Reg 1 Flashcards
When can you deduct losses from rental real estate activities
You can when you actively participate in the activity - so if you are an agent.
Up to $25K in losses can be taken if you have AGI of 100K or less.
Its phased out at 150K
between 100 - 150K the 1/2 for every dollar.
Example - you have a loss of 40K and make 120K AGI
20,000 * .5 = 10,000
You can take up to 25K so 25K - 10K = 15K
15 is the amount of rental loss you can deduct
How do you compute AMT
you calculate the tentative AMT an then compare it to the regular tax that has been calculated
IF AMT is higher the excess is reported as the AMT on the individual return
Who can deduct with alimony
- If you pay alimony - you can deduct it
If you receive alimony it is included in income
Are these included in income:
compensation for injuries
rental value of parsonages
tuition scholarships
NO - compensation for injuries
No - rental value of parsonages
NO - tuition scholarships
How do you determine what amount of interest expense you can deduct
Only can deduct the amount up to the extent of investment income:
Interest Income 10K
non Interest investment expense 8K
5K investment interest expense
10K - 8K = 2K = amount of investment interest that you can deduct
How much IRA contribution can you deduct as an adjustment to AGI
Up to $5,500
What are the rules for a C-Corp for when they must use Accrual Accounting
If c- corp and 5Million in average sales for last 3 year - then must use accrual
What are the rules when you receive a pension benefit in the form of an annuity paid for by your employer
If you get a pension that is an annuity that was totally paid for by your employer - all of the income is included
No portion is exclude
What is the limit you can deduct for a promotion item
The limit is $4 per item
When can you, can’t you deduct an assessment
As assessment for something like sewer system benefits some people - not all people and there fore is not property tax. Therefore not deductible
Its an infrastructure improvement that benefits particular property owners.
What must an event have to quality as a casualty event on Schedule A
It must be considered unusual or unexpected
The value of the casualty loss is the loss in value of the property resulting from the event
FMV = $600
After event = $200
Casualty loss = $400
How do you figure out what is taxable when you get non cash compensation from an employer like personal use of a company vehicle
They are taxable to the individual
What do you do if you get child support for 12,000
It is not deductible - but is used to determine if a child is a dependent
So not added to income note deducted from income
Where do you report if you pay yourself a management fee out of the rents you receive on a rental property
the rental income is reported on Schedule E. The management fee is deducted as an expense on schedule E
The management income is reported on schedule C as business income
How do you figure our the net operating loss
You take the net business loss 16K
and subtract from it you wages 4K
and your income (rental income) 5K
15 - 5- 4 = 7,000 is the NOL that can be carried back 2 years or forward 20 years
