2004 Income Tax Seminar Book - Part II

Table of Contents / Page No.

NEW TAX LAW
Working Families Tax Relief Act of 2004  1- 8
Child Credit Stays at $1,000 for 2005 - 2009  1
Full Marriage Penalty Relief in 2005 - 2008 for Basic Standard Deduction  2
Full Marriage Penalty Relief in 2005 - 2007 for 15% Bracket  3
No Rollback in 2005 AMT Exemption for Individuals  3
Uniform Definition of Child  3
Research Credit Extended Through 2005  6
Work Opportunity Tax Credit and Welfare-to-Work Credit Extended  6
No Phasedown of Credit for Qualified Electric Vehicles Through 2005  6
Credit for Producing Electricity From Certain Renewable Resources Extended  7
Elective Expensing of Qualified Environmental Remediation Costs Extended  7
100%-of-Net-Income Limit Suspended for Marginal Properties  7
Above-the-Line Educators' Deduction Extended Through 2005  7
Archer MSAs Extended through 2005  8
American Jobs Creation Act   9-16
New rules for charitable donations of cars, boats and planes  9
Itemized deduction for state and local sales taxes for 2004 and 2005  10
Enhanced expensing under IRC §179 extended for two years  10
New limit on expensing sport utility vehicles  11
No gain exclusion for residence acquired in exchange within 5 years  12
Above-the-line deduction for legal fees paid in discrimination claims  12
15-year recovery for qualified improvements and restaurant property  13
Election to expense film and television production costs  14
Deduction for manufacturing/production activities  14
Exclusion of certain stock options from wages  15
Capital gains treatment on certain sales of timber after 2004  16
Election to treat family members as one S shareholder  16
Increase in maximum number of eligible S shareholders  16
FEDERAL DEVELOPMENTS
Aiding and assisting in preparation of false returns  17
IRA distributions - transfers incident to divorce  17
Business deductions - illegal expenses – kickbacks  17
Business use of home - home-based business - frivolous position  18
Travel between home and a temporary work place  19
Alimony deductions - alimony vs. property settlement  19
Alimony - written separation agreement  19
Federal law denies joint filing for legally married same - sex couples  20
Valuation of estate property - unreported items - auction sales  20
Unreported income - tax protestors  20
IRS “Dirty Dozen for 2004” – 12 Common Scams  20
TAX PLANNING STRATEGIES AND CONSIDERATIONS
Take Advantage of the Installment Method  23
Form 6252, Comprehensive Example  26
Depreciation, Allowed or Allowable  28
Tax Planning and Children  34
Hiring a Spouse  36
Double Itemizing  37
Gift Tax Exclusion  39
Donating Appreciated Assets  40
Individual Retirement Accounts (IRAs)  42
Roth –IRA  43
Roth-IRA v. Traditional IRA Comparison  45-50
Saver’s Credit  51
Required Minimum Distribution Rules  56
Roth-IRA Conversions   60-70
Simplified Employee Pensions (SEPs)  71
Savings Incentive Match Plan for Employees (SIMPLE)  77
Individual 401(k)  87
Traditional 401(k) Plan  93
Safe Harbor 401(k) Plan  97
Qualified Dividends for Small Closely Held Corporations  98
FEDERAL TAX UPDATE
Form 1040  103-216
Dependent  105
Child Tax Credit  108
Dependant Care Benefits  108
Dividends  111
Non-deductible IRA  113-116
Social Security Benefits  117-126
Educator Expenses  127
Student Loan Interest  128
Health Savings Account  129-133
Self-employed Health Insurance Deduction  134
Standard Deduction  135
Personal Exemption  136
Alternative Minimum Tax  136
Child Tax Credit  137
Earned Income Credit  138
Additional Child Tax Credit  140
Estimated Tax Penalty  141
Where to File  143
Form 1040, Schedule A  144-159
Medical and Dental Expenses  143
Income Taxes vs. General Sales Taxes  147
Home Mortgage Interest  147
Investment Interest Expense  151
Charitable Contributions  156
Gambling Losses  158
Form 1040, Schedule B  160-161
Form 1040, Schedule C  162-181
Accounting Methods  164
Car and Truck Expenses  166
Section 179 Expense  167-170
Depreciation  172-176
Repairs and Maintenance  176
Travel, Meals, and Entertainment  177
Home Office Rules  178-180
Form 1040, Schedule D  182-193
Definition of Capital Asset  184
Sale of Residence  186-188
Mutual Fund Sales  189
Form 1040, Schedule E  194-200
Vacation Home Rules  197
Income and Expenses  198
Passive Activity Rules  199
Partnership and S Corp., Income and Loss  200
New Form 1065 – (Schedule K1)  204
New Form 1120S – (schedule K-1)  207
Form 1040, Schedule EIC  209-212
Earned Income Credit – Phaseouts  210
Eligible Individual and Qualifying Child Defined  211
Form 6251, Alternative Minimum Tax – Individuals  213
Form 6198, At-Risk Limitations  215