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Flashcards in REG 34 Deck (30):
1

WHAT'S THE EXCEPTION FOR UNDERPAYMENT OF TAX PENALTY
Unpaid of $ or less
_______ tax liability for a ________ year and return filed was for the whole year____
at least ________ of current tax is paid
at lest __________ of prior year is paid (what if over 150K)

Less than $1,000
No tax liabilityfor last year and filed return for whole year
At least 90% of current year
At least 100% of last year or 110% if make over 150K

2

In a partnership, is interest income a separately stated item, how about interest expense?

Interest income is a separately stated
I don't think interest expense is unless it's investment interest expense

3

for a small corporation how much stock do you have to own to be considered a related party

50%

4

SEction 179
Max ________ reduced dollar for dollar for anything over _________
Income limitation
Real property limitation - examples
bonus depreciation

max 500,000 reduced dollar for dollar over 2,000,000
ltd to business income
no real property - land and improvements including swimming pools, parking areas, fences
docs, bridges
bonus depreciation is 50%

5

HIred a sales rep for six months at a salary of X plus 6% of sales, is this an agency coupled with an interest?

No and I still don't know what is.

6

If you hire a sales person on commission does that form an agency relationship?

Yes

7

Always look for in any business law question this statute

Statute of frauds. The under a year thing in particular.

8

Are IRS publications a primary authoritative source when conducting research.

NO, treasury regulations, IRC, tax court cases

9

Whats a primary authoritative source as far as Tax research and why?

___________ aren't primary authoritative sources because they aren't part of ______________

common law consists of statutes and judicial interpretation (case law)

IRS publications aren't part of this, that's why they aren't primary sources

10

Present interest gift versus future interest gift: this isn't concerned with trusts, what it is concerned with?

The implications are for gift tax if you set up a revocable trust. How much are you actually giving that is subject to the gift tax. The future interests aren't eligible for any exclusions when it comes to gift tax.

11

Is a gift of a remainder interest in a trust interest's income if the remainder interest can be revoked a completed gift? Is it a gift of future interest?

It's not a completed gift or a gift of future interest because of the revocation option, so no impact on gift tax considerations.

12

Where is the gift tax in the code. What sub-title? What Chapter?

Title 26
Sub-Title B Estate and Gift TAxes
Chapter 12 Gift Tax (2500's)

13

Where is the stuff regarding related parties in the tax code.

26-A-1-
Subchapter B: Computation of TAxable Income 267

14

Constructive fraud mean what type of fraud versus ____________ fraud.

Actual or common-law fraud requires intent.
Constructive fraud is like strict liability, doesn't require any intent to deceive. Person need only establish that had relationship with a professional and was injured by that relationship.
Grossly negligent though just like common-law.

The basic difference between common law fraud and constructive fraud appears to be intent. Both have to prove injury.

15

Question said "support a finding of constructive fraud" need
1. Justifiable reliance on misrepresentation
2. Acted in a grossly negligent manner

Notice that it says what________
Even though your supposed to learn that constructive fraud does not require intent and even though acted in a grossly negligent manner means you intentional disregarded the consequences of failure to perform your duties, the answer is 1 and 2

So anyone answering this would A) glam onto the constructive fraud terminology and look for the definition, reject 1 because it's not a defnition.

Two look for something that implied intent was not an issue, because that's what constructive fraud means, decide that gross negligence implies intent and that doesn't fit either

I really don't get it, gross negligence to me implies intent, maybe by intent, they mean intent to deceive that person suing specifically.

16

Negligent misrepresentation versus Suing for Negligence (got love it)

Once got a lot lower bar to get over. See back

Negligence and negligent misrepresentation are important legal concepts that all professionals should be aware of because they can give rise to liability when all of their constituent elements are present in a particular situation. A successful action in negligence requires the following elements: 1. a duty of care between the parties, 2. a breach of that duty, and 3. damage resulting from that breach. The following are required elements for a successful action for negligent misrepresentation: 1. there must be a duty of care based on a 'special relationship' between the representer and the representee, 2. the representation must be untrue, inaccurate or misleading, 3. the representer must have acted negligently in making the representation, 4. the representee must have relied, in a reasonable manner, on the negligent misrepresentation, and 5. the reliance must have been detrimental to the representee in the sense that damages resulted.

17

Suing for negligence versus (negligent misrpresentation)

A successful action in negligence requires the following elements:
1. a duty of care between the parties,
2. a breach of that duty, and
3. damage resulting from that breach.

18

Negligent Misrepresentation

The following are required elements for a successful action for negligent misrepresentation:
1. there must be a duty of care based on a 'special relationship' between the representer and the representee,
2. the representation must be untrue, inaccurate or misleading,
3. the representer must have acted negligently in making the representation,
4. the representee must have relied, in a reasonable manner, on the negligent misrepresentation, 5. the reliance must have been detrimental to the representee in the sense that damages resulted.

19

Which is common law, negligent misrepresentation or negligence

Common law negligent misrepresentation is like fraud, requires scienter

Negligence is statutory under 133, doesn't require reliance

20

Employee traveling assigned to a temporary workplace may deduct ______ expenses.

Self employed traveling to a temporary workplace may deduct __________ expenses.

All expenses, regardless of how far it is.

Only if the temporary workplace is outside the metropolitan area if you have no regular place of work but you ordinarily work in the metropolitan area, if you have one regular place of work and it's outside the metropolitan area, fine

I will never remeber this

21

Is gross negligence and fraud the same thing? Common law or statutory.
How about strict liability, is that applied in cases of gross negligence.

Common law.
No gross negligence and fraud are not the same. I think one requires a personal relationship.

22

If you recklessly depart from standards of due care may be held liabile to ________ parties if you committed ___________ or ___________ negligence.

Liable to third parties if committed actual fraud or gross negligence. So there goes my personal relationship theory.

23

"Cpa who recklessly departs may be held liable to third parties if committed actual fraud or was guilt of gross negligence"

Sentence below: the doctrine of strict liability has not been applied in such cases, nor is the cpa liabile to 3rd parties for simple negligence (well yeah they are if it's 133 case)

Strict liability is I guess doesn't matter if you intended, you still have to prove intent/gross negligence. And if there's just negligence you're not liable to third parties at all. But you are, if it's under 133.

24

Wash sale rules. If you only buy back half of what you sold do you recognize some of the gain loss.

What's the within what period - ________ days.

If you don't buy back then those shares you didn't buy back reflect the loss.

30 days.

25

Buy 100 shares 18000 on April 1st year 1
Sell 50 shares February year 2 for $7,000
Buy back 25 shares in 15 days for $3,750
What is the loss for this year.

Don't let what screw you up

First compute the loss $2,000
Then apportion it back onto the shares you rebought $1,000
Which leaves $1,000 to deduct

Don't let the initial purchase date throw you, it can be 10 years before.

26

Rule 505 and 506 to be exempt from _____________ Regulation D ______ in 133
505
must be no ___________ (who)
no _______________ (for promotion)
allow for _____________ how many accredited investors
must register with Form D within ______ days from the fist sale
506 can ___________ as long s to steps to verify that all investors are _____________

registration under D, but you still have to register with FORM D within 15 days after the first sale
505 no adverstising
505 and 506 no public sale
unlimited accredited investors

27

What rule is act of _______ and rule _________ that has the interstate requirement

1934 rule 105B

28

cannot rely on my memory - if you inherit and it's fmV does the basis matter? even if the person who willed it to you had a higher basis?

inherit it's FMV period

29

the statute of limitations for the IRS on a understatement of income is 6 or 7 years.

It's 6 years, after the return is filed, maybe I think its 7 because its' for the year before.

30

the 15th day of the fourth month actually means ________

the 15th day of the 4th month after August 31st is

3 and half months

December

when it says 15th day of the x month, subtract 1 month
SO for example estimated payments are due for corpos crazy because you are filing for corps before the year is over
April - 4
June - 6
Sept - 9
Dec -12