.3 Capital Gains Rates and Holding Periods = 97
• 5.4 Capital Losses and Carryovers = 98
• 5.5 Capital Losses of Married Couples = 98
• 5.6 Losses May Be Disallowed on Sales to Related Persons = 99
• 5.7 Deferring or Excluding Gain on Small Business Stock Investment = 100
• 5.8 Sample Entries of Capital Asset Sales on Schedule D = 103
• 5.9 Counting the Months in Your Holding Period = 104
• 5.10 Holding Period for Securities = 104
• 5.11 Holding Period for Real Estate = 105
• 5.12 Holding Period for Gifts, Inheritances, and Other Property = 105
• 5.13 Calculating Gain or Loss = 106
• 5.14 Amount Realized Is the Total Selling Price = 106
• 5.15 Finding Your Cost = 107
• 5.16 Unadjusted Basis of Your Property = 107
• 5.17 Basis of Property You Inherited or Received as a Gift = 109
• 5.18 Joint Tenancy Basis Rules for Surviving Tenants = 110
• 5.19 Allocating Cost Among Several Assets = 113
• 5.20 How To Find Adjusted Basis = 113
• 5.21 Tax Advantage of Installment Sales = 114
• 5.22 Figuring the Taxable Part of Installment Payments = 115
• 5.23 Electing Not To Report on the Installment Method = 117
• 5.24 Restriction on Installment Sales to Relatives = 118
• 5.25 Contingent Payment Sales = 119
• 5.2.6 Using Escrow and Other Security Arrangements = 120
• 5.27 Minimum Interest on Deferred Payment Sales = 121
• 5.28 Dispositions of Installment Notes = 121
• 5.29 Repossession of Personal Property Sold on Installment = 122
• 5.30 Boot in Like-Kind Exchange Payable in Installments = 123
• 5.31 "Interest" Tax on Sales over $150,000 plus $5 Million Debt = 123
• 5.32 Worthless Securities = 124
• 5.33 Tax Consequences of Bad Debts = 125
• 5.34 Four Rules To Prove a Bad Debt Deduction = 125
• 5.35 Loans by Stockholders = 127
• 5.36 Family Bad Debts = 128
• 6 Tax-Free Exchanges of Property = 129
• 6.1 Trades of Like-Kind Property = 130
• 6.2 Personal Property Held for Business or Investment = 131
• 6.3 Receipt of Cash and Other Property - "Boot" = 132
• 6.4 Time Limits for Deferred Exchanges 132
• 6.5 Qualified Exchange Accommodation Arrangements(QEAAs) for Reverse Exchanges = 135
• 6.6 Exchanges Between Related Parties
• 6.7 Property Transfers Between Spouses and Ex-Spouses = 136
• 6.8 Tax-Free Exchanges of Stock = 139
• 6.9 Joint Ownership Interests = 139
• 6.10 Setting up Closely Held Corporations = 139
• 6.11 Exchanges of Coins and Bullion = 140
• 6.12 Tax-Free Exchanges of Insurance Policies = 140
• 7 Retirement and Annuity Income = 141
• 7.1 Retirement Distributions on Form 1099-R = 143
• 7.2 Lump-Sum Distributions = 144
• 7.3 Lump-Sum Options If You Were Born Before 1936 = 146
• 7.4 Averaging on Form 4972 = 146
• 7.5 Capital Gain Treatment for Pre-1974 Participation = 148
• 7.6 Lump-Sum Distribution Upon Separation From Employment = 149
• 7.7 Lump-Sum Payments Received by Beneficiary = 149
• 7.8 Tax-Free Rollovers From Qualified Plans = 149
• 7.9 Rollover of Proceeds From Sale of Property = 153
• 7.10 Distribution of Employer Stocks or Other Securities = 153
• 7.11 Survivor Annuity for Spouse = 154
• 7.12 Court Distributions to Former Spouse Under a QDRO = 155
• 7.13 When Retirement Benefits Must Begin = 156
• 7.14 Payouts to Beneficiaries = 156
• 7.15 Penalty for Distributions Before Age 59½ = 157
• 7.16 Restrictions on Loans From Company Plans = 158
• 7.17 Tax Benefits of 401(k) Plans = 159
• 7.18 Limit on Salary-Reduction Deferrals = 160
• 7.19 Withdrawals From 401(k) Plans Restricted = 160
• 7.20 Annuities for Employees of Tax-Exempts and Schools(403(b) Plans) = 161
• 7.21 Government and Exempt Organization Deferred Pay Plans = 163
• 7.22 Figuring the Taxable Part of Your Annuity = 163
• 7.23 Life Expectancy Tables = 167
• 7.24 When You Convert Your Endowment Policy = 168
• 7.25 Reporting Employee Annuities = 168
• 7.26 Simplified Rule for Calculating Taxable Employee Annuity = 168
• 7.27 Employee's Cost in Annuity = 171
• 7.28 Withdrawals Before Annuity Starting Date = 172
• 7.29 Civil Service Retirement = 172
• 7.30 Retired Military Personnel Allowed Annuity Election = 173
• 8 IRAs = 174
• 8.1 Starting a Traditional IRA = 175
• 8.2 Traditional IRA Contributions Must Be Based on Earnings = 176
• 8.3 Contributions to a Traditional IRA If You Are Married = 177
• 8.4 IRA Deduction Restrictions for Active Participants in Employer Plan = 178
• 8.5 Active Participation in Employer Plan = 181
• 8.6 Nondeductible Contributions to Traditional IRAs = 183
• 8.7 Penalty for Excess Contributions to Traditional IRAs = 184
• 8.8 Taxable Distributions From Traditional IRAs = 184
• 8.9 Partially Tax-Free Traditional IRA Distributions Allocable to Nondeductible Contributions = 185
• 8.10 Tax-Free Rollovers and Direct Transfers to Traditional IRAs = 187
• 8.11 Transfer of Traditional IRA to Spouse at Divorce or Death = 188
• 8.12 Penalty for Traditional IRA Withdrawals Before Age 59½ = 188
• 8.13 Mandatory Distributions From a Traditional IRA After Age 70½ = 191
• 8.14 Inherited Traditional IRAs = 195
• 8.15 SEP Basics = 196
• 8.16 Salary-Reduction SEP Set up Before 1997 = 197
• 8.17 Who Is Eligible for a SIMPLE IRA? = 197
• 8.18 SIMPLE IRA Contributions and Deductions = 198
• 8.19 Roth IRA Advantages = 199
• 8.20 Annual Contributions to a Roth IRA = 200
• 8.21 Converting a Traditional IRA to a Roth IRA = 201
• 8.22 Recharacterizations and Reconversions = 202
• 8.23 Distributions From a Roth IRA = 204
• 8.24 Distributions To Beneficiaries After the Death of a Roth IRA Owner = 206
• 9 Income from Rents and Royalties = 205
• 9.1 Reporting Rental Income and Expenses = 209
• 9.2 Checklist of Rental Deductions = 209
• 9.3 Distinguishing Between a Repair and an Improvement = 211
• 9.4 Reporting Rents From a Multi-Unit Residence = 212
• 9.5 Depreciation on Converting a Home to Rental Property = 212
• 9.6 Renting to a Relative = 214
• 9.7 Personal Use and Rental of a Residential Unit During the Year = 214
• 9.8 Counting Personal-Use and Rental Days = 215
• 9.9 Allocating Expenses to Rental Days = 216
• 9.10 Rentals Lacking Profit Motive = 218
• 9.11 Reporting Royalty Income = 220
• 9.12 Production Costs of Books and Creative Properties = 220
• 9.13 Deducting the Cost of Patents or Copyrights = 220
• 9.14 Intangible Drilling Costs = 221
• 9.15 Depletion Deduction = 221
• 9.16 Oil and Gas Percentage Depletion = 222
• 10 Loss Restrictions : Passive Activities and At-Risk Limits = 224
• 10.1 Rental Activities = 225
• 10.2 Rental Real Estate Loss Allowance of up to $25,000 = 226
• 10.3 Real Estate Professionals = 228
• 10.4 Participation May Avoid Passive Loss Restrictions = 230
• 10.5 Classifying Business Activities as One or Several = 231
• 10.6 Material Participation Tests for Business = 232
• 10.7 Tax Credits of Passive Activities Limited = 234
• 10.8 Determining Passive or Nonpassive Income and Loss = 234
• 10.9 Passive Income Recharacterized as Nonpassive Income = 236
• 10.10 Working Interests in Oil and Gas Wells = 238
• 10.11 Partnership Rules = 238
• 10.12 Form 8582 = 238
• 10.13 Suspended Losses Allowed on Disposition of Your Interest = 239
• 10.14 Suspended Tax Credits = 241
• 10.15 Personal Service and Closely Held Corporations = 241
• 10.16 Sales of Property and of Passive Activity Interests = 242
• 10.17 At-Risk Limits = 243
• 10.18 What Is At Risk? = 244
• 10.19 Amounts Not At Risk = 245
• 10.20 At-Risk Investment in Several Activities = 246
• 10.21 Carryover of Disallowed Losses = 247
• 10.22 Recapture of Losses Where At Risk Is Less Than Zero = 247
• 11 Other Income = 248
• 11.1 Prizes and Awards = 249
• 11.2 Lottery and Sweepstake Winnings = 249
• 11.3 Gambling Winnings and Losses = 249
• 11.4 Gifts and Inheritances = 250
• 11.5 Refunds of State and Local Income Tax Deductions = 250
• 11.6 Other Recovered Deductions = 252
• 11.7 How Legal Damages Are Taxed = 253
• 11.8 Cancellation of Debts You Owe = 254
• 11.9 Schedule K-1 = 257
• 11.10 How Partners Report Partnership Profit and Loss = 257
• 11.11 When a Partner Reports Income or Loss = 258
• 11.12 Partnership Loss Limitations = 258
• 11.13 Unified Tax Audits of Partnerships = 259
• 11.14 Stockholder Reporting of S Corporation Income and Loss = 259
• 11.15 How Beneficiaries Report Estate or Trust Income = 260
• 11.16 Repeal of Throwback Rule for Distributions of Accumulated Trust Income = 261
• 11.17 Deductions for Income Subject to Estate Tax = 261
• 11.18 Who Is a Farmer? = 262
• 11.19 Forms Farmers File = 262
• 11.20 Income Averaging for Farmers = 262
• PART 3 CLAIMING DEDUCTIONS = 263
• 12 Deductions Allowed in Figuring Adjusted Gross Income = 265
• 12.1 Figuring Adjusted Gross Income(AGI) = 266
• 12.2 Claiming Deductions From Gross Income = 200
• 12.3 What Moving Costs Are Deductible? = 268
• 12.4 The Distance Test = 269
• 12.5 The 39-Week Test for Employees = 269
• 12.6 The 78-Week Test for the Self-Employed and Partners = 270
• 12.7 Claiming Deductible Moving Expenses = 271
• 12.8 Reimbursements of Moving Expenses = 271
• 13 Claiming the Standard Deduction or Itemized Deductions = 272
• 13.1 Claiming the Standard Deduction = 274
• 13.2 When To Itemize = 275
• 13.3 Husbands and Wives Filing Separate Returns = 275
• 13.4 Standard Deduction If 65 or Older or Blind = 276
• 13.5 Standard Deduction for Dependents = 276
• 13.6 Prepaying or Postponing Itemized Expenses = 278
• 13.7 3% Itemized Deduction Reduction = 278
• 14 Charitable Contribution Deductions = 281
• 14.1 Deductible Contributions = 282
• 14.2 Nondeductible Contributions = 283
• 14.3 Contributions That Provide You With Benefits = 284
• 14.4 Unreimbursed Expenses of Volunteer Workers = 285
• 14.5 Support of a Student in Your Home = 286
• 14.6 What Kind of Property Are You Donating? = 287
• 14.7 Property That Has Declined Below Cost = 289
• 14.8 Bargain Sales of Appreciated Property = 290
• 14.9 Art Objects = 291
• 14.10 Interests in Real Estate = 292
• 14.11 Life Insurance = 293
• 14.12 Form 8283 and Written Appraisal Requirements = 294
• 14.13 Business Inventory = 294
• 14.14 Donations Through Trusts = 294
• 14.15 Records Needed To Substantiate Your Contributions = 295
• 14.16 Penalty for Substantial Overvaluation of Property = 296
• 14.17 Ceiling on Charitable Contributions = 296
• 14.18 Five-Year Carryover for Excess Donations = 299
• 14.19 Election To Reduce Property Gift Appreciation = 299
• 15 Itemized Deduction for Interest Expenses = 300
• 15.1 Home Mortgage Interest = 301
• 15.2 Home Acquisition Loans = 302
• 15.3 Home Equity Loans = 303
• 15.4 Home Construction Loans = 303
• 15.5 Home Improvement Loans = 304
• 15.6 Mortgage Payment Rules = 304
• 15.7 Interest on Refinanced Loans = 305
• 15.8 "Points" = 307
• 15.9 Cooperative and Condominium Apartments = 308
• 15.10 Investment Interest Limitations = 308
• 15.11 Debts To Carry Tax-Exempt Obligations = 309
• 15.12 Earmarking Use of Loan Proceeds = 310
• 15.13 Year To Claim an Interest Deduction = 312
• 15.14 Prepaid Interest = 312
• 16 Deductions for Taxes = 314
• 16.1 Deductible Taxes = 315
• 16.2 Nondeductible Taxes = 315
• 16.3 Deducting State Income Taxes = 316
• 16.4 When Taxes and Interest Are Capitalized = 316
• 16.5 Assessments = 316
• 16.6 Deducting Real Estate Taxes = 317
• 16.7 Tenants' Payment of Taxes = 317
• 16.8 Allocating Taxes When You Sell or Buy Realty = 317
• 16.9 Who May Deduct Real Property Taxes = 319
• 16.10 Automobile License Fees = 320
• 16.11 Taxes Deductible as Business Expenses = 320
• 16.12 Foreign Taxes = 320
• 17 Medical and Dental Expense Deductions = 321
• 17.1 Medical Expenses Must Exceed 7.5% of AGI = 322
• 17.2 Allowable Medical Care Costs = 322
• 17.3 Nondeductible Medical Expenses = 323
• 17.4 Reimbursements Reduce Deductible Expenses = 323
• 17.5 Premiums of Medical Care Policies = 327
• 17.6 Expenses of Your Spouse = 328
• 17.7 Expenses of Your Dependents = 328
• 17.8 Decedent's Medical Expenses = 330
• 17.9 Travel Costs May Be Medical Deductions = 330
• 17.10 Schooling for the Mentally or Physically Disabled = 332
• 17.11 Senior Citizen Care Facilities = 332
• 17.12 Nurses' Wages = 333
• 17.13 Home Improvements as Medical Expenses = 334
• 17.14 Costs Deductible as Business Expenses = 335
• 17.15 Long-Term Care Costs of Chronically ill = 336
• 17.16 Life Insurance Used To Pay Medical Costs of Terminally ill = 337
• 17.17 Archer MSAs = 337
• 18 Casualty and Theft Losses and Involuntary Conversions = 339
• 18.1 Sudden Event Test for Casualty Losses = 340
• 18.2 When To Deduct a Casualty or Theft Loss = 342
• 18.3 Disaster Losses = 343
• 18.4 Who May Claim the Loss Deduction = 344
• 18.5 Bank Deposit Losses = 345
• 18.6 Damage to Trees and Shrubs = 345
• 18.7 Deducting Damage to Your Car = 346
• 18.8 Theft Losses = 347
• 18.9 Nondeductible Losses = 348
• 18.10 Proving a Casualty Loss = 349
• 18.11 Floors for Personal-Use Property Losses = 349
• 18.12 Figuring Your Loss on Form 4684 = 351
• 18.13 Personal and Business Use of Property = 353
• 18.14 Repairs May Be a "Measure of Loss" = 353
• 18.15 Insurance Reimbursements = 354
• 18.16 Excess Living Costs Paid by Insurance Are Not Taxable = 354
• 18.17 Do Your Casualty Losses Exceed Your Income? = 355
• 18.18 Defer Gain by Replacing Property = 355
• 18.19 Involuntary Conversions Qualifying for Tax Deferral = 356
• 18.20 How To Elect To Defer Tax = 356
• 18.21 Time Period for Buying Replacement Property = 357
• 18.22 Types of Qualifying Replacement Property = 358
• 18.23 Cost of Replacement Property Determines Postponed Gain = 359
• 18.24 Special Assessments and Severance Damages = 359
• 18.25 Reporting Gains From Casualties = 360
• 19 Deducting Job Costs and Other Miscellaneous Expenses = 361
• 19.1 2% AGI Floor Reduces Miscellaneous Deductions = 362
• 19.2 Effect of 2% AGI Floor on Deductions = 363
• 19.3 Checklist of Job Expenses Subject to the 2% AGI Floor = 363
• 19.4 Job Expenses Not Subject to the 2% AGI Floor = 364
• 19.5 Dues and Subscriptions = 364
• 19.6 Uniforms and Work Clothes = 364
• 19.7 Expenses of Looking for a New Job = 365
• 19.8 Local Transportation Costs = 366
• 19.9 Unusual Job Expenses = 367
• 19.10 Computers and Cellular Phones = 368
• 19.11 Calculators, Copiers, Fax Machines, and Typewriters = 369
• 19.12 Small Tools = 369
• 19.13 Employee Home Office Deductions = 369
• 19.14 Telephone Costs = 370
• 19.15 Types of Deductible Education Costs = 370
• 19.10 Work-Related Tests for Education Costs = 371
• 19.17 Law School Costs = 372
• 19.18 Courses Taken by Doctors and Nurses = 372
• 19.19 Courses Taken by Teachers = 372
• 19.20 Professor's Research Expenses = 373
• 19.21 Leave of Absence To Take Courses = 373
• 19.22 Local Transportation and Travel Away From Home To Take Courses = 373
• 19.23 How To Deduct Education Costs on Your Return = 374
• 19.24 Checklist of Deductible Investment Expenses = 375
• 19.25 Costs of Tax Return Preparation and Audits = 376
• 19.26 Deducting Legal Costs = 377
• 19.27 Contingent Fees Paid Out of Taxable Awards = 379
• 20 Travel and Entertainment Expense Deductions = 380
• 20.1 Deduction Guide for Travel and Transportation Expenses = 381
• 20.2 Commuting Expenses = 383
• 20.3 Overnight-Sleep Test Limits Deduction of Meal Costs = 384
• 20.4 IRS Meal Allowance = 384
• 20.5 Business Trip Deductions = 385
• 20.6 When Are You Away from Home? = 385
• 20.7 Fixing a Tax Home If You Work in Different Locations = 386
• 20.8 Tax Home of Married Couple Working in Different Cities = 387
• 20.9 Deducting Living Costs on Temporary Assignment = 387
• 20.10 Business-Vacation Trips Within the United States = 389
• 20.11 Business-Vacation Trips Outside the United States = 389
• 20.12 Deducting Expenses of Business Conventions = 391
• 20.13 Travel Expenses of a Spouse or Dependents = 392
• 20.14 Restrictions on Foreign Conventions and Cruises = 392
• 20.15 50% Deduction Limit = 393
• 20.16 The Restrictive Tests for Meals and Entertainment = 393
• 20.17 Directly Related Dining and Entertainment = 393
• 20.18 Goodwill Entertainment = 394
• 20.19 Home Entertaining = 394
• 20.20 Your Personal Share = 394
• 20.21 Entertainment Costs of Spouses = 394
• 20.22 Entertainment Facilities and Club Dues = 395
• 20.23 Restrictive Test Exception for Reimbursements = 395
• 20.24 50% Cost Limitation on Meals and Entertainment = 395
• 20.25 Business Gift Deductions Are Limited = 397
• 20.26 Record-keeping Requirements = 398
• 20.27 Substantiating Deductions for Travel and Entertainment = 398
• 20.28 Reporting T&E Expenses as Self-Employed Person = 399
• 20.29 Reporting Unreimbursed T&E Expenses = 399
• 20.30 Tax Treatment of Reimbursements = 400
• 20.31 What Is an Accountable Plan? = 400
• 20.32 Per Diem Travel Allowance Under Accountable Plans = 401
• 20.33 Automobile Mileage Allowance = 402
• 20.34 Reimbursements Under Non-Accountable Plans = 403
• 21 Personal Exemptions = 404
• 21.1 How Many Exemptions May You Claim? = 405
• 21.2 Your Spouse as an Exemption = 406
• 21.3 Test 1. Relationship Test = 406
• 21.4 Unrelated or Distantly Related Dependents Living With You = 407
• 21.5 Test 2. Gross Income Limit for Dependents = 408
• 21.6 Children Under Age 19 or Full-Time Students Under Age 24 = 409
• 21.7 Test 3. 50% Support Test = 409
• 21.8 Lodging and Food as Support = 411
• 21.9 Examples of Allocating Support = 412
• 21.10 Multiple Support Agreements = 414
• 21.11 Special Support Test for Divorced or Separated Parents = 414
• 21.12 Test 4. The Dependent Must Meet a Citizen or Resident Test = 416
• 21.13 Test 5. The Dependent Does Not File a Joint Return = 416
• 21.14 Spouses' Names and Social Security Numbers on Joint Return = 416
• 21.15 Reporting Social Security Numbers of Dependents = 417
• 21.16 Phaseout of Personal Exemptions for Higher Income Taxpayers = 417
• PART 4 PERSONAL TAX COMPUTATIONS = 419
• 22 Figuring Your Regular Income Tax Liability = 421
• 22.1 Taxable Income = 422
• 22.2 Using the Tax Tables = 422
• 22.3 Tax Rate Schedules = 423
• 22.4 Tax Calculation If You Have Long-Term Capital Gains = 423
• 22.5 Tax Credits = 423
• 22.6 Rate Reduction Credit on 2001 Returns = 424
• 23 Alternative Minimum Tax(AMT) = 425
• 23.1 Computing Alternative Minimum Tax on Form 6251 = 427
• 23.2 Adjustments for AMT = 429
• 23.3 Tax Preference Items = 431
• 23.4 Net Operating Losses = 432
• 23.5 AMT Foreign Tax Credit = 432
• 23.6 AMT Tax Credit From Regular Tax = 432
• 23.7 Avoiding AMT = 432
• 24 Computing the "Kiddie Tax" for Children Under Age 14 = 434
• 24.1 Filing Your Child's Return = 435
• 24.2 Children Not Subject to the "Kiddie Tax" = 435
• 24.3 Children Under Age 14 Subject to the "Kiddie Tax" = 436
• 24.4 Computing "Kiddie Tax" on Child's Return = 437
• 24.5 Parent's Election To Report Child's Dividends and Interest = 438
• 25 Child Tax Credit and Dependent Care, Earned Income(EIC), and Adoption Credits = 441
• 25.1 Child Tax Credit for Children Under Age 17 = 442
• 25.2 Figuring the Child Tax Credit = 442
• 25.3 Qualifying for Child and Dependent Care Credit = 443
• 25.4 Limits on the Dependent Care Credit = 444
• 25.5 Earned Income Test for Dependent Care Credit = 445
• 25.6 Household and Dependent Tests for Dependent Care Credit = 445
• 25.7 Expenses Qualifying for the Dependent Care Credit = 446
• 25.8 Dependent Care Credit Rules for Separated Couples = 448
• 25.9 Paying and Withholding Taxes for Household Employees = 448
• 25.10 Social Security and Medicare Taxes(FICA) for Household Employees = 448
• 25.11 Federal Unemployment Taxes(FUTA) for Household Employees = 450
• 25.12 Qualifying Tests for EIC = 450
• 25.13 Income Tests for EIC = 451
• 25.14 Look up EIC in Government Tables = 452
• 25.15 Advance Payment of Earned Income Credit = 452
• 25.16 Qualifying for the Adoption Credit = 452
• 25.17 Claiming the Adoption Credit on Form 8839 = 453
• 26 Tax Withholdings = 454
• 26.1 Withholdings Should Cover Estimated Tax = 455
• 26.2 When Income Taxes Are Withheld on Wages = 455
• 26.3 Increasing Withholding = 456
• 26.4 Avoiding Withholding = 456
• 26.5 Withholding Allowances = 456
• 26.6 When To File a New Form W-4 = 457
• 26.7 Voluntary Withholding on Certain Government Payments = 457
• 26.8 When Tips Are Subject to Withholding = 457
• 26.9 Withholding on Gambling Winnings = 458
• 26.10 FICA Withholdings = 458
• 26.11 Withholding on Retirement Distributions = 459
• 26.12 Backup Withholding = 460
• 27 Estimated Tax Payments = 461
• 27.1 Do You Owe an Estimated Tax Penalty for 2001? = 462
• 27.2 Planning Estimated Tax Payments for 2002 = 463
• 27.3 Dates for Paying Estimated Tax Installments for 2002 = 464
• 27.4 Estimates by Husband and Wife = 464
• 27.5 Adjusting Your Payments During the Year = 464
• PART 5 PERSONAL TAX SAVINGS PLANS = 467
• 28 Tax Planning = 469
• 28.1 When To Defer Income and Accelerate Deductions = 470
• 28.2 Earning Over the Thresholds for the Exemption Phaseout and Itemized Deduction Reduction = 471
• 29 Tax Savings for Residence Sales = 473
• 29.1 Avoiding Tax on Sale of Principal Residence = 474
• 29.2 Meeting the Ownership and Use Tests = 475
• 29.3 Home Sales by Married Persons = 476
• 29.4 Reduced Maximum Exclusion = 477
• 29.5 Figuring Gain or Loss = 477
• 29.6 Figuring Adjusted Basis = 478
• 29.7 Personal and Business Use of a Home = 479
• 29.8 No Loss Allowed on Personal Residence = 480
• 29.9 Loss on Residence Converted to Rental Property = 480
• 29.10 Loss on Residence Acquired by Gift or Inheritance = 482
• 30 Tax Savings for Investors in Securities = 485
• 30.1 Planning Year-End Securities Transactions = 486
• 30.2 Earmarking Stock Lots = 486
• 30.3 Sale of Stock Dividends = 487
• 30.4 Stock Rights = 488
• 30.5 Short Sales = 489
• 30.6 Wash Sales = 490
• 30.7 Convertible Stocks and Bonds = 492
• 30.8 Constructive Sales of Appreciated Financial Positions = 492
• 30.9 Straddle Losses = 494
• 30.10 Capital Gain Restricted on Conversion Transactions = 495
• 30.11 Puts and Calls and Index Options = 496
• 30.12 Exchange Option Trading = 497
• 30.13 Reducing the Tax on Dividend Income = 498
• 30.14 Treasury Bills and CDs = 498
• 30.15 Investing in Savings Institutions = 500
• 30.16 Investing in Corporate Bonds = 500
• 30.17 Treasury Bonds, Notes, and U.S. Agency Obligations = 502
• 30.18 Investing in Tax-Exempts = 503
• 30.19 Investing in Unit Investment Trusts = 504
• 30.20 Ordinary Loss for Small Business Stock(Section 1244) = 505
• 30.21 Savings Bonds = 505
• 30.22 I Bonds = 507
• 30.23 Trader, Dealer, or Investor? = 508
• 30.24 Mark-to-Market Election = 508
• 31 Tax Savings for Investors in Real Estate = 510
• 31.1 Investing in Real Estate Ventures = 511
• 31.2 Sales of Subdivided Land - Dealer or Investor? = 512
• 31.3 Exchanging Real Estate Without Tax = 513
• 31.4 Timing Your Real Property Sales = 514
• 31.5 Cancellation of a Lease = 514
• 31.6 Sale of an Option = 514
• 31.7 Granting of an Easement = 515
• 31.8 Special Tax Credits for Real Estate Investments = 516
• 31.9 Foreclosures and Voluntary Conveyances to Creditors = 516
• 31.10 Restructuring Mortgage Debt = 518
• 31.11 Abandonments = 518
• 31.12 Seller's Repossession After Buyer's Default on Mortgage = 519
• 31.13 Foreclosure on Mortgages Other Than Purchase Money = 521
• 31.14 Foreclosure Sale to Third Party = 521
• 31.15 Transferring Mortgaged Realty = 522
• 32 Tax Pointers for Investors in Mutual Funds = 523
• 32.1 Investing in Mutual Funds = 524
• 32.2 Money-Market Mutual Funds = 524
• 32.3 Timing Your Investment = 524
• 32.4 Reinvestment Plans = 525
• 32.5 Reporting Mutual-Fund Distributions = 525
• 32.6 Tax-Exempt Bond Funds = 525
• 32.7 Fund Expenses = 526
• 32.8 Tax Credits From Mutual Funds = 527
• 32.9 Redemptions and Exchanges of Fund Shares = 527
• 32.10 Basis of Redeemed Shares = 527
• 32.11 Comparison of Basis Methods = 530
• 33 Family Income Planning = 531
• 33.1 Gift Tax Basics = 532
• 33.2 Custodian Accounts for Minors = 532
• 33.3 Trusts in Family Planning = 534
• 33.4 Gifts of Appreciated Property = 535
• 33.5 Life Insurance Offers Tax Advantages = 535
• 33.6 How Life Insurance Proceeds Are Taxed to a Beneficiary = 537
• 33.7 A Policy With a Family Income Rider = 538
• 33.8 How Other Insurance Proceeds Are Taxed = 539
• 34 Tax Pointers for Senior Citizens = 540
• 34.1 Special Rules for Senior Citizens = 541
• 34.2 Social Security Benefits Subject to Tax = 541
• 34.3 Computing Taxable Social Security Benefits = 542
• 34.4 Election for Lump-Sum Social Security Benefit Payment = 544
• 34.5 Retiring on Social Security Benefits = 544
• 34.6 How Tax on Social Security Reduces Your Earnings = 545
• 34.7 Claiming the Credit for the Elderly and Disabled = 545
• 34.8 Base Amount for the Elderly or Disabled Credit = 546
• 34.9 Reduction of the Credit Base Amount for the Elderly and Disabled = 546
• 34.10 Tax Effects of Moving to a Continuing Care Facility = 547
• 34.11 Imputed Interest on Refundable Entrance Fees = 548
• 35 Tax Savings for Members of the Armed Forces = 549
• 35.1 Taxable Armed Forces Pay and Benefits = 550
• 35.2 Tax-Free Armed Forces Benefits = 550
• 35.3 Deductions for Armed Forces Personnel = 551
• 35.4 Tax-Free Pay for Service in Combat Zone or Hazardous Duty Area = 551
• 35.5 Tax Deadlines Extended for Combat Zone or Hazardous Duty Area Service = 552
• 35.6 Tax Forgiveness for Combat Zone or Hazardous Duty Area Deaths = 553
• 35.7 Extension To Pay Your Tax When Entering the Service = 554
• 35.8 Tax Information for Reservists = 554
• 36 How to Treat Foreign Earned Income = 555
• 36.1 Claiming the Foreign Earned Income Exclusion = 556
• 36.2 What Is Foreign Earned Income? = 556
• 36.3 Qualifying for the Foreign Earned Income Exclusion = 558
• 36.4 How To Treat Housing Costs = 559
• 36.5 Meeting the Foreign Residence or Physical Presence Test = 560
• 36.6 Claiming Deductions = 561
• 36.7 Exclusion Not Established When Your Return Is Due = 562
• 36.8 Tax-Free Meals and Lodging for Workers in Camps = 562
• 36.9 Virgin Islands, Samoa, Guam, Northern Marianas = 563
• 36.10 Earnings in Puerto Rico = 563
• 36.11 Tax Treaties With Foreign Countries = 564
• 36.12 Exchange Rates and Blocked Currency = 564
• 36.13 Information Returns on Foreign Currency = 564
• 36.14 Foreign Tax Credit = 565
• 36.15 Computing the Foreign Tax Credit = 565
• 36.16 Carryback and Carryover of Excess Foreign Tax Credit = 566
• 37 Planning Alimony and Marital Settlements = 567
• 37.1 Planning Alimony Agreements = 568
• 37.2 Decree or Agreement Required = 568
• 37.3 Cash Payments Required = 569
• 37.4 Payments Must Stop at Death = 569
• 37.5 Child Support Payments Are Not Alimony = 571
• 37.6 No Minimum Payment Period for Alimony = 572
• 37.7 3rd Year Recapture If Alimony Drops $15,000 or More = 572
• 37.8 Legal Fees of Marital Settlements = 573
• 38 Educational Tax Benefits = 574
• 38.1 Scholarships and Grants = 575
• 38.2 Tuition Reductions for College Employees = 575
• 38.3 How Fulbright Awards Are Taxed = 575
• 38.4 U.S. Savings Bond Tuition Plans = 575
• 38.5 Qualified State Tuition Programs(Section 529 Plans) = 576
• 38.6 Student Loan Interest Deduction = 577
• 38.7 Education Tax Credits = 579
• 38.8 Hope Credit = 580
• 38.9 Lifetime Learning Credit = 580
• 38.10 Income Phaseout of Education Credits = 581
• 38.11 Contributing to an Education IRA = 581
• 38.12. Distributions From Education IRAs = 582
• 38.13 Deduction for Higher Education Expenses in 2002-2005 = 582
• 39 Estate Taxes = 584
• 39.1 What Is the Estate Tax? = 585
• 39.2 Take Inventory = 585
• 39.3 Finding the Value of Your Estate = 585
• 39.4 How the Estate Tax Is Applied = 586
• 39.5 Estate Tax Rates = 586
• 39.6 Reducing or Eliminating a Potential Estate Tax = 587
• 39.7 Estate Tax Freeze Advisory = 588
• PART 6 BUSINESS TAX PLANNING = 589
• 40 Income or Loss From Your Business or Profession = 591
• 40.1 Forms of Doing Business = 592
• 40.2 Reporting Self-Employed Income = 592
• 40.3 Accounting Methods for Reporting Business Income = 592
• 40.4 Tax Reporting Year for Self-Employed = 595
• 40.5 Reporting Business Cash Receipts to the IRS = 596
• 40.6 How to File Schedule C = 597
• 40.7 Deductions for Professionals = 601
• 40.8 Nondeductible Expense Items = 602
• 40.9 How Authors and Artists May Write Off Expenses = 603
• 40.10 Deducting Expenses of a Sideline Business or Hobby = 603
• 40.11 Deducting Expenses of Looking for a New Business = 604
• 40.12 Exclusive and Regular Use of a Home Office = 605
• 40.13 What Home Office Expenses Are Deductible? = 607
• 40.14 Allocating Expenses to Business Use = 609
• 40.15 Business Income May Limit Home Office Deductions = 610
• 40.16 Home Office for Sideline Business = 611
• 40.17 Depreciation of Office in Cooperative Apartment = 611
• 40.18 Net Operating Losses for Refund of Prior Taxes = 612
• 40.19 Your Net Operating Loss = 612
• 40.20 Form 1045 = 613
• 40.21 How To Carry Back Your Net Operating Loss = 614
• 40.22 Election To Carry Forward Losses = 614
• 40.23 General Business Credit = 614
• 40.24 Other Fuel-Related Credits = 615
• 41 Retirement Plans for Self-Employed = 616
• 41.1 Who May Set Up a Keogh Plan? = 617
• 41.2 Choosing a Keogh Plan = 617
• 41.3 Top-Heavy Plan Restrictions = 618
• 41.4 Choosing a SEP = 618
• 41.5 Deductible Keogh or SEP Contributions = 618
• 41.6 How To Claim the Keogh or SEP Deduction = 621
• 41.7 How To Qualify a Keogh Plan or SEP Plan = 621
• 41.8 Annual Keogh Plan Return = 621
• 41.9 Restrictions on Loans Before 2002 = 622
• 41.10 How Keogh Plan Distributions Are Taxed = 622
• 41.11 SIMPLE IRA Plans = 622
• 42 Claiming Depreciation Deductions = 623
• 42.1 What Property May Be Depreciated? = 624
• 42.2 Claiming Depreciation on Your Tax Return = 625
• 42.3 First-Year Expensing Deduction = 625
• 42.4 MACRS Recovery Periods = 627
• 42.5 MACRS Rates = 627
• 42.6 Half-Year Convention for MACRS = 629
• 42.7 Last Quarter Placements - Mid-Quarter Convention = 629
• 42.8 150% Rate Election = 630
• 42.9 Straight-Line Depreciation = 630
• 42.10 Computers and Other Listed Property = 631
• 42.11 ACRS Recovery for Assets in Service Before 1987 = 632
• 42.12 Straight-Line Recovery for Equipment in Service Before 1987 = 633
• 42.13 MACRS for Real Estate Placed in Service After 1986 = 633
• 42.14 Demolishing a Building = 635
• 42.15 Leasehold Improvements = 635
• 42.16 Depreciating Real Estate Placed in Service After 1980 and Before 1987 = 635
• 42.17 When MACRS Is Not Allowed = 636
• 42.18 Amortizing Goodwill and Other Intangibles(Section 197) = 636
• 42.19 Deducting the Cost of Computer Software = 638
• 43 Deducting Automobile Expenses = 639
• 43.1 IRS Automobile Allowance = 640
• 43.2 Auto Expense Allocations = 642
• 43.3 Auto Depreciation Restrictions = 642
• 43.4 Annual Ceilings on Depreciation = 644
• 43.5 MACRS Rates for Cars = 645
• 43.6 Straight-Line Method = 647
• 43.7 Depreciation for Year in Which Car Is Disposed Of = 648
• 43.8 Depreciation After Recovery Period Ends = 649
• 43.9 Trade-in of Business Auto = 649
• 43.10 Recapture of Deductions on Business Auto = 650
• 43.11 Keeping Records of Business Use = 650
• 43.12 Leased Business Autos : Deductions and Income = 651
• 44 Sales of Business Property = 652
• 44.1 Ordinary Income Recapture of Depreciation on Sale of Personal Property = 653
• 44.2 Ordinary Income Recapture on Depreciable Realty = 653
• 44.3 Recapture of First-Year Expensing = 654
• 44.4 Gifts and Inheritances of Depreciable Property = 654
• 44.5 Involuntary Conversions and Tax-Free Exchanges = 655
• 44.6 Installment Sale of Depreciable Property = 655
• 44.7 Sale of a Proprietorship = 655
• 44.8 Property Used in a Business(Section 1231 Assets) = 655
• 44.9 Sale of Property Used for Business and Personal Purposes = 656
• 44.10 Should You Trade in Business Equipment? = 657
• 44.11 Corporate Liquidation = 657
• 45 Figuring Self-Employment Tax = 658
• 45.1 What Is Self-Employment Income? = 659
• 45.2 Partners Pay Self-Employment Tax = 659
• 45.3 Schedule SE = 660
• 45.4 How Wages Affect Self-Employment Tax = 661
• 45.5 Optional Method If 2001 Was a Low-Income or Loss Year = 662
• 45.6 Self-Employment Tax Rules for Certain Positions = 663
• PART 7 FILING YOUR RETURN AND WHAT HAPPENS AFTER YOU FILE = 665
• 46 Filing Your Return = 667
• 46.1 Keeping Tax Records = 668
• 46.2 Getting Ready To File Your Return = 668
• 46.3 Applying for an Extension = 669
• 46.4 Paying Taxes Due = 670
• 46.5 Electronic filing = 671
• 46.6 Notify the IRS of Address Changes = 671
• 46.7 Choosing a Tax Return Preparer = 672
• 47 How Tax Data Is Processed by the IRS = 678
• 47.1 IRS Preliminary Review = 679
• 47.2 Information Returns Required by the IRS = 679
• 47.3 When the IRS Can Assess Additional Taxes = 681
• 47.4 Interest on Deficiencies = 682
• 47.5 Tax Penalties for Late Filing and Late Payment = 682
• 47.6 Tax Penalties for Inaccurate Returns = 682
• 48 IRS Tax Audits = 684
• 48.1 Odds of Being Audited = 685
• 48.2 Types of Audits = 686
• 48.3 Preparing for the Audit = 686
• 48.4 Handling the Audit = 687
• 48.5 Agreeing to Audit Changes = 687
• 48.6 Disputing the Audit Changes = 688
• 48.7 Recovering Costs of a Tax Dispute = 689
• 48.8 Suing the IRS for Unauthorized Collection = 690
• 49 Filing Refund Claims, and Amended Returns = 691
• 49.1 Who Should File a Refund Claim = 692
• 49.2 When To File a Refund Claim = 692
• 49.3 Joint Refund Claims = 692
• 49.4 Stating the Reasons for Refund Claims = 693
• 49.5 Quick Refund Claims = 693
• 49.6 Interest Paid on Refunds = 693
• 49.7 Refunds Withheld by the IRS = 694
• 49.8 Amended Returns Showing Additional Tax = 694
• PART 8 2001 TAX FORMS, TAX TABLES, AND TAX RATE SCHEDULES = 695
• IRS Tax Forms for 2001 = 697
• IRS Tax Tables and Tax Rate Schedules for 2001 = 743
• Earned Income Credit(EIC) Tables for 2001 = 756
• PART 9 GLOSSARY AND INDEX = 759
• Glossary of Tax Terms = 761
• Index = 767