REG 1/3/17

Question 1

IF own more than 2% of s corp

Answer 1

insurance proceeds are fully taxable

Question 2

Can credit card interest be deducted?

Answer 2

No, it is considered personal interest.

Question 3

In order for real estate taxes to be deductible they must be

Answer 3

levied against the taxpayer and not someone else (among other requirements).

In addition, the person whom the taxes were actually levied against also may not deduct the taxes since they did not pay the taxes from their own funds. Had Tom gifted the money to his mother and she had used the money to pay her taxes, she would then be entitled to claim the deduction.

Question 4

Under Section 11 of the Securities Act of 1933, the purchaser of a security may have a cause of action against the CPA if the associated financial statements are

Answer 4

materially misleading.

do not need to prove fraud or reliance on financials.

Question 5

WHat is the max deduction for section 179 expense?

Answer 5

$500,000

Question 6

An example of an express warranty would be a warranty of:

Answer 6

conformity of goods to sample

Question 7

What is the deadlines for calendar year tax payer to make IRA contribution?

Answer 7

April 15 - Extensions for filing the tax return does not extend the deadline for making the IRA contribution for the year.

Question 8

Kiddie tax applies to

Answer 8

up to 19 or under 24 if in college

Anything above $2,100 is taxed at parent rate

Question 9

What are the exceptions to the tax penalty?

Answer 9

If the amount of unpaid tax is $1,000 or less
If there was no tax liability on the prior-year tax return and the return was for a full year
If at least 90% of the current-year tax is paid
If at least 100% of the tax liability on the prior-year tax return is paid (if AGI is over $150,000—110% of the prior-year tax)
Waiver for various circumstances such as retirement or disability

Question 10

What can you personally exclude for homeowner gain on sale?

Answer 10

Up to $250,000 of gain ($500,000 for married persons filing jointly) is excluded on home sales provided John owned the home for at least two years and lived in the home as principal residence for two out of the last five years.

Question 11

How much qualified student loan interest can a person deduct? Is it above or below the line?

Answer 11

Deduct up to $2,500 of qualified student loan interest as an above-the-line deduction to arrive at AGI.

phased out for higher-income taxpayers. cant be dependent of other tax payer
cant use married filing separate

Question 12

What is a totten trust?

Answer 12

an account payable on demand. (not an actual trust)

Question 13

When a contract is silent to where the asset should be delivered, where should it be delivered

Answer 13

always to the sellers residences unless explicitly stated that it should be delivered to buyer.

Question 14

A homeowner can claim depreciation deductions if

Answer 14

he or she rents out part of the principal residence to others or uses part of it as a qualifying home office.

The deductions reduce the basis of the home / any depreciation taken after May 6, 1997, will be taxed upon the sale of the residence.

Question 15

When are domestic wages subject to federal income tax withholding?

Answer 15

Required only if requested by the employee and agreed to by the employer. Reported on Schedule H w/ Form 1040.

Question 16

What is the MACRS life of a non-residential property?

Answer 16

39 years

Question 17

What are the requirements for an instrument to be negotiable?

Answer 17

1. In writing
2. signed by drawer
3. contain an unconditional promise or order to pay
4. state a fixed amount of money
5. payable on demand or definite time
6. be payable to order or to bearer

Question 18

What is a recession?

Answer 18

Cancela contract and to restore the parties to their original positions

Question 19

What is a novation?

Answer 19

replacing an obligation to perform with another obligation

Question 20

What can you deduct if you have to move for work?

Answer 20

Moving household goods and personal effects from the old residence to the new residence, and traveling (including lodging) from the old residence to the new place of residence. Deductible moving expenses do not include meals.
The new principal place of work must be at least 50 miles farther from taxpayer’s old principal residence than was the old principal place of work.
There is no dollar limit on the amount of moving expenses which are deductible “above the line” or to arrive at adjusted gross income (AGI

Question 21

What are above the line deductions?

Answer 21

1. contributions to retirement plans (Keogh, IRA),
2. deduction for education-related interest,
3. health savings account deduction,
4. moving expenses,
5. one-half of self-employment tax,
6. 100% of self-employed health insurance, 7. interest forfeited on premature withdrawals
7. alimony

Question 22

Are pre-moving house hunting cost deductible?

Answer 22

No

Question 23

What is garnishment

Answer 23

a court order directing that money or property of a third party (usually wages paid by an employer) be seized to satisfy a debt owed by a debtor to a plaintiff creditor.

Question 24

Which of the following is a miscellaneous itemized deduction subject to the 2%-of-adjusted-gross-income floor?

Answer 24

Business-related expenses of an employee not reimbursed by the employer are deductible from adjusted gross income (AGI) as miscellaneous itemized deductions. These expenses are subject to a floor of 2% of AGI.

Question 25

what is the tax treatment for interest expense on a home-equity line of credit for an amount borrowed to finance Green’s business.

Answer 25

Even though the home was used as equity for the loan, the interest is fully deductible as a business expense on Green’s Schedule C.

Question 26

What type of instrument is a promise to pay?

Answer 26

CD

Question 27

A secured transaction is

Answer 27

a transaction in which the debtor gives to the creditor an interest in specific personal property to secure payment of the debt. The written security agreement must be “authenticated” by the debtor, which may include a signature and additional marks. The collateral must be reasonably identified.

Question 28

What is a red herring prospectus?

Answer 28

a preliminary prospectus not approved by SEC yet

Question 29

What are the deductions for rental properties?

Answer 29

mortgage interest
real estate taxes
insurance
depreciation

Question 30

What are the deductions for rental properties?

Answer 30

mortgage interest
real estate taxes
insurance
depreciation

Question 31

What are considered AMT add backs?

Answer 31

Interest on a home equity loan to purchase a motor home
Real estate tax and state income taxes
Miscellaneous itemized deductions

Question 32

How much social security income should be included in gross income?

Answer 32

Eighty-five percent (85%) of the Social Security benefits is the maximum amount of benefits to be included in gross income.