REG Flashcards
(311 cards)
1
Q
Taxable Basis=
A
FMV
2
Q
Nontaxable Basis=
A
NBV
3
Q
Is interest on state and local bonds/obligations tax exempt?
A
YES
4
Q
If deductions were itemized in the prior year, the state or local refund is what?
A
Taxable
5
Q
If deductions were standard deductions in the prior year, the state or local refund is what?
A
Nontaxable
6
Q
What are the 2 taxes on the net business income?
A
Income Tax and Federal Self-Employment Tax
7
Q
Gifts and inheritances are ____ ____ to the recipient
A
tax free
8
Q
If cash basis is used for farm income, inventories are what?
A
Expensed
9
Q
If accrual method is used for farm income, inventories are what?
A
Used and maintained
10
Q
If vacation home is rented 15 or more days, expenses must be what?
A
Prorated between personal and rental use
11
Q
If annuitant lives longer than the factor, then further payments are what?
A
Fully taxable
12
Q
If annuitant dies before the factor, the unrecovered portion of the investment in the contract is counted as what?
A
Miscellaneous itemized deduction
13
Q
Rental use expenses are deductible only to the extent of what?
A
Rental income (No rental loss allowed)
14
Q
Is unemployment or worker’s compensation tax free?
A
Worker’s compensation
15
Q
Life insurance proceeds are _____, but the interest income on life insurance proceeds is ______
A
nontaxable, taxable
16
Q
Interest on state government obligations is generally what?
A
Nontaxable
17
Q
Child support and property settlements are what?
A
Nontaxable
18
Q
Gain or loss on a year-end sale of listed stock arises on the ____ date
A
trade
19
Q
Suspended losses can be carry forward but not back, until what?
A
Utilized (property is sold)
20
Q
Gambling losses are included where?
A
Schedule A as an itemized deduction
21
Q
Accruable expense for an accrual basis taxpayer is what?
A
Repair completed prior to year end but not invoiced
22
Q
Are proceeds from a line of credit line items of gross income for a business?
A
NO
23
Q
How much can be excluded from gross income of payments made by employer on behalf of an employee’s educational expenses?
A
$5,250
24
Q
Life Insurance Premiums above the first _____ of coverage are taxable income to the recipient and normally included in W-2 wages
A
$50,000
25
Are payments made by employer or benefits received from qualified pension, profit sharing and stock bonus plans taxable?
Benefits Received
26
Series EE bonds are tax-exempt when?
Used to pay for higher education
27
Taxpayers may deduct up to _____ of net passive losses
$25,000
28
Incentive Stock Options and Employee Stock Purchase Plans for employees are what?
Not taxable as compensation and capital gain/loss when sold
29
Does an employer receive a tax deduction for Incentive Stock Options and Employee Stock Purchase Plans?
NO
30
Earned income credit=
refundable
31
A taxpayer is not permitted to deduct a contribution to an IRA when what two conditions are present?
Excessive AGI (Over $193,000) or In Retirement Plan
32
Gross self-employment income * 20%=
Maximum Allowable Deduction
33
What are the itemized deductions that are always 100% allowed?
Gambling losses, Investment interest expense, medical expenses, casualty and theft
34
What are the deductible state, local, and foreign taxes included in itemized deductions?
Real Estate Tax, Income Tax (Deduct in year paid), Personal Property Tax, Sales Tax
35
Investment Interest Deduction for Individuals is limited to what?
Net Taxable Investment Income
36
Educational Loan Interest is what?
Adjustment (Max is $2,500)
37
What is the maximum allowable deduction for property given to charity?
30% of AGI
38
How long can excess charitable contributions be carried for?
Five Years
39
Is a deduction attributable to an activity not engaged in for profit allowed?
NO
40
Examples of consumer interest that are not deductible are what?
Auto loan, life insurance loans, bank credit cards, personal note to a bank
41
Alimony payments to a former spouse are what?
Adjustments to arrive at AGI
42
Deductible medical expenses are limited to the amount that exceeds ___% of the taxpayer's adjusted gross income
10
43
Credits that reduce tax, but produce no refund
Personal Tax Credits
44
Credits that reduce tax and create a refund
Refundable Credits
45
How may taxes paid by an individual to a foreign country be treated?
As a credit against federal income taxes due
46
Retirement savings contribution credit, child and dependent care credit, education credits, foreign tax credits and adoption credits are all what?
Nonrefundable
47
What tax preference items are always add-backs?
Private activity bond interest income, Percentage depletion, Pre-1987 Depreciation
48
Are charitable contributions an add back for AMT?
NO
49
The credit for prior year alternative minimum tax liability may be carried:
Forward indefinitely
50
Increase or Decrease Adjustments to AMT=
PANIC
51
Increase (Itemized Deductions) Adjustments to AMT=
TIMME
52
What tax credit is permitted as a credit to reduce the AMT?
Foreign Tax Credit
53
Statute of limitations applies in general three years from the LATER of what?
Due date of return or date the return is filed
54
Refunds for Individuals must be on what form?
1040X
55
For a 30% understatement of gross income (anything over 25%), the statute of limitations is how many years?
6
56
If taxpayer had AGI in excess of $150,000 in the prior year, ____% of the prior year's tax liability is used to compute the safe harbor
110
57
When a tax return has not been filed, any claim for refund must be made within ___ years from the time the tax was paid
2
58
In determining whether to provide advice in oral or in writing, the tax preparer should consider what?
Tax sophistication of the client
59
The CPA cannot sign or prepare a tax return with a know _____ position
frivolous
60
Unreimbursed employee business expense=
Itemized Deduction
61
What insurance premiums are deductible as medical expenses?
Medical and Hospital Insurance
62
What type of interest is an itemized deduction NOT added back for AMT?
Home Mortgage interest
63
Basis of property assumed by corporation is greater of what?
Adjusted basis (NBV) plus any gain recognized and Debt Assumed by Corp.
64
Excess of Liabilities over NBV of assets=
Boot
65
Interest income, rental income and royalty income received in advance are all what?
Temporary Differences
66
Interest income from Municipal Bonds, Life Insurance Proceeds and Federal Income Taxes not deductible on the tax return are all what?
Permanent Differences
67
What are the Charitable Contributions for C Corps limited to?
10% of Adjusted Taxable Income
68
Casualty Losses for C Corps are what?
100% Deductible
69
What are the costs included for organizational expenditures and start-up costs for C Corps?
Legal Services, Accounting Services, Fees Paid to the State
70
How is goodwill treated for C Corps?
Amortized on a straight line basis over 15 Years
71
What taxes are deductible for C Corps?
State income, city income, federal payroll tax
72
How are capital loss carryover for C Corps treated?
3 back and 5 forward
73
All taxpayers who have inventory are required to use what basis of accounting for purchases and sales, tax shelters, and business with greater than $5 million gross receipts for 3 Years are required to use what basis of accounting?
Accrual
74
There is a 100% DRD for whom?
Affiliated Corporations (Consolidated-Common Parents owns 80% of voting power or stock)
75
Small Corporations must pay the _____ of 100% of tax for current year or 100% of tax for preceding year
lesser
76
ACE is adjusted by adding back what?
Municipal bond interest, organizational expense amortization, life insurance proceeds, difference between AMT and ACE, 70% DRD
77
What is the tax rate on AMT for C Corps?
20%
78
What is the additional tax rate for accumulated earnings/personal holding companies tax?
20%
79
Corporate distributions are first applied to current E & P and then to accumulated E&P=
Dividend Income
80
No E & P=
Return of Capital (Not taxed) and Reduces Basis
81
No basis and No E & P=
Capital Gain Distribution
82
Are stock dividends taxable?
NO, unless shareholder has a choice (FMV)
83
If Corp. Distributes Property, what increases E & P?
Gain (FMV-NBV)
84
A corporation's capital loss carryback or carryover is:
Always treated as a short-term capital loss
85
May corporations deduct any capital losses in excess of capital gains in a year?
NO
86
When does an unrealized "built-in gain" occur for an S Corp?
C Corp. elects S Corp status, FMV of assets exceeds basis of assets
87
When are fringe benefits for non-shareholder employees deductible?
The employees own 2% or less of S Corp
88
For an S Corp with No C Corp E&P, the distribution to shareholder is not taxable to the extent of what?
Basis in stock (Treated as Return of Capital)
89
For an S Corp with No C Corp E&P, the distribution to shareholder is taxable when?
Excess of basis of stock (Capital gain distributions-Taxed as Long Term Capital Gain)
90
What form is required to be filed if an organization is tax exempt and when is it due?
Form 990, May 15
91
What organizations do not have to file Form 990?
$50,000 or less gross receipts, churches, high school (religious), religious orders, internal support auxiliaries, societies-missionary related, tax exempt
92
An exempt organization is not taxed on unrelated business income of less than _____
$1,000
93
An ______ _______ does not include any activity where all the work is performed by the organization by unpaid volunteers
unrelated business
94
If corporation owns 80% or more of another, is there any dividend income?
NO
95
Recognized gain=
Lesser of realized gain or boot received
96
Losses are deductible for S Corps only to the extent of what?
Shareholder's basis (Reduce it to 0)
97
Gain or loss=
Amount realized-Adjusted Basis of Asset Sold
98
What is the holding period for inherited property?
Long-term property
99
Earlier of Distribution date of asset or alternate valuation date (max 6 months)=
Alternate Valuation Date for FMV
100
Inherited property=
Step up (down) to FMV
101
What is the amount of exclusion for homeowner's?
$500,000 for MFJ or $250,000 for single
102
What amount of taxable boot is recognized for involuntary conversions?
Extent of unreinvested amount
103
FMV of like kind property received - Deferred gain + Deferred loss=
Basis in like kind property when boot is received
104
Is a realized loss recognized in like-kind exchanges?
NO
105
What losses are nondeductible?
Wash Sale Loss, Related Party Transaction, Personal Loss
106
The holding period for related party transactions is what?
New owner's period of ownership
107
Individual Capital Losses are recognized as ordinary income to the extent of what?
$3,000, carryforward forever
108
Net capital gains of a corporation are added to what?
Ordinary income and taxed at regular tax rate
109
Nonresidential Real Property is depreciated over how many years?
39 (Mid-month convention)
110
Residential Real Property is depreciated over how many years?
27.5
111
Section 1231 losses are treated as what?
Ordinary losses
112
Gains are treated as what to the extent of all A/D?
Ordinary income
113
If the sales price is over A/D and NBV, then treat that amount as what?
Long Term Capital Gain
114
Gain recognized=
Lesser of realized gain or boot received
115
Is a realized loss recognized in like-kind exchanges?
NO
116
In a partnership, if basis is below zero from liabilities, how much is the taxable gain?
The amount of negative basis, taxable gain increases basis to 0
117
Capital Account + Partner's Share of Liabilities =
Partnership Basis
118
Related party losses for a partnership are what?
Disallowed
119
Related party gains for a partnership are what?
Ordinary income
120
Guaranteed payments are what?
Tax deductions to partnership and income to the partner
121
Partnership losses are what?
Limited to basis, excess is carryfoward indefinitely
122
Are nonliquidating distributions taxable or nontaxable?
Nontaxable, reduce partner's basis (stop at zero)
123
Gain for a complete withdrawal liquidation is recognized to the extent of what?
MONEY received exceeds the partner's basis
124
Liquidating distributions must what?
"zero out" account
125
What assets require gains to be treated as ordinary income?
Hot assets (Unrealized receivables, inventory, recapture income)
126
Payments for an interest in partnership assets result in what?
Capital gain or loss
127
Services are valued at what?
FMV (Ordinary Income)
128
Withdrawals/distributions are not reported as income, yet will decrease the partner's what?
Basis
129
DNI=
Estate Gross Income - Estate Deductions + Adjusted Tax-Exempt Interest - Capital Gains
130
Income Distribution Deduction is the lesser of what?
Actual distribution to beneficiary or DNI (less adjusted tax-exempt interest)
131
All trusts (Form 1041) must use what year end?
12/31
132
Simple trust is permitted an exemption of $____ in arriving at TI, Complex trust is permitted an exemption of $____ in arriving at TI
300, 100
133
Form 706 (Estate Tax) must be filed within how many months after the decendent's death?
9
134
Gifts must be both what?
Present and Complete
135
Does DNI include long-term capital gains allocable to corpus?
NO
136
What kind of trust may distribute principal?
Complex
137
______ (Form 1041) must use either Calendar Year or Fiscal year (15th day of fourth month after year-end)
Estates
138
The generation-skipping transfer tax is imposed:
As a separate tax in addition to the gift and estate taxes
139
Multiply the depreciation by .5 for Half year when what?
Asset is sold during the year
140
More Likely Than Not=
>50%
141
Reasonable Basis=
>20%
142
Substantial Authority=
>33% but
143
Significant purpose is to evade federal income tax:
Tax shelter
144
Position is not deemed unreasonable if the position is undisclosed and there is a what?
Substantial authority for the position
145
Position is not deemed unreasonable if the position is disclosed and there is a what?
Reasonable basis for the position
146
Position is not deemed unreasonable if the position is a tax shelter or a reportable transaction and there is a what?
More likely than not position
147
What is the penalty for understatement of taxpayer liability for preparer?
$1,000 or 50 percent of the income of the preparer
148
What are the due diligence requirements for tax return preparers?
Eligibility checklists, computation worksheets, reasonable inquiries to the taxpayer, record retention
149
What does Circular 230 address?
Practice before the IRS of "practitioners"
150
A practitioner may never charge what fee?
Unconscionable fee (may charge contingent fee)
151
Does state law allow practitioner to retain the records in the case of a fee dispute?
YES
152
Who is the only entity with the power to suspend or revoke a CPA's license?
State Boards of Accountancy
153
Are tax services allowed if pre-approved by the audit committee?
YES
154
What must forms 10-K and 10-Q include?
Internal control report
155
Under the provisions of the Sarbanes-Oxley Act of 2002, registered public accounting firms are required to prepare and maintain audit work papers for how many years?
7
156
What are the two requirements for U.S. District Courts?
Must pay disputed tax liability and sue IRS, heard before one judge, jury trial
157
Failure to file penalty is how much of the amount of tax due (Tax liability-Taxes Withheld-Taxes Paid?
5%
158
Failure to pay penalty is how much of the amount of unpaid tax?
1/2 of 1% per month
159
Negligence penalty with respect to an understatement of tax is how much?
20% of the understatement of tax, defense is reasonable basis
160
Penalty with respect to a substantial understatement of tax is how much?
Disclose: Reasonable Basis, Not Disclosed: Substantial Authority
161
What is a nationwide court that has jurisdiction over most claims for money damages against the U.S., one of which is tax refunds?
U.S. Court of Federal Claims
162
Constructive Fraud (Lack of even slight care)=
Gross Negligence (Acts recklessly)
163
What are the 5 elements of fraud?
Misrepresentation of material fact, scienter or intent to deceive, actual and justifiable reliance, intent to induce reliance, damages
164
Is privity a defense for fraud?
NO
165
Lack of reasonable care=
Ordinary Negligence
166
To whom is the CPA liable for fraud?
Everyone who relies on the F/S
167
Section 11 of 1933 Act (IPO) =
Liable to a plantiff who suffered a loss, acquired the stock, F/S contained a material misrepresentation
168
Rule 10b-5 of 1934 Act (Fraud)=
same as section 11 + misrepresentation made with SCIENTER, plaintiff RELIED on misrepresentation
169
For negligence, the general rule is that accountants are liable to whom?
Anyone in a class (such as potential lenders or investors) of third parties whom the CPA knows will rely on the opinion of the financial statements (forseen person)
170
Under the "Ultramares" rule, to what party will an accountant be liable for negligence?
Persons in Privity of contract with the CPA (clients)
171
What is the best defense for fraud?
Lack of scienter (good faith)
172
In a common law action against an accountant, lack of privity is a viable defense if the plaintiff:
Is the client's creditor who sues the accountant for negligence
173
What must the plantiff prove in a negligence case (otherwise known as breach)?
Failure to act with due care (Reasonable Care)
174
What are the elements of negligence?
Duty of care, breach, caused injury, damages
175
What type of fraud requires intent?
Actual fraud
176
What is the goal of the Securities Act of 1933?
Assure investors have sufficient information on which to make an informed investment decision (doesn't guarantee accuracy)
177
When may securities be sold?
After registration is effective (20 days after filing)
178
What securities never have to be registered under 1933 Act?
Banks, Not for Profit, Government, Railroads, Short-term commercial paper (9 months or less maturity date), insurance policies
179
1933 Act does not apply for Regulation D-Private Offering Exemption , which include what rules?
504, 505, 506
180
Under Rule 505, if only accredited investors purchase, is disclosure required?
NO
181
Under 505, if any unaccredited investors purchase, is disclosure required?
YES, to all investors
182
Is general solicitation generally prohibited under rules 504, 504, 506?
YES, always prohibited for rule 505
183
Does Rule 504 required any specific disclosure to investors prior to the sale?
NO
184
Defendants are not liable if they can prove they used what?
Due dilligence
185
What are the two types of companies who must register their securities under 1934 Act?
Shares traded on a national exchange, companies that have more than $10 million in assets and at least 2,000 shareholders or 500 unaccredited shareholders
186
What must be reported under 1934 Act?
5% or more owners, tender offers, insider trading (more than 10% stockholders), proxy solicitations and proxy statements
187
Are intrastate securities offerings exempt from the registration requirements of the Securities Act of 1933?
YES
188
What does the registration statement include?
Prospectus, Information about the Securities being issued (audit BS and profit and loss statement, principal purposes, anything affecting value, amount of stock and debt, names of >10% owners)
189
What are the three requirements of a legally enforceable contract?
Offer and Acceptance, Exchange of Consideration, Lack of Defenses
190
To create a contract, an offer must be accepted before what?
It is terminated
191
Acceptances are generally effective when they are what?
Sent (Mailbox Rule), offeror can opt out to say they must be received to be effective
192
Consideration must be what?
Legally Sufficient by both sides
193
A promise made by one party and detrimentally relied upon by another can be enforced without what?
Consideration
194
Punitive damages are only for what?
Fraud
195
Fraud in the execution=
Void
196
Fraud in the inducement=
Voidable
197
A unilateral mistake is NOT a defense to a contract, unless what?
Mistake is a material fact(other party knew or should have known of the mistake)
198
What is the statute of limitations for common law?
4-6 years (measured from date of breach)
199
What are contracts requiring a writing?
Multiyear contracts, land contracts, sale of good of $500 or more, surety contracts (promise to pay debt of another)
200
Accord=
Same parties, new agreement
201
Novation=
Same agreement, substituted party
202
What does the parol (oral) evidence rule prohibit?
Introducing evidence at trial or oral or written statements made prior to or contemporaneously (during) with the contract
203
Under common law, if there has been a material, intentional or substantial breach, the nonbreaching party can what?
Be discharged from the contract
204
Under common law, if there has been a minor breach, the nonbreaching party is what?
Entitled to damages
205
Under contract law a nonbreaching party cannot recover for damages that could have been what?
Reasonably avoided
206
Intended beneficiaries (donee and creditors) are third parties, can the contract be enforced?
YES
207
Assignment of rights=
party wants to give contract rights to a third party
208
Assignment of duties=
party wants to have a third party perform contractual duties
209
What are the elements to qualify as a firm offer?
Seller must be a merchant, offer must be in writing, offer must give assurances if will be kept open for a certain time (no longer than 90 days)
210
Under common law contracts the terms of an acceptance must _____ the terms of the offer
mirror
211
Under UCC, a shipment of nonconforming goods is what?
An acceptance and a breach of contract, exception is if seller notifies buyer (then counteroffer)
212
What are the four exceptions for sale of goods over $500 being evidenced in writing?
specifically manufactured, written confirmation, admitted in court, contracts that have been performed
213
In a noncarrier case, when does the risk of loss pass for a nonmerchant seller?
Tender of Delivery
214
In a noncarrier case, when does the risk of loss pass for a merchant sale?
Actual Delivery
215
In a carrier case, when does the risk of loss pass in a shipment contract?
On Delivery to the carrier (In the truck)
216
In a carrier case, when does the risk of loss pass in a destination contract?
Goods reach the destination
217
For risk of loss to pass, goods must be what?
Identified
218
If the seller sends nonconforming goods, the risk of loss remains on whom?
Seller, regardless of shipping terms
219
Can any implied warranty be disclaimed?
YES
220
Strict products liability focus is on product, must prove:
Defective product, defect caused injury, defect made the product dangerous, seller was in the business, product reached user without substantial change
221
When can the true owner not recover stolen goods from 3rd parties?
Entrusting the goods to a merchant, accepting a bad check
222
When can the buyer not inspect the goods prior to payment?
Cash on delivery sale
223
Warranty of title can only be disclaimed how?
specifically (I do not warrant title), or by circumstance
224
Express warranties must be part of what?
Basis of bargain between the buyer and seller
225
Insolvent=
Liabilities > FMV
226
A check is a type of draft with what two characteristics?
Drawn on a bank and payable on demand
227
What are the qualifications to be a negotiable instrument?
Be in writing, signed by the maker or drawer, contain an unconditional promise, fixed amount of money, be payable on demand or at a definite time, be payable to order or to bearer
228
If an instrument is not negotiable, there can be no what?
Holder in Due Course
229
If the endorsement is blank, what is the instrument?
Bearer
230
Bearer paper requires what?
Delivery
231
Order paper requires what?
Delivery and Endorsement
232
If the endorsement is special (names a particular person), what is the instrument?
Order
233
An endorsement that adds "without recourse" is what kind?
Qualified endorsement (No contract liability)
234
What are the 4 qualifications to being a holder in due course?
For value, good faith, without notice of defenses or claims of ownership, negotiable
235
Holder in due course is free from what defenses?
Personal
236
What are the real defenses (maker/drawer doesn't have to pay anyone)?
Fraud in the execution, Forgery, Adjudicated insanity, Material alteration, Infancy, Illegality, Duress, Discharge in bankruptcy, Suretyship defenses, Statute of limitations
237
Fraud in the inducement, breach of contract, failure of consideration and mistake are all examples of what?
Personal defenses
238
Who is primary liable and who is secondarily liable for a note/cd?
Maker=Primarily, Drawer=Secondarily
239
Who is primary liable and who is secondarily liable for draft/check?
Drawee (if they accept)=Primarily, Drawer and endorsers=Secondarily
240
Restrictive endorsement=
"For deposit only"
241
What does Article 9 apply to?
Security interests in personal property or fixtures
242
What are the three requisites for attachment?
Agreement (Authenticated Record or Creditor's taking possession of control), Value must be given by the secured party, debtor must have rights in the collateral
243
Record of the security agreement must be authenticated by whom?
Debtor
244
What are the five methods of perfection?
Filing, taking possession of the collateral (best way), control, automatic perfection, temporary perfection
245
A security interest is perfected by filing what?
Financing statement (Effective for 5 years)
246
PMSI in consumer goods is what?
Automatic Perfection
247
What are the priority rankings for collateral?
1. Buyer in the ordinary course of business, 2. Perfected PMSI, 3. Perfected Non-PMSI, 4. Unperfected Security interest, Debtor
248
PMSI in equipment has priority over other perfected security interests if filed when?
Within 20 days of the debtor getting possession of the collateral
249
What are the effects of a sale of collateral?
Subordinate claims are wiped out and there is no right of redemption by subordinate security interest holders or the debtor
250
In consumer goods case where the debtor has paid at least 60% of the loan the secured party must sell the collateral within ___ days after repossession
90
251
What purchaser will own consumer goods free of a perfected security interest in the goods?
A consumer who purchases the goods in the ordinary course of business
252
Proceeds of a default on sale are distributed in what order?
Pay the expenses of repossession and sale, creditors with a security interest in the collateral, surplus is paid to the debtor
253
A security agreement must include what?
name and address of the debtor, a description of the collateral and the debtor's authentication
254
Trustee is required for what types of bankruptcy?
Chapter 7 and Chapter 13
255
Trustee is not required for what type of bankruptcy?
Chapter 11 (Reorgs)
256
Chapter 7 is permitted if what?
Average monthly income multiplied by 12 is equal to or less than the state median income
257
Debtor may rebut the presumption of abuse by showing what?
Special circumstance (serious illness or call to duty)
258
Who may be a debtor in Chapter 7 bankruptcy?
I,P,C (No railroads, savings institutions, insurance companies, banks, small businesses)
259
Is chapter 13 voluntary or involuntary?
voluntary only (constitutes automatic order for relief)
260
To file an involuntary, If the debtor has _____ than 12 creditors, any one or more creditors who are owed at least $15,325 in unsecured debt may file
fewer
261
To file an involuntary, If the debtor has ____ than 12 creditors, at least three creditors who are owed at least $15,325 in aggregate undisputed debt
more
262
Preferential payment is:
transfer made to benefit of creditor, on account of an antecedent debt of the debtor, made within 90 prior to the filing of petition (one year for insider), made while debtor was insolvent, results in creditor receiving more than the creditor would have received under Bankruptcy Code
263
is the payment to a fully secured creditor a preference?
NO
264
What are the debts of an individual not discharged under Chapter 7 or 11?
Taxes Due within Three Years of Filing, Debts Incurred by Fraud, Debts Undisclosed in the Bankruptcy Petition, Embezzlement, Alimony, Willful and Malicious Injury, Operating Vehicle While Intoxicated, Fines and Penalties, Educational Loans
265
What are the three basic categories of claimants?
1. Secured claimants, 2. Priority claimants, 3. General creditors who filed their claims on time
266
What is the order of the Priority Claimants?
1. Support Obligations to Spouse and Children, 2. Administrative Expenses, 3. Involuntary Case Gap Claims, 4. Wage Claims up to $12,475, 5. Employee Benefit Plans up to $12,475, 6. Grain Farmers and Fisherman, 7. Consumer Deposits, 8. Tax Claims, 9. Injury Claims Arising from Intoxicated Driving
267
Guarantor is only liable when?
Debtor does not perform his duty to the creditor
268
When a debtor defaults in a suretyship situation, the creditor may do what?
Immediately demand payment from the surety, immediately demand payment from the debtor, immediately go after collateral
269
What are the defenses of the surety?
Creditor Bad Faith (Defrauded, Duress, Illegality), Payment of Tender, Release of Principal Debtor, Surety's Incapacity or Bankruptcy
270
What is the purpose of the Fair Debt Collection Practices Act?
Curbs abuses by collection agencies in collecting consumers debts
271
For an uncompensated surety, what releases the surety?
Any variation of the surety's risk
272
For a compensated surety, what releases the surety?
Material change increasing risk
273
Principal must have both what?
Capacity and consent
274
Agency power can arise through what?
Grant of actual authority, apparent authority or estoppel, ratification
275
Termination of actual authority by law includes what/
Death, incapacity of principal, discharge in bankruptcy by principal, failure to acquire license, destruction of subject matter, subsequent liability
276
Apparent authority is what?
Third party belief that the agent has power to bind the principal
277
Actual notice must be given to terminate apparent authority to who?
Old customers
278
Constructive notice must be given to terminate apparent authority to who?
New customers
279
Allowing a principal to choose to become bound by a previously unauthorized act of his agent is what?
Ratification
280
Disclosed Principal=
Agent not liable if authorized
281
Partially Disclosed and Undisclosed Principal=
Agent liable
282
Principal is bound if what?
Agent had authority
283
Is the principal liable for torts of an independent contractor?
NO
284
Principle is liable for agents torts if what?
Act within the scope of employment
285
Entity, except for federal income taxes=
General Partnership
286
When partnership is dissolved, it's assets are used to pay liabilities in what order?
1. Creditors (including partners), 2. Amounts due or owed, 3. divide profits or loss
287
Are partners liable for acts of fellow partners, employees or agents in an LLP?
NO
288
In a limited and general partnership, management is the responsibility of whom?
General partners
289
May a limited partner vote on extraordinary matters without incurring liability?
YES
290
For a limited partnership, how are the profits and losses allocated?
According to capital contributions
291
What are the two main features of an LLC?
Owners are not personally liable, flow through entity
292
How is profit and loss allocated in a GP and LLP?
Equaliy
293
What are the restrictions of an S Corp?
stock held by no more than 100 people, shareholders must be individuals, estates or trusts, domestic corp., one class of stock, foreign shareholders prohibited
294
What must be included in Articles of Incorporation?
Name of corp., registered agent names, incorporators names, number of shares authorized to be issued
295
When can shareholders dissent and demand the corporation pay them the fair value?
Dissolution, Amendment, Merger, Sale of Substantially all of assets (Fundamental corporate changes-need board and shareholder approval)
296
FICA=
Provides workers and their dependents with benefits in case of death, disability, or retirement
297
FUTA=
insurance to provide income to workers who have lost their jobs
298
Who must participate in FUTA?
Employers who have quarterly payrolls of at least $1,500 or who employ at least 1 person for 20 weeks in a year
299
What are the 3 defenses to employment discrimination (Title VII)?
Seniority system, professionally developed ability tests, occupational qualification
300
What are the exclusions for overtime?
Newspaper deliverers, cab drivers, white-collar employees
301
NLRA or Wagner Act=
workers right to bargain collectively for wages and other terms of employment
302
COBRA=
Health insurance continues after employment ends, 20 or more employees qualifies a company
303
FINCEN can enforce civil or criminal penalties?
Civil
304
What is the threshold for required reports?
$10,000 within 15 days
305
What is the threshold for record keeping?
$3,000, maintain for 5 years
306
Horizontal restraints=
Agreements between competitors (Per se Violation)
307
Vertical restraints=
Agreements by those at different marketing levels (rule of reason test)
308
What are the two elements of an illegal monopoly?
Monopoly power and power was achieved unfairly or abused once achieved
309
Monopoly=
Company with market share of more than 70%
310
Article 7 deals with what two types of documents of title?
Warehouse Receipts and Bills of Lading
311
With nonnegotiable documents of title, who must the goods be delivered to?
Party named in the document (consignee)
