REG Review 1

Question 1

Statue of Frauds

Answer 1

a. For the sale of goods (i.e. UCC)
b. Requires written agreement for goods over $500
i. Common law does not require the $500 limit for oral contracts
c. Contracts that can be completed in 1 year need not be in writing

Question 2

Gift Tax – Exclusions

Answer 2

A. Annual exclusion of $14,000 per donee; any excess of will apply
B. Certain transfers are not considered gifts;
i. Payment of medical/tuition & fees can be unlimited in $ as long as they’re paid directly to institutions
ii. Political Contributions are not gifts

Question 3

Gift Tax – Marital Deductions/Charitable Contributions

Answer 3

I. Unlimited amount for both deductions if transferred to a spouse/qualifying charity respectively

Question 4

Gift Tax – Present/Remainder Interest

Answer 4

A. Directly relates to trusts
i. watch for revocable rights per interest for completion
ii. Future interest will be fully taxable for G.T. purposes
NOTE: Donor must give up control for gift to be completed

Question 5

Estate Taxes – Filing Date

Answer 5

A. Due date for the return is 9 months after the date of death.

Question 6

Estate Taxes – Allowable Deductions

Answer 6

I. Charitable contributions – No limits

II. Funeral Expenses

Question 7

Estate Taxes – Allowable Credits to offset…

Answer 7

i. Unified Credit
ii. Foreign death taxes
iii. Gift Taxes paid prior to 77’

Question 8

Estate Taxes – GST

Answer 8

a. Tax is imposed in addition to G & E taxes imposed

Question 9

Estate Taxes – Reminders!

Answer 9

A. Marketable securities and cash are fully include able (i.e. not joint property for these purposes)
B. Life insurance proceeds not included as long as:
i. Policy holder/estate are not the beneficiary; and
ii. “X” had no incidents of ownership in the life insurance policy

Question 10

Fiduciary Taxation – DNI

Answer 10

A. Distributive Net Income “Accounting Income”

i. Subtract (-) Cap Gains from “corpus” i.e. Principal
ii. Subtract Charitable Contributions; have no limit

Question 11

Fiduciary Taxation – Requirements/Misc.

Answer 11

I. Minimum $600 to file return
II. 4 1/2 months for due date
III. Types of Tusts:
i. Grantor Trust - retained interest
ii. Simple Trust - Normal
IV. No standard deduction

Question 12

Tax Research – Primary/Secondary Authorities

Answer 12

I. Primary Authority --
i. Comes from:
1. Legislative Body (Congress)
i. Constitution>IRC>Treaties
ii. Regs>RevRulings>PLRulings
2. Administrative (Pres/Treas/IRS)
3. Judicial (Courts)
II. Secondary Authority -- Treaties, Commentary, etc.

Question 13

Tax Research – Types of Courts

Answer 13

1. Tax Court – focuses on technical Tax law
2. Small Claims Tax Court - less than $50,000
   NOTE: Both do not require the person to pay
3. U.S. District court
4. Court of Fed Claims

Question 14

Gift Tax – New basis formula

Answer 14

Orig. Basis + (Gift Tax Paid*(FMV-Basis/FMV-Exclusion))=New Basis

Question 15

Carryback/Carryforward List

Answer 15

A. Charitable Contributions - Forward 5 years
i. Individuals
a. 50% AGI Limit for Cash/Prop
b. 30% LTCG property
ii. Corporations – 10%
B. Excess investment expense over income–Forward indefinitely
C. Passive activity loss (in excess of passive activity income)–Forward indefinitely
D. AMT–Forward indefinitely against future “regular” income tax
E. Excess 179 Expense–Forward to next year and limited to taxable income
F. Individual Capital Loss (after $3K against ordinary income and $50K against capital gains)–forward indefinitely (ST or LT)
G. Corporate Capital Loss–3/5 (all ST)
H. Net Operating Loss–2/20
I. General Business Credit - 1/20

Question 16

Security Interests –

Answer 16

To create a security interest:

(1) The creditor must give value
(2) The debtor must have rights in the collateral; and
(3) The creditor must take possession of the collateral “or” obtain the agreement in a signed or authenticated writing by the debtor

NOTE: A filing statement only perfects the interest but does not create it!

Question 17

Statue of Limitations – How long?

Answer 17

I. The statute of limitations is a period of time within which a plaintiff must file an action in an appropriate court to receive judicial remedies.

A. Generally, a party wait 4 years to bring a lawsuit– in a breach of contract suit the time limit begins when the contract was breached

Question 18

Negotiable Instruments – Order to pay/Promise to pay

Answer 18

I. Order to pay

i. Drafts
ii. Checks

II. Promise to pay

i. Note
ii. CD