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MyREGNotes Flashcards

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1
Q

Surviving Parent can be taken as personal exemption even if living out of house but

A

subject to exemption minimum income

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2
Q

Although refunds may not be taxable in CY bz of PY 1040EZ, will int. received count as taxable?

A

Yes. the sole refund will be excluded but the int. on refund included

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3
Q

Is ordinary income included as self employment income?

A

No. only income from services rendered. although will be regular income in individual taxpayer

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4
Q

Are int. from municipal bonds included as income?

A

No. gvt wants you investing in their bonds

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5
Q

Are security deposits income for the receiver?

A

If kept in a separate acct or refundable, not income. if included as part of rent and not refundable, then is income.

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6
Q

Rental activity income exception

A

if own 10% or more of activity and AGI

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7
Q

When are passive loss fully deductible?

A

Only if sold or got rid off, then loss if fully deductible and mix passive w/ active participation. also might mix using $25k max deduct if active participates

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8
Q

What is the max nontaxable allowed for life insurance?

A

$50k, excess ins included as income

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9
Q

Solvency is based on

A

FMV of all assets - all liab’s

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10
Q

Annuities

A

Amount paid allocated over the time not taxable (since is recoverable), the gain is taxable.

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11
Q

Unqualified stk option

A

classified as ordinary income @ amt if traded on establish mkt rate. option price should not be less than 85% of FMV

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12
Q

Are personal int. expenses deductible?

A

No. ex: auto loans

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13
Q

Medical expenses and casualty losses relation w/ insurances

A

Expenses should be netted w/ reimbursement received by insurances. Moving exp. should also be offset w/ reimbursements b4 deduction

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14
Q

What amount is deducted for the purchase of an item for donation to an org?

A

Dif. of FMV of item and actual amt paid. (excess of FMV is the amt being donated)

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15
Q

Can IRA’s be deductible and credit in the same yr?

A

True

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16
Q

What amt of state tax refund is included in CY income?

A

Amt refund up to itemized deduct on PY return

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17
Q

Self EE tax deduction b4 the line or after?

A

All self EE goes b4 the line

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18
Q

Casualty loss

A

only includes non controllable/unavoidable to be deducted

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19
Q

Deduction on investment int. exp.

A

Excess of 2% of AGI up to net investment income (investment income - all investment exp other than inv int exp)

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20
Q

Hobbies not for profit (profit for last 3 of 5 yrs) are

A

sales included as income and exp (up to income) miscellaneous subject to excess 2% of AGI

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21
Q

Sale, exchange or transfer of worthless stk is treated as

A

as ordinary loss to the original owners up to $50k

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22
Q

Dividend income recognize for

A

shareholders when received up to earning, excess is lowering its investment

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23
Q

No G/L are recognize in the exchange of Ccorp stk for which tranx?

A

formation, reorg (t stk) and resale (t stk)

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24
Q

After a underpymt of a good faith estimate, what actions should be taken

A

exact amt should be included in the yr known or received

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25
What deductions should be made by personal holding co's (PHC) before determining amt available for distribution?
Fed taxes and net LT capital G/ less fed taxes. Must include dividends from unrelated as income. Taxes for PHC are added to regular and AMT tax for a total tax
26
Who may be liable for acc earning tax?
Ccorps regardless of # of stkholders, not for passtrhroughs
27
dividend paid in pty= income @ FMV up to
CY earning + PY earning + gain on pty
28
Tax free reorgs
Types A to F
29
Does Corps needs to file consolidated FS to file consolidated returns?
No need to file cons FS to be able for cons ITax. G/L can offset each other
30
Does the rules for statute of limitation applies for estimates dif's?
No. dif. can be included in ITax return when known or received. Rules are for errors or unintentional exclusions.
31
Can EIC be claim by Ccorps
No. only by individuals w/ dependent
32
Which entities are subject to NOL's?
Individual, C corp and estate/trusts
33
What orgs cannot file a consolidated return?
exempt, s corp, foreign, real estate, insurance
34
When can LIFO method be used for tax purposes?
only if also used for FS
35
Amt contributed for formation by shareholder w/ liab higher than basis should be?
recognize as a gain for the excess of liab of basis
36
Who pays for FUTA taxes?
ER pays for such tax, not withheld from EE wages
37
Can G/L be recognized for tranx of pty b/w related parties?
No. if related sales to 3rd party then his gain on sale can be deducted up to the parent loss. not for a loss thus parent might kept the initial loss if not sold for better price
38
Llike kind exchange does not recognized G/L on what type of assets?
tangible assets are not recognized G/L
39
When gift is sold at a loss from basis and gain from FMV, what should be recorded?
no g/l since is middle ground. always compare gifts w/ basis to move on to second step
40
On like kind if pay cash what are the realized, recognize and basis of pty?
realized same as when cash received (AJE w/ FMV), recognize same situation as cash received (lesser of realized or cash received + net liab) which is zero since you are paying it), basis changes bz instead of AJE + gain recog + cash paid - cash received + net liab
41
MACRS method of depreciation
salvage value is ignore, calculates recovery deduction on used tangible pty, must use 27.5 for residential and 39 for commercial
42
How is treated when a partnership pays for services to a partner?
For partnership as deductible exp render for services received and for partner receiving the $ as ordinary income @ the FMV
43
What are types of income for partnerships that are separately stated (no included as taxable income)?
charitable cont. (up to $5K) / dividend income / capital loss
44
When is a retired partner being liquidates terminated as a member of partnership?
Once all amt being paid. (still part of partnership during the time)
45
If partnership distributes liquidating pty, how affects the basis?
partner basis % - $ - amt left is the basis for pty received being liquidated
46
What limitations on losses are the partners liable to?
at risk and passive loss
47
Current distributions vs. liquidating distributions
current up to %, liquidating above %
48
What amt is taxable on trusts?
the distribution over the income is not taxable. only tax to extent of income distributable
49
Who controls what can be obtained for paymts of federal debts?
only by court on a plan, not federal nor state law
50
If changes of terms b/w creditor and principal debtor, what causes to surety(co-debtor)?
If not compensated, release from liab. if compensated, only release if increases the co debtor risk.
51
What are official bonds?
bonds paid by surety to cover for officials in case something goes wrong
52
When dismissing an agent, to whom must be informed?
it should be informed to clients plus nonclients by newspapers or tv etc
53
Who must be notify in order to merge
merger plans must be notified to shareholders and BOD's and approve by majority of BOD and majority of voting stk from each corp
54
Can a company buy its shares from shareholders?
Yes, instead of having the shareholders sell it to an outside party
55
Stk dividend
not income nor affects acc earnings
56
Shareholders appraisal right
right for shareholders that are not happy w/ merge or sell of assets can buy their stk at FMV
57
When can a prtner leave in a silent duration contract?
In a silent contract a partner may leave at any time
58
general partners distributes based on what if silent contract?
equally for general partners, and losses based on profits %. if interest is acquired w/o consent of other partners, will only be liable for profits
59
OSHA
developed for supervision not develop safe equipment
60
Equal pay and civil rights
based on sex and all types except age
61
Social sec payments don't include?
Medicaid
62
warehouse held liable under which minimum circumstances?
by ordinary negligence
63
What counts as definite time?
payable after sight, not at a date w/ unlimited extended time available
64
What is a draft and a CD?
negotiable instruments. draft order to pay at some specific date (involves 3 parties/ cks are on demand thus no 2 dif dates) and CD promise to pay (involves 2 parties)
65
What is the only method of payment for a note?
only in money, no services etc..
66
Dif b/w contract lib and warranty laib?
contract liab. promise to pay upon dishonor (if endorsed) . warranty all signatures are genuine and instrument not altered w/ (works for immediate transferees if not endorsed)
67
Special endorsement
specifies to whom will be payable
68
Is consideration needed for an instrument to be negotiable?
no. gift can be made in ck and the ck be negotiable
69
Can ratification be done prior to minor reaching the adult age?
No. since minor still under the age, can revoke the ratification
70
What types or contracts are assignable?
all contracts assignable except involving personal pty or increases the risk of the principal
71
when can a seller be excused from a contract?
if the performance is impossible (destroyed b4 transfer)
72
To who applies the penalty for aiding and abetting understatements applies?
to both either w/ knowledge or not, though must be proven by the IRS
73
disciplinary power by the board of accountancy if?
misconduct while performing acct services or outside of the scope of the acct services and criminal conviction
74
Are emails consider written advices?
No. writing communication should be done for sophisticated clients
75
If tax preparer fails to disclose a conflict of interest, would it be subject to penalty?
No. penalties are for not signing, providing copy to client and keeping records of returns prepared
76
Can a tax preparer inform the IRS of the persons who may have the returns records?
Yes, they can provide such info w/o any penalty
77
Exempt from registration:
non-profit, gov, loans, individuals, intrastate
78
Exempt from full registration
offerings under Regulation A up to $5M but circular offering

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