Table of Contents
Acknowledgments xv
Chapter 1 Tax insanity 1
Chapter 2 Is It Legal? 57
Chapter 3 How Our Tax System Works 63
Chapter 4 Exclusions-Tax-Free Money 69
A Alternatives to "Earned Income" 71
1 Hospitalization Premiums 71
2 Group Life Insurance Premiums 72
3 Group Legal Services Plans 74
4 Accident and Health Plans 74
5 Employee Death Benefits 75
6 Merchandise Distributed to Employees on Holidays 75
7 "Expenses of Your Employer" 76
8 Meals and Lodgings 76
9 Employee Discounts 78
10 Workers' Compensation 78
11 "Cafeteria" Plans and Flexible Spending Accounts 79
12 Dependent Care Assistance Program 79
13 Employer Educational Assistance 81
14 Employee Awards 82
15 Clergy Housing Allowance 84
16 Miscellaneous Fringe Benefits 85
B Donative Items 85
17 Gifts, Bequests, and Inheritances 85
18 Scholarships and Fellowships 86
19 Prizes and Awards 88
20 Qualified Charitable Distributions (QCDs) 90
C Investors 91
21 Interest on State and Municipal Obligations 91
D Benefits for the Elderly 92
22 Public Assistance Payments 92
23 Social Security and Other Retirement Benefits 92
24 Annuities 95
25 Sale of Your Home 98
E Miscellaneous Individual Exclusions 99
26 Carpool Receipts 99
27 Damages 100
28 Divorce and Separation Arrangements 108
29 Life Insurance 111
30 Qualified State Tuition (§529) Programs 113
31 Your Home-The Mother of All Tax Shelters! 124
32 Disabled Veteran Payments 128
33 Exclusion of Income for Volunteer Firefighters and Emergency Medical Responders 128
34 Unemployment Benefits 128
35 Homeowner Security 128
36 Reimbursed Costs to Parents of Children with Disabilities 129
37 Wrongful Conviction and Incarceration 129
38 Restitution Payments 129
39 Frequent Flier Miles 129
40 Hurricane Sandy 130
41 Cancellation of Indebtedness 130
42 Medicaid Payments for Foster Care of Related Individuals 130
43 ABLE Accounts 131
44 Foreign Earned Income Exclusion 132
F Schedule of Excludable Items 132
Chapter 5 Credits-Dollar-for-Dollar Tax Reductions 135
A Estimated Tax and Withholding Exemptions 136
B Credits 139
45 Refundable The Earned Income Credit 139
46 Excess Social Security Tax 142
47 The Child and Dependent Care Credit 143
48 Credit for the Elderly or Permanently and Totally Disabled 149
G Special Credits 151
49 Work Opportunity Credit (Formerly Targeted Jobs Tax Credit) 151
50 Welfare to Work Credit 155
51 Research Tax Credit 155
52 Orphan Drug Tax Credit 156
53 Adoption Assistance 156
54 Hope Scholarship Credit 158
55 American Opportunity Tax Credit 159
56 Lifetime Learning Credit 160
57 Child Tax Credit 160
58 Disability Credits 161
59 Health Insurance Credit 162
60 Saver's Credit 162
61 Small Employer Credit 163
62 Electric Vehicle Credit 164
63 Credit for Residential Energy Efficient Property 164
64 Energy Saving Home Improvement Credit 165
65 Hybrid Vehicles Credit 166
66 Telephone Tax Refund 168
67 First-Time Home Buyer Credit 168
68 "Making Work Pay" Tax Credit 169
69 Plug-in Electric Drive Vehicle Credit 170
70 Plug-in Electric Vehicle Credit 173
71 Conversion Kits 173
72 Treatment of Alternative Motor Vehicle Credit as a Personal Credit Allowed against AMT 173
73 Small Business Health Insurance Credit 174
74 Small Business Health Care Credit 174
75 Foreign Tax Credit 175
76 The Premium Tax Credit 175
77 Employer Credit for Family and Medical Leave Benefits 179
Chapter 6 "Above the Line" Deductions 181
A Deductions for Adjusted Gross Income 185
78 Trade and Business Deductions 185
79 Employee Business Expenses of Actors and Other Performing Artists 186
80 Employee Business Expenses 187
81 Alimony 187
82 Interest on Qualified Education Loans 196
83 Retirement Plan Payments 196
84 Self-Employment Tax 258
85 Health Insurance Deduction for Self-Employeds 258
86 Moving Expenses-Old Law 259
87 Clean Fuel Vehicles 266
88 Deduction for Qualified Higher Education Expenses-Tuition and Fees 266
89 Legal Fees 268
90 Classroom Materials 268
91 Medical Savings Accounts (Archer Medical Savings Accounts) 268
92 Health Savings Accounts 270
93 Sales Tax Deduction on Motor Vehicles 273
Chapter 7 "Below the Line" Deductions 279
A The Importance of Filing Status 280
B Tax Planning with Itemized Deductions 285
94 Medical Expenses 285
95 Income Taxes 300
96 Real Property Taxes 302
97 Personal Property Taxes 303
98 Interest 304
99 Mortgage Insurance 324
100 Charitable Contributions 324
101 Casualty Losses 347
102 Theft Losses 351
103 Miscellaneous Trade and Business Deductions of Employees 359
104 Job Loss Insurance 360
105 Travel Expenses 360
106 Transportation Expenses 365
107 Meals and Entertainment Expenses 370
108 Gifts 371
109 Reimbursable Employee Business Expenses 373
110 Educational Expenses 373
111 Limit on Itemized Deductions 375
C Schedules of Deductions 376
112 Medical Deductions 376
113 Deductible Taxes 377
114 Charitable Deductions 378
115 Casualty and Theft Loss Deductions 379
116 Miscellaneous Deductions 380
117 Employee Miscellaneous Deductions 380
118 Investor Deductions 381
Chapter 8 Traditional Tax Shelters 383
A Deferral and Leverage 398
119 Real Estate 399
120 Fees in Public Real Estate Partnerships 411
121 Oil and Gas 412
122 Equipment Leasing 421
123 Single-Premium Life Insurance 425
124 Cattle Feeding Programs 429
125 Cattle Breeding Programs 431
126 Tax Straddles 433
127 Art Reproduction 435
128 Noncash Gift Shelters 436
129 Municipal Bond Swaps 437
B How to Analyze a Tax Shelter 438
130 Getting Out of the Tax Shelter 440
131 Master Limited Partnerships 442
132 Abusive Shelters 444
Chapter 9 Super Tax Shelters 447
A Family Shifts 448
133 Unearned Income of Minor Children 451
134 Outright Gifts 455
135 Clifford Trusts 460
136 Interest-Free Loans 460
137 The Schnepper Shelter: Gift Leasebacks 460
138 The Schnepper Deep Shelter 466
139 Family Partnerships 466
140 Family Trusts 467
141 The Schnepper Malagoli Super Shelter 468
142 Employing Members of the Family 470
143 Author's Delight 473
B Running Your Own Business 474
144 Your Home 477
145 Your Car 490
146 Meals and Entertainment 492
147 Travel and Vacation 497
148 Gifts 502
149 Advertising 503
150 Deductible Clothes 503
151 Creative Deductions-Busting the IRS 504
152 Medical Premiums 504
153 Borrowing from Your Company 504
154 Miscellaneous Corporate Advantages 507
Chapter 10 Investment Planning to Save Taxes 511
155 Short Sales 518
156 Broad-Based Index Options and Regulated Futures Contracts (RFCs) 519
157 Wash Sales 519
158 Premiums on Taxable and Tax-Exempt Bonds 520
159 Original Issue Discount (OID)-Taxable Bonds 520
160 Original Issue Discount (OID)-Tax-Exempt Bonds 520
161 Market Discount 521
162 Municipal Bond Swaps 521
163 Employee Options-Nonqualified 522
164 Incentive Stock Options 523
165 Year-End Stock Sales 528
166 Fund Strategies 528
167 Dividends 529
168 Tax-Exempt Income 533
169 Old Prices 536
170 Alternative Minimum Tax for Individuals 536
171 U.S. Savings Bond Exclusion 550
172 Madoff Losses 552
173 Collars-Tax Free Lock in Your Gain 553
Chapter 11 Last-Minute Tax Planning 555
174 Defer Taxes 556
175 Accelerate Expenses 558
176 Accelerate Special Deductions 559
177 Dependents and Personal Exemptions 559
178 Phase-out of Exemptions 563
179 Timing Strategies 565
180 Retirement Plans 565
181 Individual Retirement Plans (IRAs) 566
182 H.R. 10 or Keogh Plans 566
183 Marital Status 567
184 The Goldinger Deferral 568
Chapter 12 More Tax Changes 569
A The Patient Protection and Affordable Care Act 570
B Small Business Jobs Act of 2010 573
C The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 575
D American Tax Relief Act of 2012 581
E Tax Increase Prevention Act of 2014 584
F The ABLE Act 586
G More Changes 587
H The Tax Cuts and Jobs Act of 2017 591
I The Budget Deal Passed on February 9, 2018 607
Chapter 13 How to Avoid/Survive an IRS Audit 611
Appendix A Cost Recovery/Depreciation 765
Appendix B Business Use of "Listed Property" 777
Appendix C Auto Leases 793
Index 859
