Tax

Question 1

AOTC

Answer 1

100% of the 1st $2,000 education expenses
+25% of the next $2,000 education expenses
Max: $2,500 per kid

Question 2

Lifetime Learning Credit

Answer 2

20% of ed expenses up to $10k
Max: $2,000 per family

Question 3

Child Tax Credit

Answer 3

$2k/kid

Question 4

Child & Dependent Care Credit

Answer 4

$3k/6k

Question 5

Grants

Answer 5

Pell and Supplemental Educational Opportunity Grant (SEOG): exceptional need

Question 6

Scholarships

Answer 6

Are always tax free

Question 7

Federal Direct / Stafford Loans: Direct Subsidized

Answer 7

Direct Subsidized: Must have financial need. Undergrad only, better terms, govt pays while in school and 1st 6 months and if you defer payment

Question 8

Direct PLUS

Answer 8

All college+. NO financial need required. You pay all interest

Question 9

Federal Direct / Stafford Loans: Direct Unsubsidized

Answer 9

All college+, no financial need required. You pay all interest

Question 10

Expected Family Contribution

Answer 10

Assets (5.64% of parents, 20% of students) + Income (22-47% of parents, 50% of students -$9,410)

Only parent assets excluded are home and retirement

Question 11

What income is backed out from AGI for EFC calc?

Answer 11

Distributions from Coverdell (student) and Roth IRA

Question 12

what debt can’t be forgiven if you file Chapter 7?

Answer 12

alimony, child support, taxes < 3 years due, student loans, secured debt

Question 13

Which risk is qualitative: tolerance or capacity?

Answer 13

Tolerance

Question 14

Mortgage payments: beg or end?

Answer 14

END

Question 15

Education Calc Steps 1-3

Answer 15

1: Project FV of 1 year of tuition
2: Calc PV of of that amount:
BEG
pmt=FV from step 1
i=(ROR-INF)/(1+INF)
n=4
3: Calc what they’re asking for (pmt or PV)
BEG or END
i=ROR, n=years to college, FV=step 2 result

Question 16

Mortage payments: beg or end?

Answer 16

END

Question 17

FICO Score Calc

Answer 17

Payment history (35%)
Amounts owed (30%)
Length of credit history (15%)
New credit (10%)
Credit mix (10%)

Question 18

Basis for Gift with Gift Tax Paid Formula

Answer 18

Donor’s Basis +
Gift Tax Paid X (App/(Gift-$18k))

Question 19

FICO

Answer 19

.800. Exceptional
.740. Very good
.670. Good.
.580. Fair

Question 20

how much Student loan interest is deductible?

Answer 20

$2,500

Question 21

2 Mortgage interest deduction

Answer 21

$750k/mortgage amount X intexp

Question 22

Refundable Tax Credits?

Answer 22

Additional American Earned Premium
(All Americans Eat Pie)

Question 23

how do you qualify for Head of Household?

Answer 23

Must not be married, pay >50% of housing costs. Qualifying kid>50% of year, Qualifying relative 50%+ living expenses

Question 24

Estimated tax payment dates

Answer 24

3, 5, 8, 12

Question 25

what percent of last year and this years tax must you pay to avoid tax penalty?

Answer 25

Lesser of: $0-150k: 100% LY, 90% TY $150k +: 110% LY, 90% TY

Question 26

Tax penalties - Negligence, Fraud, Frivolous?

Answer 26

20%, 75%, $5k

Question 27

Fail to file, fail to pay

Answer 27

5%, 0.5%

Question 28

1098

Answer 28

Mortgage interest

Question 29

1099-R

Answer 29

Retirement distributions

Question 30

Form 4868

Answer 30

Extension of time to file

Question 31

Form 5498

Answer 31

IRA contributions

Question 32

Form 8606

Answer 32

Nondeductible IRAs

Question 33

FIFO, LIFO inventory when prices higher

Answer 33

FIFO: inventory realistic LIFO: inventory understated

Question 34

MACRS years cars/computers

Answer 34

5 years

Question 35

MACRS machines/equipment

Answer 35

7 years

Question 36

MACRS resi and CRE

Answer 36

27.5 / 39 years

Question 37

What's not a capital asset?

Answer 37

A/R Copyrights Inventory Depreciable property used in biz

Question 38

Section 1231. Sold over orig cost? 1245 / 1250

Answer 38

Cap gains, dep @ ord income / 25%

Question 39

Section 1231 sold under cost 1245 / 1250

Answer 39

Ordinary loss for both

Question 40

Section 1231 Sold between cost and adj cost 1245 / 1250

Answer 40

Ord income rate / 25%.

Question 41

1231 Like Kind Amount Realized

Answer 41

FV-BV + Boot (cash received + mortgage dumped)

Question 42

1031 Realized Gain

Answer 42

Amount realized less BV of asset transferred

Question 43

1231 Recognized Gain

Answer 43

Lesser of (Realized Gain, net boot received)

Question 44

what qualifies for your property to be “Rental real estate”?

Answer 44

did you use the property for personal use the greater of 14 days or 10% of days rented? if no then it’s a rental.

Question 45

Rental use property

Answer 45

You use it greater than (14 days, 10% of all days rented). All expenses are allowed.

Question 46

Mixed use property

Answer 46

You use it less than (14 days, 10% of all days rented). All expenses X (personal use days / total use days)

Question 47

Cash gifts limit as percent of AGI

Answer 47

60% of AGI / 30% of AGI

Question 48

Ordinary income gifts (STCG, Art, Inventory)

Answer 48

50% of AGI / 30% of AGI

Question 49

LTCG using FMV

Answer 49

30% of AGI / 20% of AGI

Question 50

LTCG using BV

Answer 50

50% of AGI / 30% of AGI

Question 51

Use related gifts to charity max donation

Answer 51

50% of AGI if BV 30% of AGI if MV

Question 52

Use unrelated gifts to charity max donation

Answer 52

Lesser of BV or MV

Question 53

Charity deduction for services

Answer 53

Tolls + (gas and parking or 14c/mile)

Question 54

Imputed interest income

Answer 54

None on <$10k loan AFR on > $100k loan Min (net inv inc or AFR) on loans 10-100k; if NII < $1k, then $0

Question 55

AMT adjustment at option exercise

Answer 55

(Exercise - Grant) X Shares

Question 56

Kiddie Tax

Answer 56

0% on $0-1300 10% on $1300-2600 Parents top tax bracket >$2600

Question 57

Net investment income and NII Tax

Answer 57

On MAGI over $200/250k, 3.8% X lesser of (NII or excess of MAGI over $200/250k)

Question 58

FACTA: US accounts overseas unmarried or separate

Answer 58

$50k/75k

Question 59

FACTA: US accounts overseas MFJ

Answer 59

$100/150k

Question 60

FACTA: Foreign account limits to report last day / any day

Answer 60

If foreign unmarried/separate : $200/300k If foreign and MFJ: $400/600

Question 61

FBAR: Must report FinCEN Form 114 if...

Answer 61

Foreign accounts >$10k combined.

Question 62

AMT - if you're subject to it this year should you accelerate income?

Answer 62

Yes

Question 63

AMT - if you're subject to it this year should you defer deductions?

Answer 63

Yes