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Flashcards in REG mod 35d Deck (15)
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Describe the tax treatment of a $250,000 loss on the sale of a personal residence.

No deduction is allowed for this loss.


Describe the tax treatment of business start-up costs.

Business start-up costs are amortized over 15 years (180 months). Note: a taxpayer may elect to deduct up to $5,000 of start-up expenses in the first year. This $5,000 is reduced dollar for dollar by the amount of start-up costs expenses that exceed $50,0


Describe the use of Form 1041.

Form 1041 is the annual income tax return for estates and trusts.


Describe when an AMT Credit may be used.

The AMT Credit may be used in future years to reduce regular tax liability. It is carried forward indefinitely, but cannot be carried back.


Does the accumulated earnings tax apply to Personal Holding Companies?



For how many years may a person be a qualifying widower with a dependent child?

Two years following the year in which the spouse died


Gambling losses are always deductible in full. True / False

False. Gambling losses are only deductible to the extent that the taxpayer had gambling winnings. (Note: a taxpayer must itemize their deductions in order to deduct gambling losses)


Gambling winnings are included in a tax payer’s gross income. True / False



Home equity interest is deductible on loans up to $100,000. True / False



How is a distribution from an S Corporation’s AAA to a shareholder taxed, if the entity was previously a Corporation?

As Dividends to the shareholder if there were earnings and profits from when the entity was a C Corporation.


How is a gift measured?

At fair market value on the date of the gift.


How is AMT calculated?

AMT Income
= AMT Base
X 26% (26% of the first $175,000; the amount over $175K is taxed at 28%)
=Tentative AMT
(AMT Foreign Tax Credit)'=Tentative Minimum TAX
=Tentative Minimum TAX
(Regular Tax Liability)
=Alternative Minimum TAX


How is an individual’s AMT Income calculated?

Taxable Income
+/- Adjustments
+ TAX Preferences


How is an LLC taxed on income?

An LLC is a flow-through entity. The income flows to the members, who are then taxed.


How is the amount of a casualty loss calculated?

The loss is the lesser of: 1. The property’s adjusted basis
2. The decrease in the property’s Fair Market Value
After selecting the lesser of the two options above, subtract any insurance reimbursements, and finally subtract the $100 floor.