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Ethics and Responsibility in Tax Practice > Individual Taxation > Flashcards

Individual Taxation Flashcards

1
Q

What is standard deduction amount for 1) MFJ

2) Single

A

MFJ: 12,700
Single:6350

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2
Q

How much is the 2017 personal exemption?

A

4050

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3
Q

What is the 2017 Personal exemption phaseout?

A

261500-384400

313800-436300

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4
Q

Who can and cannot use cash basis accounting?

A

Can: Individuals
Cannot: 1) Corporations
2) Partnerships with a C-Corp Partner
3) Any business with inventory

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5
Q

What are some AGI deductions?

A
  1. MSA/HSA Contributions
  2. Teacher Expenses
  3. Moving expenses
  4. Deductible part of self employment tax
  5. Self employed SEP ( traditional IRA)
  6. Self employed health insurance premiums
  7. investment penalties for early withdrawal
  8. alimony paid
  9. ira deduction
  10. student loan interest ( cannot be someone else’s dependent)
  11. Qualified tuition and fees
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6
Q

What is the formula for gross income

A

Total income - exclusions

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7
Q

How do capital carryovers work?

A

back 3 years and forward 5 years

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8
Q

Describe the corporate charitable contribution limit

A

10% ( any amount over 10% may be carried over 5 years)

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9
Q

Describe the DRD %

A

Less than 20% ownership (70%)
20 80% ownership (80%)
80% or more (90%)

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10
Q

What is the tax rate for qualified service corporations

A

35% flat

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11
Q

What is the corporate AMT?

A

20% in excess of 40,000

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12
Q

If a corporation’s tentative minimum tax exceeds the regular tax, the excess amount is

A

payable in addition to the regular tax

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13
Q

What is the corporate AMT threshold amount and excess?

A

150,000 -> 15%

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14
Q

What is small corporations AMT amount?

A

Any small corporations ( receipts under 7.5 million) are exempt for a three year period average)

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15
Q

How do personal holding companies account for dividends?

A

They include 1) actual paid dividends 2) consent dividends

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16
Q

What is the tax rate for PSC?

A

35%

17
Q

Give me a brief understanding of what is a Personal Service Corporation ( PSC)

A

Perform services in field of health, law, engineering, architecture, accounting, consulting
- cannot deduct passive losses against active or portfolio income

18
Q

Describe Corporate NOL

A

Carry back 2 years, carryforward 2 years

19
Q

Give me some rules about Entity/Owner transaction rules

A
  1. Tax free contributions to form corporations
  2. Property must be contributed by investors to form corporation
  3. Investors must only receive stock
  4. investor receives NO gain or loss if only receive stock of corporation
20
Q

Give me some more rules about entity transaction rules

A
  1. if stockholder receives cash or other property gain is less of A) gain realized or B)boot recieved
  2. new corp takes the adjusted basis of the contribution shareholders
21
Q

What is the formula for determining shareholder basis in stock?

A

Adjusted Basis of property transferred + GAIN recognized - boot received (including any transferred liabilites) - election to adjust for property loss

22
Q

When is gain or loss not recognized in a property transfer

A

when the corporation is owned by 1 or more person in exchange for stock and immediately after the exchange, the people are in control of the corporation ( 80% control test)

23
Q

How do you recognize gain from boot?

A

the amount is taxable is lesser of boot received or appreciation

24
Q

What happens when a subsidiary distributes property to a parent corp ( 80% ownership?)

A

no gain or loss with be recognized by the parent -> both receive the same basis

25
Q

If a parent corporate owns more than 80% of a liquidating corporation, do they recognize gain or loss?

A

NO!

26
Q

How do non-liquidating distributions affect shareholders?

A

1) Amount distributed = FMV on the data of distribution

2) EP -> Dividend -> ROC

27
Q

How do non-liquidating distributions affect corporations

A

1) losses are non deductible

2) Corporate distributions reduce EP by the greater of FMV (FMV - adjusted basis) or adjusted basis

28
Q

What is a type B reorg?

A
  1. the stock of the TARGET corporation is acquired soley for the voting stock and 2. The acquiring corporation has immediate control of the TARGET corporation
29
Q

What are the advantages of filing for a consolidated tax return?

A
  1. offset one company’s loss with another ( capital and operating)
  2. avoiding tax on inter-company distribution
30
Q

What are some affiliated group requirements?

A
  1. common parent owns at least 80% of the voting power of the stock of the corporation
31
Q

What are some domestic corporation that CANNOT be part of a consolidated group?

A
  1. tax exempt corp
  2. insurance company
  3. foreign corporations
  4. corporations electing for tax credit
  5. regulated investment companies
  6. domestic international sales companies
  7. S Corps
32
Q

What perks do inter company dividends receive?

A

tax free status

Ethics and Responsibility in Tax Practice (10 decks)

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