R1 - Individual Taxation - Gross Income Flashcards Preview

REG Section - CPA Exam > R1 - Individual Taxation - Gross Income > Flashcards

Flashcards in R1 - Individual Taxation - Gross Income Deck (13):
1

What are the two criteria that must be met in order for a gain to be taxable?

Realized and recognized

2

How much of an employer's educational expenses are excludable from employee income?

$5,250 for both undergraduate and graduate

3

What is the limit for merchandise discounts? Service discounts?

Merchandise discounts are limited to the employer's gross profit percentage (i.e. only down to cost) and service discounts are limited to 20%

4

What is the kiddie tax exclusion graduated table amount?

Under $1,000 = 0%
$1,001 - $2,000 = child's rate
$2,001 + = parent's rate

5

What is the carryback/forward time periods for a net operating loss?

2-year carryback and 20-year carryforward

6

For long term contracts, what is the default method required to be used?

Percentage-of-completion

7

What are the exceptions to the IRA early withdrawal 10% penalty tax?

HIM DEaD
Home buyer (1st time) - $10K max
Insurance (medical)
Medical expenses in excess of 10% of AGI
Disability - not temporary
Education
and
Death

8

What is the phase-out amount for the Mom and Pop PAL exception?

$25,000 and is reduced by 50% of the excess over an AGI of $100,000 (gone @ $150,000)

9

The Uniform Capitalization Rules of Code Sec. 263A apply to retailers whose average gross receipts for the preceding three years exceed what amount?

$10,000,000

10

What amount of group life insurance premiums are not included in wages?

The premiums on a policy up to $50,000; any premiums on a policy over $50,001 are included in wages

11

Is a limited partner allowed to take a loss?

No

12

T/F: Guaranteed payments are subject to self-employment taxes

True

13

How should passive losses be allocated between activities?

A ratio of losses to total losses