Individual Tax

Question 1

Investment income includes

Answer 1

Nonbusiness income from interest, dividends, annuities, royalties, gross income from property held for investment

Net gain on sale of investment asset

Gross portfolio income

Income from interest in activities involve trade business which T not material participate# passive activity

Question 2

Investment income is not

Answer 2

From Rental real estate activity which T actively participates

Question 3

Disallowed investment interest

Answer 3

Carried forward indefinitely

Deductible up to investment income in next yr

Question 4

Interest related to producing tax exempt income

Answer 4

Is not deductible

Question 5

Investment interest income

Answer 5

Allowed to deduct a limited amount as Itemized deduction

Not include qualified residence interest & passive activity interest

Investment interest deduct only to the extent of Net Investment income

Question 6

Itemized deduction limited for AMT purpose

Answer 6

1. Medical exp-must>10%AGI not 7.5%AGI
2. Taxes: state, local, foreign and property is not allowed
3. Mortgage int: limit to acquisition int(exclude home equity interest)
4. certain INV interest exp not allowed
5. Misc 2%AGI not allowed
6. Std deduction not allowed
7. Exemption not allowed

Question 7

Tax preferences in AMT

Always ADD to Taxable income

Answer 7

Interest income on Private activity bonds

Excess ARCs depr over SL

Question 8

Qualified adoption expense

Answer 8

Taken in account in the yr adoption become final

Include ALL reasonable and adoption fees, court cost, attorney fee related directly to legal adoption and eligible child($13190) carried forward 5yrs

Question 9

Exemption of AMT phrase out

Answer 9

40000 reduce by25% of the excess of AMTI over 150k and completely phrase out if AMTI over 310k

Question 10

Exemption of AMT phrase out

Answer 10

40000 reduce by25% of the excess of AMTI over 150k and completely phrase out if AMTI over 310k

Question 11

6yr statute of limitation applies if

Answer 11

Gross income omitted from the return exceeded 25%of Gross Income (before subtract COGS and deductions) reported on the return

Question 12

Qualified relative can be a Dependent if pass the test (CRAIS)

Answer 12

Citizen of US, Canada, Mexico

Related (closer than cousin) if dont live with T for whole year

Absent of joint return ( not file joint with anyone)

Income50%of suppport

Question 13

Claim refund due to worthless stock, status of limitation is

Answer 13

7yrs from the LATER of the filing date or the due date

Regular claim for refund limit to 3yrs of the LATER of the filing date or the due date

Question 14

Non business bad debt is considered as

Answer 14

STCL in the year of worthlessness