Class 06

Question 1

what are exclusions?

Answer 1

income not subject to tax

Question 2

what are employee fringe benefits?

Answer 2

side dish benefits added to wages

Question 3

what’s the catch with employee fringe benefits?

Answer 3

must be offered to all employees

Question 4

what are child + dependent care fringe benefits?

Answer 4

up to $5K in benefits

Question 5

what are athletic facilities fringe benefits?

Answer 5

non cash allowance open to employees + families

Question 6

what are educational assistance fringe benefits?

Answer 6

as a scholarship up to $5,250

Question 7

what are adoption fringe benefits?

Answer 7

up to $15,950 (but reduced when in the phase out zone)

Question 8

what are cafeteria plan benefits?

Answer 8

choose cash (taxed) vs non tax benefits

Question 9

what are flexible plan benefits?

Answer 9

pre tax dollars put in the plan and can apply to medical services

Question 10

what are no additional cost benefits?

Answer 10

ie airline standby benefits tax free (except if a potential client prevented)

Question 11

what is the employee benefit catch?

Answer 11

discount can’t exceed the employer’s unit cost

Question 12

what are retirement planning services catch?

Answer 12

must be employee of the insurance

Question 13

what are working condition fringe benefits?

Answer 13

tax free annual dues + subscriptions in professional organizations

Question 14

what are de minimus fringe benefits?

Answer 14

benefits so small it’s impractical (i.e. company dinners)

Question 15

what are transportation fringe benefits?

Answer 15

subsidized transportation ($300/month limit)

Question 16

what are moving expenses fringe benefits?

Answer 16

limited to armed forced on active duty (everyone else is taxed)

Question 17

what is substantiation?

Answer 17

taxpayer is burdened to prove deductions

Question 18

what do you assume about deductions?

Answer 18

assume nothing is a deduction unless congress says so

Question 19

what is “for AGI”?

Answer 19

you automatically qualify and do not itemize

Question 20

what are categories of “for AGI”?

Answer 20

all are non deductible:
1. trade or business activities—sole proprietor, partnership, and farm
2. investment activities
3. personal activities

Question 21

“for AGI” vs. “from AGI”?

Answer 21

“for AGI” is before you get to AGI + “from AGI” are itemized deductions

Question 22

what is a schedule 1 1040?

Answer 22

a summary of taxpayer’s financial activities

Question 23

when do trade + business deductions apply?

Answer 23

expenses are ordinary AND helpful

Question 24

when do excessive executive compensation deductions apply?

Answer 24

reasonable + $1M deduction max

Question 25

when do qualified business income (QBI) apply?

Answer 25

1. up to 20% deduction for sole proprietorship, partnership, S corp 2. certain industries restricted (health, business, law, arts, athletics)

Question 26

what is cash method deduction timing?

Answer 26

1. expenses deducted when paid 2. prepaid expenses non deductible

Question 27

what is accrual method deduction timing?

Answer 27

1. all events test (amount determined) 2. economic performance event (event occured)