Flashcards in Deck 12 Deck (20)
What costs cannot be amortized for tax purposes?
stock issuance costs
What is the maximum amount of capital losses in excess of capital gains that a C corporation may deduct in a year?
Corporations may not deduct any capital losses in excess of capital gains in a year
A personal service corporation (PSC) is primarily involved in the performance of one of the following fields:
Accounting, law, consulting, engineering, architecture, healthy, and actuarial science
A personal services corporation may only deduct payments to an employee-owner in the year it is:
Included in income by the recipient
Taxes payable under the Federal Unemployment Tax Act (FUTA):
Credits for this tax are allowed to employers for certain state unemployment taxes paid by the employer.
General rule for corporations:
No gain or loss recognized
Basis of property that corporation receives is the greater of:
adjusted basis (net book value) or debt assume by corporation
Basis in property is:
Net book value (nontaxable)
Basis in services:
fair market value (taxable)
What happens when liabilities exceed the basis:
Gain is recognized for the excess
Stock basis =
NBV assets - liability
Examples of miscellaneous itemized deductions:
unreimbursed business expenses, business gifts,
Health insurance premiums paid by a self-employed individual are:
100% deductible as an adjustment from AGI
Penalties on early withdrawals of savings are: adjustment for AGI or from AGI?
Adjustment for AGI
Do qualifying medical expenses include drug treatments?
Yes; treatment, lodging, and meals are all covered
Health insurance premiums that are deductible include:
premiums paid by a set-employed individual, insurance premiums paid by a taxpayer with after-tax dollars (Personal disability premiums are not deductible
Interest expense that is not deductible includes:
Mortgage interest paid on commercial property, interest paid on personal credit cards, and interest paid to IRS for late filing of income tax return
Reconciles permanent and temporary differences between book income and taxable income