Interest due and paid on a qualified education loan for qualified higher education expenses can be deducted (within limits) from adjusted gross income (AGI).
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TOPICS
Individuals
Late Legislation Affects AMT, Mortgage Foreclosures, FUTA
Congress passed several pieces of legislation that affecting 2007 tax returns.
Early Retirement Payments to Former Tenured Faculty Members Are Subject to FICA
The Third Circuit held that payments under several early retirement plans made by a university to former tenured faculty members were compensation for services subject to the FICA tax.
Recent Developments in Individual Taxation
This article covers recent significant developments affecting taxation of individuals, including cases, regulations, and legislative changes.
Regulations Provide Guidance on Child and Dependent Care Credit
Sec. 21 was enacted to provide families with a tax benefit to help them stay in the workplace—a nonrefundable child and dependent care tax credit for employment-related expenses for the care of certain qualifying individuals.
Curriculum Tools for Tax Educators
A completely revised Model Tax Curriculum and a new website with content from the AICPA’s Next Generation Task Force are among the new tools available to tax faculty seeking to modify their course offerings and to help prepare students to enter the accounting profession.
IRS Agrees That Payments from VA Work Therapy Program Are Not Includible in Income
The IRS has acquiesced to a Tax Court decision that payments to veterans made by the Department of Veterans Affairs (VA) for work performed under a VA-administered compensated work therapy program are veterans’ benefits that are excluded from income.
Prop. Regs. Clarify Source of Compensation Rules
Proposed regulations would clarify the determination of the source of compensation for a person, including an artist or athlete, who is compensated for labor or personal services performed at a specific event or events.
IRS Updates Rules for Substantiating Travel Expenses
The IRS updated the rules for substantiating an employee’s travel expenses using reimbursement arrangements, per diem allowances, or the high-low method.
Transfers of Personal Goodwill in the Sale of a Closely Held Business
The Tax Reform Act of 1986, P.L. 99-514 (TRA ’86), changed the tax landscape in many ways. It created passive activities and at-risk limitations, eliminated many itemized deductions, and changed tax rates. However, from a business acquisition standpoint, the most important change was the repeal of the General Utilities doctrine.
Does Imprisonment Constitute a Temporary Absence When Applying the EIC Residency Rules?
Editor: Michael D. Koppel, CPA, PFS Should a person’s imprisonment be considered a temporary absence from home for purposes of the residency requirement for the earned income credit (EIC)? The Tax Court recently held that a taxpayer’s jail confinement after her arrest but before her conviction was a temporary absence
Foreign Earned Income Exclusion Housing Cost Limitations Increase
In Notice 2007-77, the IRS has adjusted the 2007 limitation on housing expenses under Sec. 911 for specific locations in countries with high housing costs relative to U.S. housing costs. The adjusted housing expense limitations are to be used in determining the housing cost amount eligible for exclusion or deduction
Subprime Lending Controversy Fuels Familiar Tax Issues
Editor: Michael D. Koppel, CPA, PFS It is difficult to winnow the subprime lending controversy down to a single sentence, a single page, or even a single discipline. Its effects are pervasive. In this environment, few participants or observers are thinking about tax issues. In fact, as in so many
Exercise of Options Using Borrowed Funds
Editor: Kevin F. Reilly, J.D., CPA Under Sec. 83(a), if property is transferred in connection with the performance of services, the employee who performed the services has gross income in an amount equal to the excess of the fair market value (FMV) of the property over the amount paid for
Tax Treatment of Compensation Received as a Nonprofessional Representative
Most baby boomers, who are now between the ages of 42 and 60, will soon face two major events in their lives: planning for retirement and the death of their parents. Many of these individuals will take on the role of personal representative (executor) of their parents’ estates when their
Gifting of a Remainder Interest in a Home
Editor: Kevin F. Reilly, J.D., CPA One of the first decisions taxpayers must make when planning their estates is what to do with the principal home. With the changing and sometimes downtrodden real estate market, this can be a difficult and time-consuming task for heirs, particularly if they do not
Hurricane GO Zones: An Update on Relevant Tax Provisions
The widespread devastation left in the wake of hurricanes has resulted in numerous tax provisions aimed at revitalizing and rebuilding the affected areas. Congress passed the Gulf Opportunity Zone Act of 2005, P.L. 109-135 (the GO Zone Act), in response to Hurricane Katrina and then revised it as Hurricanes Rita
The WOTC Expanded
Editor: Kevin F. Reilly, J.D., CPA The work opportunity tax credit (WOTC) has been in existence for years; however, the Small Business and Work Oppor-tunity Tax Act of 2007, P.L. 110-28 (SBWOTA), expanded the definition of some of the target groups, creating tax incentives that will affect more clients than
VITA, the MTC and the Modern Accounting Curriculum (Part II)
Editor: Annette Nellen, CPA, Esq. Part I of this two-part column, in the August 2007 issue, discussed setting up a Volunteer Income Tax Assistance (VITA) program. Part II, below, addresses integrating VITA into an accounting program. Integrating VITA into the Accounting Program If accounting faculty members determine that the benefits
IRS Clarifies NQDC Rules for Teachers
Sec. 409A was effective on January 1, 2005, and applies to nonqualified de-ferred compensation (NQDC), that is, compensation earned in one year but not paid until a future year. If NQDC does not meet the requirements of Sec. 409A, it will be subject to additional taxes, including a 20% additional
INDIVIDUALS
Current Developments in Taxation of Individuals: Part 1
This update surveys recent federal tax developments involving individuals, including court cases, rulings, and guidance issued during the six months ending October 2025.
