Gross Income Rules, Exclusions, and Adjusted Gross Income

This chapter covers the starting point of individual tax analysis by determining what enters gross income and which adjustments move the return toward AGI. TCP questions in this area often test classification, timing, and the tax effect of specialized compensation or adjustment rules.

In This Chapter

• Advanced Inclusions and Exclusions covers fringe benefits, compensation structures, and less obvious income-treatment issues.
• Retirement Contributions and Phaseouts explains HSA, SEP, and SIMPLE contribution rules and related limits.
• Stock Options and Equity Compensation addresses ISO, NSO, and equity-based compensation consequences.
• Alimony and Special Adjustments covers post-TCJA alimony treatment and selected AGI adjustments.

How to Use This Chapter

• Read this chapter first within Part II because later individual-tax analysis assumes the income base is correct.
• Focus on what changes inclusion, exclusion, or above-the-line adjustment treatment.
• Revisit it whenever a TCP question turns on compensation design, AGI phaseouts, or timing of inclusion.

In this section

• Fringe Benefits, Compensation Structures, and Income Exclusions
  Gross-income treatment of fringe benefits, noncash compensation, and less-obvious inclusion or exclusion issues.
• HSA, SEP, and SIMPLE Contribution Limits and Phaseouts
  HSA, SEP, and SIMPLE contribution rules, limits, phaseouts, and related penalty triggers.
• ISOs, NSOs, and Equity Compensation Tax Treatment
  Tax treatment of ISOs, NSOs, and related equity-compensation timing and AMT consequences.
• Post-TCJA Alimony Rules and Other AGI Adjustments
  Post-TCJA alimony treatment and selected adjustments that affect AGI, planning, and reporting.