REG Deck 2

Question 1

To qualify for head of household, a Parent Dependent has to have been provided for ______ of the tax year

Answer 1

ALL, THE ENTIRE

Question 2

The Overall Limitation to QBI deduction is : Less of Combined ______ deductions or __% of the taxpayer’s taxable income in excess of net capital gain

Answer 2

QBI, 20%

Question 3

In Bankruptcy, secured creditors have a “priority” order. The spouse, former spouse, or child takes priority over other creditors

Question 4

True or False: FICA provides benefits for unemployed workers

Answer 4

FALSE

Question 5

The equation for accumulated earnings taxable income for manufacturing companies:
Taxable income - Federal Income Taxes - Minimum Accumulated Earnings Credit
Minimum accumulated earnings credit = $__________

Answer 5

$250,000

Question 6

True or false: After an annuity investment has passed the expected amount of payments, the remaining payments are not taxable

Answer 6

FALSE, they are 100% taxable

Question 7

True or False: Section 1231 gain is NOT considered Self Employment income

Answer 7

TRUE

Question 8

When calculating Gross Receipts Limitation, interest income isn’t included in the taxable income, but it is included in the limitation

Question 9

Are itemized deductions a deduction FOR AGI or FROM AGI?

Answer 9

FROM AGI

Question 10

Is one-half of the self-employment tax a deduction FOR AGI or FROM AGI?

Answer 10

FOR AGI

Question 11

True or False: Chapter 11 Bankruptcy requires liquidation of the Debtor.

Answer 11

FALSE, this is REORGANIZATION BANKRUPTCY

Question 12

True or False: Home office deductions cannot create a net loss

Answer 12

TRUE

Question 13

Net Operating Losses occurring in tax years 2018, 2019, and 2020 can be carried back five years a carried forward ________

Answer 13

INDEFINITELY

Question 14

Which tax credit can offset tax liability but CANNOT BE REFUNDED? (Hint: Education credit)

Answer 14

LIFETIME LEARNING CREDIT

Question 15

For QBI, the two limits for QBI are, 340,100 for Joint and 170,050 for Single. Then there is a range between 340,100 and 440,100 for Joint, and 170,050 to 220,050 for Single. Then do this calculation:
20% - [(Income over 340,100 or 170,050 limit / 100,000 or 50,000) * 20%]
Use the answer to multiply by the QBI. This the QBI deduction when the income is in the above ranges. If it aboe the 440,100 or 220,050, then there is no QBI deduction allowed if it is a SSTB. If a QTB, then above the limits, it is the lesser of
20% of QBI or
50% of wages paid or 25% or wages paid + 2.5% of unadjusted basis in qualified property

Question 16

Partnerships and corporations are _________ when filing chapter 7 bankruptcy, NOT DISCHARGED

Answer 16

DISSOLVED

Question 17

Gain’s on installment sales are calculated by taking the basis and dividing it by the selling price. Then take this percentage and apply it to the cash received in the current year to tell you the gain to be reported

Answer 17

Basis: 50,000
Selling Price: 100,000
Gross Profit Percentage: 50,000 / 100,000 = 50%
Cash received: 5000
Gain = 5000 * 50% = $2,500

Question 18

True or False: Ordinary Income includes Long Term Capital Gains

Answer 18

FALSE

Question 19

When a loan for property is foreclosed, the gain recognized by the debtor is The original loan balance - the basis of the property

Answer 19

Loan = 45,000
Land basis = 20,000
Land was foreclosed, gain is 45,000 - 20,000 = 25,000

Question 20

If a stock option is QUALIFIED, then the employee DOES NOT recognize any income in the year of the option grant

Question 21

Don’t forget that when a corporation distributes property to a shareholder, the corporation recognizes a gain for the difference between the FMV of the property distributed and the basis of the property. THIS INCREASES CURRENT EARNINGS AND PROFITS!! So, this increases the amount that can count as TAXABLE DIVIDEND INCOME!

Question 22

For an individual shareholder in a corporation, a property DIVIDEND has a taxable basis equal to the _____ of the property dividend

Answer 22

FMV

Question 23

Pay a LOT of attention to whether they say REALIZED or RECOGNIZED when it comes to any kind of gains. This has gotten me so many times. For example, when it comes to Wash Sales, you just can’t RECOGNIZE a loss. But there is still a REALIZED loss

Question 24

Any income generated by an estate after bankruptcy procedures has started can be included in the estate if it was received within 180 days after. (This includes rents, interests, and dividends. Even municipal bond interest)

Question 25

For nonbusiness bad debt (as in, someone isn't going to pay you what they said they would pay you), is deductible in the year you receive the final payment as a short term capital ____

Answer 25

LOSS

Question 26

For nonbusiness bad debt (as in, someone isn't going to pay you what they said they would pay you), is deductible in the year you receive the final payment as a short-term capital ____

Answer 26

LOSS

Question 27

For employee stock purchase plans, the option exercise price my not be less than the lesser of ______% of the FMB of the stock when granted or exercised

Answer 27

85%

Question 28

True or false: Preemptive rights provide a shareholder with the right to a proportionate share of corporate assets on dissolution

Answer 28

FALSE

Question 29

Pay attention to whether it says the taxpayer is a CORP, PARTNERSHIP, or INDIVIDUAL! Individuals can deduct 3000 of capital losses but Corps can't deduct ANY, it has to be carried forward to offset capital gains!

Question 30

Under the UCC, a financing statement must contain the name and mailing address of the ______ and secured party

Answer 30

DEBTOR