Tax Flashcards

Question

How does qualifying widow work?

Answer 1

For the 2 years after a partner dies, they can file as qualifying widower if there are dependents In the year of death, still file as married filing jointly

Answer 2

If MFJ: Blind - $1400 over 65 - $1400 It's per spouse. Can collect both blind and over 65 If single: Each is $1700

Answer 3

Does not provide more than 50% of their support Under 17

Answer 4

- child, grandchild, stepbrother, stepsister - under 19 or 24 if in school

Answer 5

- Gross income is less than $4,400 - Child, grandchild, sibling, parents, grandparents, parents siblings or anyone that lives with you year around

Answer 6

-Compensation for services -Gains from property -interest and dividends -rents and royalties - Income from life insurance and endowment contracts -Pensions - forgiven debt (unless bankruptcy) -unemployment benefits -income in respect of a decedent -annuity payments -below market rate loans -alimony and separate maintance

Answer 7

Use the exclusion ratio Investment in the contract/Expected total return The portion of each annuity payment must be included in gross income according to the exclusion ratio

Answer 8

max 85% Hurdles..

Answer 9

$0-$10k loans -- $0 imputed interest $10k-<=$100k -- impute interest -- AFR rate minus loaners rate -- Cap at the investors net investment income* -- If NII is less than $1k, no impute >$100k -- Interest calculated using AFR interest calculated using stated rate of loan. No cap for NII *NII = Interest, STCGm NQDiv

Answer 10

Gifts and inheritances Life insurance proceeds Scholarships (tuition, fees, books) Gain on sale of personal residence Qualifying distributions from Roth Compensation for injuries and sickness Meals and lodging furnished for the convenience of the employer or the employers premises

Answer 11

Athletic facilities Educational assistance programs (limited to $5,250) Employee discounts (20% on service)`` FSA and HSA

Answer 12

Can be deducted on up to two homes Can't be used on HELOC unless HELOC is for home improvement $1m for homes finances prior to 2017 $750k for homes financed after 2017

Answer 13

Taxable interest short term cap gains non qualified dividends

Answer 14

Capped at $10k Below the line deduction

Answer 15

Itemized, below the line If a public charity (can't be donor advised fund) 60% deduction on cash 50% deduction on ordinary property RELATED USE If you donate real property, intangible assets (stocks, bonds)or tangible property -deduct 30% if FMV -deduct 50% if basis

Answer 16

Strategically take the standard or itemized deduction in alternating years

Answer 17

ADD BACK: Private activity bonds (stadium, parking lot, etc) Depreciation ISO SALT Intangible drilling costs Percentage depletion

Answer 18

You don't get a SD with AMT You get an exemption amount

Answer 19

If you've deprecated more than what you've sold it for, you have to recognize the depreciation as ordinary income.

Answer 20

They can choose to file as an entity OR individual -- 1040 or K1

Answer 21

Both K1 and W2 Employees get W2 Shareholders get K1

Answer 22

1. IRS (primary source) 2. Regulations - explain code 3. Revenue Rulings - 4. Revenue procedures 5. Private Letter Rulings - one taxpayer seeks guidance. Not binding. Pre-transaction 6. Determination Letters - post transaction 7. Technical Advice Memorandums 8. Judicial Sources - courts

Answer 23

3 years when return has been filed -- Can extend to 6 years if you underestimate gross income by more than 25% 10 years to collect Does not apply if you don't file a return or file an intentional fraudulent return

Answer 24

fed short term rate plus 3%

Answer 25

5% per month up to 25%

Answer 26

.5% per month up to 25%

Answer 27

Reduce FTF by FTP

Answer 28

Only court where no payment of tax is necessary No jury trial available Deficiencies under $50k Appeals to US court of appeals

Answer 29

Advantages - local - actual jury - convenient Disadvantage - Judge may be less experienced with tax cases - must have paid taxes already Appeals to court of appeals

Answer 30

Advantages - local - actual jury - convenient Disadvantage - Judge may be less experienced with tax cases - must have paid taxes already Appeals to court of appeals

Answer 31

60% of AGI (public charity) Charitable contributions can be carried forward for FIVE years

Answer 32

Ordinary income property - ex: computers for business or inventory Valuation is the lesser of adjusted basis or FMV Deduct: 50% of AGI (public) 30% of AGI (private) Also applies to loss property and Short-Term Capital Gain property

Answer 33

If the property fits one of these categories: 1. real prop 2. intangible prp (stock) 3. tangible property which is usable to the charity Donator can choose to deduct one of 2 ways. Either - taxable basis of the property and retain the 50% AGI OR - FMV of the property up to 30% of AGI

Answer 34

50% of agi (public) 20% of AGI (private)

Answer 35

Prescription drugs Health insurance premium (outside of work) Eligible capital improvements - making home accessible for mobility (ramps, elevator when medically necessary, etc Nursing home and special schools Travel and lodging for medical treatments

Answer 36

anything over 7.5% of AGI

Answer 37

Elective cosmetic surgery General health items - vitamins Health club Marijuana (state might allow) OTC drugs Dance lessons

Answer 38

Reimbursement becomes taxable income

Answer 39

Under 19 or under 24 if still in school

Answer 40

First $1150 is not taxed Next $1150 is taxed to the child (single filer rates Above $2300 is taxed at the parental rate

Answer 41

Deduction is the greater of earned income + $400 OR $1150. Standard deduction can't exceed single filers standard deduction

Answer 42

Real property In the US Held for investment purposes or for production of income (Can't be personal property)

Answer 43

Basis stays the same No tax consequences because no funds where exchanged

Answer 44

Reduce the basis

Answer 45

Identified within 45 days of date when old property was transferred Received within 180 days of transfer

Answer 46

If you use boot, you must recognize gain on that boot. Example, someone uses $10k ($7k basis) in stocks to pay for a like kind exchange. -- $3k gain

Answer 47

Taxpayer materially participates in generating income -losses are fully deductible -salary, general partnerships, self-employment income

Answer 48

- real estate ventures - rental income - limited partnerships - losses deductible UP TO a passive income -- Losses can be carried forward to following years

Answer 49

- traditional investment activities - losses are deductible

Answer 50

Public must net with public Non public must net with non public

Answer 51

When disposing of a passive activity, you can offset the full loss against active income Normally you can only offset with passive income

Answer 52

Mortgage deduction. (up to 2 properties) Can deduct losses up to $25k (depending on income) -Phase out starts at $100k, phases out at 50

Answer 53

Rented more than 15 days, used personally more than 14 days OR 10% of the amount of time it's rented Note that if they are doing repairs on the property it doesn't count as personal use

Answer 54

- must report income - Can deduct rental use expenses ($25k limit with phaseout)

Answer 55

No losses can be deducted Must include rental income

Answer 56

No losses can be deducted Must include rental income

Answer 57

No losses can be deducted Must include rental income

Answer 58

Think marijuana Must report income Can deduct cost of goods sold, rent, legal activities

Answer 59

If signed before end of 2018, - included in income - deduction to payer If after, - not included in income (not taxable) - no deduction

Answer 60

Stopped being deductible with TCJA Only when moving for armed services

Answer 61

When there is a FEDERALLY declared disaster that is SUDDEN and UNEXPECTED Loss is equal to lesser of decline in FMV or ATB Subject to 10% AGI floor Less $100 per incident

Answer 62

homes financed prior to 2017 can have interest on up to $1m loan deducted After 2017, $750k loan interest deductible No reverse mortgage deduction No heloc deduction unless used for home improvement

Answer 63

Take out: -last medical expenses -admin expenses -funeral expenses -debts of the decedent -losses occurred during administration of estate

Answer 64

$2000 total. Up to $1500 for EACH child may be refundable AGI phase outs - $200k S, $400k MFJ Child must have a social security Under 17 Lived with parents over half the year son, daughter, stepchild, foster child, sibling, step sibling, half sibling, and descendent If doesn't qualify, still might qualify for dependent tax credit

Answer 65

$500 NON refundable credit Dependents are defined under present law Doesn't need SSN

Answer 66

Credit of 20% of expenses paid for the care of - a dependent under 13 - spouse or dependent with a handicap Expenses are lesser of 20% of actual costs or $3k per child - also limited by the earned income of the lower earning spouse. -- so stay at home parents don't get this unless they themselves are in school or handicapped and can't care for the kid

Answer 67

no profit in 3 of 5 years 2 of 7 for horses Hobby activities can't generate deductible losses

Answer 68

You need to include hobby income You CAN"T take any losses or deductions

Answer 69

below the line deduction (after AGI) Essentially a business owner (non corp) can deduct 20% of their business income! Form 8995 Qualified 20% based on qualified business income Separate from itemized and standard deductions

Answer 70

Up to $1,080,000 of tangible property in service Dollar for dollar reduction for every dollar earned over $2,700,000 limited to the amount of your income. Can carry over excess

Answer 71

Internal Revenue Code. Congressional Committee Reports (Blue Book). Treasury Regulations Private Letter Rulings

Answer 72

the 16th Amendment gave Congress the power to impose an individual income tax

Answer 73

Raised the rates previously imposed under the Revenue Act of 1913

Answer 74

Revenue act of 1913

Answer 75

Commerce Clearing House (CCH)

Answer 76

Congressional Committee Reports (sometimes known as the Blue Book) provides congressional reasoning for enacting tax law. This language is often very technical and difficult to understand.

Answer 77

Rulings of the U.S. Tax Court in the form of case law.

Answer 78

District court - Jury Tax court - bench US court of federal claims - bench Small claims division - bench

Answer 79

Gross income - Above the line deductions = AGI - Below the line deductions (standard deduction or itemized) - Personal and dependency exemptions (after TCJA expires) = Taxable Income Calculate tax based on filing status (tax liability) - Credits + Other taxes - Prepayments = refund or additional tax due

Answer 80

Don't need to file for age MUST file if you are blind (they don't know you're blind but they do know your age)

Answer 81

Short term loss or ordinary loss ex: billed a client for services already done and they never paid the bill.. However, a cash basis taxpayer does not recognize income not received. Since the bad debt was never recognized as income, it cannot be recognized as a loss or a bad debt expense.

Answer 82

small business stock loss is treated as ordinary loss

Answer 83

Tax planning fees may no longer be deducted against a taxpayer's itemized deduction, Schedule A. However, because the taxpayer is self-employed, the portion of services related to the business and not personal may be taken as a deductible expense on the taxpayer's Schedule C.

Answer 84

Any deduction for personal exemptions. · Capital losses in excess of capital gains. · The section 1202 exclusion. · Nonbusiness deductions in excess of nonbusiness income. · Net operating loss deduction. · The domestic production activities deduction.

Answer 85

When they are held more than 60 days in the 121 days surrounding the ex-dividend date. If they aren't held of for the 60 days, they are taxed at ordinary rates

Answer 86

You must be married through the end of the year. THe year you divorce, you'd be single

Answer 87

You are able to file as a head of household if you are considered to be abandoned by your spouse and are claiming dependent children. An individual is required to live apart from his or her spouse for the entire last six months of the tax year to file under abandoned spouse status.

Answer 88

Upon the death of either spouse in a community property state, both halves of community property are stepped to the fair market value regardless of who inherits the decendant's half.

Answer 89

1. Gross income 2. support 3. member of household or family 4.citizenship or residence 5. joint return.

Answer 90

Income received but not spent is applicable to the gross income test but not the support test. To claim someone as a dependent you have to provide at least 50% of their support. If the child has income that just goes into savings or spent on miscellaneous fun items instead of being used toward paying their bills (housing, clothing, food, etc.), while you are paying their bills, then you are supporting them. The income counts as gross income for the child, but it is not support unless they use it to support themselves.

Answer 91

Earned Income credit NOT fully refundable: The American Opportunity credit. Lifetime Learning credit. Child Tax credit. Adoption credit.

Answer 92

If the rental is for less than 7 days. Ex: dvd business

Answer 93

1) the Taxpayer dedicated more than 500 hours to the activity or 2) the Taxpayer dedicated more than 100 hours and the most of anyone. Part of the rules for PAL allows a Taxpayer to make an annual election to join similar activities to achieve the > than 500 hours for materiality, which is what III is outlining.

Answer 94

NO! Passive Income from a publicly traded limited partnership may not be offset by any other passive losses. The Passive Income from a publicly traded LP would need to be offset by a prior suspended loss from the publicly traded LP.

Answer 95

Active, passive, portfolio Note Earned income is a subset of active income while unearned income may be either passive or portfolio income.

Answer 96

The taxpayer must own at least 10% of the value of the real estate. The taxpayer must have an AGI of less than $150,000. The taxpayer must actively participate in the activity.

Answer 97

The basis of personal property converted to business use will be the taxpayer's adjusted basis on that property as of the date of conversion or the FMV if lower. So if you convert personal property to business property, it gets the LOWER of the basis or FMV on date of conversion. Therefore gain will be MORE when sold as biz property

Answer 98

The buyer receives the seller's invoice.

Answer 99

When income is readily available to the taxpayer, and that income is not subject to substantial limitations or restrictions, that income should be subject to tax. Doctrine of constructive receipt applies to many areas, including tax, employee benefits and retirement. For example, an employee is granted an employee bonus plan to be payable upon their retirement from the company. It is not taxable to the employee while they are working for the company. Once the employee reaches retirement age, the restrictions have been lifted and the employee can freely access the funds, they will become taxable.

Answer 100

Cash accounting recognizes income upon either actual or constructive receipt. Actual receipt is where the taxpayer has received the cash directly. Constructive receipt occurs when, though not having received the money in hand, the taxpayer has immediate access to the money (i.e., lock box receipt).

Answer 101

attorney, enrolled agent, certified public accountant and the taxpayer NOT A CFP

Answer 102

If he makes a substantial understatement of his tax liability: - generally more than 10% of the correct tax liability and at least a $5,000 tax deficiency. The penalty imposed is generally 20% of underpayment amount.

Answer 103

The penalty for filing a fraudulent income tax return is 75% of the deficiency. Ex: you fraudulently file to avoid $10k in taxes - $7,500 penalty. (plus what you owe)

Answer 104

$0! TCJA eliminated

Answer 105

Expenses from self-employment are deducted above the line and have no AGI floor.

Answer 106

$50/night per person

Answer 107

5 years (so 6 total if you include the year of the initial charitable contribution)

Answer 108

Exception for certain prizes and awards transferred to charities Gross income does not include amounts received as prizes and awards made primarily in recognition of religious, charitable, scientific, educational, artistic, literary, or civic achievement, but only if— (1) the recipient was selected without any action on his part to enter the contest or proceeding; (2) the recipient is not required to render substantial future services as a condition to receiving the prize or award; and (3) the prize or award is transferred by the payor to a governmental unit or organization described in paragraph (1) or (2) of section 170(c) pursuant to a designation made by the recipient.

Answer 109

When it's for room and board Not for tuition or books

Answer 110

Punitive damages are always included as taxable income. Other than damages awarded for personal injury, other damages, including punitive damages and recovery of lost wages, are taxable.

Answer 111

Property transfers are treated as acquired by gift and the transferor's basis in the property is carried over to the transferee.

Answer 112

For 2021 and 2022 only MEALS 100% deductible! Domestic: If primarily business then deduct all airfare. Prorata meals and lodging. Foreign: Prorata meals and lodging. Prorata airfare unless (then you can deduct all): < 7 days <25% on personal No control; vacation not a deciding factor Starting in 2023: Same as above BUT MEALS 50% deductible!

Answer 113

Costs to improve, better, or extend the life of an asset are capitalized. Versus things like tune-ups which are a maintenance activity. Maintenance and repairs (roof and windshield) are period costs deductible in the period in which they were incurred-- no need to capitalize these costs

Answer 114

$0! this was eliminated at the end of 2017

Answer 115

Cost of goods sold is the only deduction allowed for illegal drug operation activities. If it's illegal but not related to drugs (gambling), salaries, rent, etc is also deductible as long as it's a legal expense

Answer 116

the business must be purchased (Can't deduct if you decide not to purchase it) if it's the same line of business If it's a different line of business and the costs of investigation are recouped by capitalizing the expenses and amortizing it ratably over a 60-month period.

Answer 117

- If less than 25% of time is for personal - When vacation is not a primary consideration - When the taxpayer does not have control over the timing or arrangements - The trip lasts for less than 7 days

Answer 118

Ordinary, necessary, reasonable if it's compensation

Answer 119

not recognized

Answer 120

Cars - 5 years Furniture - 7 years Rental real-estate? - 27.5 years Hotel - 39 years Remember “CAT-CORN” Computers, Autos, and Trucks are 5 year. Office furniture is 7 year. Residential real property (rental houses) is 27.5 year and Nonresidential real property (commercial buildings) is 39 year.

Answer 121

Allows you to accelerate depreciation! - up to $1,080,000 depreciation deduction on property that exceeds $2.7m Machinery, gasoline storage tanks, livestock, vehicles, office equipment, etc NOT rental income, buildings, land, etc Writing off the expense of something (like a truck for business) all in the first year. Section 179 deduction cannot exceed net business income in a given year. The rest of the Section 179 deduction can be carried over, but a 179 deduction cannot be used to create a business loss. Therefore, they would only be allowed to deduct $15,000 for the current year and carry forward $135,000.

Answer 122

NOTHING! You can't deduct uncollected rent if the renter fails to pay

Answer 123

According to Publication 17, “Advance rent is any amount you receive before the period that it covers. Include advance rent in your rental income in the year you receive it regardless of the period covered or the method of accounting you use.”

Answer 124

- must be a US citizen or US resident - Can also be an estate, trust, or charitable org -Votes on the board of directors - receives K-1 annually in order to prepare a personal income tax return - Reports on a personal income tax return a pro-rata share of corporate profit or loss

Answer 125

S Corp sole proproeter LLC partnship

Answer 126

Indefinitely

Answer 127

Double basis is created When double basis is in effect, the gains are that of the holding period of the donor. For loss in this case below $750, it will use the donee’s basis, in this case short term loss.

Answer 128

Section 165 creates an artificial sale date of December 31 for worthless securities. So it's deemed to have sold the stock for $0 on December 31 and you can take that loss

Answer 129

Carry over basis, carry over holding period

Answer 130

Cost of the first $50k of coverage is not taxable to employee The excess coverage over $50k is taxable as determined in the uniform premium table

Answer 131

Can't be greater than the cost of the product Service, can't be more than 20%

Answer 132

$5250 FSA - $2850

Answer 133

80% of current years income It can be carried forward There used to be carry back allowed until 2018. Now there is NOT carry back allowed

Answer 134

If income exceeds standard deduction, or, if self employed, net earnings exceeds $400

Answer 135

100% if based on last years tax witholding 90% of expected tax owed this year

Answer 136

Capital gains rates as long as the stock was held 60 days before and after the dividend was paidIf If not held for 60 day requirement - taxed at ordinary income rate

Answer 137

They apply to flow through entities Losses can only be deducted to the extent of property/money invested (at risk) THEN passive losses can only offset passive income and/or gains So, if you have passive activity (rental with non material participation) you can deduct losses up to the gains However, if you are ACTIVE, you can only deduct $25k from ordinary income subject to phase out of $1 for every $2 that AGI exceeds $100k Passive activity suspended losses can be deducted at sale

Answer 138

Greater than 500 hours per year Greater than 100 hours and the most of any participant

Answer 139

Publicly traded: ONLY deduct when the exact partnership produced a gain Non-publically traded can net agains another non publicly traded investment

Answer 140

Applies to one or more dependents under age 13 or a dependent who can't take care of themselves. not refundable. Can claim a percent of up to $3k for one dependent, or $6k for 2 or more. If your AGI is over $43k, you can claim 20%. For AGI under $43k, the percent of credit you can claim goes up to 35%

Answer 141

under $27m

Answer 142

The preparer penalty for willful or reckless conduct is the greater of $5,000 or 50% of the income derived by the preparer for the return. So if you charged $1500 - penalty is $5k If you charged $24000 - penalty is $12k

Answer 143

The preparer penalty for willful or reckless conduct is the greater of $5,000 or 50% of the income derived by the preparer for the return. So if you charged $1500 - penalty is $5k If you charged $24000 - penalty is $12k

Answer 144

Ex: Harvey works for Ice Cream Dream, a company that sells commercial ice cream makers. Ice Cream Dream normally has a gross profit percentage of 30%. Harvey's wife loves ice cream, so he decides to buy her a commercial ice cream maker for her birthday. Harvey paid $650 for an Ice Cream Dream 5000, that has a company retail price of $1,000. What, if any, amount must be included in Harvey's gross income? The discount cannot exceed gross profit on personalty or 20% on services. Ice Cream Dream's normal gross profit percentage is 30%. That gives him a $300 discount or $700 price based on the $1,000 retail price. He paid $650. $50 is more than the discount and is included in income. However, Harvey's discount was 35% (1,000 - 650 = 350 / 1,000 = 35%). Therefore, Harvey must include 5% of the discount, or $50, in his gross income.

Answer 145

A cafeteria plan must offer at least one taxable benefit, usually cash, and one qualified nontaxable benefit. All of the other statements regarding cafeteria plans are correct. a written plan under which the employee may choose to receive either cash or taxable benefits as compensation or qualified fringe benefits that are excludable from wages. authorized by Section 125 of the Internal Revenue Code. appropriate when employee benefit needs vary within the employee group.

Answer 146

Taxed at cap gains rates applies to individuals only Qualified when: 1. us company or qualified foreign corp 2. must hold the stock for min 60 days during 121 day period around ex div date

Answer 147

can't generate capital losses. So if you sell loss property to a charity at a bargain rate, can't claim a loss. no double basis rules

Answer 148

Intent of the parties to the transaction. Whether any equity results from the arrangement. Whether any interest is paid. Whether the fair market value of the car is less than the "lease payment" or option when the option to buy is exercised. Any sign of ownership, including that of an installment sale will cause a leased vehicle to be treated for tax purposes as a purchased vehicle. Rather than deducting the lease payments, the taxpayer will be required to elect either standard mileage or to take depreciation plus actual expenses.

Answer 149

Through amortization. Ex: goodwill`

Answer 150

Tax implications of stock that is held in a ESOP or other employer plan. If they move the ESOP out of the plan, The employer put stock into the plan for you so you have to pay ordinary income tax on the basis of the stock that they contributed. The difference between the basis and FMV is locked in as the NUA. This amount is locked in at LTCG rates. If you sell it for an additional gain, additional amount is taxed based on holding period NUA is locked in for benes - still LTCG on that

Answer 151

Relationship test: child, descendent, sibling, step sibling, half sibling, descendent of sibling, step sibling, half, etc - NO COUSINS, AUNTS, etc Abode Test: live with the taxpayer 6+ months. Considered an occupant when at schooll hospital, vaca, military, away on biz Age test: Under 19 or under 24 if student Support test: Qualifier does not proivde mor than half of support. scholorships don't count

Answer 152

Relationship test: descendent, sibling, ancestor, step family, nephew/niece, aunt/uncle, in laws - Can be unrelated if they live there year around Gross income test: dependent makes less than $4400 Support test: more than half support- food, clothing edu, med, Not a qualifying child no joint return with a spouse can't be a spouse must be a citizen

Answer 153

MAGI = AGI less SS + tax exempt interest (muni) + interest earned on saving bonds for edu + adoption assistance + edu interest deduction + foreign income that would otherwise been exluded Hurdles MFJ - $32k/$44k S - $25k/$34k

Answer 154

Not for tuition or books. Room and board scholarship IS included!

Answer 155

trade or business expenses property loss on sale or exchange pre 2018 alimony deductions from rental prop half of self employment tax 100% of self employment health insurance contributions to pension, profit sharing, annuity, IRAs, (phase outs) Student loan interest (phase out) HSA Teacher expense

Answer 156

FOR AGI Above the line All business expenses (taken by their owners, i.e. sole proprietor or partner) are taken above the line or FOR AGI. “Business deductions” are deductible directly against the business income, and will be reported on Schedule C or Schedule E (flow through from a K-1 is reported on Schedule E, and rental income and expenses are reported on Schedule E as well). On those forms, the business income and business deductions are netted, and the net amount is reported on the Form 1040 above-the-line. QBI is not a business expense against revenue. It is a deduction based on pass through income of the owners. The QBI deduction is at the individual level and is taken below-the-line. It is not a direct deduction against business income, it is a deduction against the individual owner’s share of income. Due to the phaseouts being based on each owner’s adjusted taxable income, it could be available for one owner, but not for another owner of the same business.

Answer 157

John CAN'T deduct alimony Margie does NOT include alimony in her income

Answer 158

NO! They are not taxaable But PUNATIVE damages are You can exclude awards for mental distress if it's for medical bills

Answer 159

If you are chronically ill- 2/6 tasks or severe mental

Answer 160

If you are handicap and improve home to help For most things, you can deduct the expense less how much it increased the value of your home For exit ramps, widening of hallways, lowering of bathroom fixtures (but not elevators) you can deduct the entire cost even if it increases the value of your home.

Answer 161

Only when they are private activity bonds

Answer 162

Multiple income by .9235 and .0765 Use this to calculate what can be contributed to a self employed qualfied planb

Answer 163

Qualified plans but not IRAs

Answer 164

$14k employee deferral $9k employer match SIMPLE does a 3% match and has no covered comp limit when it it's a match Does use covered comp max if it's a non elective contribution

Answer 165

NO annual testing 25% penalty!

Answer 166

pro rata - penalty on the taxable portion of the withdrawal only

Answer 167

However, if a tax return is filed more than 60 days late (as it is in Ford's case), the minimum failure to file penalty is the lower of $435 or 100% of the tax due. The penalty will not exceed 100% of the tax due.

Answer 168

No! Qualified transfers are medical and eduction

Answer 169

NOT DEDUCTIBLE UNLESS THERE IS PASSIVE INCOME

Answer 170

Must adopt a calendar year

Answer 171

Form 5498 reflects contributions to the IRA. Use it when figuring out rolling over to an IRA

Answer 172

Increases it!

Answer 173

When personal use exceeds 14 days, expenses are allocated between personal and rental use, and expenses are only deductible to the extent of income (no loss can be created). In calculating the expenses that can be used, depreciation is the last available, and the portion of the other expenses already allocated against the rental income would have reduced the income to zero. The depreciation cannot be used to create a loss, so it is not deductible.

Answer 174

The earnings for Dennis from the Blue Elf are $58,000 of Schedule E income from the partnership. To compute the self-employment tax on Schedule SE for Dennis, multiply the self-employment earnings by .9235 (part of the self-employment calculation), to arrive at the new earnings of $53,563. This amount is multiplied by the 15.3% self-employment tax, and the tax is $8,195. The deduction for self-employment tax is one-half of this amount, or $4,098.

Answer 175

Adjust for half of self employment tax (multiple by .9265)

Answer 176

A trip outside the United States is considered to be purely for business when less than 25 percent of the time spent on the trip was personal. The taxpayer does not have control over the timing or arrangements for the trip. The trip outside the United States lasts for less than seven days. Vacation was not a primary consideration for the trip.

Answer 177

Intent of the parties to the transaction. Whether any equity results from the arrangement. Whether any interest is paid. Whether the fair market value of the car is less than the "lease payment" or option when the option to buy is exercised. Any sign of ownership, including that of an installment sale will cause a leased vehicle to be treated for tax purposes as a purchased vehicle. Rather than deducting the lease payments, the taxpayer will be required to elect either standard mileage or to take depreciation plus actual expenses.

Answer 178

All dividends must be reported as income. If you hold the stock longer than 60 days, they are qualified (LTCG) ortherwise STCG

Answer 179

Lesser of! If it's LTCG prop then you can choose either fmv or basis LTC

Answer 180

if they earn $400 net income or more

Answer 181

When the deductions a company takes are greater than it's income. Some stuff is deductible for a negative loss, some is not. The net operating loss can carry forward to offset income in future years The application of carryforward NOL is limited to 80% of the next years income What is not allowed to be included in NOL? Any deduction for personal exemptions. · Capital losses in excess of capital gains. · The section 1202 exclusion: Small Business Stock Gains Exclusion, · Nonbusiness deductions in excess of nonbusiness income. · Net operating loss deduction. · The domestic production activities deduction.

Answer 182

So the benefit of 1231 is Capital Gains on Gains and Ordinary Loss On Loss!

Answer 183

Ordinary gain is only 25% (note that it's still called ordinary gain although it's a different rate) Note where 1231 and 1245 are Same chart for 1250 but 1250 goes where the 1245 is - and 1250 is ordinary income not the special 25% ! 1250 is real estate, land, and building Section 1231 losses can be carried forward 5 years

Answer 184

1) Gross Income Test, 2) Support Test, 3) Not a qualifying child, 4 ) Citizenship Test (U.S., Canada or Mexico), and 5) Joint Filing Test.

Answer 185

NOOO Reagan purchased stock in XYZ Corporation three years ago for $110,000. Today it is worth $100,000. Reagan exchanges (sells) the stock to a local charity for $10,000. What is Reagan’s capital loss on the transaction? answer: 0

Answer 186

no. Section 179 expense is only available for property used in a trade or business. Property used for the production of income, such as rental property furniture, is not eligible for the Section 179 expensing deduction.

Tax Flashcards

(223 cards)