REG MCQ mistakes Flashcards
Under section 11, which of the following must be proven by a purchaser of the security for a CPA for certifying materially misstated fin statements?
purchaser need not prove 1) reliance 2) or fraud/negligance.
Section 11 shifts the burden of proof from the plaintiff to the defendant
If CPA acted with intent to materially ignore material omissions…
they will be liable
An accuracy related penalty applies to portion of tax underpayment when
1) negligance or disregard of rules
2)any substantial understatement of income tax
ONLY ACCURACY PENALTY (20% civil penalty)
3) substantial valuation mistatement
4) substantial estate or gift stax valuation
If someone wants to change delivery date for something under 500, and fails what happens?
agreement is binding ( no writing is required for enforceable contract if contract is less than 500)
** Also an agreement that modifies a contract needs no consideration to be binding”
How do you calculate basis in an estate when transferred upon death?
1) usually take the value at the time of death
2) unless elected the alternative valuation date -> basis can be taken 6 months afterwards as long its lower than at the time of death
At risk rules limits a partner’s deductible loss to the amount which the partner is considered to be at risk
A partner is considered at risk for 90% of the total expected tax of the current year
What is the basis of a property received in a liquidating distribution?
Original adjusted basis minus cash recieved
When does the built in gain tax applies?
When a C corp turns into an S corp. NOT sole proprietorship changes into an S corp.
Which entity may adopt ANY tax year end
C corp
…
s corp usually -> calendar year (conforms to the predominant tax year of their partners)
LLC with 2 or more member is taxed as a partnership which is generally calendar year (partner’s taxable year)
trust -> only calendar year
what is considered a capital asset for tax purposes?
mineral deposits sold in place… but if removed and sold in units = ordinary income.
Which of the following is a capital asset?
1) copy held by creator?
2) purchased copy right?
purchased copyright
Are inventory and land used in business capital assets?
NO!
How do charity deductions work?
1) Any land held more than one year = long term capital asset
2) 30% of income limit applies to 50% limit orgs
(does not apply when taxpayer chooses to reduces the FMV of the property by long term capital gain)
Payment for registration and licensing of a car may be deductible as a personal property tax only if imposed annually and asses in proportion to the value of the car
Not deductible based on the weight of the car
Donation of appreciated property
limited to the basis if the holding period of 1 year is not met
