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Flashcards in LAST MINUTE Deck (12):
1

PERSONAL CONTRACTUAL DEFENSES

free of contractual or “personal” defenses, including nonperformance of the contract, lack of consideration, and fraud in the inducement. However, a holder in due course will not prevail in the face of “real” defenses, including minority of the maker.

2

MINORITY OF THE MAKER

IS ANOTHER TERM FOR MINOR IN FFAAIIDDSS
FRAUD IN INDUCEMENT
FRAUD IN EXECUTION
ADJUDICATED INSANTIY
ALTERATION
INFANCY
ILLEGALITY
DISCHARGE IN BANKRUPTCY
DURESS
SURETY
STATUTE OF LIMITATIONS

3

when do courts use specific performance as a contract remedy

when the thing unique, eg patent

4

Void versus Voidable, they have minors under both

Void contracts are unenforceable by law. Even if one party breaches the agreement, you cannot recover anything because essentially there was no valid contract. Some examples of void contracts include:

Contracts involving an illegal subject matter such as gambling, prostitution, or committing a crime.
Contracts entered into by someone not mentally competent (mental illness or minors).
Contracts that require performing something impossible or depends on an impossible event happening.
Contracts that are against public policy because they are too unfair.
Contracts that restrain certain activities (right to choose who to marry, restraining legal proceedings, the right to work for a living, etc.).
Voidable contracts are valid agreements, but one or both of the parties to the contract can void the contract at any time. As a result, you may not be able to enforce a voidable contract:

Contracts entered into when one party was a minor. (The law often treats minors as though they do not have the capacity to enter a contract. As a result, a minor can walk away from a contract at any time.)
Contracts where one party was forced or tricked into entering it.
Contracts entered when one party was incapacitated (drunk, insane, delusional).
- See more at: http://www.legalmatch.com/law-library/article/void-vs-voidable-contract-lawyers.html#sthash.RUet7uAc.dpuf

5

ELEMENTS OF A CONTRACT


Offer and Acceptance

The two basic elements of a valid contract are “offer” and “acceptance”.

One party makes an offer (outlines what is provided), and the other party accepts the terms of the offer (usually in writing). Acceptance can take time, whereby the negotiation process takes place until an agreement is reached.

Legal Object and Capacity of Parties

The subject matter of the agreement must be legal and both parties must:

Freely agree to the terms
Be over the age of consent
Be able to mentally carry out the agreement
Consideration

A valid contract must have the element of consideration (a price or value) exchanged in the agreement. Consideration is not limited to money, and can include a right, interest, or benefit. Both parties must benefit in some form.

For instance, when one party sells their vehicle to another party, the seller receives money, and in exchange, the buyer receives the vehicle.

Written and Verbal

There are oral agreements that can be enforced, but some contracts are not valid unless they are in writing. Usually those that involve a large amount of consideration or debts, real property, or contracts that won’t be carried out for quite some time (e.g. a Last Will and Testament), need to be in written form.

In summary, a contract is valid if the agreement is consensual, legal, backed up with a promise of consideration, and it is executed by two adult parties who are in sound mind—both of which intend to hold up their end of the bargain

6

VOID CONTRACT EXAMPLES

A contract can be void for the following reasons:

The terms of the agreement are illegal or against public policy (unlawful consideration or object)
A party was not of sound mind while signing the agreement
A party was under the age of consent
The terms are impossible
The contract restricts the rights of a party
Example: If an individual is hired by an employer and the terms of the employment agreement list illegal job responsibilities, this contract is void because it is against the law and does not adhere to valid contract elements.

I THINK IT'S VOID IF YOU WANT TO ENFORCE A CONTRACT WITH A MINOR
IT'S VOIDABLE IF THE MINOR DOESN'T WANT TO COMPLY

7

A CONTRACT IS VOIDABLE EXAMPLES


A contract can become voidable under the following circumstances:

A party was coerced or threatened into signing the agreement
A party was under undue influence (one party is able to dominate the will of another)
A party is not of sound mind or mentally competent (minor or mentally ill)
The terms of the contract were breached
Mutual mistakes on behalf of both parties
The contract is fraudulent (omitting or falsifying facts or information, or the intention to not carry out the promise in the contract)
Misrepresentation occurs (a false statement of fact)
Example: A minor signs a lease agreement with a landlord.

X

8

personal holding company requirements

is tax exempt interest considered in determining whether met phc?
dividends from a related domestic corp?

no and no

Since Edge Corp. met the stock ownership requirements of a personal holding company, of the two choices of income you had to select from, only dividends received from an unrelated domestic corporation is considered personal holding company income.

Generally, any corporation could be a personal holding company (PHC). There are specific corporations that are exempt from PHC classification.

A corporation must meet both the stock ownership test and the gross income test to be a personal holding company (PHC). These tests are:

at any time during the last half of the year more than 50% in value of its outstanding stock is owned, directly or indirectly, by five or fewer individuals, and
at least 60% of its adjusted ordinary gross income is PHC income.
A sample of some of the personal holding company income includes:

dividends, taxable interest, royalties (except copyright or software royalties), and annuities.
rents, unless they constitute 50% or more of the adjusted ordinary gross income.
mineral, oil, and gas royalties, unless they constitute 50% or more of the adjusted ordinary gross income.

9

Deferred tax asset/liability
Do separately for income and expense items
Like items have to be grouped together
Over a year is non-current

separate them or you'll get confused
book income tax income tax up or down. up = asset. down = liability

10

Ridiculous you go this wrong: think!Collander Corporation is preparing Schedule M-1 of its Form 1120, U.S. Corporation Income Tax Return. Which of the following statements is INCORRECT with regard to the preparation of Collander’s Schedule M-1.
? The starting point is net income per books and the ending point is taxable income before the NOL and dividends-received deductions.
? Life insurance proceeds paid on the death of a key employee is a negative adjustment to book income to arrive at taxable income.
X Federal income taxes on book income are added back to net book income to arrive at taxable income.
? The premiums paid on the key employee life insurance policy are a negative adjustment to book income to arrive at taxable income.

look at that second answer = true or false

11

Three refundable credits
C
A
E

ADDITONAL Child Tax Credit
Earned INCOME
American opportunity credit

12

Charitable Contributions Individual
50% normal organization
30% private type organization

Capital Gain Property
30% of FMV for 50% normal organizations.
20% of FMV for 30%

Actually it's lower of FMV or AB

s