General Principles Chapter 7 Flashcards
Special Circumstances & Economic Concepts
Alimony Test for Deductibility
ONLY BEFORE 2019 (bc of TCJA)
deductible:
-cash payments from payor spouse for mortgage, rent, tax tuition etc
- premium payments made by payor for life insurance owned by payee and insured is payor (PREMIUMS ON PAYOR SPOUSE)
not deductible/not alimony
payments to maintain property owned by payor/used b payee
transfers of noncash items
1984 Tax Act
any transfer of property between spouses incident to divorce is tax free gift, basis transfers
Who Claims Childs Deductions In Divorce
typically the custodial parent, but divorce agreement can be for the noncustodial parent if that is what is agreed up
Additional Coverage for a Disabled Person
SSDI
workers comp
employer provided disability insurance
medicare or medicaid benefits
Who does Intestacy Favor if there is no will
blood relatives
Best transfer arrangement for unmarried domestic partners
revocable trust
tenancy in common
COBRA Features
employers are required to offer terminated employees the right to buy continued health coverage (less than 20 employees full or part time are exempt)
Cobra Qualifying Event: termination, full to part time
coverage offered to terminated employee and other dependents for 18 months
Cobra qualifying event: death, divorce legal sep
coverage offered to spouses and other dependents
up to 36 monthsl
loss of dependent status (marriage, reching dependency)
dependents whose status changed
up to 36 months
ACA - Affordable Care Act
guaranteed enrollment with no preexisting condition exclusion
Structured Settlement
stream of tax free payments
Compensatory Damages Tax Treatment
tax free, interest is taxable (unless damages are paid over time periodically, annuitized, even earnings/interest is tax free)
Punitive Damages
taxable UNLESS it is in conjunction with wrongful death
punish wrongdoing by negligent defendent
Prizes/Awards Tax Treatment
full value included in gross income even if annuity is selected
Fiscal Policy
fed taxation and spending
Monetary Policy
fed reserve board influences supply of money
-reserve requirements
-discount rate
-open market operations
-margin rates
Discount Rate
rate the fed charges members to borrow to meet reserve requirements
leading indicators
initial claims for unemployment insurance
new manufacturing orders
new private housing units
stock prices, 500 common stock
index of consumer expectations
Coincident Indicators
industrial production
Lagging Indicators
av duration of unemployment
av prime rate charged by banks
commercial/industrial loans outstanding
ratio of consumer installment credit outstanding to personal income
change in CPI
Recession
2 consecutive quarters of real gdp decline
Depression
6 quarters (1.5 yrs)
GDP
us economy total production of goods and services. no regard for inflation
consumption + investment, govt spending + net exports
