Federal Taxation Flashcards
(96 cards)
1
Q
Gifted Property Basis (not for gift tax purposes)
A
- Gain - Adjusted Basis of Donor
2. Loss - lower of FMV @ date of gift or Adjusted Basis of Donor
2
Q
Sale of Equipment or Inventory in the ordinary course of business is what type of income?
A
Ordinary
3
Q
Land Held For Investment is what type of asset?
A
Capital
4
Q
Property received at death has what basis for the recipient?
A
FMV
5
Q
Max Capital Loss for an individual in a single year?
A
$3,000
6
Q
Max Capital Loss loss deduction for Corporation?
A
Zero, capital losses can only offset capital gains
7
Q
Carryback/Carryforward of Capital loss for individual
A
no carryback, indefinite carry forward
8
Q
Carryback/Carryforward of Capital loss for Corporation
A
3 years back, 5 years forward
9
Q
Capital gains tax rate for most indivduals
A
15%
10
Q
Capital gains tax rate for wealthy individuals
A
23.8%
11
Q
What is a Section 1244 asset?
A
Stock in a copy that
- Had less than $1mm original issuance
- Holder is original holder
12
Q
Sections 1244 deduction is what?
A
deduct losses as ordinary income
13
Q
Section 1244 limitations
A
Individuals - $50,000
Married Filing Jointly - $100,000
14
Q
Capital Losses Carried forward and back for corporations are classified as what?
A
Short-Term
15
Q
Section 1245 recapture applies to what?
A
Depreciation of Personal Property
16
Q
Section 1250 recapture applies to what?
A
Depreciation of Real Property
17
Q
Section 1245 recapture applies what tax rate to recaptured depreciation?
A
Ordinary Tax Rate
18
Q
Section 1250 recapture applies what tax rate to recaptured depreciation?
A
Straight-Line at 25% with excess over straight-line as ordinary income
19
Q
Tangible assets owned for less than a year are what type of asset?
A
Ordinary
20
Q
Residential Real property is depreciated over how long?
A
27.5 years
21
Q
Section 179 deduction is eligible for both new and used assets (T/F)
A
True
22
Q
Salvage value is ignored for MACRS (T/F)
A
True
23
Q
How long is the Amortization of Intangibles?
A
15 years
24
Q
Casualty Loss Equation
A
Less of Decline in FMV and Adjusted basis < Insurance Reimbursement> < $100 per casualty> < %10 of AGI> Equals: Casualty Loss Deduction
25
What is the difference between casualty losses for personal assets and business assets
Personal are itemized deductions, and business is a full business deduction
26
5 Major types of itemized deductions subject to the 2% floor
1. Un-reimbursed Business Expense
2. Investment expense (not royalty or rental)
3. Tax Return Prepare
4. Home office expense of an employee
5. Hobby Expense
27
Section 179 amount and phase out
$25k amount
| $200k phase out dollar for dollar
28
Section 179 limits
$25k or business income
29
Amount of Child/Dependent Credit
$1,000 per qualifying child
30
Phase out amount for Child/Dependent Credit and how it's phased out
$75,000 unmarried
$110,000 married
$50 for each $1,000 over
31
Hope Credit amount, and how it's calculated
$2,500 a year
| 100% of the first $2,000 and 25% of the next $2,000
32
Requirements to get the Hope Credit
First four years of college in degree program & qualified education expense
33
When are Materials and Textbooks qualified education expense?
When required to be purchased from the University
34
Lifetime Learning Credit amount and how it's calculated
$2,000
20% of $10,000 of qualified education expense
35
What is the minimum Dependent Care Credit?
20% of qualified expenses
36
Bequeathed property has what type of basis?
Long-Term
37
Is bonus depreciation the same as Section 179?
No
38
6 types of Personal Itemized Deduction
1. Medical Expense
2. Interest
3. Taxes
4. Charity
5. Casualty Losses
6. Miscellanous
39
Standard Deduction Amounts
Single = $6,200
HOH = $9,100
Married Joint = $12,400
Married Sep = $6,200
40
What is the benefit to filing Married Surviving Spouse?
Can file Married Filing Jointly Rate for two years after the year of death of the spouse
41
Addition Standard deduction for Blind and Over 65 (Unmarried & Married)
```
Unmarried = $1,550
Married = $1,200
```
42
AGI limits for itemizing Medical Expenses
Under 65 = %10
| Over 65 = 7.5%
43
Taxes not allowed to be Itemized (4)
1. Federal
2. Death
3. Excise
4. Sales Tax, in general
44
Deduction Limits for Charitable Contribution
Overall - 50% of AGI
LTCG for A Charities - 30% of AGI
LTCG for B Charities - 20% of AGI
45
How is legal expense in connection with an attempt to produce or collect income deducted?
Misc Itemized deduction subject to the 2% floor
46
How are custodial fees for an IRA deducted?
Investment Expense misc itemized deduction subject to the 2% floor
47
How is the floor for Itemized deductions applied?
Add up all deductions and the apply the floor
48
2 ways an individual can deduct a loss in a transaction for personal purposes
1. Casualty
| 2. Theft
49
Limitation of Hobby Loss Expense and how it's deducted
Limited to Hobby revenue, misc itemized deduction subject to 2% floor
50
How is Social Security income used in the gross income test for a dependent?
No included
51
Qualifying Relative Test (4)
1. Support
2. Gross Income
3. Joint Return
4. Citizenship/Residency
52
NOL carryback and carryforward
2 back, 20 forward
53
4 Things that can't create an NOL for individuals
1. Personal Exemption
2. Standard Deduction
3. Excess non-business capital loss (limit $3,000)
4. A NOL from another year
54
Head of Household applies if a taxpayer provides what 2 things?
1. Provides over 1/2 Support for
| 2. Qualifying Child or Relative
55
What is the Mini Standard deduction and what is the amount?
Taxpayer is claimed as a dependent by someone else, $1,000
56
Is Tax-Exempt interest from Private Activity Bonds issued after 1986 a Preference for AMT?
Yes
57
How is Self-Employment Tax included in Schedule C to calculate net-earnings from self employment
It is not used in the Calculation and is not on Schedule C
58
What are the max amounts of eligible Child and Dependent Care expenses
1 child = $3,000
| 2 or more = $6,000
59
What is the amount of the Foreign Tax Credit
Lower of...
1. Foreign Tax Paid
2. (Foreign Taxable Income/Worldwide Income) x U.S. Source Taxable Income
60
What is the amount of the Work Opportunity Credit?
40% of the first $6,000 wages, max $2,400
61
What amount of gain is recognized on a corporate formation what includes liabilities and assets
The amount that liabilities exceed the basis in the assets contributed
62
What is the ownership percentage required of a stockholder to recognize no gain on a corporate formation?
80%
63
Basis in Corporate Formation for shareholder
Adjusted Basis in Property Given-Up
+ Recognized Gain (lower of)
a. Realized Gain
b. Boot Received
64
Gain and Basis on a corporate formation are 2 different things (T/F)
True
65
Is there a gain or loss on the complete liquidation of a subsidiary that a corporation owns 80% or more?
No
66
Are distribution of Roth IRAs first made from interest or capital?
Capital
67
IRA contribution limit
$5,500
68
Support for Dependent Include (7)
1. Food
2. Clothing
3. Lodging
4. Medical
5. Recreational
6. Educational
7. Certain Capital Expenditures
69
How long must a corporation own stock to get the Dividends Received Deduction?
46 days
70
Charitable Contribution Rate for Corporations, and what it's calculated off of?
10%, Business Income plus dividends, before DRD
71
Corporate AMT Exemption amount
$40,000 - (25% of AMT Taxable Income over $150,000)
72
Who is Accumulated Earnings Tax imposed on?
Corporation that do not distribute Earnings
73
2 Accumulated Earnings Tax downward Adjustments?
1. $250,000 from Accumulated Earnings
| 2. Dividends paid within the first 2 1/2 months of the next year
74
Deduct the following to determine undistributed earnings from a Personal Holding Company (2 items)
1. Federal Income Tax
| 2. Net Long-Term gain less related FIT
75
What amount of dividend income does the shareholder receive when land, or other property, is distributed as a dividend?
Fair Market Value (FMV)
76
Property Dividend of land from a Corporation to a Shareholder
Basis = $30,000 FMV = $38,000 Liability = $3,000
What is Dividend Income and Basis to Shareholder
Dividend Income = $35,000 ($38,000-$3,000)
| Basis = $38,000 (FMV)
77
Order of distributing appreciated property and then calculating taxable dividend
1. Add gain to E&P
| 2. Determine if Distribution at FMV is taxable
78
What type of transaction is the redemption of stock in a partial liquidation to the Shareholder?
Entirely Capital Gain
79
What test do you use to determine if it's a reorganization?
80% control test
80
Is Exchange of Stock for Stock in an reorganization a taxable event?
NO
81
Exchange of Stock for Stock in an reorganization would be a taxable gain if what occurred?
Boot is received
82
What is a Type B reorganization
Stock for Stock
83
Stock ownership test to determine if a company is a "Personal Holding Company"
More than 50% ownership directly or indirectly by 5 shareholders
84
What is the passive income limit for S-Corps that will terminate an S-Corp Election?
Passive investment income exceeding 90% of gross receipts in each of the three consecutive years
85
Shareholder losses from S-Corp are limited to what?
Shareholder's Basis
86
Ordering Rules for Partnership and S-Corp
1. Increase for Income
2. Decrease for Distributions
3. Decrease for Losses
87
What type of Tax Payer gets a 6 month extension?
Individual
C-Corporation
S-Corporation
Estate Tax Return
88
What type of taxpayer has an different extension due date and what is the difference?
Tax-Exempt, 3 months plus another 3 if approved
89
Regular Return Due Date of 4 months and 15 days after year end for who?
Individuals
Partnerships
Fiduciaries (Estates and Trust)
90
Regular Return Due Date of 3 months and 15 days after year end for who?
C-Corporations
| S-Corporations
91
Regular Return Due Date of 5 months and 15 days after year end for who?
Tax-Exempt Organizations
92
What is the Due Date for and Estate Tax Return?
9 months
93
What type of Tax Payer gets a 5 month extension?
Partnerships
| Fiduciaries (Estates and Trust)
94
When is a Non-filing penalty imposed?
Taxpayers, who must file, do not file a return by the due date
95
What is the Non-Filing Penalty
5% per month on tax due, not to exceed 25%
96
Passive Activity Limits are applied to what entities?
1. Individuals
2. Estates
3. Trust
4. Personal Service Corporations
5. Closely-Held Personal Service Corporations
