Table of Contents

Chapter 1 - 2018/2017 Easy Update & Inflation Adjustments - Section 1. 1

Individual 1

Income Tax Rates - §1. 1

Marriage Penalty - Mostly Gone. 3

Capital Gain & Qualified Dividend Rate. 3

Same-Sex Marriage. 3

Innocent Spouse Relief - §6015(f) 4

Standard Deduction - §63. 4

Dependent Limit - §63(c)(5) 5

Personal Exemptions & Phaseout (Suspended) - §151. 5

Limitation on Itemized Deductions - §68. 6

Itemized Deductions Subject to 2% Floor Fully Denied. 6

Unearned Income of Children ("Kiddie Tax") - §1(g) 8

AMT - §55. 9

Exemption Amounts & Permanent “Patch” - §55(d)(1) 9

AMT Exemption Phaseout - §55(d) & §59(j) 10

AMT & Personal Credits. 10

New Inflation Adjustment 10

Wage Base for Social Security & Medicare Taxes. 11

Earned Income Tax Credit - §32. 11

Disqualified Income - §32(i) 12

Means-Tested Programs. 12

Chapter 1 - Section 1 - Review Questions. 13

Chapter 1 - 2018/2017 Easy Update & Inflation Adjustments - Section 2. 15

Child Tax Credit - §24. 15

Earned Income. 15

AGI Phaseout 15

Child & Dependent Care Expenses Tax Credit - §21. 16

Alimony Payment Deduction Repealed. 16

Moving Expense Deduction & Reimbursement Repealed. 16

State & Local Taxes (SALT) Limited. 17

$10,000 Exception. 17

Charitable Contributions Modified. 18

Cash Contributions. 18

College Athletic Event Seating Rights Repealed. 18

Substantiation Exception for Donee Reported Contributions Repealed. 18

Mortgage Interest Deduction Limited. 19

Securities Rollover Into SSBICs Repealed. 19

Educator Expenses - §62. 20

Discharge Of Student Loan Indebtedness Expanded. 20

Higher Education Tuition Deduction (Expired) - §222. 21

Tax on Net Investment Income - §1411. 21

Reduced Home Sale Exclusion For Nonqualified Use - §121. 22

Computation. 22

Nonqualified Use. 22

Post-May 6, 1997 Depreciation. 23

Surviving Spouse Home Sale Exclusion - §121. 23

Insubstantial Benefit Charitable Contribution Limitation - §513. 23

Household Employees - §3121. 23

Adoption Credit - §23 & §137. 23

Education Savings Accounts - §530 & §529. 24

Rollovers Between §529 Tuition & ABLE Programs. 25

Chapter 1 - Section 2 - Review Questions. 26

Chapter 1 - 2018/2017 Easy Update & Inflation Adjustments - Section 3. 27

Hope & Lifetime Learning Credits - §25A.. 27

Lifetime Learning Credit - §25A(a)(1) 27

Phase Out - §25A(d)(2) 27

Hope (with American Opportunity modifications) Credit - §25A(b)(1) 27

Phase Out - §25A(d)(2) 28

Refundable. 28

Educational Savings Bonds - §135. 28

Student Loan Interest Deduction - §221. 28

Phase Out 28

Discharge Of Student Loan Indebtedness - §108. 29

Foreign Earned Income Exclusion - §911. 29

Rehabilitation Credit Modified. 29

Conservation Base Expansion - §170(b) 30

Definitions. 31

Grandfathered Archer Medical Savings Accounts - §220. 31

Medical Expense Deduction - §213. 31

Personal Casualty Losses Repealed. 32

Wagering Losses Limited. 32

Health Savings Accounts (HSAs) - §223. 32

High Deductible Health Plan (HDHP) 33

Annual Limit On Contributions. 33

Interaction with Obamacare. 33

Long-Term Care Premiums - §213(d)(10) 33

Long-Term Care Payments - §7702B(d)(4) 34

ABLE Accounts - §529A.. 34

Qualified ABLE Program... 35

Contributions. 35

Distributions. 35

Rollover 36

PATH Act Modification. 36

Affordable Care Act (“Obamacare”) 36

Mandates. 36

Individual - Repealed in 2019. 36

Health Plan Coverage Credit - §36B.. 37

Employers. 38

Small Employers - Fewer Than 50 Employees. 38

Large Employers - 50 or More Full-time Employees. 38

Marketplaces & The Protecting Affordable Coverage for Employees Act 39

Medical Device Excise Tax. 40

Expatriation - §877A.. 40

Failure to File Tax Return - §6651. 40

Penalties Regarding Preparing Other’s Tax Returns - §6695. 40

Attorney's Fees - §7430(c)(1) 41

Chapter 1 - Section 3 - Review Questions. 42

Chapter 1 - 2018/2017 Easy Update & Inflation Adjustments - Section 4. 43

Energy. 43

Personal Solar Property Credit - §25D.. 43

Renewable Energy Production Tax Credit - §45 & §48. 43

Plug-In Electric Drive Motor Vehicle Credit - §30. 44

Advanced Energy Investment Credit - §48C.. 44

Business. 44

Business Income of Individuals - 20% Deduction. 44

Limitations. 45

Deduction Amount 45

Qualified Trade Or Business. 46

Corporate Tax Rate Reduced to 21%... 46

Alternative Minimum Tax for Corporations. 47

Small Business Accounting Methods Expanded. 47

Excessive Employee Remuneration Limitation Modified. 49

Qualified Equity Grants. 50

Entertainment Activities Or Facilities Deduction Repealed. 51

Business Interest Limited. 52

Limitation on Non-corporate Losses. 53

Net Operating Loss Deduction Modified - §172. 53

Expenses for Child Care Facilities & Services - §45F. 54

Family & Medical Leave Credit - §45S. 55

Uniformed Services Wage Credit  - §45P. 55

Health Care Coverage. 56

Credit - §45R.. 56

Reporting - §6051(a)(14) 56

Small Employer HRA - §9831(d)(2) 56

Bonus (or Additional First-year) Depreciation - §168(k) 57

Qualified Property - §168(k)(2) 58

Depreciation Limits on Business Vehicles - §168(k)(2)(F) 58

Nonqualified Property - §168(k)(2) 58

Vehicle Depreciation “Caps” - §280F(a) 59

Bonus Depreciation - Good News, Bad News. 59

$25,000 Limit 59

Expensing - §179. 59

General Business Credit - §38. 61

Special Film & TV Production Expensing (Expired) - §181. 61

Live Theatrical Productions. 61

Estimated Tax Payments - §6654. 62

Standard Mileage Rates. 62

Chapter 1 - Section 4 - Review Questions. 63

Chapter 1 - 2018/2017 Easy Update & Inflation Adjustments - Section 5. 65

Self-Employment Tax & CRP Payments - §1402. 65

Final Repair Regulations - §162. 65

Health Insurance Deduction in Computing SE - §162. 65

Social Security, Medicare & FUTA (or Payroll) Taxes. 65

FICA - §3111 & §3121. 66

SECA - §1401. 66

Wage Base. 66

Additional Hospital Insurance Tax On Certain High-Income Individuals. 66

FUTA - §3301 & §3306. 67

Research Tax Credit - §41. 67

Incremental 68

Alternative Simplified Credit 68

Relation to §174. 68

Qualified Expenses. 68

Repatriation of Deferred Foreign Income. 68

5 Year Amortization of Research & Experimental Expenditures. 69

Low-Income Housing Tax Credit - §42. 70

Rate Freeze. 70

Basis Amount 70

Military Allowances & Low-Income Housing - §42(h) & §142(d) 70

Cafeteria Plans - §125. 70

Employer-Provided Educational Assistance - §127. 71

Parking Exclusion & Passes - §132. 71

Bicycle Commuters Fringe Benefit (Suspended)- §132(f) 71

Cents-per-Mile Valuation Method - §61. 72

Employee Achievement Awards Exclusion Modified - §74. 72

Moving Expense Reimbursement Exclusion Repealed. 73

Travel Per Diem Rates. 73

Work Opportunity Tax Credit (WOTC) - §51. 73

Targeted Groups. 74

Credit Amount 75

Special Long-Term Family Assistance Recipients Calculation. 76

Special Veterans Calculation as a Result of “VOW”. 76

Leasehold Improvement, Retail Improvement & Restaurant Property - §168. 77

Qualified 15-Year Leasehold Improvement Property - §168(e)(3)(E)(iv) 77

Qualified Leasehold Improvement Property. 77

Subsequent Owner 78

Qualified 15-Year Retail Improvement Property - §168(e)(E)(ix) 78

Qualified Retail Improvement Property. 78

15-Year Restaurant Improvement Property - §168(e)(3)(E)(v) 79

Qualified Restaurant Property. 79

Expensing & Bonus Depreciation Permitted. 79

Expensing - §179. 79

Bonus Depreciation - 168. 79

Recapture Considerations - §1245 & §1250. 79

2018 TCJA Provisions. 80

Potential Technical Correction. 80

Qualified Improvement Property. 80

Recovery Period Of Certain Farm Property Shortened. 80

Like-kind Exchanges Limited to Real Property - §1031. 81

Enhanced Charitable Deduction for Food - §170. 81

Qualified Small Business Capital Gains - §1202. 82

75% Exclusion - February 17, 2009 to September 27, 2010. 82

100% Exclusion - September 27, 2010, to Present 83

Domestic Production Activities Deduction (Repealed) - §199. 83

New Markets Tax Credit - §45D.. 83

Qualified Equity Investment 84

Qualified Low-Income Community Investments. 84

Qualified CDE.. 84

Credit Amount 84

Imputed Interest Small Transaction Exception - §1274. 85

Denial of Deduction for Certain Fines Expanded. 85

Denial of Deduction for Sexual Harassment Settlements. 85

Technical Termination Of Partnerships Repealed. 85

Increased Holding on Certain Partnership Profit Interests. 86

Limitation On Allowance Of Partner’s Share Of Loss. 87

Built-In Loss Definition On Transfer Of Partnership Interest 87

Foreign Person Sale of U.S. Partnership Interest 87

S to C Corporate Conversion Rules Modified. 88

S Corporation Built-In Gain Period - §1374. 89

S Corporation Charitable Contributions - §1367. 89

Beneficiaries Of An Electing Small Business Trust 89

Charitable Deduction for Electing Small Business Trust 90

Small Life Insurance Company Deduction Repealed. 90

Unrelated Business Income Tax (“UBIT”) Separately Computed. 90

UBTI Increased by Taxable Fringe Benefits. 91

Tax-Exempt Organization Executive Compensation Tax. 91

Payments To Controlling Exempt Organizations - §512(b) 92

Private College And University Investment Income. 92

Dividends Of Regulated Investment Companies (RIC's) - §871. 93

Information Reporting & Penalties - §6721 et al 93

Corrections Resulting in Reduced Penalties. 94

Small Businesses. 94

Reasonable Cause. 94

Failure to File Partnership Return - §6698. 95

Failure to File S Corporation Return - §6699. 95

Chapter 1 - Section 5 - Review Questions. 96

Chapter 1 - 2018/2017 Easy Update & Inflation Adjustments - Section 6. 98

Retirement Plans. 98

Defined Benefit Plans - §415(b)(1)(A) 98

Defined Contribution Plans - § 415(c)(1)(A) 98

Rollover Period For Plan Loan Offset Amounts Extended. 98

Compensation Limit - §401, §404 & §408. 98

IRA Contribution Limit - §219. 99

Catch-up Contribution. 99

IRA AGI Phaseout Limits - §219. 99

Individual Taxpayer is an Active Plan Participant 99

Spouse is an Active Plan Participant 100

Charitable Distributions from IRAs - §408. 100

Roth Contribution Limit - §408A(c)(2) & §219. 101

Roth AGI Phaseout Limits - §408A(c)(3) 101

Rollovers to Roth IRAs. 101

In-Plan Rollovers to Roth Accounts. 102

Roth IRA Conversions for Retirement Plans. 102

Special Roth IRA Recharacterization Repealed. 102

Designated Roth Accounts for §457 Plans. 103

§401(k), §403(b) & §457 Elective Deferral & Catch-up Limits. 103

SIMPLE Plans. 103

Simplified Employee Pensions (SEPs) 103

Contribution Limit 103

Compensation Limit 104

Retirement Savings (Saver’s) Credit - §25B(b) 104

Nonspouse Rollovers - §402. 104

Estate, GST & Gift Taxes - §2001, §2601 & §2501. 105

Estate Tax - §2001. 105

Repeal & Reinstatement of Estate & GST Taxes. 105

Applicable Exemption Amount - §2010. 105

Basis of Inherited Property - §1014. 106

2010 Special Election. 106

Portability - §2010(c)) 106

State Death Tax Credit Replaced with Deduction - §2058. 106

Real Property Valuation - §2032A.. 106

Interest on Estate Tax Installments - §6166 & §6601. 106

Estate & Trust Income Tax Rates - §1(e) 107

Consistent Basis Reporting Between Estate & Heirs. 107

GST Tax - §2601. 107

Rates. 107

Applicable Exemption Amount for GST - §2010. 108

Gift Tax - §2501. 108

Reunification of Estate & Gift Taxes. 108

Applicable Exemption Amount for Gift Tax - §2505. 108

Annual Exclusion for Gifts - §2503. 109

Noncitizen Spouse Exclusion - §2523(i)(1) 109

Notice of Large Gifts Received from Foreign Persons - §6039F. 109

Chapter 1 - Section 6 - Review Questions. 110

Answers & Explanations. 112

Chapter 1 - Section 1 Review Questions Feedback. 112

Chapter 1 - Section 2 - Review Questions Feedback. 116

Chapter 1 - Section 3 - Review Questions Feedback. 119

Chapter 1 - Section 4 - Review Questions Feedback. 122

Chapter 1 - Section 5 - Review Questions Feedback. 125

Chapter 1 - Section 6 - Review Questions Feedback. 129

Glossary. 132

Index of Keywords & Phrases. a

CPE Exam Answer Sheet e

Final Examination. f