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186 - Income Tax Planning ii More than one second home Can treat only one as a quali ed second home for the year Can choose a different one each year if neither of the second homes is rented out (e) If a home is used for business and personal use, only the portion used for residential living counts as a quali ed residence (f) IRS says that a taxpayer cannot deduct interest paid on behalf of another person; however, tax law has allowed deductions where the taxpayer is an equitable owner of the personal residence (g) Loan origination fees, maximum loan charge, loan discount, and discount points are tax deductible in the year paid if secured by the principal residence (h) If a seller pays points, they are deductible by the buyer in the year paid, but the buyer must reduce the basis in the home by the amount paid by the seller (5) Charitable contributions (see Topic 71) (a) Must be made to a quali ed charitable organization Payment must be made, not just pledged Credit card payments are deductible (b) Services provided to a charity are not deductible, but out-of-pocket costs incurred for those services are deductible (6) Casualty and theft losses (a) Include damage, destruction, or loss of property resulting from an identi able event that is sudden, unexpected, or unusual The amount of casualty loss is the difference between the lesser of i FMV before event less the FMV after event (if stolen, the FMV after event is 0) ii The adjusted basis (b) Losses are reduced by any insurance recovery (c) Reduction for $100 and 10 percent AGI oors A $100 oor applies to each incident, but a 10 percent AGI oor is applied to the aggregate casualty loss amount for the year (d) Example: Steve had his Babe Ruth autographed ball stolen It was valued at $15,000, with a basis of $10,000 Steve s salary for the year was $40,000 The itemized deduction is calculated as $10,000 (lesser of basis or reduction in FMV) minus $4,000 (10 percent AGI) minus $100 oor The itemized deduction for casualty loss equals $5,900 (7) Employee business expenses (a) This section is not applicable if all of the following are true: i The employee fully accounted all work-related expenses to his or her employer ii The employee received full reimbursement for expenses iii The employer required the employee to return any excess reimbursement iv Box 12 of the employee s W-2 shows no amount (b) Employees can deduct unreimbursed business-related expenses for (1) travel, (2) entertainment, (3) gifts, and (4) transportation (c) Travel versus transportation expenses: Transportation expenses do not include expenses incurred while traveling away from home overnight Those expenses are travel expenses.



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Each operation may be handled by a different application server There's no telling what can happen with any one operation; for example, the hotel registration may fail or return an error If there are errors, we certainly don't want to continue the series of operations and we want to undo actions that occurred in earlier operations This is just the kind of thing transactions are good at With transactions, there are two important terms to remember: commit and rollback When one operation is completed, it is still not finalized Instead, all such operations wait until the last one has completed At that point, the transaction can explicitly issue a commit operation, which finalizes all of them If an error or failure occurred during the execution of any of these operations,

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Because some Windows programs interfere with the setup program, Access or Office may warn you to shut down any applications that are currently running. If you get this warning, you can simply click the Continue button to continue the setup, or you can click the Exit Setup button to cancel the installation. Then, shut down the applications and restart the setup. The install program begins, and if it needs to update Windows and Office components, it displays the window shown in Figure 2-2, which states: Microsoft Office XP requires newer Windows system components not detected on your computer. . . . After installing this update, Setup will automatically resume with Office installation. If you get this message, simply click the Next button to review the End User License Agreement. Click the Agree button and the program begins to update your Windows components. A new screen appears, and you see a status bar moving as the program files are being updated. After the new system files are installed, you are prompted to shut down your computer to complete setup of Office XP. Re-start your computer by clicking the Yes button.

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Topic 59: Income Tax Fundamentals and Calculations - 187 (8) Investment interest (a) Investment interest costs are limited to the amount of investment income (b) Capital gains may be included in investment income at the election of the taxpayer The trade-off is that any capital gain included in investment income is not eligible for preferential long-term capital gain rates (9) Miscellaneous itemized deductions (a) Deductions subject to a 2 percent limit i Unreimbursed employee expenses ii Tax preparation fees iii Other expenses (b) Deductions not subject to the 2 percent limit i Amortizable premium on taxable bonds ii Federal estate tax on income in respect to decedent iii Gambling losses up to the extent of gambling winnings iv Unrecovered investment in an annuity v Expenses of of cials paid on a fee basis vi Repayments of more than $3,000 under claim or right vii Impairment-related work expenses of persons with disabilities (c) Nondeductible expenses i Broker s commissions paid in connection with property or account ii Burial or funeral expenses iii Capital expenses iv Fees and licenses, such as car license, marriage license, or dog tags v Hobby losses vi Home repairs, insurance, and rents vii Losses from the sale of a home viii Personal disability insurance premiums ix Lobbying expenses C Limitations itemized deduction phaseout (3 percent/80 percent rule) (1) A taxpayer s allowable deductions are reduced by the lesser of (a) 3 percent of the excess of AGI over a speci ed amount or (b) 80 percent of the allowable itemized deductions for the year, but not including deductions for medical expenses, investment interest, nonbusiness casualty and theft losses, and gambling losses The speci ed amount for 2003 is $139,500 ($69,750 if married ling separately) (2) Example: A husband and wife have AGI of $175,000 in 2003 Their itemized deductions total $30,000, including $3,500 in investment interest, but no medical or casualty losses The amount by which their AGI exceeds $139,500 is $35,500 This amount is multiplied by 3 percent to get $1,065 Next, take 80 percent of the allowable itemized deductions, which is (30,000 3,500) 80% = $21,200 The lesser of the two calculations is $1,065 The total amount of itemized deductions that can be used to reduce taxable income is $30,000 $1,065 = $28,935.

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