PART II: Individuals & Personal Financial Planning (Area 1)

In this section

• Chapter 3: Gross Income & Adjusted Gross Income
  • Advanced Inclusions & Exclusions (Fringe Benefits, Compensation Structures)
    Explore complex fringe benefits, noncash compensation, and essential rules for discerning timing and tax treatment of ISO vs. NSO. Learn about key exceptions, including foreign earned income exclusions, to ensure robust CPA Tax Compliance & Planning readiness.
  • Complex Retirement Contributions & Phaseouts (HSA, SEP, SIMPLE)
    Discover advanced strategies for Health Savings Accounts (HSAs), SEP IRAs, and SIMPLE IRAs. Learn about contribution limits, phaseout nuances, and penalty triggers to navigate complex retirement planning with confidence.
  • Stock Options & Equity Compensation Nuances (ISO, NSO)
    Explore key differences in tax treatment for Incentive Stock Options (ISOs) vs. Nonqualified Stock Options (NSOs), including grant, vesting, exercise, and AMT pitfalls.
  • Alimony Post-TCJA & Other Special Adjustments
    Explore major changes to alimony taxation under the Tax Cuts and Jobs Act, including real-life calculations and compliance insights for CPA candidates. This comprehensive guide covers the shift from payer deductibility to updated rules on divorce settlement timing, offering practical examples to ensure exam readiness.
• Chapter 4: Deductions & Taxable Income Computation
  • Business vs. Personal Deductions (Home Office, QBI Deduction)
    Comprehensive guidance on differentiating business from personal expenses, along with an in-depth exploration of the Qualified Business Income Deduction for CPA candidates and tax practitioners.
  • Itemized Deductions: SALT Caps, Medical Expenses, Charitable Strategies
    A comprehensive guide to SALT Caps, medical expenses, and sophisticated charitable giving strategies—comparing standard vs. itemized deductions for the CPA Exam.
  • AMT Mechanics & Planning (Preference Items & Adjustments)
    Explore Alternative Minimum Tax (AMT) fundamentals, how AMT interacts with standard tax deductions, and key preference items like Incentive Stock Options to effectively plan and minimize potential AMT liability.
  • Estimated Tax Payments, Safe Harbor Rules & Underpayment Penalties
    Understand safe harbor thresholds for estimated tax payments, special rules for high-income taxpayers, and how to avoid underpayment penalties through practical planning strategies.
• Chapter 5: Passive Activity & At-Risk Rules
  • Material Participation & Passive vs. Active Income Definitions
    Explore the seven tests for material participation under IRC §469, distinguish active vs. passive income, and discover practical insights on short-term rentals, grouping rules, and borderline scenarios.
  • Suspended Losses, Carryforward Mechanics & Special Real Estate Exceptions
    Explore the core principles of suspended passive losses, the indefinite carryforward provisions, and critical real estate professional exceptions under U.S. tax law. Understand when and how suspended losses can be released, as well as the AGI-based special allowances for real estate investments.
  • Interplay Between Passive Losses & At-Risk Limitations
    Master the interplay between passive activity losses and at-risk limitations, covering ordering rules, real-world K-1 examples, and Form 8582 calculations.
  • K-1 Allocations in Partnerships & S Corporations: Layering for Passive vs. Active Activities
    A comprehensive guide to how K-1 allocations in Partnerships and S Corporations are classified as passive or active, including detailed steps for verifying material participation in each entity type.
• Chapter 6: Transfers During Life – Gift Taxation & Strategy
  • Unified Transfer Tax System & Unified Credit Limits
    Gain an in-depth understanding of how the unified transfer tax system seamlessly integrates gift and estate taxes, including current annual and lifetime exclusions, practical examples, best practices, and key strategies for CPA exam success.
  • Valuation Techniques & Discounts (Minority, Marketability)
    Explore key valuation methodologies, understand minority and marketability discounts, and learn how these concepts are applied in gift taxation and estate planning.
  • Lifetime Gifting Strategies: Grantor Retained Annuity Trusts (GRATs), Crummey Powers
    A comprehensive overview of Grantor Retained Annuity Trusts (GRATs) and Crummey Powers, their mechanics, tax implications, and strategies for effectively transferring wealth—including family business interests—under the U.S. gift tax framework.
  • Compliance: Completing Form 709 & Record-Keeping
    Master the intricacies of Form 709, gift tax filings, and thorough documentation procedures to ensure seamless future estate calculations and compliance in the Unified Credit system.
• Chapter 7: Personal Financial Planning
  • Retirement Vehicles & Tax-Deferred Growth (401(k), 403(b), 457 Plans)
    Understand 401(k), 403(b), and 457 plans' benefits, tax implications, statutory contribution limits, and catch-up provisions. Explore employer-sponsored plan differences, best practices, and real-world CPA exam scenarios.
  • Educational Funding (529 Plans, Coverdell ESAs, Student Loan Interest)
    In-depth exploration of 529 Plans, Coverdell ESAs, and Student Loan Interest for comprehensive tax compliance and planning. Learn effective strategies, pitfalls, and best practices surrounding educational funding accounts and interest deductions.
  • Insurance & Risk Management (Life, LTC, Disability)
    Explore how life, long-term care, and disability insurance protect against financial risks, including key tax treatments of policy premiums and payouts.
  • Investment Allocation & Tax-Efficient Asset Placement
    Master tax-savvy tactics for allocating interest-bearing and growth-oriented assets among taxable, tax-deferred, and tax-exempt accounts to optimize your portfolio and meet CPA Exam requirements.