INDIVIDUAL TAX FUNDAMENTALS
This annual exclusion allows a donor to make gifts up to a certain inflation-indexed amount per donee without using lifetime exemption
Annual gift tax exclusion
This document reports a beneficiary’s share of income, deductions, credits, and other tax items from a trust or estate
What is Schedule K-1
This business entity generally passes items of income, deduction, gain, loss, and credit through to its owners
Pass-through entity
This annual filing may be required when a U.S. person has foreign financial accounts exceeding the applicable reporting threshold
FBAR or FinCEN Form 114
This federal tax applies to certain net investment income of individuals, estates, and trusts when income exceeds applicable thresholds
Net investment income tax or NIIT
This unlimited deduction generally allows a U.S. citizen spouse to transfer property to another U.S. citizen spouse without estate or gift tax
Marital deduction
This concept determines how much taxable income of a trust or estate is carried out to beneficiaries through distributions
What is distributable net income, or DNI
This type of S corporation income may avoid self-employment tax, although reasonable compensation must be paid to shareholder-employees
S Corporation Distribution
This form is generally used by certain U.S. taxpayers to report specified foreign financial assets under FATCA
Form 8938
This type of loss generally may offset only passive income unless the taxpayer qualifies for an exception, such as real estate professional status
Passive activity loss
This estate planning technique freezes the value of appreciating assets by selling or gifting them to a trust in exchange for a promissory note or retained annuity
Estate Freeze
This type of trust is disregarded in whole or in part for income tax purposes because the grantor retains certain powers or interests
Grantor trust
This partnership rule generally prevents a partner from deducting losses in excess of the partner’s economic investment in the partnership
Basis Limitation
This status describes an individual who is neither a U.S. citizen nor a U.S. resident for U.S. income tax purposes
Nonresident Alien
This doctrine allows the IRS to disregard a transaction if it lacks both meaningful economic effect and a substantial non-tax business purpose
Economic substance doctrine
This type of trust may qualify for the marital deduction even though the surviving spouse receives only an income interest, if a proper election is made
QTIP trust
This tax rule can cause a beneficiary of a complex trust to be taxed on prior-year undistributed income when certain accumulation distributions are made
Throwback Rule
This limitation may restrict a noncorporate taxpayer’s deduction for business losses above a threshold amount
Excess business loss limitation
This rule counts days of U.S. presence over a three-year period to determine whether an individual is treated as a U.S. resident for income tax purposes
Substantial presence test
This itemized deduction limitation concept historically reduced certain deductions for high-income taxpayers, though its applicability depends on current law
Pease limitation
This generation-skipping transfer tax exemption allocation can protect trust assets from GST tax for multiple generations if properly applied
Allocation of GST exemption
This election allows a qualified revocable trust and an estate to be treated as a single estate for income tax purposes for a limited period after death
Section 645 Election
This provision may allow noncorporate taxpayers to exclude gain from the sale of qualified small business stock held for more than five years
Section 1202 or the qualified small business stock exclusion
This set of anti-deferral rules can cause U.S. shareholders of certain foreign corporations to include income currently, even without a distribution
Controlled foreign corporation or CFC