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Flashcards in REG 23 Deck (22):
1

Characteristics of a Personal Service Corporation

1. Substantially all activities are health, law, engineering, archite ture, actuarial science, performing arts or consulting

2. All stock owned by EE's who perform services

3. Flat tax rate of 35%

2

Who can only use the cash method for corps.

PSC's, S's and C's that have average annual gross receipts of not more than $5 million in the 3 preceding years.

3

Corporations can carry unused charitable contributions how far forward.

5 years, not back, FIFO

4

DRD deduction can't be more than what?

80% of taxable income before the DRD deduction.

5

What FUTA unemployment is payable on a household ee

Pays at least 1000 to hoursehold ee in any calendar quarter in the current or preceding year

6

Fair Labor Standard Act REgulates What

Wages
OT
Number of Hours in Workweek

7

If you sell illegal substances what can you deduct.

Just COGS nothing else.

8

If employer reimburses EE for meal expenses and not added to salary are they deductible as a business expense.

Yes, but only 50%

9

Be careful to read dates!

Answered wrong because it asked for 2nd year instead of first.

10

If you borrow money to use in your business as a self employed person is the interest deductible.

YEs

11

Again read carefully: Question asked for business gifts and then gave info about gifts, tickets to game and gift to son of client. I counted on that I new it was gift of only $25 / client, son was a no, and entertainment. It asked for business gifts only and yet I added in the entertainment.

Gifts to kids of clients are not deductible.
Taking the customer to a game versus giving tickets is entertainment.

12

You take a vacation that's a combination of business and pleasure, what can you deduct.
Airfare
Hotel and other incidental Expenses
What are the time/%
Different rules for North America vs. other places outside US

Must be allocated if Travel is more than 1 week and more than 25% non business
If more than 25% personal. - NO AIRFARE
No conventions outside of North America, unless related to active business and reasonable to be held outside North America as within
If yes, can deduct the hotel and other incidental for the time of the seminar/convention
Seminar FEES

13

S CORP revocations - what is required as far as % of voting and non-voting stock for revocation?

Doesn't matter if it's voting or non-voting, just has to be more than 50% of outstanding shares.

14

What FUTA unemployment is payable on a household ee

Pays at least 1000 to hoursehold ee in any calendar quarter in the current or preceding year

15

Fair Labor Standard Act REgulates What

Wages
OT
Number of Hours in Workweek

16

If you sell illegal substances what can you deduct.

Just COGS nothing else.

17

If employer reimburses EE for meal expenses and not added to salary are they deductible as a business expense.

Yes, but only 50%

18

Be careful to read dates!

Answered wrong because it asked for 2nd year instead of first.

19

If you borrow money to use in your business as a self employed person is the interest deductible.

YEs

20

Again read carefully: Question asked for business gifts and then gave info about gifts, tickets to game and gift to son of client. I counted on that I new it was gift of only $25 / client, son was a no, and entertainment. It asked for business gifts only and yet I added in the entertainment.

Gifts to kids of clients are not deductible.
Taking the customer to a game versus giving tickets is entertainment.

21

You take a vacation that's a combination of business and pleasure, what can you deduct.
Airfare
Hotel and other incidental Expenses
What are the time/%
Different rules for North America vs. other places outside US

Must be allocated if Travel is more than 1 week and more than 25% non business
If more than 25% personal. - NO AIRFARE
No conventions outside of North America, unless related to active business and reasonable to be held outside North America as within
If yes, can deduct the hotel and other incidental for the time of the seminar/convention
Seminar FEES

22

S CORP revocations - what is required as far as % of voting and non-voting stock for revocation?

Doesn't matter if it's voting or non-voting, just has to be more than 50% of outstanding shares.