Sec. 1 - Ch.7: Special Circumstances/Economic Growth Flashcards
How are property settlements taxed?
They are tax-free exchanges
What are the requirements for alimony pre 12/31/2018 to be deductible by the payor and taxable to the payee?
- The tax payers cannot file a joint tax return or live together at the time of the payment
- Payments must be made in cash
- Payments must be received by or for the benefit of the payee spouse (i.e. not treated as child support)
- The payments cannot extend beyond the death of the recipient spouse by decree or by state law
How is child support payments taxed?
Child support payments are on-taxable to the payee and nondeductible by the payor
**Any amount tied to a contingency or occurrence of an event relating to a child is considered to be child support and not alimony
How are property settlements taxed in a divorce? How is basis handled?
Any transfer of property between spouse’s incident to a divorce is gift tax free
- The basis in the property is “carried over” to the transferee
Who is favored in intestacy cases?
Blood relatives over domestic partners
What are the best transfer agreements for unmarried domestic partners?
Revocable trusts and tenancy-in-common
- A will can be contested and a JTWROS can be siphoned by a disgruntled partner
What is COBRA and who offers it?
- Employers providing group or self-funded health coverage that are required to offer terminated employees the right to buy continued health coverage
- Small companies are exempt from this: fewer than 20 employees for at least half the year
What are structured settlements? How are they taxed?
Voluntary agreement between the personal injury victim and the defendant who was deemed to be negligent
- Injury victims receive a stream of tax-free payments tailored to meet future medical expenses and living needs, as opposed to one lump-sum
What are compensatory damages? How are they taxed? How does it change if the damages are due to discrimination or other non-physical injuries?
Damages received due to physical injuries or physical illness
- They are generally tax-free, but interest paid on a tax free damage award is taxable.
- Damages received in discrimination or other non-physical injury cases are taxable
**Exception: damages up to the amount of actual medical care expenses due to emotional distress are tax-free
How are punitive damages taxed? What is the exception?
Punitive damages are taxable
**Exception: Damages paid to a beneficiary in conjunction with wrongful death are received tax-free
What is Supply? What factors determine Supply?
The amount of a good or service that producers are willing to sell
Determined by:
- Price
- Costs of production (i.e. labor costs)
- The level of tech
What is Demand? What factors determine Demand?
The amount of a good or service that buyers are willing to purchase
Determined by:
- Price
- Price of other goods, especially substitute goods
- Consumers’ income and tastes
What is the reserve requirement?
Is the level of reserve the Fed sets for its member banks that they must maintain.
- If it is reduced than this is expansionary policy
- If it is increased than this is contractionary policy
What is the Discount Rate?
It’s the rate the Fed charges its member banks to borrow to med reserve requirements (this is the rate between the Fed and the banks not the banks and the publics)
– If they reduced the rate than this is expansionary policy
- If they increased the rate than this is contractionary policy
What is Open Market Operations?
The fed’s trading desk adjusts credit availability daily through repurchase and reverse-repurchase agreements with government securities dealers
- Repo/buying bonds is expansionary policy. They are putting money into the economy
- Reverse Repo/Sell bonds is contractionary policy. They are taking money from economy
