EA2 Study Unit 08 - Credits, Losses, and Additional Taxes

A nonrefundable tax credit that includes certain employer FICA credits but excludes others.

Costs like providing interpreters for accessibility qualify for the credit, but new building access does not.

A loss that occurs when a business's expenses exceed its revenues, considered under Sec. 172.

Interest income and long-term capital losses are not included in the NOL calculation.

A loss that cannot offset business-related capital gains and is treated differently in tax calculations.

A tax credit for 50% of access expenditures between $250 and $10,250, capped at $5,000.

Includes remuneration for employment, educational assistance, and dependent care expenses.

NOL is calculated by adjusting deductions and excluding certain income types, resulting in a precise loss amount.

For a carryover NOL, only 80% of the taxable income can be canceled out in the subsequent year.

Defined as the excess of deductions over gross income; impacts tax credit availability.

NOL calculated by adjusting for nonbusiness income and losses, resulting in a specific amount.

In future, only 80% of the taxable income may use NOL carryover.

Costs related to making facilities accessible to disabled persons qualify for the credit.

Nonbusiness income can affect the calculation of net operating loss.

The net capital gain is derived from sale profits after subtracting sale losses.

Interest income and personal capital losses do not affect NOL calculations.

Deduction for personal losses is capped by AGI percentage and deductible thresholds.

Add back deductions like prior NOLs and excess losses when calculating NOL.

A loss on business property can lower taxable income and affect NOL.

Losses on business-use property count, but personal-use losses face stricter rules.

Cash payments over certain amounts to workers trigger FICA tax obligations.

Wages in the context of NOL include compensation, salary, or amounts received in various forms.

Losses from rental property disposals are deductible in NOL calculations.

Certain entities cannot claim NOL deductions, such as non-profits and some corporations.

Insurance proceeds reduce deductible losses; only net losses may be claimed.

Trusts and estates are allowed to carry over NOL deductions.

Gains offset losses and may limit NOL claims depending on sources.

Losses greater than profits and income can be deducted in calculating NOL.

Subtract salvage value from the basis when determining losses on destroyed property.

Only part of losses for personal property might count towards deductions.

Special rules apply if losses are from federally declared disasters.

Certain types of NOLs can be carried back to previous tax years for refunds.

Both original owners and new owners can incur liability for highway taxes under certain conditions.

Farmers must meet specific employee thresholds to owe federal unemployment taxes.

An activity is not a hobby if it profits in 3 of 5 tax years, or 2 of 7 for horse activities.

Nine factors are assessed to determine if an activity is for profit, such as taxpayer's expertise and time investment.

Previously, hobby expenses matched income could be deducted, subject to a 2% floor on various deductions.

The TCJA suspended deductions for hobby expenses starting 2018, making them nondeductible for 2023.

A casualty loss arises from sudden, unexpected events caused by external forces such as fires or storms.

Personal casualty and theft losses are deductible only for federally declared disasters and up to the extent of gains.

Losses from ordinary accidents or deterioration are not deductible as casualty losses.

Losses from progressive deterioration like rust are not deductible; only sudden events qualify.

A credit against U.S. tax for foreign taxes paid or accrued, limited to U.S. tax on foreign income.

The FTC equals the lesser of foreign taxes paid or U.S. tax on foreign income.

Credits not used in a tax year can be carried back 1 year and forward 10 years.

NOLs from 2021 onward can be carried forward indefinitely, limited to 80% of taxable income.

NOLs from 2018 to 2020 can be carried back 5 years and forward indefinitely.

NOL can only be deducted in years with taxable income, based on its origin year.

NOL can affect the availability of tax credits due to taxable income limits.

Tax credits that can reduce tax liability to zero but not beyond that.

Limited to net income tax minus the greater of AMT or 25% excess over $25,000.

Corporations' GBC is capped at net income tax minus 25% of tax over $25,000.

Illustrates credit application where regular tax exceeds AMT.

Tax credits reduce the total amount owed to the government.

Losses from theft or damage that can potentially reduce taxable income.

A brief explanation of various business-related taxes beyond income tax.

Net operating loss is computed as allowable deductions exceeding gross income.

An NOL can offset up to 80% of taxable income in future years.

Limited by a deductible and 10% of AGI; only applies to federally declared disasters.

Losses from business activities can reduce taxable income and affect NOL.

Only business income and losses are included in calculating NOL.

Personal use losses generally face stricter deduction rules compared to business losses.

Original and subsequent vehicle owners can share tax liability under certain circumstances.

Farmers must meet certain cash wage thresholds to qualify for unemployment tax liabilities.

S corporations do not directly benefit from NOL; investors may claim losses instead.

Loss on rental properties is deductible when calculating NOL.

Capital gains can counterbalance capital losses and affect NOL deductions.

Insurance reimbursements must be subtracted from casualty losses when determining deductibility.

Farmers must report cash and non-cash wages for Social Security tax purposes.

Losses in disaster areas are assessed based on reduced FMV and basis after insurance.

Casualty loss must exceed deductions and adjustments based on the situation.

Nonbusiness income reduces the NOL calculation by affecting standard deductions.

Deductible personal losses are also subject to several limitations.

Trusts and estates can utilize NOL carry forwards and back like individuals.

Various modifications are required for accurately assessing an individual's business loss.

Farmers can report specific losses differently due to unique tax rules.

Certain income types, such as interest, do not contribute to NOL computations.

NOL signifies that a business has incurred more expenses than income, affecting taxes.

Certain agricultural businesses qualify for special tax treatments and exemptions.

When calculating losses for business assets, consider adjusted cost and depreciation.