Flashcards in REG 1 Deck (21):
How are amortization of bond premium treated if the tax payer elects to do that. What's the method called and what is it offset against.
Constant yield to maturity method.
Treated as an offset to the interest income on the bond.
What types of organizational costs are amortized?
Temporary Directors Fees
Accounting and Legal Fees
Expenses of Organizational Meetings
Are stock issue costs amoritizable?
No they are charged against paid in capital.
If audited statements are included in a prospectus what is the CPA's defense?
CPA did not have actual or constructive knowledge of the misstatements.
Estate tax marital deduction. What conditions have to be for exemption to be unlimited.
Spouse is US Citizen
Decedent must still be married to spouse and survived by
Spouses interest must be NOT BE A terminable interest
Property must be included in the decadents gross estate and pass to spouse
what is a terminable interest
Interest in property that will end upon occurrence of a certain event or contingency (etc.) if something happens.
If you have a terminable interest then it DOES NOT qualify for the marital deduction.
Estate tax form number ____ and due date _____
Due 9 months after death of tax payer
Unless a 6 month extension is filed last
When must you exercise due diligence (3)
1. Determining correctness of oral or written representations in any matter administered by the IRS>
2. Preparing, approving and filing of returns.
3. Determining the correctness of oral or written representations by the practitioner of the department of the treasury.
Why should the CPA be responsible for 3?
When can you NOT file as a surviving spouse?
When you don't have a dependent child living with you. if not u have 2 file single.
If parent gives stock worth 40,000, FMV on date of gift is 30,000 and then child sells it for 36,000 what's the gain or loss.
WTF: it's no gain or loss, if it's between the FMV and the cost, then nothing.
Sales article of the UCC, says you have to accept offer w/I 10 days, does not specify how.
May respond in any reasonable manner, doesn't matter if it gets there on the 11th day.
Estimated Tax Rules General Safe Harbor - what does it say
100% of last years or 90% of current years due
Estimated Tax Rule: Special Safe Harbor?
If last years taxable income was over $150,000, then 110% of prior-year tax.
If your prior year was $30,000 then 110% is $33,000
Unrelated business income.
What if it's over $100K
Is it taxed if it's less than $1,000
Is it taxed if it's intermittent and once per year
If there's a loss is it excluded from the definition of unrelated business.
This is the right answer but it contradicts the info provided which says that they are taxed on any amount of Unrelated business income.
Not taxed if it's not regularly carried on.
Loss from an unrelated trade or business may create a net operating loss.
Formula for Outside Partnership Basis:
(versus inside basis which is ??? - Roger says partnership basis in "their assets"
Initial OUtside Basis
+/- % Income/Loss (Muni Bond interest separate stated item)
Due date notes on changes. If take exam after July
July 2016 Partnership is now due 3/15 instead of 4/15 (that's the 1065)
S Corps are 3/15 with a 6 month extension, that way they get the K-1 which you put on the Schedule E by 4/15
Corporations were 3/15 are now 4/15 with a 5 month extension if it's a calendar year and a 6 month extension if it's a fiscal year
Partnership informal (versus S or C Corp.) with unlimited liability, everything is at risk, as partnership debt goes up, basis goes up, because at risk to lose more
Now he's saying 1065 has a 5 month extension, so that way K-1's are there to file by the personal 6 months.
How much of the gain is taxable for a married couple who has not sold a home during the period?
It's $250,000 for each spouse, combined exclusion of $500,000, rest of gain is taxed at Lt rates looks like 15% to 20% depending on income
Partner contributes property with a basis of $250,000 for a 50% interest. Question asks if recognizes gain if:
FMV exceeds basis
It's encumbered by a mortgage
Answer: No gain or loss is recognized by partner or partnership when property is exchanged for partnership interest.
Partner exchanged interest for services rendered or 2 b rendered, which results in taxable income and is added to his basis
If it is subject to a mortgage, basis of the partners interest is reduced by the the portion of indebtedness assumed by the other partners (not gain here that is affected)
Compute the taxable gain when the guy contributes property worth $250,000, but the property has a mortgage of $250,000.
This contradicts the previous card. It's an example of an exception. I suppose it's trying to point out when the partner offloads a debt onto the partnership, but contributes property valued less. So in this case they got property worth $250K, but debt worth $300 (because he's still liable for 1/2 of the $600,000). So in actuality he is up by $50K
Adjusted Basis $250,000
Assumed by P. $300,000
Gain to Guy. $50,000