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Flashcards in REG 2 Deck (17):
1

What type of partnership costs can be amoritized and over what period?

Legal fees to prepare partnership agreement (organizational costs)
May be amoritized over 180 months from the formation of the business

2

Are accounting fees incurred to prepare the representations in offering materials deductible?

No they are not organizational costs and so can't be deducted or amortized over the 180 months.

3

What are guaranteed payments to partner.

Income to the partner, expense to the partnership (I.e., take out before allocating income to partners based on %)

4

How are capital gains treated in partnership?

I think they are treated as a separate item on the partners return. Are apportioned in the %, but are reported separately.

5

When are corporation tax returns due?

2.5 months after end of year - currently March 15th

6

S-Corporation. What type of liability do owners have?

Limited

7

S-Corporation. How is it set up formally or informally?

Formally, articles of incorporation, bylaws.

8

?What's the number of the tax return an S Corp files

1120-S and it's an information return only.

9

Where do the numbers on the K-1 flow through to (what form?)

The flow through to the owner's schedule E. Flow-through entity.

10

S-Corp. What is the maximum number of shareholders.

No more than 100

11

S-Corp. what must shareholders be?

Individuals, not other corps., not trusts (unless for individuals testamentary and ?remainder)
married individuals count as 1 person
must be citizens of the US
domestic
only 1 class of stock - each share musts be allocated an equal amount, ok for some to be voting and some to be non-voting
must be small and simple

12

What is control over cash and property % wise.

Over 80%

13

If you don't control over 80% of what you invest in the S-Corp, what happens?

It's like you sold it outright and then put the money in so you have to recognize a gain.

14

If it's over 80% for S-Corp how is that handled as far as basis, holding period, etc.

Over 80% same basis, same holding period.

15

S Corp over 80% it's taxable or tax free transfer.

Tax free if over 80%

16

Election to become an S Corp must be made ________________ and any election made within ______ months after the beginning of the CY or FY for it to apply retroactively to the beginning of the year. If it's after that the S Corp doesn't start until the next year. What are you before that then?

Unanimously
2.5 Months (March 15th)
Your a C-Corp.

17

Partnership:
Services in exchange for interest, use what value in calculated earned income.

FMV of partnership
Notice it's earned income and not capital gain