Regulation 1 Update – 2009 Edition

Regulation 1
Online Update for the 2009 Edition
Last Updated February 17, 2009

SECTION A: TEXT ERRATA

A.1.
Page R1-15, Item III Example "Phase-out of Personal and Dependency Exemptions"
The example inadvertently uses amounts that would work with the 2007 thresholds. The example should
be modifies to read as follows:

EXAMPLE
A married couple filing jointly has AGI of $251,950 in 2008. They would only get 90% of the
exemptions for which they would otherwise be entitled. The 90% is calculated as follows: $251,950 –
239,950 = $12,000. $12,000/$2,500 = 4.80 (round up always). Therefore, use 5. 5 x 2% = 10%.
100% - 10% = 90%.

SECTION B: PASSMASTER/SIMULATIONS/QUIZZES ERRATA

NONE

SECTION C: TEXT ADDITIONAL OR ENHANCED INFORMATION

C.1.
National Lecturer Comments Related to Page R1-49, Item C.1 "Homeowner's Exclusion"
On page R1-49 regarding the Homeowner's Exclusion, the text indicates that either spouse must meet
the ownership requirement but that BOTH spouses must meet the use requirement. On the CD Rom, the
national lecturer provides a correct example of this rule in which only one spouse qualifies for the use
requirement. There has been some confusion in understanding what is being said here, but the example
is absolutely correct. The national lecturer points out that the exclusion is renewable and reusable. His
example involves one spouse who only lived in the home one day and another spouse who lived there
the entire two years. The implication is that the full $500,000 would generally be available to the couple;
however, because only one spouse met the use test, the exclusion is only $250,000.

C.2.
Page R1-18, Item 7.a. "Life Insurance Proceeds"
Item 7.a. on page R1-18 deals with the general rule for life insurance proceeds. However, for policies
issued after 8/17/06, if the policy is company-owned (COLI), the beneficiary may exclude from gross
income benefits received only up to the total amount of premiums and other amounts paid by the
policyholder—any excess would be taxable. Of course, exceptions apply. If proper notice and consent
requirements are met and the incurred was a qualified highly compensated officer, director, or employee
and a US citizen or resident, proceeds were paid to a member if the insured's family, the beneficiary is a
family member or another individual (not the policyholder), or the beneficiary is a trust for the benefit of
the insured's family (or the estate of the insured), the gross income inclusion requirement for the COLI is
not applicable.

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© 2009 DeVry/Becker Educational Development Corp. All rights reserved.
 Regulation 1 Update – 2009 Edition

SECTION D: PASSMASTER/SIMULATIONS/QUIZZES
ADDITIONAL OR ENHANCED INFORMATION
NONE

NOTE from the Editors

Some of the Items above have come from our internal review process, some have come from questions
and comments from Becker instructors around the world, and some have come from questions asked by
various candidates, either from Becker Profhelp or in online or live classes. We wish to thank all of these
individuals as a group for their efforts to improve our materials.

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© 2009 DeVry/Becker Educational Development Corp. All rights reserved.