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Regulation > Additional cards 2 > Flashcards

Additional cards 2 Flashcards

1
Q

Secured party

A

Th eperson that provides credit to the debtor and takes an interest in the debtor’s collateral to help assure repayment of the debt

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2
Q

Security interest

A

The legal interest in collateral that secures either payment or debtor’s special performance of some obligation

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3
Q

Chattel paper

A

A writing that provides evidence of the monetary obligation and the security interest in the good

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4
Q

Requirements of a valid security agreement:

A

The agreement must be in writing

Must be signed by debotr, creditor’s signature not required

Reasonable description of the collateral

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5
Q

Attachment

A

Term used to describe the moment when security interest is enforceable against a debtor by the secured party

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6
Q

Perfecting a security interest gives:

A

notice to other parties

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7
Q

3 primary ways that an attached security interest may be perfected

A
  1. most security interest eith can or must be perfered by filing financig statements in the appropriate state office
  2. secured party takes possession of collateral
  3. automatic perfection only with consumer goods
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8
Q

Purchase money security interest in consumer goods

A

Perfection is accomplished

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9
Q

Purchase money security interest (PMSI) in noninventory has:

A

priority over nonpurchase money security interests if it was perfected within 20 days after the dbtor received the collateral

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10
Q

Any debtor may file for Chapter 7 except

A

Railroads

Banking institutions

Insurance companies

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11
Q

Chapter 11

A

reorganization of debts

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12
Q

If there are fewer than 12 creditors:

A

a single creditor may file the petition as long as his/her claim aggregates $15,325 in excess of any security he may hold

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13
Q

IF there are 12 or more creditors:

A

then at least 3 must sign the petition and they must have claims that aggregate $15,325 in excess of any security held by them

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14
Q

Trustee may set aside:

A

transfers made within one year to the filing of the bankruptcy petition

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15
Q

Preferential transfers made to insiders:

A

within the previous 12 months may be set aside

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16
Q

claims for consumer deposits for undelivered goods or services:

A

limited to $2,775 per individual

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17
Q

Discharge

A

The release of a debtor from all his debts not paid in bankruptcy

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18
Q

Chapter 11

A

Goal is to keep financially troubled firm in business

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19
Q

Creditor’s committee

A

A group of unsecured creditors who essentially function as the bankruptcy trustee in chapter 11 cases

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20
Q

Reaffirmation

A

When a debtor voluntarily chooses to repay a debt that otherwise would be fully discharged under the Bankruptcy code

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21
Q

Set aside

A

effectively this action returns the parties back to their original position before the wrongful transfer took place

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22
Q

stay

A

a cour order that prevents further collection actions by creditors. the stay is issued upon the filing of the bankruptcy petition, but does not apply to family law issues

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23
Q

Any deficiency for secured creditors after the collateral is sold:

A

is paid along with the general creditors

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24
Q

Liens

A

Creditors claims on real or personal property to secure payment of debt or performance of obligations

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25
Q

Mechanic’s lien

A

Statutory lien on real property to secure payment of debts for service to improve real property

ex. worker puts a new roof on an owner’s building. puts lien on building to secure payment

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26
Q

Artisan’s lien

A

One repairs or improves personal property for another and retains posession of that personal property

ex. mechanic puts an artisan’s lien on a car

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27
Q

Attachment is a court-ordered seizure of property:

A

due to lack of payment prior to court judtment for past-due debt

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28
Q

Garnishment

A

Allows creditor to seix property, usually money, owed to debtor by third party

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29
Q

Fair Debt Collection Practices Act

A

Restricts how creditors may collect debts

Collection agencies are prevented from contacting debotor-consumer at inconvenient hours, inconvenient places, or at work if employer object

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30
Q

Consumer Lenders

A

Required to make additional disclosures in credit card statements relating to minimum payments, late fees, and introductory rates

disclose toll-free number

more disclosures on tax consequences

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31
Q

Credit card holder’s liability for lost or stolen credit card

A

Limited to $50 per credit card for unauthorized charges

not liable for any charges after holder notifies issuer

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32
Q

Homestead exemption

A

Can exempt a debtor’s equity in certain property from postjudgment collection by a creditor

applies to general creditors and bankrutptcy trustee, not secured creditors or lien holders

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33
Q

In both suretyship and guaranty

A

Third party promises to pay debt owed by debtor if debtor does not pay

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34
Q

Strict suretyship

A

Surety promises to be responsible for the debt and is primarily liable for the debt

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35
Q

In contrast to suretyship, in guaranty contract gurantor is normally:

A

secondarily liable

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36
Q

If guarantor’s promise is primarily for his/her own benefit (main purpose doctrine)

A

it need not be in writing

*normally these do need to be in writing

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37
Q

A guarantor of collection is different than a mere guarantor:

A

A creditor only needs to request payment from payment from the debtor before proceeding against a guarantor

Whereas the creditor must exhaust all legal remedies against the debtor before proceeding against a guarantor of collection

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38
Q

subrogation

A

Upon payment, surety obtins same rights against principal debtor that the creditor hard

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39
Q

Fraud by principal debtor to induce a suretyship agreement:

A

will NOT release surety if credtiro has extended credit in good faith

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40
Q

If creditor relases the debtor, the creditor reserves its rights gainst the suurety

A

the surety is still liable to the creditor

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41
Q

Release of surety by creditor

A

Does Not release principal debtor because debtor is liable whether or not surety is liable

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42
Q

S is a surety on a $10,000 loan between Creditor and Debtor. Creditor is also holding $1,000 of Debtor’s personal property as collateral on the $10,000 loan. Before the loan is paid, Creditor returns the collateral to Debtor

A

This action releases S from $1,000 of the $10,000 loan

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43
Q

Cosureties

A

Exist when there is more than one surety for same obligation of principal debtor to same creditor

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44
Q

Assignment for the benefit of creditors

A

A possible alternative to bankruptcy

This occurs where a debtor assigns assets to a third party who uses those assets to pay the debtor’s creditors.

It is important to remember that an assignment for the benefit of creditors does not release the debtor from the debt, unless the debts are paid in full

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45
Q

Agency

A

Relationship between 2 parties, whereby one party (agent) agrees to act on behalf of the other party (principal) with respect to third parties.

A contract is not required but is frequently present

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46
Q

Employer and Employee

A

Principal - employer

Agent - employee

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47
Q

Power of attorney

A

A person authories another person to act as his representative

agency

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48
Q

Del credere

A

A sales agent who guarntees the accounts of the cusomers to his principal

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49
Q

If agency contract cannot be completed within a year

A

must be in writing

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50
Q

Actual authority comes from:

A

the principal

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51
Q

Apparent Authority

A

Comes from a third party’s reasonable, but mistaken, belief that the agent has actual authority to enter into the contract

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52
Q

If agent acts with no authority, then the principal is not liable unless:

A

the principal ratifies the contract

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53
Q

The principal’s liability for the agent’s tort depends upon whether the agent’s tort was committed:

A

in the scope of employment

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54
Q

Intentional torts are normally:

A

outside the scope of employment

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55
Q

Relationship between a corporation and CPA to audit corporate books

A

Employee and independent contractor

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56
Q

To whom do subagents owe fiduciary duties

A

both agent and principal

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57
Q

FICA

A

Imposes social security tax on employees, self-employed, and employers

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58
Q

FICA is also used to fund:

A

Medicare, not Medicaid

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59
Q

Unemployment insurance (FUTA)

A

Tax is used to provide unemployment compensation benefits to workers who lose jobs and cannot find replacement work

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60
Q

Workers compensation

A

A form of strict liability whereby employer is liable to employee for injurries or diseases sustained by employee which arise out of and in course of employment

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61
Q

Important point about workers compensation:

A

No fault need be shown

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62
Q

If employer intentionally injures employee

A

Employee may proceed against employer based on intentional tort in addition to recovering under workers compensaiton benefits

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63
Q

Employee is entitled to workers compensation benefits without:

A

regard to fault

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64
Q

Title VII

A

of 1964 civil rights act forbids discrimination in employment on the basis of race, color, religion, sex, or national origin

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65
Q

Quid pro quo

A

Intentional harassment involving promotions, job offers, job benefits, in exchange for sexual relations

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66
Q

National Labor Relations Act (NLRA)

A

Provides that employees have right to join, assist, or form labor organizations

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67
Q

Permissive bargaining subjects

A

Topics that either side may negotiate about.

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68
Q

Federal Consolidated Omnibus Budget Reconciliation Act

A

Provides that when employee quits, he may keep group health insurance coverage for 18 months

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69
Q

Worker Adjustment and Retaining Notification Act

A

Provides that employers before the close or have massive layoffs must give 60 days notice to employees

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70
Q

Parties involved in cleanup costs and environmental damages have joint and several liability:

A
  1. current owners and operators
  2. past owners and operators of site
  3. persons who transported waste to site
  4. persons who arranged to have waste transported
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71
Q

The standard is based on ________ for all cleanup costs

A

strict liability

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72
Q

Antitrust law

A

Main purpose of federal antitrust law is to promote the production and distributin of goods and services in the most economical and efficient manner by preserving free, compettive market

Regulation is by federal law*

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73
Q

Sherman Act of 1890

A

Contracts, combinations, conspiracies, or agreements in restraint of trade are illegal under this act

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74
Q

per se rule

A

the restraint is automatically illegal

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75
Q

illegal to obtain or create a monopoly

A

sherman law

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76
Q

Clayton Act

A

Prohibits a corporation from acquiring the stock of a competing corporation (merger) where the effect might substantially lessen competition or tend to create a monopoly

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77
Q

conglomerate merger

A

not in the same industry

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78
Q

Tying arrangements

A

Where the seller forces the buyer to take one ore more other products as a condition to acquiring the desired product

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79
Q

Robinson-Patman Act

A

Prohibits price discrimination

When a seller charges different prices to different buyers of the same good

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80
Q

Firm offer rule

A

Promise to hold an offer open is irrevocable if the promise is:

in writing and

made by merchant

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81
Q

Perfect tender rule

A

Seller’s tender of goods must conform exactly to the terms of the contract

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82
Q

Anticipatory repudiation

A

One party clearly indicates that it is unwilling, or unable, to perform the contract as promised

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83
Q

Bill of lading

A

A document of title that is issued by a private or common carrier in exchange for goods delivered to it for shipment

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84
Q

Examples of voidable title

A

Goods paid for with a check subsequently dishonored

Goods obtained by fraud, mistake, dures, or undue influence

Goods obtained from minor

Thieves and or finders of property have void title

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85
Q

Sale on approval

A

Goods may be returned even if they conform to the contract

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86
Q

Express warranties

A

Any affirmation of fact or promise made by the seller to the buyer that relates to the goods and becomes part of the basis of the bargain creates an express warranty

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87
Q

warranty of merchantability

A

goods are fit for ordinary purpose

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88
Q

Warranty of fitness for a particular purpose

A

Created when the seller knows of the particular use for which the goods are required and further knows that the buyer is relying on skill and judgment of seller to select and furnish suitable goods for this particular use

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89
Q

Negligence

A
  1. duty to exercise reasonable care
  2. breach of duty of reasonable care
  3. caused injury/damages
  4. damages
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90
Q

Work Product doctrine

A

Doctrine that protects work product from detection

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91
Q

Entity Classification Form

A

Form 8832

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92
Q

whre does federal tax legislation begin?

A

house of representatives

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93
Q

__________ are not considered personal holding company income

A

capital gains

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94
Q

Chapter 9

A

municipalities

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95
Q

listed property

A

must be used in business 50% or more to get 179 treatment

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96
Q

all court cases start where?

A

trial court

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97
Q

small oil and gas depletion percentage

A

15%

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98
Q

_____________ may not deduct the costs of fringe benefits

A

sole proprietorships

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99
Q

death benefits received from term life insurance policy on parent.

A

not taxable

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100
Q

Audit committees of the board of directors:

A

All members must be independent

Must have at least one financial expert

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101
Q

The registration statement describes:

A

the use of the proceeds

and contains audited financial statements

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102
Q

Tombstone ad

A

informs investors about obtaining prospectus

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103
Q

how many days for proxies

A

10 days

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104
Q

Short swing profits

A

Must be returned to the company

6 months

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105
Q

All members of the compensation committee of the BOD

A

must be independent

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106
Q

Emerging companies do not have to have audits of internal control

A

for 5 years or until gross revenues are $1 billion or more

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107
Q

Alien corporation

A

when it is operating in a different country

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108
Q

collateral estoppel

A

you didnt file the papers but everyone thinks you are an entity

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109
Q

A revocation is effective when:

A

received by the offerree

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110
Q

A promise to hold an offer open for a specified time is not binding:

A

unless suppoted by consideration

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111
Q

condition precedent

A

a condition that must be met before a contract becomes enforceable

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112
Q

condition subsequent

A

a condition that, upon being met, releases a party from obligation

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113
Q

Fraud in the execution (deceived into thinking it isnt a contract)

A

void

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114
Q

Fraud in the inducement

A

Voidable

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115
Q

mutual mistake

A

voidable

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116
Q

extreme durress

A

void

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117
Q

simple durress

A

voidable

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118
Q

When the subject contract is unique:

A

specific performance

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119
Q

common carrier

A

strict liability

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4
5
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120
Q

Sale on Approval

A

Buyer takes possession - risk of loss remains with seller

title and risk of loss transfer upon acceptance

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121
Q

COD

A

buyer generally has right to inspect goods before making payment

Buyer gives up right to inspect before payment in contract specifying COD shipment

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122
Q

How id warranty of merchantability disclaimed?

A

phrases such as “as is”

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123
Q

When partial payment is made to an insolvent seller, the buyer may recover or capture goods identified to the contract that are in the possession of the sller under the right of __________

A

replevin

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124
Q

trade acceptance

A

seller extends credit

draft

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125
Q

acronym for requirements of negotiability

A

FAMOUS

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126
Q

bearer paper:

A

negotiated by delivery alone

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127
Q

Order paper:

A

negotiated by delivery and endorsement

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128
Q

3 Requirements of HDC

A

instrument taken for value

taken in good faith

without notice of defects

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129
Q

forgery

A

real defense

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130
Q

fraud in the execution

A

real defense

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131
Q

material alteration

A

real defense

132
Q

discharge in bankruptcy

A

real defense

133
Q

minority

A

real defense

134
Q

extreme durress

A

real defense

135
Q

breach of contract

A

personal defense

136
Q

lack of consideration

A

personal defense

137
Q

imposter or fictitious name given by payee

A

personal defense

138
Q

simple duress

A

personal defense

139
Q

fraud in the inducement

A

personal defense

140
Q

Consumer credit contracts

A

cannot take as a holder in due course

141
Q

The only warranty that requires the transferor knows of the warranty breach

A

transferor’s warranty liability

142
Q

No one has primary liability on a draft until:

A

it has been accepted

143
Q

A party may eliminate its contract liability, not warranty liability, by signing:

A

without recourese

144
Q

3 requirements for a valid security agreement:

A

in writing, except when in possession of collateral

signed by the debtor

a description of the collateral

145
Q

attachment gives the right to WHAT upon default of debtor

A

collateral

146
Q

Acronym for attachment

A

GRIPS

147
Q

acronym for perfection

A

ASAP

148
Q

Requirements for PMSI in noninventory goods to have highest priority

A

Must be perfected within 20 days of debtor possessing collateral

149
Q

If perfection by filing versus perfection by possession:

A

in order of perfection date

150
Q

Authorized credit counselor

A

Consumer debtor must meet with an authorized credit counselor within 180 days prior to filing for bankruptcy

151
Q

Avoidance acronym

A

FLAP

Fradulent transfers

Liens against debtor’s property

after-filing date transfers

voidable preferences

152
Q

Acronym for voidable preferences

A

nopie

within ninety days of filing of petition to a noninsider

within one year of filing to an insider

for a pre-existing debt

while the debtor is insolvent

when the transfer exceeds the amount the creditor would obtain through bk

153
Q

Priority claims acronym

A

stop it

support payments

trustee fees

obligations created after petition

payroll benefits

individual deposits on consumer goods not received

taxes owed to federal, state, and local governments

154
Q

acronym for exceptions to discharge

A

stupid

student loans

taxes within 3 years

unscheduled debt causing credit not to be notified of bankruptcy

pension and profit sharing obligations

intentional force or fraud against another person

domestic support oglibations for alimony and child support

155
Q

Composition of creditors

A

agreement between debtor and certain creditors

creditors agree to accept portion of their claims

remainder of claims of agreeing creditors discharged

156
Q

require principal debtor to pay the obligation

A

exoneration

157
Q

obtain repayment from principal debtor

A

reimbursement

158
Q

obtain rights of creditor against debtor and debtor’s collateral

A

subrogation

159
Q

receive proportionate payment from cosureties

A

contribution

160
Q

If a cosurety is released by the creditor:

A

the remaining sureties are not liable for the proportionate share of the released surety

161
Q

Fiduciary duties include duty of:

A

loyalty

obedience

due care

162
Q

principals are not responsible for actions of:

A

independent contractors

163
Q

Recommendations for actions affecting the environment must be accompanied by:

A

an environmental impact statement

164
Q

unreimbursed amounts of FICA are:

A

compensation to the empoyee

165
Q

noncontributory

A

only employer makes payments to plan

166
Q

Employee contributions must vest:

A

immediately

167
Q

Employer contributions must vest:

A

over a reasonable time

168
Q

COBRA

A

protects employees from losing medical insurance upon termination of employment

169
Q

intentional discrimination:

A

disparate treatment

170
Q

unintentional discrimination

A

disparate impact

171
Q

Horizontal agreements

A

Agreements between competitors

illegal per se

172
Q

vertical restraints

A

vetween separate businesses in the chain of distribution

173
Q

monopoly power

A

=> 70% or more

174
Q

Robinson-patman act

A

prohibits sellers from charging different prices to different buyers for same goods

price discrimination

175
Q

which tenants can have unequal ownership rights?

A

tenants in common

176
Q

If trademark is not used for ________ years the trademark is abandoned

A

3

177
Q

Businesses with average gross receipts > __________ cannot use the cash method

A

$5,000,000

178
Q

Fringe benefits incurred for employer’s benefit:

A

excluded from gross income

179
Q

Amortization of bond discount

A

included in income

180
Q

Interest on Series HH US savings bonds

A

included in income

181
Q

Nondeductible passive activity losses:

A

may be carried forward indefinitely or deducted when property sold

182
Q

Coverdell Education Savings Accounts (ESA)

A

may contribute up to $2,000

must be on behalf of beneficiary under age 18

183
Q

Portion of jury duty fees remitted to employer:

A

are deducted in calculating AGI

184
Q

amortization of premium

A

itemized deduction

185
Q

premiums for health insurance coverage

A

deductible medical expense

186
Q

Interest on personal indebtedness is not deductible:

A

car loans

credit card debt

187
Q

NOL from casualty and theft losses:

A

can carry back 3 years instead of normal 2 years

188
Q

Qualifying child

A

relationship

age - child under 19 or under 24 and full time student

support - child must not provide more than half of own support

housing - child must live with taxpayer for more than half of year

189
Q

Dependent care credit:

A

qualifying child under age 13

190
Q

Resulting base amount x Tax rate = Tentative minimum tax

A

26% x first 182,500

28% (base amount - 182,500)

191
Q

Tax payments include:

A

excess payroll taxes withheld

federal income taxes withheld

estimated tax payments

192
Q

Penalty imposed for late payment of taxes unless:

A

underpayment for year <$1000

payments >= 90% of current year’s liability

taxes paid >= 100% of prior year’s liability

193
Q

Qualified widow or widower

A

Must be providing > half the costs of maintainig household for dependent child

Available for 2 years after death of spouse

joint return was filed for year of spouse’s death

194
Q

Schedule A

A

itemized deductions

195
Q

Schedule B

A

interest and dividend income

196
Q

Schedule C

A

Profit or Loss from Business

197
Q

Schedule D

A

capital gains and losses

198
Q

Schedule E

A

Supplemental income and loss

199
Q

Form 4797

A

sale of business property

200
Q

Schedule 1116

A

foreign tax credit

201
Q

Net earnings from self employment >= _____ must file

A

$400

202
Q

Recovery period for residential real property:

A

27.5 years

203
Q

recovery period for nonresidential real property

A

39 years

204
Q

Equipment, office furniture, and fixtures

A

7 years

205
Q

cars, light trucks, and office equipment, computers

A

5 years

206
Q

small tools

A

3 years

207
Q

Personal property uses what convention:

A

half-year

208
Q

Related taxpayer:

A

corporation or partnership where direct or constructive ownership > 50%

209
Q

Like-kind exchanges

A

Gains recognized to extent of boot received

210
Q

Partnership tax return form:

A

1065 tax return

211
Q

Partnership terminates and its tax year closes when either:

A

Partnership no longer has at least 2 partners or stops doing business

More than 50% of total partnership interests are sold within a 12 month period

212
Q
A
213
Q

Corporation basis for asset:

A

same as shareholder’s basis

+ gain recognized

214
Q

Corporate Tax

Going from Preliminary tax liability to total tax liability

A

+ personal holding company tax

+ accumulated earnings tax

+ alternative minimum tax

215
Q

If received from a shareholder, property has _________

A

a transferred basis

216
Q

If received from a nonshareholder, property has _________

A

a zero basis

217
Q

When a corporation issues its own stock

A

never recognizes gain or loss

218
Q

Premiums on key person insurance if company is beneficiary

A

nondeductible for corp

219
Q

DPAD deduction

A

lower of 9% of QPAI or taxable income

limited to 50% of W2 wages

220
Q

Dividends Received Deduction does not apply to:

A

Dividends from a foreign corporation

Dividends from a tax exempt organization

221
Q

2 conditions for PHC tax

A

Interest, dividends, rents, royalties, or personal service contracts > 60% of gross income

Five or fewer shareholders own > 50% of stock

222
Q

PHC tax =

A

Undistributed PHC income x 20%

223
Q

PHC tax can be reduced by

A

actual and consent dividends

224
Q

The accumulated earnings tax is not:

A

self assessed

225
Q

Adjustments to pre-ACE AMTI to compute ACE include adding:

A

Seventh percent dividends received deduction

Life Insurance proceeds

Municipal bond interest on general obligation bonds

SLIM

226
Q

ACE adjustment;

A

75% x (ACE - pre ACE AMTI)

227
Q

Foreign Tax Credit =

A

smaller of:

Amount of foreign tax paid

(Foreign taxable income / total taxable income) x total us tax liability

228
Q

Schedule M-3

A

More detailed version of M-1

for corporations with total assets in excess of $10 million

229
Q

Spin offsand split offs

A

One corpporation divides into 2 or more separate corporations

230
Q

1244 stock gains

A

Capital gains

231
Q

Only 1 class of stock for S corps

A

voting and nonvoting are one single class of stock

232
Q

Net rent and royalty income:

A

Subject to passive activity loss limitations

233
Q

Tax preferences and adjusments:

A

Used to compute shareholder’s AMT

234
Q

Charitable contributions and simple trusts:

A

Simpe trusts cannot make charitable contributions

235
Q

Estate exemption

A

$600

236
Q

Simple trust exemption

A

$300

237
Q

complex trust exemption

A

$100

238
Q

Net capital gains and DNI

A

Net capital gains are allocated to the principal and not included in DNI

239
Q

Tax return due date for an estate:

A

3.5 months after close of year

240
Q

Estimated quarterly tax payments for Estates

A

Not required for first 2 years

Required after

241
Q

Discount on sale ofproperty to family member:

A

included in taxable gifts

242
Q

Reduction in interest on loans to family members at low rates

A

included in taxable gifts

243
Q

Inherritance holding period

A

automatically long term

244
Q

Amended individual income tax return: due date

A

within 3 years from when original return filed

245
Q

S corporation tax return due date:

A

March 15

246
Q

Exempt organization tax return: due date

A

May 15th of following year

247
Q

HSA savings account

A

Deduction for AGI

248
Q

______ is tax free when withdrawn

A

ROTH IRA

249
Q

Attorney fees in discrimination lawsuit

A

deduction for AGI

250
Q

Section 179

A

$25,000

Up to total purchases of $200,000

excess 179 can be carried forward

251
Q

interest and dividend income

A

portfolio income

252
Q

personal property

A

mid year (or mid quarter)

253
Q

leasehold improvements

A

39 years

254
Q

accident premiums

A

not deductible

255
Q

foregin income tax

A

deductible

256
Q

Investment interest expense on tax free

A

not deductible

257
Q

mortgage points

A

dedutible if prepaid interest

258
Q

Donate property to charity

LTCG and related to charity

A

Deductible up to 30% of AGI

use FMV

259
Q

Donate property to charity

STCG and not related

A

Deductible up to 50%

Use adjusted basis

260
Q

Childs investment income that exceeds $1900

A

will be taxed at parent’s rate

261
Q

Nonresident aliens

A

can still file married, filing jointly

262
Q

Refundable tax credit

A

earned income credit

child tax credit

American opportunity credit

263
Q

_____ days to petition the tax court

A

90

264
Q

no petition =>

A

10 days to pay tax

265
Q

S corp dividend income

A

tax free

266
Q

adoption credit

A

not refundable

267
Q

adoption expense

A

not deductible

268
Q

Current Earnings and Profits =

A

Taxable Income
+ Nontaxable Income (permanent differences)
- Nondeductible expenses (permanent differences)
+/- Temporary GAAP vs Tax differences

269
Q

current earnings are allocated on a

A

pro rata basis

270
Q

accumulated ep is allocated based on

A

chronological order

271
Q

Accumulated Adjustments Account =

A

Ordinary Income
+/- Separately Stated Items (lines 2-12 on K-1)
- Distributions

272
Q

S corp distributions with C corp E&P

A
  1. to extent of AAA - reduces basis - not taxed
  2. to extent of C corp E&P - does not reduce basis - taxable dividend
  3. to extent of basis - reduces basis - return of capital not taxed
  4. in excess of basis - taxable capital gain distribution
273
Q

Paul Pappas owns all of the stock of an S corporation which had previously been a C corporation.
The S corporation had the following balances at the beginning of its tax year:

Accumulated adjustments account $ 8,000
Accumulated earnings and profits $ 10,000

Paul’s stock basis was $20,000 at the beginning of the tax year.
The S corporation made a distribution of $19,000 to Paul during the year.
What is Paul’s stock basis at the end of the year?

A

11,000

274
Q

fee information from a tax practictioner:

A

It may communicated in a number of ways

professional lists, telephone directories, mailings, and electronic mail

275
Q

_________ are not eligible under Chapter 11 of bankruptcy

A

Stockbrokers

276
Q

FUTA

A

credits for this tax are allowed to employers for certain state unemployment taxes paid by the employer

277
Q

Subpart F income example

A

Services are provided by an Irish company in England under a contract entered into by its US parent

278
Q

If a security becomes worthless in the current taxable year, it is treated as sold or exchanged on:

A

The last day of the current taxable year

279
Q

what is the tax rate for an S corporation that pays tax on built in gains?

A

The highest corporate income tax rate

280
Q

Which of the following contractual assignments is prohibitted?

A

The right to receive royalties

The right to be insured under a liability insurance policy

The right to receive installment payments

The rights under an option contract

281
Q

Computer used in the business, held for 4 years

A

qualifies for treatment under section 1231

282
Q

A personal services corporation may deduct payments made to owner employees only in the year in which the:

A

owner-employee includes it in income

283
Q

What is a disavantage of a revocable trust?

A

The trust is included in the gross estate of the grantor

284
Q

The CPA was preparing the financial statement for a limited liability company. To which of the following would the CPA’s report be adressed?

A

Member

285
Q

payment for lease cancellation

A

included in income

286
Q

private foundation not subject to:

A

accumulated earnings tax

287
Q

social security benefits do not include:

A

medicaid

288
Q

An executor of a decedent’s estate that has only U.S. citizens as beneficiaries is required to file a fiduciary income tax return, if the estate’s gross income for the year is at least:

A

$600

289
Q

Contributions to unemployment insurance:

A

not taxable

290
Q

A trust in which the beneficiaries are given a future right to trust income or corpus and the $13,000 gift tax exclusion is retained is termed a:

A

Crummey trust

291
Q

If a tax-exempt organization’s unrelated business income is taxed, what tax rates are used?

A

tax rates for trusts

292
Q

FUTA is a ____ paid text

A

employer

293
Q

age discrimination

A

40 and above

where at least 20 people are employed

294
Q

offeror becomes dead or insane

A

void if acceptance that given yet

295
Q

revocation of contract does not count until:

A

until person receives the revocation

296
Q

Requirements contracts

A

company becomes exclusive provider of something in exchange for consideration

*companies cant get locked into one and then be forced to sell something at an unreasonable price

297
Q

promises to donate =>

A

legally enforceable

promissory estoppel

298
Q

invalid contracts

A

fraud in the execution - void

extreme durress - void

illegal - void

error - void

299
Q

fraud in the execution

A

didnot know they were signing a contract

300
Q

undue influence

A

voidable

301
Q

error in contract =>

A

unenforceable

302
Q

cosigning and guaranteeing the debt of another =>

A

must be in writing

303
Q

how many parties does a promissory note have?

A

2 parties

304
Q

check is a _______

A

draft

305
Q

drawer

A

the person writing the check

you keep your checkbok in your desk DRAWER

306
Q

looks like a check

30 days after date pay to the order of

A

negotiable time draft

307
Q

blank indorsement

A

doesnt name a new payee

308
Q

restrictive endorsement

A

doesnt cancel negotiability

309
Q

who has primary liability on a check?

A

no one

unless bank certifies funds => they are primarily liable

310
Q

by signing =>

A

warrant to all future parties

311
Q

by not signing =>

A

warrant to next party only

312
Q

holder in due course beats fraud in the ________

A

inducement

313
Q

if maker declares bankruptcy =>

A

holder in due course loses right to collect

314
Q

property deeds

A

must be in writing and signed

description of property

deed must be recorded

315
Q

personal property is both:

A

tangible and intangible

316
Q

accumulaton of income in what trust is ok?

A

complex

317
Q

estate tax credits are available for _______

A

foreign death taxes

318
Q

trust beneficiaries only pay tax if

A

earnings are distributed

319
Q

estate beneficiaries pay tax

A

on dni

regardless of distiributions

320
Q

When there has been no performance by either party, which of the following events generally will result in the discharge of a party’s obligation to perform as required under the original contract?

A

both mutual recision and accord and satisfaction

321
Q

The IRS has ______ years to collect after a tax has been assessed

A

10

322
Q

spenthrift trust bars:

A

seizure from creditors of the beneficiary

323
Q

collateral trust certificates are considered:

A

securities

324
Q

Charles and Marcia are married, cash-basis taxpayers. In 2015, they had interest income as follows:

$500 interest on federal income tax refund
$600 interest on state income tax refund
$800 interest on federal government obligations
$1,000 interest on state government obligations

What amount of interest income is taxable on Charles and Marcia’s 2015 joint income tax return?

A.

$500

B.

$1,100

Correct C.

$1,900

D.

$2,900

A

1900

325
Q
A

Regulation (23 decks)

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