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R4 Flashcards

1
Q

Name some temporary differences when calculating taxable income

A

Interest income in advance, Rental income in advance, Royalty income in advance, depreciation

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2
Q

Name some permanent differences when calculating Taxable income

A

Interest income from muni or state bonds, proceeds for “key person” life insurance, Federal income taxes

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3
Q

When are advanced Rental payments taxable?

A

Taxable when paid

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4
Q

Under the TCJA what is the new rule concerning business meals and entertainment?

A

Business meals = 50%

Entertainment = non deductible

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5
Q

What are the two rules which accrual- basis corp can deduct accrued contribution?

A
  1. It was authorized to a qualified charity by board before resolution before end of taxable year
  2. Paid by the 15th day of the 4th month after the end of the tax year (4/15)
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6
Q

What amount of the penalty for the underpayment of FIT is deductible?

A

It’s not moron

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7
Q

What does rental income include?

A

Cash received + rent receivable + Nonrefundable deposit

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8
Q

What is the carryover rules for Charitable Contributions?

A

5 years CFWD

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9
Q

What is deducted from a PHC in computing PHCI?

A

FIT and Net LTCG are deducted

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10
Q

If an individual did not pay PY tax, what method is used in Yr2?

A

Annualization method

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11
Q

Formula for Accumulated Earnings Tax.

A

TI - FIT - 250k exclusion

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12
Q

What are examples of Personal Service Corporations?

A

accounting, law, consulting, engineering, architecture, health, actuarial science

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13
Q

What is similar about PSC and PHC’s?

A

Both must include 100% of dividends received from unrelated taxable domestic corps in GI in computing regular TI

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14
Q

What is Sec. 1244 stock?

A

When stock is sold or becomes worthless. If the original owner then able to treat as ordinary loss(tax deductible= 100k MFJ, 50k all else ) rather than capital loss

Loss in excess of amount is capital loss (3k max)

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15
Q

What is the gain that is recognized from a Corporate liquidation and distribution?

A

capital Gain is recognized to the extent that FMV of assets> shareholders basis in corporations stock

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16
Q

How do shareholders treat property received in a complete liquidation of corporation?

A

Shareholders treat this as full payment for their stock,

Shareholder recognizes CG/CL = FMV - Basis

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17
Q

When is there no G/L recognized by a parent or sub in a liquidation?

A

When the parent owns atleast 80%

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18
Q

What companies is the accumulated earnings tax imposed on?

A
  • does not depend on the number of shareholders a corporation has
  • PHC and PSC are not liable for this Accumulated earnings tax
  • regular corporation
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19
Q

In a liquidation between sub to parent, what is the basis of the asset?

A

The basis is a carryover basis from the sub to parent

20
Q

What kind of interest is included in PHCI?

A

interest that is included would be the interest included in corp income. not tax free interest

21
Q

What value is a dividend taxable in a distribution?

A

A dividend paid in property other than money is taxable to individual to the extent of the property FMV (not in excess of E&P)

22
Q

Can you recognize G/L on the formation of a C corp?

A

No, the formation of a corporation Is a nontaxable event

23
Q

Can a shareholder of an S corp recognize a gain?

A

Yes ONLY if the liabilities are in excess of the basis of property contributed

24
Q

Which type of entity has the most flexibility in accounting period?

A

C Corp

25
Q

For corporation purposes, what amount of underpayment of estimated tax will receive a penalty?

A

If the tax for that year is less than $500

26
Q

What are the 2 deductions for a PHC in determining undistributed personal holding company income?

A

FIT and Net LT capital gain less related FIT

27
Q

For corporation purposes, what is the annual estimates tax payment to avoid an underpayment penalty?

A

Lessor of:

  1. 100% of tax liability of the PY return(if positive tax liability
  2. 100% of the CY tac liability
  3. 100% of estimated CY liability
28
Q

What type of entity can the accumulated earnings tax be imposed on?

A

On regular corporations not classified as PHCs; does not depend on the number of shareholders

29
Q

What is the character of C Net capital loss /

A

BCAK 3 yrs and CFWD 5 yrs, always treated as Short Term

30
Q

What is the character of the basis of assets a corp receives from its subs in a liquidation?

A

Carryover basis

31
Q

What is the gain recognized in a corporate liquidation?

A

Gain is recognized to the extent that FMV of assets distributed to a shareholder exceeds the shareholders basis in the corporations stock

32
Q

What amount of dividend income does a shareholder recognize?

A

to the extent of cash received + FMV of noncash (the FMV of date of declaration is irrelevant)

33
Q

How are losses treated in nonliquidating distributions?

A

no deduction

34
Q

If a nonliquidating liquidation is distributed at a gain, how is the dividend income calculated?

A

To the extent of Current E and P + Acc E and P + Gain on disposition

35
Q

What is the result to shareholders of a distribution in a complete liquidation of corporation?

A

Capital gain or loss

36
Q

As of 2018, what is the rule regarding NOL

A

Can only offset up to 80% of NOL, No CBCK and unlimited CFWD.
Before 2018 - can offset up to 100%. 2 BACK 20 FWD

37
Q

What is the min holding period requirement in order to have a DRD?

A

45 days

38
Q

How is a gain recognized in the transfer of equipment to a corporation?

A

If the liabilities assumed by the corporation are greater than the basis of the property contributed

39
Q

Are interest incurred on loans to carry U.S obligations and the provision for state corporation income tax Adjustment to schedule M1?

A

No

40
Q

How much the DRD is applicable in a consolidation?

A

100% is applied so dividend income is eliminated in consolidation

41
Q

What are the two levels of taxation in a corporate liquidation of distributions?

A
  1. recognize G/L= selling assets @ FMV

2. s/o G/L= FMV - basis

42
Q

How do you calc gain a shareholder recognizes on the liquidating of distribution?

A

gain is recognized to the extent that the FMV os assets are distributed to a shareholder exceeds the shareholders basis in stock

43
Q

What is the charitable contribution limit for Corporations?

A

10%

44
Q

When can a shareholder recognize income for cash?

A

only if they acquire up to 80% of stock in acquiring

45
Q

What organization uses cash method of accounting?

A

Qualified personal service organization

46
Q

What type of deduction method does a corporate that is not a small bank use?

A

Direct charge of method

REG (16 decks)

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