Flashcards in Deck 39 Deck (21):
How will book income be affected by "interest income from municipal bonds"?
Subtracted from book income
How will book income be affected by "excess capital losses over capital gains"?
Add back to book income
Unlimited exclusion from gift tax includes:
1) payments made directly to an educational institution for a donee's tuition, (2) payments made directly to a health care provider for medical care, (3) charitable gifts, and (4) marital transfers
Capital assets generate either:
Long-term capital gains or long term capital asset
What limitations exist that won't allow an item to qualify for the 179 deduction?
1) When there is a loss or 2) when the purchases exceed $2 million or 3) when it is land 4) can't exceed $500,000; if none of these limitations apply then the amount of the deduction is equal to lessor of the amount purchased or the taxable income amount
Maximum cap on 179 deduction?
When a partnership purchases an asset, does this affect a partner's basis?
How does the dividends received deduction affect book income?
Add back to book income to get taxable income
When you sell an item that you normally sell within your business, you treat the gain as...
When you sell a random item that is not in your ordinary course of business, the gain is treated as....
Short-term or long-term capital gain
What transactions are subject to a securities exemption?
Securities of charitable organizations, municipal bonds, and stock splits
When a seller notifies the buyer, before acceptance, that the seller is shipping nonconforming goods; what results?
This is considered a counteroffer (If there was no notification, then it would be acceptance and breach of contract)
Two have an enforceable option contract, two things must happen:
Must be for the sale of goods and there must be consideration exchanged (writing is not required, can be oral)
Priority rules for Bankruptcy (SAG WEG CTI)
S: support to spouse, children; A: Administration expenses (fees); G: gap claims; W: wage claims up to $12,475; E: employee benefit plans up to $12,475; G: grain farmers; C: consumer deposits; T: Tax claims; I: injury claims from intoxication
In calculating the tax of a corporation for a short period, what process is used?
Annualize income and calculate the tax on annualized income, then multiply by the number of months divided by 12
Taxable gross profit =
amount collected x gross profit percentage
When a corporation distributes assets to a shareholder, the corporation must:
Recognize a gain as if it sold the asset; FMV or liabilities (whatever is higher) minus the adjusted basis of the asset
An investment in a capital asset (stock) results in the income being:
Capital; capital loss or capital gain
A partner will recognize a gain only when:
Money received exceeds the partners basis
Form 1065 reports:
Reports ordinary business income for partnership (interest income not included)