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Roth IRA Contributions and Distributions

A Roth IRA is an individual retirement plan set up solely for the benefit of a taxpayer or his beneficiaries. The main difference between a Roth IRA and a traditional IRA is that contributions to a Roth IRA are not deductible as they would be if made into a traditional IRA.

Stock Redemptions

A stock redemption is the reacquisition of stock by a corporation in exchange for property, which includes money, securities, and indebtedness to the corporation. After a redemption, the stock may be canceled, retired, or held by the corporation as treasury stock. If the corporation redeems its stock in a manner that makes the distribution "equivalent" to a dividend distribution, then the amount received by the stockholder is a taxable dividend to the extent that it is paid out of earnings and profits.

Excess Passive Income in an S Corporation

Generally, an S corporation pays no federal income taxes. Any income or loss is usually passed through to shareholders in proportion to the ownership interests on a per-share, per-day basis, and the shareholders report their portion of the entity's income or loss on their individual tax returns. However, additional taxes may be assessed against S corporations with excess passive income.

Lottery and Gambling

All winnings, including cash and the fair market value of noncash prizes such as cars, houses, and vacations, must be included in a taxpayer's income. Gambling winnings are fully taxable. The taxpayer is permitted to deduct gambling losses for the year only if he choses to itemize deductions, and then only to the extent of winnings.

Exclusion of Lodging Furnished by an Employer from Gross Income

Generally, the value of lodging provided by an employer to an employee, his or spouse, or dependents is excluded from gross income if all of the following requirements are met: