R1 Individual Tax- Income

Question 1

Extensions to Due Date

Answer 1

Automatic 6month extension -Oct 15
Avail to those who couldn’t file before. Must be requested by April 15. no extension on pmt

Out of the country automatic 2 month
need not file for extension but must include documentation

Question 2

Filing Status Types

Answer 2

Single
MFJ 
MFS
Qualif Widower
Head of Household

Question 3

Head of Household requirements

Answer 3

have a dependent either child or parent
if non relative they must live with you HALF of the year
if in nursing home -half year - parent
child- have a home for them HALF year

Question 4

Qualifying Widower Requirements

Answer 4

can use for 2 years after death
the year of death you use MFJ
must have a dependent child you live with for WHOLE year

Question 5

Qualifying Child Requirements

Answer 5

Close relative - child
Age - 19/24 full time student
Residency - US, MX, Can
Eliminate GI- not apply...kiddie tax
Support - provide >50%

Question 6

Qualifying Relative Requirements

Answer 6

Support - >50% you provide
Under 3,800 (their income) - SS bens dont count if only income they receive.
Precludes MFJ - they cant MFJ unless just to get a refund
Only Citizens- US,MX,CD
Relative - must be OR
Taxpayer lives with person (if not relative)

Question 7

4 Baskets of Income

Answer 7

Ordinary
Portfolio
Passive
Capital

Question 8

Life Insurance Proceeds

Answer 8

EXCLUDE bens rec’d up to premiums paid
excess over premiums paid is taxable
exceptions: family member

Question 9

Employer Paid Health,Medical,Accident Insurance

Answer 9

Premium pmts EXCLUDED from income BUT amounts paid to employee are included UNLESSS

reimbursement for medical exps actually incurred OR compensation for loss of member

Question 10

Meals and Lodging

Answer 10

EXCLUDED from GI if for the convenience of employer.

50% excludable from Bus expenses (Sched C)

Question 11

Employer Paid Educ Exps

Answer 11

EXCLUDIBLE up to 5250

Question 12

Tuition Reductions

Answer 12

EXCLUDIBLE if teach/research and you get compensation for that separately. Then that is taxable and your reduction is NOT

Question 13

Qualified pensions

Answer 13

Pmts by employer NOT taxable

benefits received TAXABLE

Question 14

Flexible Spending Arrangements

Answer 14

Salary reduction deposited into account.
can be used to pay meical or dependent exps
deposited pretax

Question 15

Tax Exempt interest income

Answer 15

State/local bonds or obls
US bonds
EE bonds (conditions apply)
Veterans Admin Insurance

Question 16

Series EE -> educational expesnes -> Requirements for exemption (to not include in GI)

Answer 16

be used to pay for higher education (reduced by tax free scholarships)
there is taxpayer or joint ownership
taxpayer is >24yrs old
acquited afer ‘89

Question 17

Series EE bonds exemption phase out

Answer 17

begins at 72850 Single &HH

109,250 MFJ

Question 18

Kiddie Tax

Answer 18

0-950 -> 0%
950-1900 -> child’s
1901 and over - Parent’s %
parents can include in theirs if it’s solely dividends and interests and it is between 950&9500

Question 19

Taxable Dividends

Answer 19

special rate
15% most ppl
0% if in 10/15 bracket

Question 20

NONtaxable dividends

Answer 20

Return of capital
Stock Split
Stock Dividend
Life Insurance Dividend

Question 21

Alimony

Answer 21

Included & Deductible
Reqs:
legally required
in cash
not beyond death
designated as alimony
they dont file MFJ with each other

Question 22

Child Support

Answer 22

NOT included & NOT deductible

Question 23

Property Settlement

Answer 23

NOT included &NOT deductible

Question 24

Bus Expenses

Answer 24

COGS
Saliers and commisions TO OTHERS
state/local taxes paid
actual car expenses &mileage
50% meal and entertainment
depr on bus assets
interest expense on bus loans (not deducted until the year that it applies to)
employee bens
legal and Prof fees
bad debts actually written off

Question 25

NON deductible Bus Exps

Answer 25

Salaries paid to proprietor federal income tax personal portion of: car, travel, personal meals, interest expense (itemized if mtge interest of invmt interest), state/local tax expense (itemized), health insurance of proprietor ( adjustment NOT deduction)

Question 26

Net Business Income taxes

Answer 26

``` 2 taxes: Income tax & SE(federal) tax 7.65 of 110,100 +1.45 of rest also all income subj to 2.9 medicare & 12.4 SS only up to 110,100 ```

Question 27

Business Operating Loss

Answer 27

Back 2 years | FWD 20 years

Question 28

Uniform Capit Rules

Answer 28

applies to property produced for sale/use & acquired for resale costs to capit DL, DM, OH costs NOT capit SGA, R&D, Mkting

Question 29

LT contracts income recog

Answer 29

use %completion unless exception exceptions: small contractors (<10M) & Home construction contractors Allocate costs directly associated. NOT SG&A,RD,Mkting dont have to allocate if if small of home contractor

Question 30

Production period

Answer 30

Starts: when incurred (cash ppl) OR earlier of when incurred or 5%incurred (accrual ppl) ENDS when complete or when 95% costs incurred

Question 31

IRA income & penalty tax

Answer 31

req'd to receive by 70.5 yrs old can receive after 59.5 yrs old if withdraw before 10% penalty it is taxable @receipt ROTH IRA bens rec'd up to invmt amouont are NOT taxable TRADITIONAL principal is NONtaxable. earnings taxable

Question 32

Penalty Tax exemptions

Answer 32

``` HIMDEAD house - up to 10k Insurance - when SE or unemp for 12 mots Medical exces of 7,5AGI Diasibility Education Death ```

Question 33

Annuities

Answer 33

invmt amount/factor = amt excludible amount above that number is taxable if you die before you get all -> itemized deduction on ur dead return

Question 34

Rental Property when is it personal and when mixed?

Answer 34

rented 15 days and personal GREATER OF 14 days or 10%of rental days - personal/rental- allocate exps - -- taxes and interest -> over annual - --util/depr/repair --> over usage

Question 35

PAL exemptions

Answer 35

MOM&POP actively participate &own >10%activity deduct 25k-> phase out after 100k-> reduce by 50% of excess over 100k REAL ESTATE PROFESSIONAL PAL not passive anymore. can deduct agains other income. more than 50% svces come from real estate & do more than 750 hrs in it

Question 36

SS icnome, includible or not?

Answer 36

INCLUDED depending on provisional income (AGI+taxempt int+50%SSbens) 34% -> 85% included MFJ instead of 25 ->32. Instead of 34 ->44

Question 37

NONtaxable Misc items

Answer 37

``` Life insurance proceeds -only interest part Gifts&inheritance medicare workers comp- sick and injury injury and illness accident insruance premiums paid by you Foreign income ```

Question 38

capital assets

Answer 38

``` personal car furniture and fixtures stocks and secs (except those held by dealers) personal prop NOT used in business Real property NOT used in business interest in partnership Goodwill of corporation copyrights PURCHASED assets held for investment ```

Question 39

NONcapital Assets

Answer 39

``` stuff in inventory OR held for sale depreciable assets (S1231,1245,1250) AR & Notes Receivable Copyrights held by original person Tstock ```

Question 40

Gifted property calculations

Answer 40

Basis = donor's basis UNLESS fmvs basis | if that the case then it depends on Future SP

Question 41

Inherited Property

Answer 41

basis=FMV@death UNLESS Alt Val Date is chosen | that is either 6 mths after deaht OR distrib date. whatever comes first

Question 42

Related party transactions

Answer 42

Your basis depends on what you sold it for. | compare old basis, PP & SP

Question 43

Excludible GAINS

Answer 43

HIDEIT Home exclusion -250 single, 500 MFJ Involuntary - include portion not reinvested. Divorece settlements - exclude Exch Llike kind - gain only if booth rec'd Installment sale - recog when cash rec'd using GP% Tstock transactions

Question 44

Exch Like kind Prop basis & gain recog

Answer 44

basis= old basis +boot give - boot recd + gain recog Gain recog = LESSER OF gain realized or boot recd

Question 45

NONdeductible Losses

Answer 45

WRaP Wash sale Loss - you sell at a loss within 30 days you repurchase. Portion repurchased disallows loss. add disallowed loss to basis of repurch stock Related Party Tran- losses when selling to reltive (not inlaws) are disallowed Personal loss - no deduction- maybe itemized deduc for casualty or loss

Question 46

Cap gains & losses treatment for people

Answer 46

Net losses with Gains first within %group and then in order first agains high group and then lowest group max deduction of 3K carryF forever

Question 47

Cap gains & losses treatment for corporations

Answer 47

only deductible agains capital gains NOT agains ordinary income carryB 3 yrs, carryFWD 5 yrs

Question 48

Employee Stock Option Types

Answer 48

``` NONQualified - taxed to empyee -- value Ascertainable - taxed @grant --value NOT ascertainable - taxed @exer basis =exerprice +amt prev paid Qualified - NOT taxed to employee --ISO --ESPP ```

Question 49

Incentive Stock Option (ISO) Reqs & Charac

Answer 49

-granted within 10yrs of EARLIER of appvd or adopted -exerprice NOT 10% -hold 2 yrs after grant and 1 yr after exer -remain employee from grant to 3 months before exer CHARACS -no tax on employee -G/L ord if HP reqs not met -basis= exerprice +amt paid before -lapse- no deduction, maybe loss if paid money before -can exer UPTO100K -excess FMV exer-PP= AMT preference

Question 50

Employee Stock Purchase Plan (ESPP) Reqs & Characs

Answer 50

REQS - written and approved -cant own >5% -exer price NOT < LESSER OF 85%FMV@grant or @exer -cannot exer after 27mths -cannot purch >25k pr year -hold 2 yrs after grant and 1 year after exer -remain employee from grant date to 3 moths before CHARACS - NO TAX on employee -G/L ord if HP reqs not met -basis= exerprice +amt paid before -lapse-no deduction, maybe loss if paid money - if option price