Ind Federal Income Tax

<div class="Section1"><br /> <br /> Several refundable tax credits, such as the earned income credit and the refundable portion of the child tax credit, are allowed as an offset against AMT liability. Other personal nonrefundable credits also allowed as an offset include:<br /> <blockquote>Adoption tax credit<br /> <br /> Child and dependent care credit<br /> <br /> Nonrefundable portion of the child tax credit<br /> <br /> Certain learning credits<br /> <br /> Tax credit for IRAs and retirement plans<br /> <br /> Energy saving credits<a href="#_ftn1" name="_ftnref1">¹</a></blockquote><br /> </div><br /> <div class="refs"><br /> <br /> <hr align="left" size="1" width="33%" /><br /> <br /> <a href="#_ftnref1" name="_ftn1">1</a>.  IRC § 26(a)(2).<br /> <br /> </div>

<div class="Section1">The 2017 tax reform legislation created a special rule to allow partnerships to carry forward certain disallowed business interest (the rule does not apply to S corporations or other pass-through entities, although the new law specifies that similar rules will apply).&nbsp;The general rules governing carrying forward disallowed business interest (<em><em>see</em></em> Q <a href="javascript:void(0)" class="accordion-cross-reference" id=""></a>) do not apply to partnerships.<div class="Section1"><br /> <br /> Instead, disallowed business interest is allocated to each partner in the same manner as non-separately stated taxable income or loss of the partnership.<a href="#_ftn1" name="_ftnref1">¹</a>&nbsp;The partner is entitled to deduct his or her share of excess business interest in any future year, but only:<br /> <blockquote>(1)&nbsp;&nbsp; against excess taxable income (<em><em>see</em></em> Q <a href="javascript:void(0)" class="accordion-cross-reference" id=""></a>) attributed to the partner by the partnership, and<br /> <br /> (2)&nbsp;&nbsp; when the excess taxable income is related to the activities that created the excess business interest carryforward.<a href="#_ftn2" name="_ftnref2">²</a></blockquote><br /> Such a deduction also requires a corresponding reduction in excess taxable income. Further, if excess business interest is attributed to a partner, his or her basis in the partnership interest is reduced (not below zero) by the amount of the allocation even though the carryforward does not permit a partner&rsquo;s deduction in the year of the basis reduction.&nbsp;The partner&rsquo;s deduction in a future year for the carried forward interest will <em>not</em> require another basis adjustment.<br /> <br /> If the partner disposes of the partnership interest after a basis adjustment occurred, immediately before the disposition the partner&rsquo;s basis will be increased by the amount that any basis reduction exceeds the amount of excess interest expense that has been deducted by the partner.<a href="#_ftn3" name="_ftnref3">³</a><br /> <br /> The IRS has released proposed regulations stating that business interest is first accounted for at the partner level, and then allocated to the partners. A partner cannot later include his or her share of the partnership&rsquo;s business interest income for the year except to the extent of the partner&rsquo;s share of the excess of (i) the partnership&rsquo;s business interest income over (ii) the partnership&rsquo;s business interest expense (excluding floor plan financing). A partner cannot include his or her share of floor plan financing interest in determining his or her individual business interest expense deduction limitation.<a href="#_ftn4" name="_ftnref4">⁴</a><br /> <br /> <em><em>See</em></em> Q <a href="javascript:void(0)" class="accordion-cross-reference" id=""></a> for a discussion of the general rules governing the corporate deduction for business interest.<br /> <br /> </div><div class="refs"><br /> <br /> <hr align="left" size="1" width="33%"><br /> <br /> <a href="#_ftnref1" name="_ftn1">1</a>.&nbsp;&nbsp; IRC &sect;&nbsp;163(j)(4).<br /> <br /> <a href="#_ftnref2" name="_ftn2">2</a>.&nbsp;&nbsp; IRC &sect;&nbsp;163(j)(4)(B).<br /> <br /> <a href="#_ftnref3" name="_ftn3">3</a>.&nbsp;&nbsp; IRC &sect;&nbsp;163(j)(4)(B)(iii).<br /> <br /> <a href="#_ftnref4" name="_ftn4">4</a>.&nbsp;&nbsp; Notice 2018-28.<br /> <br /> </div></div><br />

<div class="Section1">Medical expenses of a decedent paid out of the estate within one year from the date of death are considered paid by the decedent at the time the expenses were incurred.<a href="#_ftn1" name="_ftnref1">¹</a> A decedent’s medical expenses cannot be taken as an income tax deduction unless a statement is filed waiving the right to deduct them for estate tax purposes. Amounts that are not deductible under IRC Section 213 may not be treated as deductible medical expenses for estate tax purposes. Thus, expenses that do not exceed the 7.5 percent floor are not deductible.<a href="#_ftn2" name="_ftnref2">²</a></div><br /> <div class="refs"><br /> <br /> <hr align="left" size="1" width="33%" /><br /> <br /> <a href="#_ftnref1" name="_ftn1">1</a>.  IRC § 213(c).<br /> <br /> <a href="#_ftnref2" name="_ftn2">2</a>.  Rev. Rul. 77-357, 1977-2 CB 328.<br /> <br /> </div>

<div class="Section1">If an extension to pay federal estate tax over a period of time is in effect, the interest portion of the payment is deductible.<a href="#_ftn1" name="_ftnref1">¹</a></div><br /> <div class="refs"><br /> <br /> <hr align="left" size="1" width="33%" /><br /> <br /> <a href="#_ftnref1" name="_ftn1">1</a>.   IRC § 163(h)(2).<br /> <br /> </div>

<div class="Section1">Generally, personal interest is not deductible. However, in defining personal interest, all of the types of interest described Q <a href="javascript:void(0)" class="accordion-cross-reference" id="8530">8530</a> through Q <a href="javascript:void(0)" class="accordion-cross-reference" id="8540">8540</a> are not considered personal interest, and, thus, are deductible subject to the limitations discussed therein. Generally, non-deductible personal interest includes, but is not limited to, consumer credit card interest, car loans and interest on tax deficiencies.</div><br />

<div class="Section1">An individual who meets the following requirements may file a tax return as head of household:<div class="Section1"><br /> <blockquote>Taxpayer is not married or considered married (excluding a qualifying widow(er) with dependent child,<a href="#_ftn1" name="_ftnref1">¹</a> <em><em>see</em></em> Q <a href="javascript:void(0)" class="accordion-cross-reference" id="8503">8503</a>);<br /> <br /> Taxpayer paid more than half the cost of maintaining a home for the tax year;<br /> <br /> A &ldquo;qualifying person&rdquo; (<em><em>see</em></em> Q <a href="javascript:void(0)" class="accordion-cross-reference" id="8505">8505</a>) lived with the individual for more than half the year (except for temporary absences); and<br /> <br /> Taxpayer is not a nonresident alien.<a href="#_ftn2" name="_ftnref2">²</a></blockquote><br /> </div><div class="refs"><br /> <br /> <hr align="left" size="1" width="33%"><br /> <br /> <a href="#_ftnref1" name="_ftn1">1</a>.&nbsp;&nbsp; IRC &sect;&nbsp;2(b)(1).<br /> <br /> <a href="#_ftnref2" name="_ftn2">2</a>.&nbsp;&nbsp; IRC &sect;&sect;&nbsp;2(b), 2(d).<br /> <br /> </div></div><br />