Chapter 2 Flashcards
(40 cards)
Donations of short-term capital gain property are deductible to the donor to the extent of the
adjusted basis
Long term appreciated property is limited to the lesser of
30% of AGI or the remaining amount to reach 50% after cash contributions
Donation of general property is deducted at
lesser of basis or FMV
Individual taxpayers may deduct the ______ of PROPERTY donated to charity?
FMV- 30% of AGI is the limit
How do you calculate a casualty loss?
FMV before - FMV after - - NOTE the loss cannot exceed the adjusted basis. the amount should also be reduced by insurance recovery.
Casualty loss calculation
Lesser of 1. lost cost/adjusted basis 2. Decreased FMV
Taxpayer’s Loss
Eligible Loss
Deductible Loss
Appreciated property held over one year is deductible at
its FMV (up to lesser of 30% of AGI or the remaining amount to reach 50% after cash contributions)
Cash donated to charity can be deducted up to
full 50% of AGI
State and local income taxes withheld from cash basis tax payer are deductible
in the year withheld.
Estimated tax liability is
deductible in year paid
Federal income tax withheld is not deductible in calculating federal income tax
true
Types of deductible medical expenses
medice and drugs, doctors, medical and accident isnurance, required surgery, transport to medical facility, physically disabled costs
What are non deductible moving costs?
meals, pre moving house hunting, expense of breakin a lease, temporary living expenses
A personal service corporation is an entity whose principal activities involve
performing personal services in the areas of health, law, engineering, architecture, accounting, actuarial science, performing arts, or consulting.
PCS tax
Restrictions on tax years available (IRC Section 441(i))
Taxed at a flat 35% rate (IRC Section 11(b)(2))
Ordinary and necessary administration expenses are deductible on either the
fiduciary income tax return (Form 1041) or the federal estate tax return (Form 706) but not both.
When a debtor moves collateral subject to a perfected security interest to another jurisdiction, the original creditor retains the status of a perfected creditor for up to four months after the collateral is moved.
x
Since Tom had the option to receive either cash or the ABC Corp. stock with a fair market value of $1,000, the fair market value of the stock received is included in income by Tom. The Internal Revenue Code states that if a distribution (or series of distributions) results in the receipt of cash or other property by some shareholders in the corporation’s assets or earnings and profits, then stock or stock rights distributed to a shareholder on the common stock of the corporation must be treated as a taxable distribution.
x
Since Tom had the option to receive either cash or the ABC Corp. stock with a fair market value of $1,000, the fair market value of the stock received is included in income by Tom. The Internal Revenue Code states that if a distribution (or series of distributions) results in the receipt of cash or other property by some shareholders in the corporation’s assets or earnings and profits, then stock or stock rights distributed to a shareholder on the common stock of the corporation must be treated as a taxable distribution.
x
Wages paid for domestic services are subject to special rules for determining whether they are subject to payroll taxes. When are domestic wages subject to federal unemployment tax?
Over $1,000 in wages per quarter
Fred Berk bought a plot of land with a cash payment of $40,000 and a purchase money mortgage of $50,000. In addition, Berk paid $200 for a title insurance policy. Berk’s basis in this land is:
Cash payment $40,000
Mortgage 50,000
Title insurance 200
-------
Total basis $90,200Under the Securities and Exchange Act of 1934, which of the following types of instruments is excluded from the definition of “securities”?
Certificate of desposit
What is a security?
Under Securities and Exchange Act of 1934 they are an investment in a common enterprise with the expectation of profit( investment contracts and both convertible and nonconvertible debentures.)
Which of the following securities is exempt from the registration requirements of the Securities Act of 1933?
Bonds issued by a charitable foundation, securities issued by municipalities and governmental entities, securities issued by any type of charitable organization.
