-- Palestinian State And Powers:
The Palestinians want an independent sovereign state in the West Bank and Gaza Strip with east Jerusalem as its capital. Israel wants a demilitarised Palestinian state, a long-term military presence in the West Bank's Jordan Valley, and to retain control over its airspace and borders.
-- Palestinian Borders And Jewish Settlements:
The Palestinians want Israel to withdraw from all land occupied in the 1967 Six-Day war and to dismantle all Jewish settlements, although they have accepted the principle of minor land swaps equal in size and value.
The United States believes a Palestinian state should be based on the 1967 borders, but with agreed land swaps.
Israel rules out a full return to pre-1967 borders but is ready to pull out of some parts of the West Bank while annexing its largest settlement blocs which are home to the majority of the 360,000 settlers in the territory.
Israel captured Arab east Jerusalem from Jordan in 1967 and later annexed it in a move not recognised by the international community. It considers the city its "eternal and indivisible" capital.
The Palestinians want to make east Jerusalem, home to some 280,000 Palestinians and more than 200,000 Israelis, the capital of their future state.
There are about five million registered Palestinian refugees, mostly descendants of the 760,000 Palestinians who fled or were expelled when the Jewish state was created in 1948.
The Palestinians demand Israel recognises their "right of return", but during peace talks have demanded Israel recognise the "principle" of it and thus take responsibility for the issue.
Israel rejects the demand for the "right of return." Netanyahu wants the Palestinians to accept Israel as "the state of the Jewish people", which would ensure the refugee issue be resolved within the borders of a future Palestinian state.
Kerry has insisted any deal would definitively end all claims. It remains unclear though exactly how the refugees issue would be resolved, although it is possible there could be some kind of financial compensation along with a limited return of some refugees.
Israel controls most of underground water resources in the West Bank. The Palestinians want a more equitable share.