Flashcards in REG mod 35d Deck (15)
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 Base
X 26% (26% of the first $175,000; the amount over $175K is taxed at 28%)
(AMT Foreign Tax Credit)'=Tentative Minimum TAX
=Tentative Minimum TAX
(Regular Tax Liability)
=Alternative Minimum TAX
How is an individual’s AMT Income calculated?
+ TAX Preferences
= AMT INCOME
How is an LLC taxed on income?
An LLC is a flow-through entity. The income flows to the members, who are then taxed.