EA Part 2-Passkey 7-8 Flashcards
Net Operating Loss (NOL)
is when a business has tax deductions that exceed its current income, resulting in negative taxable income
NOL carryback period: ___ years,
carry forward up to ___ years
2 years, then carry forward any remaining NOL for up to 20 years.
A business may elect not to carry back, only carry forward.
Longer carryback periods: exception to the 2-year carryback rule are for:
- “qualified small business”, 3 years if in federally declared disaster
- NOL due to casualty or theft, 3 years
- farming loss, 5-year
- product liability, 10-year (ex: recall & lawsuits)
FORM 1045
FORM 1045 Application for Tentative Refund, used to apply for quick tax refund resulting from the carryback of an NOL. Or TP may choose to amend a prior year return.
NOL only offsets income tax. It cannot change prior years’…
self-employment tax, or interest or penalties
Form 3800
Form 3800 General Business Credit
The GBC is a combination of 32 business credits. Each is claimed on a separate form, then the credits are added in aggregate on Form 3800.
GBC is nonrefundable credit, but it can be carried back __ year and forward for ___ years
1 year back, 20 years forward.
Form 3468 Investment Credit
is sum of 5 credits:
- Rehabilitation of pre-1936 bldgs 10%, or historic structures 20%
- Energy Credits - 10-30% fuel cell or solar to power their manuf. eqpt
- Advanced Coal, Gasification or Advanced Energy Project Credits - to reduce greenhouse emissions by retrofitting existing technology projects
Form 8826
Disabled Access Credit
50% of qualified expenses to allow business to comply with Americans w Disabilities Act, $5,000 max cr per yr, for businesses earning $1 million or less, no more than 30 full-time employees
Form 5884 Work Opportunity Tax Cr
up to $9,600 per veteran hired & working for for-profit employers
up to $6,240 for Tax-exempt organizations
Form 8910 Alternative Motor Vehicle Credit
- fuel cell
- advanced lean burn technology
- hybrid
- alternative fuel
- plug-in electric drive
Unusual: allowed for personal vehicle as nonrefundable cr, or business-use become part of GBC
Form 8936
Qualified Plug-in Electric Drive Motor Vehicle Credit
$2,500 to $7,500 purchased or leased
Form 8909
Energy Efficient Appliance Credit
for manufacturers of eligible -dishwashers, -clothes washers -refrigerators; based on how little energy appliance uses
Form 8908
Energy Efficient Home Credit
Ranges from $1,000 to $2,000; for contractors of residences
Form 8846
Credit for Employer Social Security and Medicare Taxes Paid on Certain Employee Tips
credit equal to employer’s portion of Soc. Sec. & Medicare taxes paid on tips received by employees of restaurants & food service
Form 8932
Credit for Employer Differential Wage Payments
incentive to small business to pay wages to military employee on active duty for period of more than 30 days
Form 8941
Credit for Small Employer Health Insurance Premiums
25% of premiums for tax-exempt small business;
35% all other small employers;
Business must have <25 FTE employees with ave. wages <$50,000
Form 8881
Credit for Small Employer Pension Plan Start-up Costs
A new defined benefit, defined contribution, 401(k), SIMPLE or simpliifed employee pension.
For businesses with no more 100 employees;
50% of costs up to max credit of
$500 per year
for first 3 years of retirement plan
Form 8882
Credit for Employer-Provided Childcare Facilities
Up to 25% of cost of childcare facility plus
10% of childcare resources & referral costs.
Limited to $150,000 per tax year.
Credit for Increasing Research Activities
intended for use in developing new or improved technology that would be used in a taxpayer’s business
In 2012, section 181 allows film & TV producers to expense
the first $15 million or production costs incurred in US, $20 million if in economically depressed areas, rather than capitalizing costs
DPAD
Domestic Production Activities Deduction
DPAD is equal to __% of the lesser of a business’ …
9%
-qualified production activities income or
- taxable income determined without regard to the DPAD
Limited to 50% of wages paid on Form W-2 (meant to discourage outsourcing & use of independent contractors)
Eligible Activities for the DPAD
all must be done or relating to U.S.-based production or services
- manufacturing activities in U.S.
- Selling, leasing or licensing U.S.-manufactured items
- selling, leasing or licensing motion pictures (except porn)
- construction of real property
- engineering & architectural services
- software development
- production of water, natural gas & electricity
- growth & processing of agricultural products & timber
