[krokofilen]

Don’t know if anyone else is struggling with distinguishing adjustments to GI from deductions to AGI. I’ve been trying to memorize this, since there are lots and lots of questions in the NINJA testbank relating to this.

Any tips?

Big 4 Audit Manager from Europe here to pass the CPA in the U.S. of A in 2014! Niiice!

AUD - 95 / Jul 15 / 130h over 4 weeks
FAR - 86 / Aug 14 / 240h over 4 weeks
(11 week break)

REG - 81 / Nov 14 / 200h over 4 weeks
BEC - 87 / Nov 17 / 30 h over 2.5 days

[CPA soon]

You will have to format it well to see everything clearly, I'm pasting this from excel but I don't know how else to share this. I don't know why no course has a 1040 summary so I made one to fit on two pages!

Gross Income Taxable Event = Income at FMV = Basis at FMV

Non-Taxable Event = No Income = Basis at NBV

Wages (Include excess of $50K life insurance premuim;Exclude health insurance)

Interest -Schedule B – (Include interest on Federal/Corporate bonds, bank accounts, late tax refund payments;Exclude qualified Series EE Savings Bonds

which are acquired after 1989 and taxpayer over 24 using for higher education expenses for self, spouse, or dependents)

Dividends – Schedule B – (Include portion of a corporation's earning; Exclude amounts that are not earnings up to basis, any excess is capital gain;

Qualified dividend are taxed at net capital gain rate)

State and Local Tax Refunds (If benefited previous year's itemized deduction;AKA Tax-Benefit Rule)

Almony Received (Include Cash paid periodically & required by law;Exclude lump-sum prop settlements & Child Support which takes payment priority)

Business Income – Schedule C – (Deduct 50% of meals & entertainment expenses in excess of 2% of AGI;$25 Business Gift); CARRY BACK 2, FORWARD 20

Capital Gain/Loss – Schedule D – (Dispositions/Gifts/Inherited LT Property)

Dispositions (Deduct $3K/ALL $1500/MFS;On Real/Pers Prop not used in business;Stocks/Securities,Partnership Int.); CARRY FORWARD INDEFINITELY

Amount Realized/Received=Cash Received+Cancelation of Debt+Property/Services at FMV

Adjusted Basis of Asset Sold=Cost+Improvements-Depreciation (Tax Dep)

Amount Realized-Basis=Capital Gain/Loss; LTCP is taxed at 0/15,15/39.59,or 20/39.6+

Gifts (Cash or Property at donor's Basis at date of sale;Disposition Gain=Above Donor Basis;Loss=Under FMV;No G/L between)

Inherited Property is LT property (Basis=FMV at date of death or Election of lower valuation 6 months after death)

G/L Exclusions,Deferrals,Disallowed HIDE IT

Non-Deductable/Disallowed Losses WRaP

IRA Income (Required Minimum Distributions “RMDs” by 70.5; Deduct Penalty Before 59.5)

Deductible AKA Traditional (Deduct Now;Tax Distributions)

Roth (Non-Deductable;Tax-Free Distribution)

Non-Deductable (Non-Deductable; Tax-Free Original Distributions but not earnings/Interest)

*Exceptions to Penalty Tax HIM DEAD (Tax As Ordinary Income)

Pension and Annuity

Passive Activity Income – Schedule E – (No material participation;LP Interest/Rental Prop/S-Corps/Tax Shelters/Royalties/Partn K-1 Passive Income)

Passive Losses only offset Passive Income; CARRYFORWARD INDEFINITELY ;Deduct 100% when disposed

Mom & Pop rental activity;Deduct up to $25K/Year if participate & own 10%+ of Activity;Reduce 50% of Excess of $100K of AGI

K-1 Income/Loss

Miscellaneous (Unemployment Compensation/Prizes & Awards/Gambling Winnings,Deduct Losses up to Winnings)

Partially Taxable Income (SSI based on income level/Scholarship & Fellowships not used for Qualified Expenses)

Exclude From Income=Non-Taxable; (Life Insurance Proceeds/Gifts/Inheritence/Medicare Benefits/Workers' Comp/Personal Physical Injury Awards)

<Adjustments>

SHE RAMP

Self employment Health Insurance Deduct 100%, Retirement and 1/2 FICA

Health/Medical Savings Account (HSA,Deduct $3,300/S $6,500/Fam at least $1,250/2,500 Deductible Max out-of-pocket $6,350/$12,700;

MSA,Participants of small business less than 50 emp & can't enroll after 2008,$3,450/$6,550 out-of-pocket $4,350/$8,000)

Educator Expense/Tuition and Fee Deductions EXPIRED ;Student Loan Interest Expenses ($2,500/Year Phaseout 65-80/S 130-160/MFJ)

Retirement (Deductible IRA $5,500S/$11,000MFJ;IF Participates in another plan Reduce/Phaseout Modified AGI 60-70/S 96-116/MFJ)

Modified AGI Excludes Interest/Dividend/Annuity/Pension Income; Non-working spouse Phaseout $191K+;$1,000 Catch-up 50+

Roth ($5,500/$11,000 Reduce/Phaseout M.AGI 114-129/S 181-191/MFJ);Keogh (Lesser of 25% self-emp net earnings or $52K);SEP/Simple

Coverdale Education IRA Non-Deductible,Tax-Free Distribution & earnings for Tuition/Fees/Room&Board/Supplies/Equipment;10% penalty)

Max Contribution $2K/year/beneficiary under 30 then Rollover to Family Free or withdraw with

Alimony Paid (Legal Divorce, Cash/Equivalents Payments, Spouse can't live in same household or be MFJ) Exclude Child Support/Property Settlements

Moving Expenses (Distance to work is 50 miles in excess of previous distance; 23.5 Cents/Mile; Work 39 weeks of 12 months after move);

If Self-Employed 78 weeks/24 Months; Include Travel/Lodging/Parking/Toll Exclude Meals/House-Hunt/Break Lease/Temp Living Expenses

Penalty on Interest Withdrawal (IRA/CD's;Time Deposits)

Adjusted Gross Income (AGI)

<Standard Deduction> ($6,200/S/MFS $9,100/HOH $12,400/MFJ;65 or/& Blind $1,550/3,100/S $1,200/$2,400/MFJ);

OR (Standard Deduction on Dependent of Another is greater of $1,000 or Income+$350)

<Itemized Deductions> – Schedule A -Phaseout $254,200/S $305,050/MFJ/Surviving Spouse $152,525/MFS $279,650/HOH

MISC TOM

Medical Expense (Excess of 10% of AGI;7.5% if over 65); Include Prescriptions/Med. Premuim/Transportation);

Exclude Optional Surgery/Vitamins/Life Insurance/Funeral are NON-DEDUCTIBLE

Interest Expense (Home Mortgage/Investment/Prepaid); HIPPE; Personal & Education are NON-DEDUCTIBLE

State/Local/Foreign Tax (Income/Property);Federal/Inheritence/Bus. Sched-C/Rental Prop Sched E are NON-DEDUCTIBLE; Sales Tax deduction EXPIRED)

Charity To Public Organization (30% of AGI for Cash/50% of AGI for property at lesser of Basis or FMV;Limit is 20% for non-op. private foundations);

Gifts to People/Political Contributions/Services donated are NON-DEDUCTIBLE but Tolls/Fees/Mileage at 14 Cents to charity are DEDUCTIBLE

Deduct when Received/Charged even if not received by bank;Keep records of contribution;FORM-8283 for $500+ Prop;Appraisal for $5K+Collectibles

*Total charity contributions combined cannot exceed 50% of AGI & NON-DEDUCTIBLE if Standard Deduction is elected;; CARRYFORWARD 5 years FIFO

Theft/Casualty (Lesser of Decrease in FMV or Adjusted Basis-$100-Excess of 10% of AGI); NON-DEDUCTIBLES: Losses not covered by insurance/

Failure to file Ins.Claim/Damage caused by Trees with Dutch Elm Disease/Lost/Broken/Misplaced Items)

Other Miscellaneous (Gambling Losses to extent of Winnings/Federal Estate Tax paid by Beneficiary on Related Income)

Miscellaneous (Excess of 2% of AGI); Unreimbursed Business Expenses (Overnight Travel 56 Cents per Mile/Lodging/Meals;

50% of Meals if not overnight/50% Business-Related Entertainment,Club Dues NON-DEDUCTIBLE);Work Uniforms/Employment Agency Fees/

$25 Business Gifts/Safe Deposit Box/Investment Advise/Tax Prep Fees + Debit Card Convenience Fees to Pay Income Tax/Prof Subscriptions

/Activites Not in for Profits such as Hobbies, Profits of 3+ years out of the last 5 are considered engaged in profits;

Education Expenses (Needed to maintain/improve skills for current Trade or required by employer for retention)

<Exemptions> (Tax Payer+Spouse+Dependents)x$3,950; CARE (Child) OR SUPORT (Relative); Born/Died of either during the year qualify;

Close Relative (Kids including adopted and foster, Step/Siblings, Descendants of either)

Age (19/24 if FT=Daytime student and younger than taxpayer; ignore if permanently disabled)

Residency (At least half year, whole year if foster child;Temporary Absences are OK; Preclude requirement applies)

Eliminate Gross Income test (no $3,950 limit) & Support Test

*Child Tax/Earned Income/Child & Dependent care expense credits claimed by others disqualify

Support Test (%50+, 10% if multiple combine 50%+; Exclude scholarships include SSI/Welfare)

Under Gross Income Test ($3,950 after exclusions such as SSI/Tax-exempt income/Scholarships)

Precludes dependents FILING joint returns with others unless only for refund claim purpose

Only Citizens/Residents of US/Canada/Mexico

Relative (Grand/Step/Parents/Aunts/Uncles/Siblings/In-laws/Temporary absences such as Illness/Education/Business/Vacation/

OR Military not required to live with taxpayer;No Foster parents or permanent absences like nursing homes)

Taxpayer lives with individual for the whole year

Taxable Income

Taxable Income

<Regular Income Tax> (Taxable Income X Tax Rate)

AMT Adjustment (Individual):

PANIC TIMME (PANIC P1987 are Timing Differences & CARRYOVER;ITEMM PP does NOT CARRYOVER)

Start with Regular Taxable Income

(+) Passive Activity Losses are Added Back or Recalculated

Accelerated Depreciation on Post-1986 Prop Adjustment To (40 Year Straight Line on Real;150% DDB on Personal);No adj. on Sec 179 Expense Prop.

Net Operating Loss Recomputed

Installment Method may not be used by dealer for Property Sales

Contracts (Adjust Completed Contracts to Percentage of Completion)

(+) Interest Expense Deductions on Equity Secured by Home; Investment Interest Expense gets Recalculated; HIPPE

(+) Tax Deductions (State,Local,Foreign; Subtract Refunds meeting Tax-Benefit Rule)

(+) Exemptions (Personal & Standard Deductions are NOT allowed)

(+) Medical Expense Deductions (10% not 7.5%); Only applies to 65+

(+) Miscellaneous Deductions (All that are subject to 2% Floor)

*ITEMMized Deductions always get added back; MISCTOM

Other AMT Adjustments (Incentive Stock Options/Recalculate Gain or Loss on Depreciable Assets/Pollution Control Activities/Circulation Expenses/

Mining Exploration & Development Costs/Research & Experimental Expenditures/Passive Tax Shelter Farm Activities)

AMT Preference Items (Same for Individual & Corporations)

3P

Private Activity Bond Interest Income (Certain Bonds)

Percentage depletion excess over adjusted basis of property

Pre-1987 Accelerated Depreciation (Add back Excess over Straightline)

Alternative Minimum Taxable Income

<Exemptions>

Single: $52,800-.25(AMTI-$117,300)

MFJ: $82,100-.25(AMTI-$156,500)

MFS: $41,050-.25(AMTI-$78,250)

Alternative Minimum Tax Base

X

Tax Rate (26% on AMTB of $182,500; 28% on Excess)

Tentative AMT Tax

<Regular Income Tax>

Alternative Minimum Tax (CARRYOVER FOREVER)

<Alternative Minimum Tax> (CARRYOVER FOREVER)

<Credits>

Personal Tax Credits (Reduce Tax Liability to Zero)

Adoption Credit; Once Final (AMT Offset; Not Spouse/Surrogate Child; $13,190/Child Phaseout $197,880-$237,880)

Child and Dependent Care Credit (35% reduced by 1%/$2K or fraction in excess of $15K AGI to a Min of 20% of Babysitter/Nursery School/Day Care/

Not Grammar School, $3K per person up to $6K on Qualifying Child Under 13, Disabled Dependent supported by 50%+, Disabled Spouse)

Education Credits (1st 4 Years, AMT Offset American Opportunity 100% of 1st $2K + 25% of next $2K of elgible expenses Including books/Per Student,

Phaseout $80-90K $160-180K; After 4 Years, Lifetime Learning Credit 20% up to $2K Excluding books/Per Tax Payer Phaseout $54-64K $108-128K)

*Coverdale Income Expenditures are NOT Elgible Expenses for Education Credits

Foreign Tax Credit (AMT Offset;Lesser of Foreign Taxes Paid; OR (Foreign Income/Total Income+Exemptions)x US Tax;CARRYBACK 1 CARRYFORWARD 10

General Business Credit (100% of $25K then 75% on excess of Tentative Tax;Investment/Alcohol Fuels/Research/Low-Income Housing/Welfare-To-Work

/Qualified Childcare Expenditures/Small Employer Pension Plan Start-Up Cost/Alternative Motor Vehicle) CARRYBACK 1 CARRYFORWARD 20

Elderly and Permanently Disabled Credit (65+ or Under 65 & Retired due to disability)

Formula: [(Base: $5K/S $7.5/MFJ $3,750/MFS)-.5(AGI excess of $7.5K/S $10K/MFJ $5K/MFS)-SSI-Pensions-Annuities]X.15

Retirement Savings Contribution Credit (AMT Offset; Max $2K; AGI $18K/S 50%, $19.5K 20%,$30K 10%, then Phaseout);MFJx2

*(Adopted Child gets Educated, Opens Foreign Personal Business, gets Old & Retires)

Refundable Credits (Reduce Tax Liability to Zero and Result in a Refund)

Child Tax Credit (AMT Offset; $1,000 per Resident/Citizen CARE child under 17) Phaseout Reduce by $50 per $1K exceeding $75K/S $110K/MFJ

Earned Income Credit (AMT Offset; Age 25-65, MFJ, Live in US half the year) No Kids=7.65% of Income ,Excluding Portfolio/Passive/Capital Gain,

up to $496; 1 Qualified “CARE” Child=34% up to $3,305; 2 CARE Children=40% up to $5,460; 3 or more Children= 45% up to $6,143

Withholding Tax (W-2); Paycheck Credit

Excess Social Security Paid (FICA)

American Opportunity Credit (40% Refundable, up to $1,000)

Total Owed Or Refund

FAR - 71, 68, 74, (8/31/14) 78 ✔
REG - 67, 71, 71, (10/18/14) 78 ✔
BEC - (11/29/14) 86 ✔
AUD - 73, (4/4/15) 86 ✔

I can't believe this is over! 2 years and 3 months..

[CPAfit]

@kroko if you have Becker, there's a detailed list of adjustments and itemized deduction items on the 4th page of R-1. I'm writing this list down everyday before I start doing any MCQs. Hopefully it will start to stick after a couple more times.

AUD - 82
BEC - 78
FAR - 78
REG - 83

HIYA!

NH Licensed CPA - Jun 2018

[Anonymous]

There are different mnemonics posted all over the forum. Here's one. https://www.another71.com/cpa-exam-forum/topic/reg-1040-mnemonics

The one I like for Adjustments is “SHIT IM ASS DOPE” and for Deductions “COMMIT”.

[krokofilen]

zubairs:

Yeah, I know the list, it's just that it is rather difficult to memorize without having some sort of technique for it (like mnemonics).

CPAby2015:

Thanks, will check it out. “SHIT IM ASS DOPE” is awesome, and easy to remember.

Big 4 Audit Manager from Europe here to pass the CPA in the U.S. of A in 2014! Niiice!

AUD - 95 / Jul 15 / 130h over 4 weeks
FAR - 86 / Aug 14 / 240h over 4 weeks
(11 week break)

REG - 81 / Nov 14 / 200h over 4 weeks
BEC - 87 / Nov 17 / 30 h over 2.5 days

[krokofilen]

Just don't read it out loud while taking the exam

Big 4 Audit Manager from Europe here to pass the CPA in the U.S. of A in 2014! Niiice!

AUD - 95 / Jul 15 / 130h over 4 weeks
FAR - 86 / Aug 14 / 240h over 4 weeks
(11 week break)

REG - 81 / Nov 14 / 200h over 4 weeks
BEC - 87 / Nov 17 / 30 h over 2.5 days

[Author]

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