Back to Tax School Homepage

2018 Taxable Income Beyond Wages and Salaries

In this tax subject, we will review income items beyond wages and salaries. These items include gambling income allowable gambling deductions. We will also look at the tax treatment of the forgiveness of debt such items reported on Form 1099C and foreclosures. All income is taxable from all sources even income from overseas. We will review the tax treatment of a U.S. citizen or resident alien with foreign income and also individual tax treaties. Other income items will be discussed such as scholarships, barter income, hobby income, taxable recoveries, NOLs and virtual currency such as Bitcoin.

When explaining about income, we have to discuss, and we do discuss, the constructive receipt of income and also the consequences of making payments of personal expenses from a business account. The payment of personal expenses from a business account of a business entity is especially wrong as you will learn later.

The discussion of passive and non-passive income is also extremely important as determining if your income is passive or non-passive makes a great difference in your tax return and items you can deduct.

In this topic, we will also discuss pass-through entities, pass-through entity income, deductions, basis and the forms such as Schedule K-1. Furthermore, we will deal with royalties and the related expenses, income from recoveries such as recoveries from itemized deductions. Finally, we will cover the 1099 MISC reporting requirements, irregularities and corrections.

Once you complete this 2018 Taxable Income Beyond Wages and Salaries course, you will have satisfied 8 hours of continuing education which satisfies 8 hours of tax law towards your total continuing education required hours.

Tax School Home Page

Student Instructions: Follow the following 2 steps:

	Instructions - You should do all of the following (steps 1 - 2)	Links:

Step 1	Read the reading material and answer the questions on this page (scroll down). So before you go to the reading material look at steps 1 and 2 here and at the questions on this page.	Reading Material
Step 2	Take each question below (scroll down) and write a paragraph for each question as part of an essay. Include one paragraph for an introduction and a paragraph for a conclusion. Each paragraph should have at least three complete sentences. Once you have your essay prepared, click on Submit Essay to submit your work one paragraph at a time. You should not go to submit essay until your essay is prepared.	Submit Essay
		Click on Reading Material for the multiple choice exam option

Tax Interview

Question

Introduction - For the introduction part of this essay, you may want to first answer the following three questions with one paragraph each and then come back to fill in the introduction and mention something from each of the three paragraphs.

What gambling income is included on your tax return? Can a gambler deduct gambling expenses? If so, up to what amount and on which form? What can you say about professional gamblers? How is a professional gambler treated differently than just a person who casually wins? Is it beneficial or a detriment to be considered a professional gambler?

If you debt is canceled in the amount that you don't have to pay, it this taxable or not taxable? If it is taxable, what part of Form 1040 would you include this taxable amount? Which form should you expect to receive from a credit about your canceled debt?

4

What are the tax consequences if you had your vehicle repossessed? What are the tax consequences of having your home foreclosed or if you abandone your home?

Does a bankrupt taxpayer have any protections or exceptions under the tax law? What are these? How do you qualify for bankruptcy exclusion?

What is the tax treatment of canceled qualified real property business indebtness? What are the conditions that this property must meet in order to qualify as qualified real property indebtness and thus to get the tax benefit?

7

Certain student loans provided that all or part of the debt incurred to attend a qualified educational institution will be canceled if the person who received the loan meets certain requirements. What are these requirements and how do you report this canceled debt to the IRS?

What are NOLs? Who takes a NOL? What are the limits on NOLs and what can be done if you reached the limit? Do you carry the excess forwards, back? How do you claim a NOL on your tax return?

9

Something different about real estate - is it considered a business? If someone rents their house, can they deduct all their expenses? How does the code treat real estate professionals different from a landlord renting a home? What is the key to being able to deduct all your rental expenses?

Conclusion - For the conclusion part of this essay, you may mention something from the three previous paragraphs and offer an opinion. What do you think about all this?

Back to Tax School Homepage

Revised: 04/02/18

Back