The Ernst and Young Tax Saver's Guide 2002 Book

	How to Use This Book	ix
	Index to Life-Cycle Events	xi
	Changes in the Tax Law You Should Know About	xiii
	10 Smart Tax Planning Tips	xviii
	Tax Relief for Victims of September 11 Attacks	xix
Part I	Tax Strategies for Individuals	1
1.	What You Have to Include as Income	3
	Introduction	3
	Wages, Salaries, and Other Earned Income	3
	Interest and Dividends	7
	Rental Income and Expenses	10
	Capital Gains and Losses	10
	Selling Your Home	11
	Income from Business and Other Investments	11
	Social Security and Other Benefits	15
	Other Income	21
2.	What You Can Deduct: Exemptions, Adjustments, and Deductions	33
	Introduction	33
	Standard Deduction	34
	Personal and Dependent Exemptions	35
	Individual Retirement Arrangements (IRAs)	37
	Simplified Employee Pensions	38
	Keogh (HR 10) Plans	38
	SIMPLE Retirement Plans	38
	Divorce or Separation	38
	Medical and Dental Expenses	40
	Taxes	43
	Interest Expenses	44
	Charitable Contributions	49
	Casualty and Theft Losses	49
	Moving Expenses	51
	Employee Business Expenses and Other Expenses	52
	Overall Limit on Itemized Deductions	57
3.	Travel and Entertainment Expenses	58
	Introduction	58
	The 50% Deduction Limitation	58
	Travel and Transportation	60
4.	Tax Planning and Your Home	75
	Introduction	75
	Rules for Selling Your Home	75
	Clarification of Definition of Principal Place of Business	88
5.	IRAs, 401(k) Plans, and Other Retirement Plans	89
	Introduction	89
	IRAs	89
	Roth IRAs	93
	Education IRAs	95
	401(k) Plans	97
	SIMPLE Plans	98
	Distributions from IRAs and 401(k) Plans	99
	Simplified Employee Pensions	103
	Keogh (HR 10) Plans	104
	Company Retirement Plans	105
6.	Charitable Contributions	107
	Introduction	107
	Who Is the Recipient?	107
	Private Foundations	110
	Nondeductible Contributions	111
	Gifts of Property	112
	Bargain Sales	114
	Limits on Deductions	114
	Charitable Remainder Trusts	117
	Carryovers	119
	Record-Keeping and How to Report Charitable Contributions	120
	Cash Contributions	120
	Contributions to Charity Dinners, etc.	121
	Noncash Contributions	122
7.	Capital Gains and Losses	124
	Introduction	124
	How Capital Gains Are Taxed	124
	Strategies for Selling Securities	128
	Other Opportunities for Individuals	131
8.	Mutual Funds	135
	Introduction	135
	Dividends	136
	Sale of Mutual Fund Shares	142
9.	Filing Status and How to Calculate Your Tax	147
	Introduction	147
	Who Must File	147
	Filing Status	151
	Citizens Living Abroad	154
	Children under Age 14	156
	Tax Rates for Individuals	157
	Alternative Minimum Tax	158
	Credits That Reduce Your Tax	162
	The Hope Scholarship Credit	167
	The Lifetime Learning Credit	168
	Estimated Tax Payments and Withholding	169
	Employment Taxes on Services by Domestic Employees	172
	Penalties	173
10.	Year-End Planning for Individuals	174
	Introduction	174
	Filing Status	176
	Income	178
	Adjustments and Deductions	182
	Itemized Deductions	184
Part II	How to Improve Your Financial Future	191
11.	Investment Planning	193
	Introduction	193
	Getting Started	193
12.	Retirement Planning	206
	Introduction	206
	Planning for Retirement Expenditures	206
	Retirement Cash Flow and Inflation	207
	Sources of Retirement Income	207
13.	Estate and Gift Planning	213
	Introduction	213
	Getting Started	213
	Estate Tax Fundamentals	214
	Installment Payment of Estate Tax	233
	Concerns Regarding Community Property	235
Part III	Tax Strategies for Businesses	237
14.	Choosing the Right Entity for Your Business	239
	Introduction	239
	Choosing the Proper Business Entity	239
	Types of Businesses	241
15.	Determining Income, Deductions, and Taxes for Your Business	247
	Introduction	247
	Accounting Periods and Methods	247
	What to Include and What to Deduct from Income	249
	How to Report Business Income	267
16.	S Corporations	279
	Introduction	279
	Electing S Corporation Status	279
	Advantages of Being an S Corporation	280
	Operating as an S Corporation	282
	State Tax Considerations	285
17.	Year-End Tax Planning for Businesses	287
	Introduction	287
	Timing of Income and Deductions	287
	Depreciation	288
	Capital Asset Transactions	289
	Charitable Giving	289
	Executive Compensation	289
	Dividends-Received Deduction	290
	Estimated Tax Filing Requirements	291
	State Tax Considerations	291
	Appendices	293
	Tax Calendar	299
	Index	301