Capital Gain and Loss Long term capital gain = 15% Short term tax rate = ordinary tax

rate 35% Corporations- all gains taxed at 35% Individual can deduct a max of $3,000 against ordinary income if it is a capital loss.

Corps Capital Loss -Carried back 3 years ( subtract gains from lost and receive tax refunds for years carried back) -Carried forward 5 years

Passive Loss Limitation Personal Service Corporation Taxable income= active/ordinary income + Portfolio Income Passive loss can only offset passive income -CHC can use passive lose to offset ordinary income but not portfolio.

Charitable Contribution Indv. 50% of AGI for ordinary income and property and cash contributions 30% of AGI for capital gain property Corp. Max at 10% of taxable income. Excess can be carried forward 5 years.

DRD(DEDUCTION) -purpose to reduce effect of multiple levels of taxation on inter-corp dividends -to qualify must hold stock for at least 46 days. IF taxable income is LOSS after step 1 use step 1 as DRD and NO LIMITATION Ownership Less than 20% 20%-80% 80%+ TAXrate 70% 80% 100%

The limit amount = lesser of a) Dividends Received Amount x DRD % b) Taxable Income x DRD % Taxable income before DRD= gross income- operating expenses + dividend income

NOL (NET OPERATING LOSS) TAXABLE LOSS= gross income expense deduction DRD deduction FOR BOTH IND AND CORP Carry back 2 years Carry Forward 20 years For 2008-2009 can be carried back 5 years.

DPAD (DEDUCTION) CORP 9% of lower of a) Qualified production activities income b) Taxable income Cannot exceed 50% of w-2 wages related to DPA

INDIV 9% lower of a) QPAI b) AGI AMT AMT= Tenative Min TAX Regular tax TMT = Adjusted AMTI x 20% AMTI= TAXABLE INCOME +/- adjustments + tax preferences AMT NOL +/- ACE adjustment ACE AMTI x 75% POSITIVE ADJUSTMENT IF ACE IS LARGER NEGATIVE ADJUSTMENT IF AMTI IS LARGER Any negative adjustment cannot exceed prior net positive adjustment AMT can be carried over to reduce regular tax.

MIN TAX CREDIT. AMT LIABILITY FROM PREVIOUS YEAR CAN BE TAKEN AS CREDIT FOR REGULAR TAX. Max amount taken is regular tax tentative min tax.

Sec. 351 a) One or more persons transfer property to corporation b) Soley in exchange for the corps stock c) Immediately after the exchange the transferors control the corp GAIN REALIZED = FMV- Adjusted Basis Gain RECOGNIZED only if Debt > AB Recognized gain is the lesser of BOOT/LIABILTY or GAIN REALIZED Basis of stock = Adjusted Basis + Gain Recognized Debt Relieved Basis of property = Owners Property Basis + Gain Recognized by Owner

E&P and Sec 301 Distributions Preferred stockholders taxed at full distribution amount -common stock holders taxed at lower of a) amount distributed B) remaing E&P balance after the preferred stock dividend TOTAL distribution divdend portion stock basis = capital gain

Dividend income recognized = fmv of property distributed WHEN LAND IS DISTRIBUTED GAIN = LIABILTY GIVEN UP ABASIS