Federal Income Taxation
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Adult Medical Surgical
Surgical Online
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Practice2025
2025
Study online at https://quizlet.com/_1vayuj
1. Five Step Fed- (1) Determine GROSS INCOME; (2) Deductions; (3) Characterizations; (4) Apply
eral Income Tax rates (progressive) to taxable income to arrive at TAX LIABILITY; and (5) Subtract
Analysis* credits from tax liability to meet NET TAX DUE.
2. Definition: Gross Gross income includes ALL income from whatever source derived.
Income
3. Definition: In- Income is (1) undeniable ACESSIONS TO WEALTH; (2) clearly realized; and (3) over
come (3) which taxpayers have COMPLETE dominion.
Loans are NOT income or gross income unless there is a DISCHARGE OF INDEBT-
EDNESS.
4. Analysis of (1) Determine gain (or loss) realized; (2) Determine if gain (or loss) is REC-
Sale/Other Dis- OGNIZED; (3) Determine if the gain is EXCLUDED (for losses, must determine if
position of Prop- DEDUCTIBLE); and (4) Characterize gain (or loss).
erty*
5. Calculating Real- For all "sales or other dispositions of property," you must determine the AMOUNT
ization of Gain of gain realized. This is computed by taking the amount REALIZED less the ADJUST-
ED BASIS.
6. Amount of Gain The amount of gain realized is the sum of MONEY and the FMV of property OTHER
Realized than money received - includes any liabilities relieved.
7. Adjusted Basis The adjusted basis is the basis under the applicable section (based on HOW
the property was acquired), adjusted for capital expenditures or depreciation.
Conceptually, adjusted basis is the amount of capital (money) that a taxpayer has
in any given piece of property.
8. Cost Basis Cost basis is the amount of money used to purchase the property. This INCLUDES
any liabilities incurred in purchasing the property.
9.
RN Adult Medical Surgical Online Practice 2025
, Federal Income Taxation
RNRN AdultMedical
Adult Medical Surgical
Surgical Online
OnlinePractice
Practice2025
2025
Study online at https://quizlet.com/_1vayuj
Definitions: Recourse Loan: The lender has a recourse against the borrower's OTHER assets,
Recourse Loan not just the property purchased with the loan.
Non-Recourse Non-Recourse Loan: The lender's ONLY recourse is AGAINST THE SECURITY FOR
Loan THE LOAN. If the borrower defaults, the lender can only take the security interest,
not any of the borrower's other assets.
10. Gift Basis The transferee's adjusted basis is the SAME as the transferor's basis. It is said that
the transferee "steps into the shoes" of the transferor.
11. Basis of Proper- The basis of property acquired from a decedent is the FMV at the date of the DECE-
ty Acquired from DENT'S DEATH. The rule applies to BOTH appreciated AND depreciated property.
Decedent Generally known as the "stepped-up basis."
12. Basis of Property Property which represents the surviving spouse's one-half share of community
Acquired by Sur- property held by the decedent and the surviving spouse under the community
viving Spouse of property laws of any State will also receive the FMV basis.
Decedent
13. Property Straight transferred basis (transferee treats transfer as gift and tansferor has no
Transfers gain recognized on the transfer).
Between
Spouses/Former
Spouses
"Incident to
Divorce"
14. "Incident to Di- Transfers between former spouses are "incident to divorce" if: (1) Done within ONE
vorce" Rule (2) YEAR of the cessation of marriage; or (2) is RELATED to the cessation of marriage.
A transfer of property is RELATED to the cessation of the marriage if the transfer is
pursuant to a divorce/separation instrument and it occurs within 6 years after the
date on which the marriage ceases.
RN Adult Medical Surgical Online Practice 2025
RNRN AdultMedical
Adult Medical Surgical
Surgical Online
OnlinePractice
Practice2025
2025
Study online at https://quizlet.com/_1vayuj
1. Five Step Fed- (1) Determine GROSS INCOME; (2) Deductions; (3) Characterizations; (4) Apply
eral Income Tax rates (progressive) to taxable income to arrive at TAX LIABILITY; and (5) Subtract
Analysis* credits from tax liability to meet NET TAX DUE.
2. Definition: Gross Gross income includes ALL income from whatever source derived.
Income
3. Definition: In- Income is (1) undeniable ACESSIONS TO WEALTH; (2) clearly realized; and (3) over
come (3) which taxpayers have COMPLETE dominion.
Loans are NOT income or gross income unless there is a DISCHARGE OF INDEBT-
EDNESS.
4. Analysis of (1) Determine gain (or loss) realized; (2) Determine if gain (or loss) is REC-
Sale/Other Dis- OGNIZED; (3) Determine if the gain is EXCLUDED (for losses, must determine if
position of Prop- DEDUCTIBLE); and (4) Characterize gain (or loss).
erty*
5. Calculating Real- For all "sales or other dispositions of property," you must determine the AMOUNT
ization of Gain of gain realized. This is computed by taking the amount REALIZED less the ADJUST-
ED BASIS.
6. Amount of Gain The amount of gain realized is the sum of MONEY and the FMV of property OTHER
Realized than money received - includes any liabilities relieved.
7. Adjusted Basis The adjusted basis is the basis under the applicable section (based on HOW
the property was acquired), adjusted for capital expenditures or depreciation.
Conceptually, adjusted basis is the amount of capital (money) that a taxpayer has
in any given piece of property.
8. Cost Basis Cost basis is the amount of money used to purchase the property. This INCLUDES
any liabilities incurred in purchasing the property.
9.
RN Adult Medical Surgical Online Practice 2025
, Federal Income Taxation
RNRN AdultMedical
Adult Medical Surgical
Surgical Online
OnlinePractice
Practice2025
2025
Study online at https://quizlet.com/_1vayuj
Definitions: Recourse Loan: The lender has a recourse against the borrower's OTHER assets,
Recourse Loan not just the property purchased with the loan.
Non-Recourse Non-Recourse Loan: The lender's ONLY recourse is AGAINST THE SECURITY FOR
Loan THE LOAN. If the borrower defaults, the lender can only take the security interest,
not any of the borrower's other assets.
10. Gift Basis The transferee's adjusted basis is the SAME as the transferor's basis. It is said that
the transferee "steps into the shoes" of the transferor.
11. Basis of Proper- The basis of property acquired from a decedent is the FMV at the date of the DECE-
ty Acquired from DENT'S DEATH. The rule applies to BOTH appreciated AND depreciated property.
Decedent Generally known as the "stepped-up basis."
12. Basis of Property Property which represents the surviving spouse's one-half share of community
Acquired by Sur- property held by the decedent and the surviving spouse under the community
viving Spouse of property laws of any State will also receive the FMV basis.
Decedent
13. Property Straight transferred basis (transferee treats transfer as gift and tansferor has no
Transfers gain recognized on the transfer).
Between
Spouses/Former
Spouses
"Incident to
Divorce"
14. "Incident to Di- Transfers between former spouses are "incident to divorce" if: (1) Done within ONE
vorce" Rule (2) YEAR of the cessation of marriage; or (2) is RELATED to the cessation of marriage.
A transfer of property is RELATED to the cessation of the marriage if the transfer is
pursuant to a divorce/separation instrument and it occurs within 6 years after the
date on which the marriage ceases.
RN Adult Medical Surgical Online Practice 2025
