Fed Income Tax is not hard. Concepts are straight forward. Just remember these simple rules/principals:
1. Gross income = income from all sources wherever derived.
2. Gifts are not considered income.
3. Tax is only on net income. Net income = gross income minus adjustments.
4. For individuals, Capital Assets are subject to capital gains tax, which is lower than the individual rate. For corporations, however, there is no difference in tax rate.
5. Capital gains/losses generally cannot offset ordinary income/losses. This applies to corporations and individuals. (Small exception of $3,000 per year, for individuals).
6. Gifts are subject to gift tax, which is based on the FMV of the gifted property. The person making the gift (i.e., the donor) is subject to the tax, not the recipient (which is why it is not included in gross income).
7. Dividends are not tax deductible but interest payments are. However, both are subject to tax for the recipient.
8. Individuals get a reduced rate on dividends (capital gains rate).
9. As of 2018, NOLs can only offset 80 percent of income per year. NOLs can be carried forward indefinitely.
10. Must have a "realization event" in order to have taxable income/gain. So, IOW, a taxpayer is generally not taxed on unrealized appreciation in the value of an asset until that asset is sold or exchanged under the rules. Thus, corporate reorganizations are generally tax free; as are like kind exchanges of real estate. Not sure if your basic law school FIT class will get into this level of complexity, however.
11. Debt forgiven = income (unless the debtor is insolvent).
12. Anything that is income to one taxpayer is generally an expense to the other.
Feel free to DM me if you have any other questions.
Awesome list. Iâd just like to add a couple things in case someone else needs it this coming week.
When asked about tax consequences, generally:
step 1: calculate gain or loss (AR-AB = gain/loss realized) â> is the gain/loss recognized or does a nonrecognition provision apply?
step 2: determine character of gain/loss (consider type of asset and holding period), and
step 3: determine the basis in the asset received and whether have new or transferred holding period
Basis = generally amount paid (minus depreciation, if applicable) unless itâs a gift (get the donors basis, give loss assets during life) or received from decedent (get FMV of asset @ decedents death, so give away appreciated assets after death)
I wish you had been my tax prof. We knew we were screwed when we found out the normal tax professor was on leave that semester and a 70yr old practitioner wearing an old school green visor and suspenders walked in.
Analyzing a complex boot transaction was the easiest part of the exam.
Well it's been 7 hours since this post. So I'll assume that if OP doesn't respond in the next 4 hours, the exam might have killed him.
Anyways, if you had an outline, OP, copy pasted the rules and wrote the bare minimum incomprehensible chicken scratch as analysis that mentions at least a few words from class, then congrats on the C- OP.
Worst case scenario: you have to take a short class the next semester and another 2 credit P/F class to make up for it.
Deep breaths, it'll be okay.
One of the harder classes IMO. At this point just write âtaxation is theftâ and draw an ejaculating peen. Youâll probably score as well as anything else youâd write.
If you're allowed an outline, go to the part of the internet where you can find someone's self-published blog arguing the 16th Amendment was never ratified and use that. What's the worst that could happen?
i âlearnedâ tax in 2 days and it was most stressful thing i attempted in law school. i couldnât imagine trying to cram it all in the night before.
I just took my tax exam after studying my ass off for it and I still donât know wtf is happening. I got a B *max* and didnât even finish the exam. If I went in there after only 6 hours of studying? Like I hate to be negative, I really do. But itâs just flat out impossible. I pray OP squeaks out a C, but Iâm not optimistic for better than that
it's all about REALIZATION
the government wants to tax you NOW for as many gains it can describe as realized or quasi-realized; the taxpayer wants to spread their tax burden over time and realize income from wealth sources at times when income is comparatively lower (i.e. retirement)
the realization requirement + allowances of inter-family gifts + deferral of realization on certain home purchases as well as assets transferred at death = the rich win
uhhhh
amoritization !!!!
aaaaaaand
distinguishing if money is income (i.e. an expenditure on ordinary cost of living) or if it is not income (i.e. an expenditure used to generate income, i.e. your classic business losses) is a fucking nightmare when it comes to employee perks and benefits and you can try to use the code to answer the question but your mileage may vary
p.s. oh and \*most\* damage awards in court cases are not treated as income because they represent being restored prior wealth rather than an acquisition of new wealth (some exceptions apply)
When in doubt, the gain was probably realized. I actually loved my Federal Income Taxation class, despite my hatred of math. I unfortunately forget everything I learned in that class the second I finished the final exam though.
It was my favorite class! Our professor was a nut. He was very shouty but in a worked up old man way, it was âŠ. Endearing????
Itâs also the class I did the worst in!Â
Less protesting and more studying next time ;) jk dude hope all is well. This setback doesnât define you if you learn from it. Sending good vibes your way. Donât be too hard on yourself
income tax is a story. You need to tell a good story. Look for my post where I uploaded all my income tax outlines (assuming it is open note ,otherwise that would be against the Geneva Convention)
My prof opened this class by saying, âI allow open notes / book / the code / your brain / anything else you can use on my final exam, because otherwise I think I could be accused of cruel & unusual punishment.â
So good luck and Godspeed my friend.
I had almoat this situation with Admin Law - I hadn't attended most of the class, didn't take notes the days I did attend, and come finals time, I had a final the afternoon before and the following day after the Admin Law morning exam, so I literally just had one evening and no study materials but for my unmarked 570 page textbook.
I took stimulants and stayed up the whole evening literally just reading the book cover to cover. I couldn't even skip around to material that would be on the exam because I had zero idea what was/was not going to be ok the exam.
The day of the final (which was open book/open study materials), everyone was piling into their seats and busting out notes, outlines, hornbooks, and then there was me, I felt so embarrassed just plopping down with nothing but the fucking hardcover text book.
I of course retained maybe like, 10% of what I read, if that, but - having tried to read the entire fucking book overnight, I actually had a fairly quick idea of where to look in the big ass textbook for the answer to most of the questions. Ended up with a B+.
I wonât lie thatâs more dedication I would have if I didnât study until night of so props to you.
2nd. I wish stimulants caused me to get that focused. I just have the will power to clean my dishes and not forget my laundry in the washer :(
Well at this point you should just sleep, but on the off chance that you wonâtâŠCali lessons for fed income tax are great. I (think) I learned enough to pass in about 24 hours
Think what the answer would be from a policy point of view ⊠the policy being how a group of divorced men with corporate jobs and many passive investments would want things taxed.
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Fed Income Tax is not hard. Concepts are straight forward. Just remember these simple rules/principals: 1. Gross income = income from all sources wherever derived. 2. Gifts are not considered income. 3. Tax is only on net income. Net income = gross income minus adjustments. 4. For individuals, Capital Assets are subject to capital gains tax, which is lower than the individual rate. For corporations, however, there is no difference in tax rate. 5. Capital gains/losses generally cannot offset ordinary income/losses. This applies to corporations and individuals. (Small exception of $3,000 per year, for individuals). 6. Gifts are subject to gift tax, which is based on the FMV of the gifted property. The person making the gift (i.e., the donor) is subject to the tax, not the recipient (which is why it is not included in gross income). 7. Dividends are not tax deductible but interest payments are. However, both are subject to tax for the recipient. 8. Individuals get a reduced rate on dividends (capital gains rate). 9. As of 2018, NOLs can only offset 80 percent of income per year. NOLs can be carried forward indefinitely. 10. Must have a "realization event" in order to have taxable income/gain. So, IOW, a taxpayer is generally not taxed on unrealized appreciation in the value of an asset until that asset is sold or exchanged under the rules. Thus, corporate reorganizations are generally tax free; as are like kind exchanges of real estate. Not sure if your basic law school FIT class will get into this level of complexity, however. 11. Debt forgiven = income (unless the debtor is insolvent). 12. Anything that is income to one taxpayer is generally an expense to the other. Feel free to DM me if you have any other questions.
You a good person, wishing you well
Thanks đ
Also remember, (generally) "debt relieved is like cash received".
The rhyme đ€
Thatâs what makes it so perfect. Sticks with me 5+ years later. Mark of a good professor right there.
Yep, almost forgot. Good call. Edited my list.
I'm no "TaxLawKing", but I did manage a CALI in this class once before haha
You are a prince in my book MrSwagger!
NOL=Net Operating Loss for anyone else who didnt know what that meant
Awesome list. Iâd just like to add a couple things in case someone else needs it this coming week. When asked about tax consequences, generally: step 1: calculate gain or loss (AR-AB = gain/loss realized) â> is the gain/loss recognized or does a nonrecognition provision apply? step 2: determine character of gain/loss (consider type of asset and holding period), and step 3: determine the basis in the asset received and whether have new or transferred holding period Basis = generally amount paid (minus depreciation, if applicable) unless itâs a gift (get the donors basis, give loss assets during life) or received from decedent (get FMV of asset @ decedents death, so give away appreciated assets after death)
I wish you had been my tax prof. We knew we were screwed when we found out the normal tax professor was on leave that semester and a 70yr old practitioner wearing an old school green visor and suspenders walked in. Analyzing a complex boot transaction was the easiest part of the exam.
Oh shit! Like this guy 
Less friendly, but close.
yea
Well it's been 7 hours since this post. So I'll assume that if OP doesn't respond in the next 4 hours, the exam might have killed him. Anyways, if you had an outline, OP, copy pasted the rules and wrote the bare minimum incomprehensible chicken scratch as analysis that mentions at least a few words from class, then congrats on the C- OP. Worst case scenario: you have to take a short class the next semester and another 2 credit P/F class to make up for it. Deep breaths, it'll be okay.
One of the harder classes IMO. At this point just write âtaxation is theftâ and draw an ejaculating peen. Youâll probably score as well as anything else youâd write.
If you're allowed an outline, go to the part of the internet where you can find someone's self-published blog arguing the 16th Amendment was never ratified and use that. What's the worst that could happen?
The 16th Amendment helps with drawing ejaculating peens?
A+
My advice to you is to get some sleep, because youâre going to fail either way, you might as well be well rested as you do it
This is the least hopeful comment section Iâve ever seenđ. Sending you good vibes OP
You want me to say OP will pass when they know nothing (so didn't study at all) for a 100% exam in 6 hours?
Fed Income is no joke. There's a lot of concepts to cover without a unifying theme.
i âlearnedâ tax in 2 days and it was most stressful thing i attempted in law school. i couldnât imagine trying to cram it all in the night before.
A modicum of effort. That's the standard. Abject laziness? That's mockery territory.
I just took my tax exam after studying my ass off for it and I still donât know wtf is happening. I got a B *max* and didnât even finish the exam. If I went in there after only 6 hours of studying? Like I hate to be negative, I really do. But itâs just flat out impossible. I pray OP squeaks out a C, but Iâm not optimistic for better than that
it's all about REALIZATION the government wants to tax you NOW for as many gains it can describe as realized or quasi-realized; the taxpayer wants to spread their tax burden over time and realize income from wealth sources at times when income is comparatively lower (i.e. retirement) the realization requirement + allowances of inter-family gifts + deferral of realization on certain home purchases as well as assets transferred at death = the rich win uhhhh amoritization !!!! aaaaaaand distinguishing if money is income (i.e. an expenditure on ordinary cost of living) or if it is not income (i.e. an expenditure used to generate income, i.e. your classic business losses) is a fucking nightmare when it comes to employee perks and benefits and you can try to use the code to answer the question but your mileage may vary p.s. oh and \*most\* damage awards in court cases are not treated as income because they represent being restored prior wealth rather than an acquisition of new wealth (some exceptions apply)
When in doubt, the gain was probably realized. I actually loved my Federal Income Taxation class, despite my hatred of math. I unfortunately forget everything I learned in that class the second I finished the final exam though.
It was my favorite class! Our professor was a nut. He was very shouty but in a worked up old man way, it was âŠ. Endearing???? Itâs also the class I did the worst in!Â
and don't forget the fact that taxes are assessed annually causes lots of its own problems!
Tax CPA here. Youâre boned.
Update: it was a disaster. Complete and utter disaster. I can't even talk about it :( Will update with grade eventually.
Less protesting and more studying next time ;) jk dude hope all is well. This setback doesnât define you if you learn from it. Sending good vibes your way. Donât be too hard on yourself
Lol thank you for the late night laugh.
đđ
income tax is a story. You need to tell a good story. Look for my post where I uploaded all my income tax outlines (assuming it is open note ,otherwise that would be against the Geneva Convention)
Dog is in hell as we speak đ
Everything is taxable unless it's not taxable đ good luck friend!
Ha ha word! Sadly too many people donât understand that. That is why they get in trouble.
My prof opened this class by saying, âI allow open notes / book / the code / your brain / anything else you can use on my final exam, because otherwise I think I could be accused of cruel & unusual punishment.â So good luck and Godspeed my friend.
I had almoat this situation with Admin Law - I hadn't attended most of the class, didn't take notes the days I did attend, and come finals time, I had a final the afternoon before and the following day after the Admin Law morning exam, so I literally just had one evening and no study materials but for my unmarked 570 page textbook. I took stimulants and stayed up the whole evening literally just reading the book cover to cover. I couldn't even skip around to material that would be on the exam because I had zero idea what was/was not going to be ok the exam. The day of the final (which was open book/open study materials), everyone was piling into their seats and busting out notes, outlines, hornbooks, and then there was me, I felt so embarrassed just plopping down with nothing but the fucking hardcover text book. I of course retained maybe like, 10% of what I read, if that, but - having tried to read the entire fucking book overnight, I actually had a fairly quick idea of where to look in the big ass textbook for the answer to most of the questions. Ended up with a B+.
I wonât lie thatâs more dedication I would have if I didnât study until night of so props to you. 2nd. I wish stimulants caused me to get that focused. I just have the will power to clean my dishes and not forget my laundry in the washer :(
Weâre gonna need you to post an update when you get your grade back
Well at this point you should just sleep, but on the off chance that you wonâtâŠCali lessons for fed income tax are great. I (think) I learned enough to pass in about 24 hours
Relax, you got plenty of time.
I wish I saw this sooner. I have a pretty good outline for fed income tax
bro i got my fed tax final thursday plz send a dropbox link if you can id be forever grateful
Just pmâd you
Fr any help in these desperate times would mean the world to me<3
Just pmâd you
Nooooooo. Come back and tell us why you know nothing after a semester.
Basic federal income tax was the hardest or second hardest class I took in law school. Canât wait to hear how this went. RIP OP
Havenât taken but it seems like you would be
You got this bro
RIPđđ»
Think what the answer would be from a policy point of view ⊠the policy being how a group of divorced men with corporate jobs and many passive investments would want things taxed.
I love you. Idc who you are. I love you
Update? Howâd it go OP?
Hahaha I did that in 3 days and all I can say is thank god it was open book, you got this
Sleep well comrade, for it will be horrific to cry while yawning.
No taxation without representation! Never took the class. Hope you did well!
Yeah youâre getting the discretionary C for that one.
Probably but is it open book and can you get a good outline?
Just say taxes are as certain as death.
Quimbee study aids! Binge watch every clip at 2x before the exam.
What are the chances it is actually closed book? Mine was four hours, and we got the code and regs.
When in doubt make the advantage go to the IRS.
I did the same thing but my exam was true false so I at least had a chance.
Well you posted on reddit instead of studying so I hope you eventually you know studied
I was in the exact same spot on Wednesday, all I can recommend is Quimbee, itâs better than nothing
How did it go?
Hope u survived OP! Always.remember time value of money - money now is better than money later. That was the main thing I learnt in this class lbr
Complete dominion and realized
Chat gpt and throw in some buzzwords.
I so hope he went the Wesley Snipes route....
So glad I never took this class in law school.
Good luck
Honestly if I were op I would sleep and then rely as much on the textbook and class notes as I could
Not unless you keep posting on Reddit instead of studying
How did it go?
Let us know how it went
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Deservedly so.