Table of Contents

Chapter 1 - Family Tax Planning  Section 1. 1

Filing Status. 1

Marital Status. 1

Unmarried. 1

Abandoned Spouse Rule. 1

Married. 2

Joint Return. 2

Innocent Spouse Relief - '6015. 2

Refund Offset Program - '6402. 3

Injured Spouse - Form 8379. 3

Separate Returns. 3

Separate vs. Joint Dilemma. 4

Disadvantages of a Separate Return. 4

Advantages of a Separate Return. 4

Joint Return after Separate Returns. 5

Head of Household. 5

Exemptions Suspended. 5

Phaseout of Exemptions Suspended. 5

Dependents. 6

Social Security Numbers. 6

Dependency Tests. 6

Unified Definition of a Child. 6

Children of Divorced or Separated Parents. 7

Divorce Costs. 8

Tax Advice - '212(3) 8

Fees to Obtain Alimony or Protect Income - '212(1) & (2) 9

Fees to Obtain Property - '1012 & 1016. 9

Living Together 9

Married v. Unmarried Tax Rate Comparison. 10

Sham Divorce. 10

Dependency Exemptions. 10

Alimony & Property Divisions. 10

Income Earned by Children. 11

Unearned Income of Children Under 18 - The "Kiddie Tax". 11

Application of Suspended Rule. 11

Adoption. 11

Exclusion from Income for Employer Reimbursements. 12

Child or Dependent Care Credit - '21. 12

Eligibility. 13

Employment Related Expenses. 13

Qualifying Out-of-the-home Expenses. 13

Payments to Relatives. 13

Allowable Amount 13

Dependent Care Assistance - '129. 13

Reporting. 14

Dependent Care Assistance - '129. 14

Amount of Assistance. 14

Requirements. 14

55% Test 14

Conflict with Dependent Care. 15

Work-Related Educational Expenses - '162. 15

Qualifying Education. 15

Requirements. 15

Exception. 15

Education Required by Employer or by Law.. 16

Education to Maintain or Improve Skills. 16

Education Expense Credits. 16

HOPE (with American Opportunity modifications) Credit 17

Phase Out 17

Refundable. 17

Lifetime Learning Credit 18

Phase Out 18

Chapter 1 - Section Review Questions. 19

Chapter 1 - Family Tax Planning  Section 2. 20

Education Savings (or Coverdell) Accounts - '530. 20

Contribution Limits. 20

Beneficiary Limit 20

Contributor Limit 20

Phased Out of Contribution. 20

Qualified Expenses. 21

Homeschool 22

Student Loan Interest - '221. 22

Qualified Education Loan. 22

Related Party Loan. 23

Qualified Higher Education Expenses. 23

Qualified Tuition Programs - '529. 23

Distributions. 24

Form 1099-Q Reporting. 24

Education Expenses - '529(e)(3) 24

Cancellation of Student Loans - '108. 25

Higher Education Expense Deduction (Expired)- '222. 25

Eligibility. 26

Maximum Deduction. 26

IRA Withdrawals for Education - '72(t) 26

Scholarships & Fellowships - '117. 26

Degree Candidate. 27

Student Loans. 27

Qualified Tuition Reduction. 27

Educational Savings Bonds - '135. 27

Medical Costs - '213. 28

Spouse. 28

Dependents. 28

Health Savings Account - '223. 28

Eligible Individuals. 29

Contributions. 29

Health Insurance For Self-Employed. 29

Charitable Contributions - '170. 29

Requirements for Deductibility. 30

Limitations on Contributions. 30

60% Ceiling. 30

30% Ceiling. 30

20% Ceiling. 30

Carryovers - Five Years. 30

Casualty & Theft Losses - '165. 30

Casualty. 31

Theft 31

Limitations. 31

Special Residence Rule. 31

Disaster Area Losses. 31

Unsafe Home. 31

Special Residence Rule. 32

Home Sales. 32

Exclusion Amount 33

Two Year Ownership & Use Requirements. 33

Tacking of Prior Holding Period. 33

Prorata Exception. 33

Limitations on Exclusion. 33

Vacant Land. 34

Moving Expenses Suspended - '217. 34

Distance Test 35

Time Test 35

Time Test for Employees. 35

Time Test for Self-employment 35

Moving Expense Reimbursement 36

Home Mortgage Interest 36

Home Acquisition Debt Modified. 36

Home Equity Debt Suspended. 37

Points. 37

Exception - Fully Deductible Points. 37

Property Rights. 38

Marital Property. 38

Common Law Property. 38

Community Property. 38

Equitable Distribution. 39

Separate Property. 39

Premarital Agreements. 39

Limitations. 40

Enforceability Requirements. 40

Property Settlements. 40

Passive Activity Loss Property. 40

Residence. 40

Qualified Domestic Relations Order 41

Alimony. 41

Recapture of Alimony. 41

Child Support 42

Contingency Relating To the Child. 42

Clearly Associated With a Contingency. 42

Elderly & Disabled Planning. 43

Managing the Estate. 43

Catastrophic illness. 43

Health Care Decisions. 43

Accelerated Death Benefits. 43

Terminally Ill Individual 44

Chronically Ill Individual 44

Exclusion Limited. 44

Estate Planning. 44

Simple Will 45

Applicable Exclusion. 45

Portability  Deceased Spousal Unused Exclusion Amount 45

Danger for Larger Estates. 45

Probate. 45

Living A-B Revocable Trust 45

Living A-B-C (QTIP) Trust 49

Impact of Spousal Portability on Trust B.. 49

Chapter 1 - Section 2 Review Questions. 51

Answers & Explanations. 53

Glossary. 60

Index of Keywords & Phrases. a

CPE Exam Answer Sheet d

Final Examination. e