Mod 35: Individual Taxation Pt. 3 Flashcards Preview

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Flashcards in Mod 35: Individual Taxation Pt. 3 Deck (119):
1

Mortgage points:

If you used the loan to buy, build or improve your home you...

Can deduct whole loan that year

2

Qualified residence interest:

Home equity indebtedness is the lesser of...2

1 $100,000 interest or

2 FMV - acquisition indebtedness

3

Investment interest exp, define

Borrow money to buy investments

4

Investment interest expense can be...

Deducted up to net investment income

5

Where are gross investment income expenses deducted?

Miscellaneous expenses (excess of 2% of AGI)

6

Qualified dividends and net long term capital gains are not considered...

2) unless...

Net investment income

2) elect to tax them at ordinary rate

7

For a charitable contribution in cash or property of $250 or more, to get deduction you must...

Get written acknowledge,net stating what they got from you

8

Cost of appraisal for charitable contribution can be...

Deducted under miscellaneous 2% itemized deductions

9

Charitable contributions:

Cash amounts donated...

Cannot exceed 50% of AGI

10

Charitable contributions:

Donate securities held over 12 months, your deduction is...

FMV up to 30% of AGI

11

Charitable contributions:

Donate securities held 12 months or less, your deduction is...

Adjusted basis limited to to 50% of AGI

12

Charitable contributions:

Donate securities declined in value, your deduction is...

Adjusted basis limited to 50% of AGI

13

Charitable contributions:

Tangible personal property (art), in which LT capital gain and donated to related industry (art museum) your deduction is...

FMV = 30% of AGI

14

Charitable contributions:

Tangible personal property (art), in which LT capital gain and donated to unrelated industry (Salvation Army) your deduction is...

Adjusted basis limited to 50% of AGI

15

If you elect adjusted basis, your limit will...

Go from 30% of AGI to 50% of AGI

16

Any charitable deduction that remains after maximum deduction is taken is...

Carried forward up to 5 years

17

Mortgage points:

If you did not use the money to buy, build or improve your home you must...

Amortize loan amount over its useful life

18

No deduction is used for prepaid interest, it must be...

Amortized and deducted over future periods

19

Personal interest...

No deduction is allowed for personal interest

20

Credit card interest, deductibility 2

1 not deductible for personal purchases

2 deductible for interest expenses

21

Qualified residence interest

Can deduct interest on primary and secondary residence

22

2 types of qualified residence interest

1 acquisition indebtedness

2 home equity indebtedness

23

Under Acquisition indebtedness, interest is...

Deductible up to $1 million

24

Acquisition indebtedness is interest of loans secured by residence if loans were used to...3

1 acquire

2 construct

3 substantially improve the home

25

Home equity indebtedness, interest is...

2) what is the use of this loan?

Deductible up to $100,000

2) loan can be used for anything

26

Net investment income includes...5

1 interest
2 rents
3 dividends (other than qualified dividends)
4 royalties in excess of any related expenses
5 ST capital gains

27

Investment expenses remaining after 2% AGI limitation used in computing net investment income. 3

1 rental fees for safety deposit box rental

2 investment counseling fees

3 subscriptions to investment periodicals

28

Charitable contributions:

A pledge is...

Not a payment

29

Charitable contributions:

Charging the contribution on credit card...

Does constitute a payment

30

Charitable contributions:

No deduction will be allowed for contributions of cash, checks or other monetary gifts unless the donor maintains a cancelled check, receipt or letter or other written communication from...

Donee

31

Charitable contributions:

No deduction will be allowed for contributions unless donor has written documentation from donee indicating...3

1 donee's name

2 contribution date

3 amount

32

No charitable deduction is allowed for any contribution of $250 or more unless donor obtains written acknowledgement of contribution from donee organization including a good faith estimate of the value of any goods or services...

Provided to donor in exchange for contribution

33

A canceled check is not sufficient substantiation for...

Contribution of $250 or more

34

For any noncash property donation exceeding $500 in value, the tax payer must maintain a written record containing...2

1 date and manner of acquisition of property

2 cost or other basis of property if held less than 12 months

35

For any noncash property donation exceeding $500 in value, the tax payer must include in the tax return...

A description of the donated property

36

If donated noncash property exceeds $5,000 in value, the taxpayer is required to...2

1 obtain qualified appraisal

2 attach summary of appraisal to return

37

If donated noncash property exceeds $500,000 in value, the taxpayer is required to...

Attach qualified appraisal to the return

38

Political contributions are...

Nondeductible

39

For a casualty loss calculation:

FMV BEFORE - FMV AFTER = Decrease in FMV, next you use...

The lesser of decrease in FMV or adjusted basis

40

For a casualty loss calculation:

After starting from decrease in FMV or adjusted basis what is subtracted...3

1 insurance proceeds

2 $100/casualty

3 10% of AGI

41

If you have a casualty gain of $2,000 and a personal casualty loss (after a $100 floor), you do...

Not net them

42

Casualty insurance premium on personal residence is...2

1 personal expense

2 not deductible

43

If you pay appraisal fee to get insurance policy for casualty loss, the appraisal fee is...

Deductible as Misc. 2%

44

Mortgage insurance policy

If anything happens to you, insurance company will make your mortgage payments

45

Mortgage insurance premiums are considered...

Interest that you pay

46

Itemized deductions started to get phased out is...

2013

47

Casualty loss must be...3

1 identifiable

2 damaging to property

3 sudden, unexpected or unusual

48

Casualty loss that are deductible:

Includes damage from...5

1 fire
2 storm
3 accident
4 mine cave in
5 loss from vandalism

49

Casualty loss that are deductible:

Damage to trees and shrubs if there is a...

Decrease in total value of real estate

50

Casualty loss that are deductible:

Includes a loss on personal residence that has been rendered unsafe by reason of disaster...2

1 declared by president and

2 ordered demolished or relocated by state/local gov

51

Losses not deductible as casualties include...2

1 losses from breakage of China or glass ware through handling or family pet

2 disease, termite or moth damage

52

Unreimbursed employee expenses are...

Miscellaneous 2% deductions

53

Miscellaneous 2% AGI deduction:

Employee education expenses are deductible if incurred to...

Maintain or improve skills required in employee's present job

54

Miscellaneous 2% AGI deduction:

Deductible employee education expenses include...5

1 unreimbursed transportation
2 travel
3 tuition
4 books
5 supplies

55

Miscellaneous 2% AGI deduction:

Education expenses are not deductible if...

Required to meet minimum educational requirements in employee's
job

56

Miscellaneous 2% AGI deduction:

If education qualifies employee for new job, even if new job is not sought. This is...

2) give example

Not deductible

2) ex. CPA review course expense

57

Other deductible unreimbursed employee expenses (from 2% AGI):

Transportation and...2

1 transportation and travel = 100% deduction

2 meals and entertainment = 50% deduction

58

Other deductible unreimbursed employee expenses (from 2% AGI):

Uniforms...

Not adaptable to general use

59

Other deductible unreimbursed employee expenses (from 2% AGI):

Employment agency...

Employment agency fees to secure employment in same occupation

60

Other deductible unreimbursed employee expenses (from 2% AGI):

Subscription to...

Professional journals

61

Other deductible unreimbursed employee expenses (from 2% AGI):

Dues to...3

1 professional societies

2 union dues

3 initiation fees

62

Other deductible unreimbursed employee expenses (from 2% AGI):

Malpractice...

Insurance premiums

63

Other deductible unreimbursed employee expenses (from 2% AGI):

To deduct custodial fees of investment account...

You have to write out separate check

64

Other deductible unreimbursed employee expenses (from 2% AGI):

Tax related 3

1 tax council

2 assistance

3 tax return preparation fees

65

Other deductible unreimbursed employee expenses (from 2% AGI):

Expenses for production of income other than those incurred in trade or business or for production of rents and royalties. 3 examples

1 investment council fees

2 safe deposit box rent

3 legal fees to collect alimony

66

Legal fees to collect child support are...

Not deductible

67

Other deductible unreimbursed employee expenses (from 2% AGI):

If stock brokerage gets...

Fees for custody of stock certificate

68

Income in respect to decedent

Collect money for services performed before death

69

Following miscellaneous expenses are not subject to 2% floor and are fully deductible:

Gambling

Gambling losses to extent of gambling winnings

70

Following miscellaneous expenses are not subject to 2% floor and are fully deductible:

Estate tax related to...

Income with respect of decedent

71

Following miscellaneous expenses are not subject to 2% floor and are fully deductible:

Amortizable bond premium on bonds acquired...

Before October 23, 1986

72

Following miscellaneous expenses are not subject to 2% floor and are fully deductible:

Casualty and theft losses of...

Income producing property (business property)

73

Examples of no deductible expenses 5

1 fees and licenses
2 personal legal expenses
3 life insurance
4 burial expenses
5 political contributions

74

Nondeductible expenses:

Fees and licenses 3 examples

1 auto licenses

2 marriage licenses

3 dog tags

75

Nondeductible expenses:

Personal legal expenses example

Expenses to prepare a will

76

Itemized deductions subject to high income phase out reduction include...4

1 taxes
2 qualified residence interest
3 charitable contributions
4 miscellaneous itemized deductions

77

Itemized deductions not subject to high income phase out reduction include...4

1 medical
2 investment interest
3 casualty and theft losses
4 gambling losses

78

Husband and wife get personal exemptions, they are not...

Not Dependents

79

To be a qualifying relative, the cousin must...

Live with you for entire tax year

80

Qualifying relative neumonic

CRAIS

81

Qualifying relative neumonic:

What does CRAIS stand for?

1 Citizen or resident of US, Canada or Mexico
2 Relationship
3 Absence of join return
4 gross taxable Income 3,950
5 more than half their Support

82

There is no income limitation as far as...

Qualifying child

83

A husband and wife can file a joint return even if spouses have different accounting methods. Example 2

1 self employed schedule C with inventory uses accrual method

2 W-2 wages use cash method

84

Personal exemptions are similar to itemized deduction in that they are...

Deducted from adjusted gross income

85

Personal exemptions are allowed for taxpayer, spouse and dependent if dependent is...

A U.S. citizen or resident

86

Personal exemption for 2014 is

$3,950

87

A personal exemption is allowed for a dependent who is either a...

1 qualifying child or

2 qualifying relative

88

Exemption for a dependent:

Birth or death of dependent during year

A full exemption is allowed for year

89

To be a dependent an individual must be a citizen, national or resident of...

2) or a resident of...

The U.S.

2) Mexico or Canada

90

What additional tests must an individual satisfy to be classified as a qualifying child...4

1 relationship
2 age
3 abode
4 support

91

Qualifying Child:

Relationship 2

must be taxpayer's child or adopted

92

Qualifying Child:

Age 2

1 must be younger than taxpayer and under age 19 or

2 must be full-time student at least 5 months during the year and
under age 24

93

Qualifying Child:

Abode 2

1 Must have same principal place of abode as taxpayer

2 for more than half of taxpayer's tax year

94

Qualifying Child:

Support

Child must not have provided more than 1/2 of their own support
During calendar year

95

A qualifying child must not have...2

1 Filed a joint return with his or her spouse

2 unless filed solely for refund of tax withheld

96

A qualifying child can not be claimed as a dependent on...2

More than one return

2) even though child satisfies qualifying child test on more than
One taxpayer's return

97

An individual must satisfy 5 additional tests to be classified as a qualifying relative:

Must not be...

a Qualifying child

98

An individual must satisfy 5 additional tests to be classified as a qualifying relative:

Joint return 2

1 Dependent can't file a joint return

2 unless filed solely for refund of tax withheld

99

qualifying relative:

Member of household 2

1 Dependent must either live with taxpayer for entire year or

2 be relative (closer than cousin) to be related

100

Temporarily absent person meets member of household test for following 4 possible reasons

1 vacation
2 school
3 sickness
4 indefinitely confined in nursing home

101

qualifying relative:

Has gross income...

2) gross income does not include...

Less than $3,950

2) tax exempt income (nontaxable social security)

102

qualifying relative:

Support

Tax payer must furnish over 1/2 of support

103

qualifying relative:

Support from tax payer includes...6

1 food
2 clothing
3 FV of lodging
4 medical
5 education
6 recreation

104

qualifying relative:

Support from tax payer excludes...2

Excludes life insurance premiums and funeral expenses

105

Multiple support agreement may be used if...

No person furnishes more than 50% support of dependent

106

Multiple support agreement says that...

Only one supporter will claim person as a dependent

107

Multiple support agreement:

Person claimed as dependent on multiple support agreement is treated as...

Qualifying relative

108

Multiple support agreement:

The person can be treated as providing more than half the dependent's support if...3

1 more than 10% of support provided

2 signed agreement by those who provided over 10%, that they
Won't claim exemption

109

Filing status:

Married persons (married at end of year or time of death of spouse) can file...2

1 joint or

2 separate returns

110

Filing status:

Qualifying widow(re) with dependent children (surviving spouse) may use...

May use joint tax rates for 2 years following date spouse died

111

Surviving spouse requirements:

Surviving spouse must have been eligible to...

File joint return in year of spouse death

112

Surviving spouse requirements:

Dependent son, stepson, daughter or stepdaughter must...

Live in household with surviving spouse

113

Surviving spouse requirements:

Surviving spouse must provide...2

1 More than 50% of costs of maintaining a household

2 that was main home of child for entire year

114

Head of house hold status applies to...3

1 unmarried person
2 with dependent child
3 provides more than 50% of costs of maintaining household that
Is principal abode

115

3 people who qualify you for head of household

1 qualifying child

2 relative, where taxpayer entitled to dependency exemption

3 tax payer maintains parent's household

116

Head of household qualifications:

Qualifying child must not...

Not be married by end of tax year

117

Head of household qualifications:

Parents need not live with tax payer, but parent's household must be maintained by taxpayer (nursing home) and parents must...

Qualify as tax payer's dependents

118

Costs of maintaining a household includes...7

1 rent
2 mortgage interest
3 taxes
4 insurance on home
5 repairs
6 utilities
7 food eaten at home

119

Cost of clothing, education, medical expenses, vacations, life insurance, transportation, rental value of home and value of taxpayer's services are...

Excluded from cost of maintaining a hosuehold

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