PART V: Federal Taxation of Individuals (Area IV)

In this section

• Chapter 14: Gross Income (Inclusions and Exclusions)
  • Items Included in Gross Income (Wages, Dividends, Pensions)
    Deep dive on how wages, dividends, and pension income must be included in gross income for individual taxation, including ordinary vs. qualified dividends and practical wage reporting insights.
  • Interest Income and Dividends (Taxable vs. Non-Taxable)
    Discover the tax implications of interest income and dividend payments, including municipal vs. corporate bonds, qualified dividends, and partial exclusions, with practical examples and best practices.
  • Capital Gains and Losses (Short-Term vs. Long-Term) - Key Rules for Netting and Carryover
    A comprehensive guide to short-term vs. long-term capital gains, their distinct holding periods, netting processes, and strategic carryover rules for individuals under U.S. tax law.
  • Exclusions (Gifts, Inheritances, Life Insurance Proceeds, Scholarships)
    Comprehensive coverage of statutory exclusions from gross income including gifts, inheritances, life insurance proceeds, scholarships, and fringe benefits for the REG CPA exam.
  • Kiddie Tax (Unearned Income of Minor Children)
    Explore the Kiddie Tax, including the threshold for unearned income, child’s standard deduction, and parental rate calculations under U.S. tax law.
• Chapter 15: Adjustments, Deductions, and Credits
  • Adjustments to Arrive at Adjusted Gross Income (Self-Employed Expenses, IRAs, HSAs)
    Learn how to reduce taxable income through common above-the-line adjustments, including self-employed expenses, traditional IRA deductions, and Health Savings Accounts (HSAs). Explore definitions, eligibility criteria, phaseouts, and real-world examples.
  • Itemized Deductions (Medical, Taxes, Interest, Charity, Casualty)
    Maximize tax benefits by understanding the thresholds, AGI limitations, SALT caps, and other special rules for itemized deductions, including medical expenses, taxes, interest, charitable contributions, and casualty losses.
  • Tax Credits (Refundable vs. Nonrefundable)
    Learn the differences between refundable and nonrefundable tax credits, including critical qualifications, calculations, and best practices for major credits such as the Child Tax Credit, Earned Income Tax Credit, and Education Credits.
  • Qualified Business Income Deduction (QBI)
    In-depth exploration of QBI deduction thresholds, specified service trades, W-2 wage limits, and UBIA factors for CPA exam success.
  • Filing Status and Estimated Tax Payments
    Discover how to choose the optimal filing status—including Head of Household, Single, or Married Filing Jointly—and learn about estimated tax safe harbors, payment schedules, and best practices for avoiding underpayment penalties.
• Chapter 16: Loss Limitations (At-Risk, Passive Activity, and Other)
  • At-Risk Rules and Material vs. Non-Material Participation
    Explore in-depth at-risk basis computations, the significance of material participation under IRS rules, and practical strategies for limiting losses in individual taxation.
  • Passive Activity Loss Limitations and Rental Real Estate Activities
    Discover how rental real estate activities are treated under passive activity loss limitations, including real estate professional exceptions, material participation rules, and the $25,000 offset.
  • Utilization of Suspended Losses upon Disposition
    Learn how suspended passive losses are freed up upon the complete disposition of an activity, and discover strategies for optimal tax outcomes.
  • Hobby Losses and Other Non-Deductible Items
    Explore critical insights into hobby loss rules, key distinguishing factors, and partial deductions to maintain accurate compliance under IRS guidelines.
• Chapter 17: Reporting of Income from Pass-Through Entities
  • Partnership and S Corporation Flow-Through Items
    Explore how Partnerships and S Corporations report ordinary vs. separately stated items and understand the self-employment tax implications for owners in these dynamic pass-through structures.
  • Separately Stated Items vs. Ordinary Income (Loss)
    Learn how partnerships and S corporations classify, compute, and distribute ordinary income and separately stated items to their owners, including guidance on Section 179 deductions, charitable contributions, and special allocations.
  • Basis Calculations and Loss Utilization
    Explore partner and shareholder basis, outside basis adjustments, debt allocations, and their critical role in limiting losses for pass-through entities.
  • Schedule K-1 Compliance Considerations
    A comprehensive guide on interpreting, classifying, and ensuring compliance with pass-through entity Schedule K-1 forms, including line-by-line insights, common errors, and best practices.