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Tax Flashcards

1
Q

What is the required time period for a widow and head of household?

A

W: Whole year
H: Half year (more than)

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2
Q

When can a spouse claim personal exemption on separate return?

A

Taxpayer’s spouse - no gross income, not claimed as dependent by another taxpayer

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3
Q

What are the requirements for qualifying child?

A

CARES
Close relative
Age limit (19/24 college)
Residency and filing requirements - same principal place of living as taxpayer for more than 1/2 yr
Eliminate gross income test
Support test - child did not contribute over 1/2 of support

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4
Q

What are the requirements for a qualifying relative?

A

SUPORT
Support test - taxpayer supplies over 1/2 of support
Under exemption amount of taxable gross income
Precludes dependent filing joint return
Only U.S. citizens or residents of U.S., Mexico, Canada
Relative
Taxpayer lives with individual (if nonrelative) for whole year

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5
Q

What are flexible spending arrangements?

A

Pretax deposits into employee’s account

Lose funds not used within 2 1/2 months after year-end

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6
Q

What interest on government bonds is tax-exempt?

A

Interest on state and local bonds/obligations

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7
Q

When are state and local tax refunds taxable?

A

When itemized

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8
Q

What are alimony requirements under tax law?

A

Payments:
legally required pursuant to written divorce agreement
in cash/cash equiv
cannot extend beyond death of payee-spouse
not made to members of same household
not designated as other than alimony

spouses may not file joint return

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9
Q

What items are included in gross income?

A

Cash (amt received)
Property (FMV)
Cancellation of debt

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10
Q

What option do taxpayers have with net business taxable losses?

A

2-yr carryback

20-yr carryforward

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11
Q

What inventory expenses are capitalized?

A

Direct materials
Direct labor
Factory overhead

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12
Q

What inventory expenses are period expenses?

A

Selling
General
Admin
R & D

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13
Q

What are the exceptions to penalty taxes?

A 
HIM DEAD
if premature distribution used to pay:
Home buyer (1st time)
Insurance (medical)
Medical expenses > 10% AGI
Disability
Education: tuition, books, fees
and
Death
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14
Q

How do taxpayers treat unemployment compensation and workers compensation?

A

included in gross income;

tax-free

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15
Q

When is income from prizes and awards excluded from taxable income?

A

winner selected without entering into contest

award assigned directly to government or chfor arity

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16
Q

How do we treat gambling winnings and losses?

A

Winning included in gross income

Losses only deducted to extent of winnings

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17
Q

What things are taxable for a student scholarship?

A

Room and board

Services required

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18
Q

When is net loss from rental property disallowed?

A

Rental property oersonally used > 14 days

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19
Q

How are offsite storage costs treated under uniform capitalization rules?

A

Capitalized

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20
Q

What type of interest is excludable from gross income?

A

Municipal Bond Interest

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21
Q

What is an accruable expense?

A

services have been received/performed but have not been paid for by the end of the reporting period

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22
Q

What is the maximum capital loss deduction on investment sale?

A

$3000

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23
Q

How do we treat Kiddie Tax?

A

Total Income - standard deduction = diff. not taxed
Diff. above - standard deduction = diff. taxed at child’s rate
Remainder taxed at parent’s rate

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24
Q

What is the basic formula for net rental income or loss?

A 
Gross rental income
Prepaid rental income
Rent cancellation payments
Improvements in lieu of rent
(Rental expenses)
Net rental income (loss)
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25
Q

Are these taxable or non-taxable?
Child Support
Alimony
Property Settlements

A

Non-tax
Taxable
Non-Tax

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26
Q

When are gains and losses on securities recognized?

A

Trade Date

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27
Q

What amount of passive losses are deductible?

A

Amount of passive gains to offset

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28
Q

What is the exception for passive activity losses

A

Losses fully deductible in year of disposal

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29
Q

What are not allowed as deductions on Schedule C of the 1040?

A

Personal Expenses

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30
Q

uniform capitalization rules do not apply to inventory acquired for resale if the taxpayer’s average gross receipts for the preceding three tax years do not exceed

A

$10,000,000

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31
Q

What is the tax rule for suspended passive losses?

A

allows loss carryforwards, but not loss carrybacks until utilized

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32
Q

What is the mom and pop exception?

A

up to $25,000 of passive losses and the deduction equivalent of tax credits that are attributable to rental real estate may be used as an offset against income from nonpassive sources.
$25,000 allowance is reduced, but not below zero, by 50% of the amount by which the individual’s modified AGI exceeds $100,000.
$25,000 is therefore completely phased out when modified AGI reaches $150,000.

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33
Q

What do we do with qualified stock option income?

A

Do not recognize in year of grant

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34
Q

When are nonqualified options taxed?

A

When granted if option has ascertainable value

Taxed when exercised otherwise

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35
Q

What does the rule limiting the allowability of passive activity losses and credits apply to?

A

personal service corporations

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36
Q

When should a cash basis taxpayer report gross income?

A

for the year in which income is either actually or constructively received, whether in cash or in property

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37
Q

How do we calculate deductible medical expenses?

A 
Qualified medical expenses
- insurance
Qualified medical expense "paid"
- 10% of AGI
Deductible medical expenses
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38
Q

Which expenses are deductible as itemized deductions subject to the 2% floor?

A

Employee business expenses

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39
Q

What is amount deductible for donated short-term capital gain property?

A

Deductible to the donor to the extent of his/her adjusted basis

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40
Q

What is the deduction limit for FMV of donated property?

A

30% of taxpayer’s AGI

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41
Q

What must an employee report as wages under a nonaccountable plan?

A

any amounts received by an employee from the employer

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42
Q

What was the maximum amount of charitable contributions taxpayers can claim as an itemized deduction for the current year?

A

50% of contribution base (AGI)

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43
Q

What do we do with state and local income taxes withheld from a cash-basis taxpayer?

A

Deductible in the year withheld

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44
Q

What amount of self-employment tax is deductible to get to AGI?

A

1/2

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45
Q

The deduction for interest expense on investment indebtedness is limited to what?

A

net investment income

investment income less investment expenses

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46
Q

What do we do with interest paid on a debt secured by a home mortgage?

A

Classified as deductible qualified residence interest. Able to deduct the interest paid as an itemized deduction.
Limit is $100,000 of mortgage interest since the loan was not to buy, build, or improve the home.

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47
Q

How much of mortgage interest can be deducted?

A

Mortgages of up to $1,000,000 to buy, build, or substantially improve a home allow for the full deduction of interest

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48
Q

Tax return preparation fee is a miscellaneous itemized deduction subject to

A

2% adjusted gross income (AGI) floor

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49
Q

Charitable contributions subject to the 50% limit that are not fully deductible in the year made may be carried forward how long?

A

five years

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50
Q

What is the tax benefit rule?

A

if one receives a tax benefit from an item in a prior year because of a deduction and then recovers the money in a subsequent year, the money must be counted as income in the subsequent year.

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51
Q

How do we treat moving expenses?

A

Deductible before AGI

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52
Q

To qualify for additional standard deduction, what needs to happen?

A

65 years old

Blind

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53
Q

What part of medical expenditures are deductible for capital expenditures?

A

deductible to the extent that the expenditure exceeds the increase in value of the asset

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54
Q

When are premiums on insurance policies deductible?

A

When payments of policy used for medical expenses

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55
Q

What education loan interest is an itemized deduction or an adjustment?

A

Adjustment of lower of: amount paid or $2500

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56
Q

For IRAs, when are adjustments allowed?

A

Adjustment allowed for a year ONLY if the contribution is made by the due date of the tax return for individuals (April 15)
The due date for filing the tax return under a filing extension is NOT allowed

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57
Q

What is Schedule A and what does it contain?

A 
Personal Itemized Deductions schedule
Medical
Taxes
Interest
Charity
Casualty
Misc.
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58
Q

What is all included in adjustments for AGI?

A 
Educator expenses
IRA contributions
Student loan interest expense
Tuition and Fee deduction
Health savings accounts
Moving expenses
50% self-employment FICA
Self-employment health insurance
Self-employed retirement
Interest withdrawal penalty
Alimony paid
Attorney fees
Domestic production activities deduction
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59
Q

What is the itemized deduction for medical expenses?

A

10% of AGI

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60
Q

What amount of refund is included in this year’s taxable income?

A

Recovery limited to amount actually deducted

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61
Q

What are the rules for educational loan interest?

A

Adjustment (above AGI)

limited to $2500 per tax year

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62
Q

What is the requirement for a casualty loss deduction?

A

Sudden or unexpected

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63
Q

When is prepaid interest deductible?

A

year and extent interest is allocable (when accrues)

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64
Q

How are long and short term property contributions treated differently for deductions?

A

LT: deduct at FMV at date of gift
ST: deduct at lower of cost or FMV

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65
Q

What is the deduction for investment interest expense limited to?

A

Net taxable investment income (taxable investment income - related investment expenses)

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66
Q

What is the taxpayer’s deduction for investment interest expense?

A

lesser of net investment income or investment interest expense

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67
Q

What do we do with capital losses in excess of capital gains?

A

up to $3000 deducted before AGI

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68
Q

What credit results in a refund even if the individual had no income tax liability?

A

Earned Income Credit

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69
Q

The credit for prior year alternative minimum tax liability may be carried

A

Forward indefinitely

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70
Q

What are the AMT adjustments?

A

PANIC (increase or decrease) TIMME (only increase)

Passive activity losses
Accelerated depreciation
Net operating loss of individual taxpayer
Installment income of dealer
Contracts - percentage completion vs. completed contract

Tax “deductions”
Interest deductions on home “equity loans”
Medical deductions (limited to excess of 10 percent AGI)
Misc deductions not allowed (2% AGI)
Exemptions (personal) and standard deduction

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71
Q

What are the tax preference items for AMT?

A 
Always add-backs (increase)
PPP
Private activity bond interest income
Percentage depletion excess over adjusted basis of property
Pre-1987 accelerated depreciation
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72
Q

What are the AMT credits?

A 
FACCE
Foreign tax credit
Adoption credit
Child tax credit
Contributions to retirement plans credit
Earned income credit
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73
Q

What does the wealthy taxpayer have to do to avoid the penalty for the underpayment of estimated tax?

A

Pay lesser of:
90% current year tax (annualized method)
110% of prior year tax (prior year method)

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74
Q

What form does an individual submit a claim for refund of erroneously paid income taxes?

A

Form 1040X

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75
Q

What is the latest date that the Internal Revenue Service can assess tax and assert a notice of deficiency (general rule)?

A

3 years from later of:
Due date of return
Date return is filed

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76
Q

What is the statute of limitations on the IRS pursuing omissions of >25% of AGI?

A

6 years from later of:
Due date of return
Date return is filed

77
Q

When can an individual file an amended tax return? (form 1040X)

A

Later of:
within 3 years of the date the original return was filed within 3 years from original due date
within 2 years of the date the tax was paid

78
Q

What is the statute of limitations for fraud or filing false returns?

A

None

79
Q

When a tax return has not been filed, any claim for refund must be made within _______ from the time the tax was paid

A

two years

80
Q

What are the adjustments to add or subtract from federal taxable income?

A

LID
Long-term contracts
Installment sale dealer
Depreciation adjustments

81
Q

What are the add-back preferences to increase taxable income?

A

PPP
Percentage depletion
Private activity (tax-exempt interest income)
Pre 87 ACRS excess depreciation

82
Q

What are the ACE adjusted current earnings inc./dec. to federal taxable income?

A

Muni interest income
Organizational expense amortization
Life insurance proceeds on key employees
Difference between AMT and ACE depreciation
Dividends received deduction (under 20% ownership)

83
Q

What is the criteria for personal holding companies?

A

50% ownership by 5 or less individuals with 60% AGI from NIRD:
Net rent
Interest (taxable)
Royalties
Dividends from unrelated domestic corporation

84
Q

How are a C Corp’s net capital losses treated?

A

Carried back 3 years, forward 5 years as a “short term capital loss”

85
Q

What is the limitation for worthless stock?

A

Owners can treat $50,000 as ordinary loss

86
Q

What is the rule for method of accounting in organizations for tax purposes?

A

Tax shelters, large C corps, and manufacturers = accrual method
Personal service corps = cash method

87
Q

What percent of business meals and entertainment are deductible?

A

50%

88
Q

What costs of a corp are expensable and amortizable?

A

Costs of organizing the corp, not the costs of selling stock

89
Q

What is a main advantage of consolidated tax returns?

A

ability to offset gains and losses among group members as if they were a single taxpayer

90
Q

What is a Type B reorganization?

A

Company acquired using stock of the acquiring corp

Acquiring corp in control of company immediately after acquisition

91
Q

What are the tax effects on shareholders and the corp in a reorganization?

A

Nontaxable to both

92
Q

For which types of entities can Net Operating Losses be deducted?

A

C corps
Estates and Trusts
Individuals

93
Q

What are the requirements for consolidation on a tax return?

A

parent must directly own at least 80% of the voting power of at least one of the affiliated (includible) corporations and at least 80% of the value of the stock of that corporation

94
Q

What is the gain/loss effect when the parent or sub liquidates its sub?

A

No gain/loss recognized

95
Q

What is the general rule about payment of a dividend?

A

Does not create taxable event

96
Q

What is the taxable amount of a dividend to a shareholder from a corporation’s earnings and profits?

A

Amount received in cash or the FMV of the property received

97
Q

(PSC) is primarily involved in the performance of one of the following fields:

A

accounting, law, consulting, engineering, architecture, health, and actuarial science

98
Q

What is the income restriction for former C corps that are now S corps? This would terminate S corp status

A

S election is terminated if the S corporation has passive investment income greater than 25% of gross receipts for three consecutive years

99
Q

Which entity can adopt any tax year-end?

A

C Corp

100
Q

What NFPs are not required to file form 990?

A 
50,000 or less gross receipts or CHRIST
Churches
High schools - religious
Religious orders
Internal support auxiliaries
Societies - missionary related
Tax exempt - organized by Congress
101
Q

What is an Advanced Pricing Agreement?

A

binding contract between the IRS and the taxpayer by which the IRS agrees not to seek a transfer pricing adjustment for a covered transaction if the taxpayer files its return for a covered year consistent with the agreed transfer pricing method

102
Q

What are section 1244 losses limited to? who are they available to?

A

Limited to $50,000

Available only to original owners

103
Q

When can an accrual-basis corporation deduct an accrued contribution?

A

1) authorized to a qualified charity by Board resolution before the end of the taxable year AND
2) paid by the 15th day of the 3rd month after the end of the taxable year of accrual

104
Q

What is the amount of gain recognized on C corp’s property distribution?

A

FMV - adjusted basis

105
Q

What is the general tax treatment for transfer of property in forming a C corp?

A

Nontaxable

106
Q

What is a C corp’s basis for transferred assets?

A

Cash (amt contributed)
Property (NBV-liability) - nontaxable
Services (FMV) - taxable

107
Q

How is a C corp’s accumulated earnings tax calculated?

A

Taxable income

  • Federal income tax
  • Accumulated earnings tax credit (250,000 for manufacturing company; 150,000 for service company)
108
Q

What is the gain limited to in a C corp transfer of assets?

A

Lesser of:
Realized gain
Boot received

109
Q

What groups are denied the privilege of filing a consolidated return?

A 
S corporations,
Foreign corporations,
Most real estate investment trusts (REITs),
Some insurance companies, and
Most exempt organizations
110
Q

What is the C corp’s basis of property received from a shareholder?

A

Greater of (NBV+gain) or debt assumed by C corp

111
Q

What C corp insurance policies are tax deductible? not deductible?

A

insured employee named as beneficiary;

corp named as beneficiary

112
Q

How are foreign income taxes paid by a domestic corp treated?

A

deduction or credit, at the option of the corporation

113
Q

What is a C corp’s exemption amount of AMTI equal to?

A

$40,000 - (25% of AMTI over $150,000)

114
Q

What entities must include 100% of the dividends received from unrelated taxable domestic corporations in gross income in computing regular taxable income?

A

personal service corporation and personal holding company

115
Q

How are corporation organization costs treated?

A

Amortized over a period greater or equal to 180 months

116
Q

What gain/loss is recognized in complete liquidation of a controlled sub?

A

None

117
Q

What is the order of allocation for non-liquidating cash distributions?

A 
ordinary dividends (current and accum. E&P)
return of capital (up to basis)
capital gain (excess)
118
Q

What gains not recognized?

A

HIDE IT
Homeowners exclusion (up to $500,000 for married filing joint sale of primary residence)
Involuntary conversions (insurance proceeds must be reinvested)
Divorce property settlement
Exchange of like-kind business/investment assets (except inventory, stock, securities, partnership interests, and real property in different countries)

Installment sale
Treasury and Capital stock transactions (by corp)

119
Q

What losses are recognized?

A 
WRaP
Wash sale loss (security sold for loss and repurchased within 30 days before or after sale date)
Related party transactions
a
Personal loss
120
Q

What is the basis in like-kind property equal to when boot is received?

A

FMV of like-kind property - deferred gain + deferred loss

121
Q

What can individuals do with net capital losses?

A

$3000 max deduction

Excess carried forward forever

122
Q

What can corps do with net capital gains? net capital losses?

A

Added to ordinary income and taxed at regular tax rate;

Carried back 3 yrs and forward 5 yrs as short term capital loss

123
Q

What MACRS convention is used for machinery and equipment? Real estate?

A

half year or mid-quarter (over 40% in Q4);

mid-month

124
Q

How are section 1231 gains and losses treated?

A

Long-term capital gain treatment

Ordinary loss treatment (fully deductible against ordinary income)

125
Q

What are capital assets?

A

Investment assets of a taxpayer that are not inventory

126
Q

What are section 1231 assets?

A

Depreciable personal and real property used in the taxpayer’s trade or business and held for over 12 months

127
Q

How is installment sale income/gain calculated?

A 
GP = sale - COGS
GP % = GP/sales price
Earned revenue (tax income) = cash collections * GP %
128
Q

What is the holding period for inherited property?

A

Always Long-Term

129
Q

How is section 1245 depreciation recapture treated?

A

Always ordinary income/gain

130
Q

To qualify for IRC Section 179, what are the requirements?

A

the property must be tangible personal property acquired by purchase from an unrelated party for use in the active conduct of a trade or business

131
Q

How is residential realty depreciated under MACRS? Nonresidential?

A

27.5 yr SL

39 yr SL

132
Q

What is the required recapture under section 1245?

A

Lesser of:
Depreciation taken
Gain recognized

133
Q

What is the contributing partner’s initial basis?

A

+ Cash (amt contributed)
+ property (NBV)
- liabilities (assumed by other partners at ownership %)
+ services (FMV)
+ liabilities (assumed by incoming partner)

134
Q

When does a partnership terminate?

A

operations cease
50% or more of total partnership capital and profits sold or exchanged within 12 month period
only one partner

135
Q

What are guaranteed payments?

A

Compensation paid to partner without regard to ratio of income

136
Q

Who makes tax elections in partnership?

A

Partnership, NOT partner

137
Q

When are partnership gains treated as ordinary income?

A

Ordinary income to extent of:
Appreciated inventory
Unrealized receivables

138
Q

When can a partnership elect to have a tax year other than the generally required tax year?

A

if the deferral period for the tax year elected does not exceed three months

139
Q

What does a partner’s basis of partnership interest consist of?

A

cash paid
adjusted basis of property transferred
new partner’s share of partnership liabilities

140
Q

How are contributed services treated in a partnership?

A

Recorded as ordinary income at FMV

141
Q

What is the basis rule for liquidating distributions?

A

Partnership interest basis

Zero-out to get out

142
Q

What is the basis rule for nonliquidating distributions?

A

NBV asset taken basis

Stop at zero

143
Q

In the absence of an election to adopt an annual accounting period, the required tax year for a partnership is

A

A tax year of one or more partners with a more than 50% interest in profits and capital

144
Q

What is the income distribution deduction equal to?

A

Lessor of:
Actual distribution to beneficiary
Distributable net income (DNI - adjusted tax exempt interest)

145
Q

When is an estate income tax return (Form 1041) required?

A

annual income > $600

no standard deduction allowed

146
Q

When are estimated payments required for estate income tax?

A

after 2 years

147
Q

What is the year-end for trust income tax years? estate?

A

Dec. 31;

Anytime (calendar or fiscal year)

148
Q

Under the de minimis rule, what amounts are allowed as deductions for tax purposes?

A

Applicable f/s = $5000 per item

No applicable f/s = $500 per item

149
Q

What income is recognized with a qualified stock option?

A

None in date of grant

150
Q

What are the carry rules for charitable contributions subject to the 50% limit that are not fully deductible in the year made?

A

may be carried forward 5 years

151
Q

What types of organizations can distribute appreciated property tax-free?

A

Partnerships

LLCs

152
Q

Unused capital losses of a corporation that are carried back or forward are treated as ________________ whether or not they were short-term or long-term when sustained.

A

short-term capital losses

153
Q

What is the normal AMTI exemption amount and when is it reduced?

A

$40,000

Reduced by 25% for any excess AMTI above $150,000

154
Q

What is the amount of gift tax each taxpayer may exclude to each donee?

A

$14,000 per

$28,000 joint w/ spouse

155
Q

When is Form 1041 due for estates?

A

15th day of the fourth month after the close of its taxable year

156
Q

What can we do with medical expenses and administrative expenses associated with an estate?

A

Deduct on decedent’s final income tax return or estate return

157
Q

What is the maximum amount that can be transferred pursuant to a death tax-free?

A

$5,340,000 (2014)

158
Q

What are unique attributes of a complex trust?

A

accumulate current income
distribute principal
provide for charitable contributions
$100 exemption

159
Q

What are unique attributes of a simple trust?

A

only make distributions from current income (not corpus, or principal)
must distribute all income currently
may not make charitable contributions
$300 exemption

160
Q

When is trust property with an independent trustee includible in the grantor’s gross estate?

A

Revocable trust

161
Q

What gifts have unlimited exclusion for tax purposes?

A

Payments made directly to educational institution
Payments made directly to health care provider for medical care
Charitable gifts
Marital deduciton

162
Q

When is Form 709 for Gift Tax Returns due?

A

April 15

163
Q

When is the federal estate tax return (Form 706) due? When must property be valued?

A

9 months after death

6 months for property valuation

164
Q

When is the generation-skipping transfer tax applied?

A

Separately in addition to federal estate and gift tax

Applies when property transferred to a person 2 or more generations younger than transferor

165
Q

How are campaign contributions classified?

A

Nondeductible business expense

166
Q

What does Distributable Net Income (DNI) mean?

A

DNI from the trust is taxable income to the recipient(s), with any additional distributions being considered nontaxable distributions of trust corpus

167
Q

What amount of capital loss can be used by individuals to offset ordinary income?

A

$3000

168
Q

What is the alternative valuation date for gifts?

A

earlier of:
6 months after date of death
date gift distributed

169
Q

Unrelated business income is:

A

Derived from an activity that constitutes a trade or business

Regularly carried on

Not substantially related to the organization’s tax-exempt purpose.

170
Q

When do transfer pricing issues exist?

A

U.S.-based taxpayer shares costs with an affiliate that is not subject to U.S. income tax

Does not file a consolidated income tax return with the U.S.-based taxpayer

171
Q

When is an ordinary loss not allowed on worthless securities?

A

When inherited

Only available to original owners

172
Q

What is the deductibility for underpayment of federal income tax?

A

Not deductible

173
Q

When are insurance expenses deductible?

A

When individuals, NOT corp, are beneficiaries

174
Q

Unrelated business income is:

A

Derived from an activity that constitutes a trade or business
Is regularly carried on
Is not substantially related to the organization’s tax-exempt purpose

175
Q

Any losses in excess of the at-risk amount are:

A

suspended and carried forward without expiration and are deductible against income in future years from that activity

176
Q

What type of income can an S corp have? and who can be shareholders of an S corp?

A

passive and non-passive

individuals, estates, voting trust, grantor trust, bankruptcy estate

177
Q

What is a like-kind exchange?

A

Real property exchanged for other real property (in same country)

178
Q

How are business buildings and equipment depreciated for tax purposes?

A

SL method over 39 yrs

use mid-month convention when placing in service and disposing of

179
Q

What do we do with losses in excess of the at-risk amount?

A

suspended and carried forward without expiration and deductible against income in future years from the activity.

180
Q

What are the main differences between complex and simple trusts?

A

Complex trusts: accumulate current income, distribute principal, and provide for charitable contributions
Simple trusts: distributions from current income (not corpus, or principal), distribute all income currently, and may not make charitable contributions

181
Q

How is the American Opportunity Credit calculated?

A

100% of first $2000
25% of second $2000
must be enrolled at least half=time for one academic period during the year

182
Q

How is the lifetime learning credit calculated?

A

20% of up to $10000

183
Q

In a multiple support agreement, to claim the exemption an individual must contribute ______ of the support of the dependent

A

qualifying relatives

over 10%

184
Q

Where are real property expenses reported?

A

Schedule E of 1040
subject to passive activity loss provisions
deduction to arrive at AGI

185
Q

What is the deductibility of personal/consumer interest, expense, loss?

A

not deductible (have to be related to collection or receipt of taxable income)

186
Q

What is the social security amt based on for self-employed? regular employee? who pays?

A

self-employed person’s net profit
For employees, gross wages
employer also pays the tax

187
Q

Where are real property taxes deductible if personal? rental?

A

schedule a itemized deduction

schedule e rental deduction

188
Q

When is the penalty for underpayment of taxes avoided?

A

if underpayment < $1000

REG (2 decks)

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