Exam 1 Material

• Review the 3 long form problems from Exam 1 to prepare for the tax return component of

the exam (don’t worry about the parts that are crossed off):

o Gross income and above the line deductions

o Itemized deductions

o Individual income tax formula

• Understand above the line deductions, below the line deductions, and tax credits – see #23

• Determining filing status and dependent status – see #18-22

• Tax rate structures – see #2

• Various tax rate measures: marginal tax rate, effective tax rate, average tax rate – see #1, #5

• Due dates, extensions, and statute of limitations – see #7-8

• Losses on business assets vs. losses on capital assets ($3,000 limit only on latter) – see #10

• Taxability of Social Security benefits – see #9 (I’ll give you the details for the calculation)

• Timing strategies and calculating NPV – see #11, #13

• Deductibility of self-employment taxes and health insurance premiums for a self-employed

individual – see #17

Exam 2 Material

• Taxability of interest and dividends – see #1

• Calculating gain/loss on stock sale – see #2

• Netting process for ST and LT capital gains/losses – see #4-5

• Net investment income tax – see #6

• Calculating tax basis in a partnership interest – see #23

• Limitations on passive losses (tax basis, then at-risk, then passive income) – see #7

o Exception for real estate losses – see #8

• Tax consequences of independent contractor vs. employee – see #13

• Calculating self-employment taxes – see first long form problem

• Child tax credit and phase out – see first long form problem

• Lifetime learning credit – see #12

• American opportunity credit – see first long form problem

• Earned income credit – see first long form problem

• Ordering of tax credits when calculating tax due – see #14 and the first long form problem

• Cash vs. Accrual method – review second long form problem

o Rules for bad debt – see #19

• Depreciation – understand how to apply Section 179 immediate expensing, bonus

depreciation, and regular depreciation, see last long form problem

o Understand how calculation changes for assets that are partially personal-use #24

o Understand NPV consequences of bonus depreciation #25