Flashcards in Deck 20 Deck (20):
Gifts that qualify for the exclusion must be both:
Present and complete
Gift tax return
Under safe harbor rules, a taxpayer may deduct improvements (if they qualify as routine maintenance) that do not exceed the lessor of:
$10,000 or 2% of the unadjusted basis; if they do not qualify as routine maintenance then the amount is 0
The "built-in gains" tax applies if a C corporation elects:
S corporation status during the year
Section 1244 stock that becomes worthless is considered what kind of loss?
Ordinary loss; other worthless stock besides section 1244 stock would be considered capital loss
When do the section 1245 rules apply?
For personal property
An investment in stock (capital asset) results in the income being: (ordinary income or long-term capital gain)
Long-term capital gain
The penalty for failure to comply with the IRS' "due diligence" requirements with respect to determining a client's eligibility for the earned income credit is:
Penalty of $500 for each such failure
Penalty that can be imposed by the SEC
Can suspend or permanently revoke an accountant's right to practice before the SEC
What authoritative source is not considered primary when conducting tax research?
No adjustments from book income are required for:
1) state income taxes, 2) Interest earned on US treasury bonds, and 3) interest expense on bank loans to purchase US treasury bonds
What is not included in organizational costs?
Underwriting fees to issue corporate stock
"At risk" rules apply:
At the shareholder level rather than at the corporate level
Deductions for S corporations must be:
Ordinary and necessary and reasonable
A worthless security is treated as sold or exchanges on:
the last day of the current taxable year
Convention under MACRS for real property (buildings)
Convention under MACRS for personal property (machinery)
Half year and/or mid-quarter
MACRS 5-year property includes:
Automobiles, light trucks, computers, typewriters, etc.
MACRS 7-year property includes:
Office furniture and fixtures