Taxes

Question 1

How do Health Savings Account (HSA) contribution impact an individuals tax return?

Answer 1

It is an “above-the-line” deduction unless it is made through the employer’s cafeteria plan.

Question 2

What are the 2012 standard mileage rates?

Answer 2

• $0.555 for business use
• $0.14 for charity use
• $0.23 for medical or moving use

Question 3

What is the 2012 FUTA rate?

Answer 3

6% of the 1st 7k of income

Question 4

Is unemployment income taxable?

Answer 4

It is considered repayment of lost wages so will be taxed as income.

Question 5

What are the 2012 income limits that affect how social security income is taxed (and what are the rates)?

Answer 5

50% 85%
Single: 25k 34k
Joint: 32k 44k

Question 6

For 2012, how is the social security benefit reduced due to other income?

Answer 6

Prior to full retirement age (FRA), benefit is reduced $1 for every $2 of income over $14,640.

In year of FRA, reduction is $1 for every $3 of income over $38,880.

No reduction after FRA.

Question 7

How many years are subject to the”second disposition” rule?

Answer 7

2

Question 8

What are the steps of a recapitalization freeze transaction? (2)

Answer 8

1) change from single owner type entity to multiple owner type
2) create different ownership interests in the company

Question 9

2012 exemption amount

Answer 9

$3800

Question 10

Exclusion or above the line items

Answer 10

Inheritance
Gifts rcvd
Muni interest
Workers comp
HSA controls
Alimony paid
IRA contributions
Student loan interest
Tuition
1/2 of self employment

Question 11

IRA phase out for 2012

Answer 11

58-68k single
92-112k JNT

Note: active stratus with ER plan changes JNT to 173-183k

Question 12

Roth phase out for 2012

Answer 12

110-125k SGL

173-183k JNT

Question 13

Student loan interest phase out (2500)

Answer 13

60-75k SGL

125-155k JNT

Question 14

4 classifications of property

Answer 14

1) realty
2) personalty
3) tangible
4) intangible

Question 15

Property uses wrt taxes

Answer 15

1) trade or business
2) production of income
3) inventory (no depreciation)
4) personal use

Question 16

5 year property

Answer 16

ACC

Auto
Computer
Copiers

Question 17

7 year property

Answer 17

Furniture

Equipment

Question 18

15 year property

Answer 18

Landscape improvements like fences, sidewalks, driveways

Question 19

Realty depreciation

Answer 19

27.5 y residential

39 y commercial

Question 20

S179 effect on basis

Answer 20

Reduces basis. Must be adjusted PRIOR to calculating 1st year depreciation

Question 21

S179 max & phaseout for 2012

Answer 21

139k or taxable income which ever is least

Phase out $560k

Question 22

S1245 recapture

Answer 22

Personalty prop

Question 23

S1250 recapture

Answer 23

Realty depreciation

Question 24

Look back rules in S1231

Answer 24

If 1231 gain in current year…must be recharacterized by previous years 1231 losses (which will be treated as OI)

Question 25

S1250 gains taxed at what rate

Answer 25

25%

Question 26

S1245 gains taxed at what rate?

Answer 26

Ordinary income

Question 27

Excluded items for s1031

Answer 27

Stocks and bonds Livestock of different sexes Inventory

Question 28

Is s1031 boot taxable?

Answer 28

Yes

Question 29

S121 exclusion

Answer 29

SGL 250k JNT 500k Cap gain exclusion on sale of primary residence

Question 30

S121 requirements

Answer 30

1) Principal residence in 2 of prior 5 years 2) once every 2 years 3) partial exclusion for health, job, or unforeseen stuff

Question 31

Income limitation to casualty & theft loss reduced by

Answer 31

Lesser of FMV or adj basis - Insurance - 10% AGI - $100 floor per loss

Question 32

1244 allows

Answer 32

Up to 100k (jnt return) to be treated as ordinary loss. Overage is a capital loss.

Question 33

Above the line adjustments

Answer 33

``` IRA Alimony Interest forfeitures Half self employment tax Student loan interest ```

Question 34

Itemized deductions

Answer 34

``` Home mortgage interest Prop taxes Medical expenses State and local taxes Investment interest expense Charitable contributions Casualty & theft losses Misc Tier II misc ```

Question 35

Tax credits

Answer 35

``` Dependent care Child tax credit Elderly disabled Foreign tax General business Education ```

Question 36

Professional service corporations

Answer 36

Call AAA for HELP Accounting Actuarial Architecture Health Engineering Legal Performers

Question 37

PSC tax rates

Answer 37

Flat 35%

Question 38

Business accumulated earning tax penalty

Answer 38

15% on amount over 250k that doesn't have a valid business purpose

Question 39

Negligence penalty (accuracy mistakes)

Answer 39

20% of the underpayment

Question 40

Civil fraud penalty

Answer 40

75% of underpayment

Question 41

Failure to file penalty

Answer 41

5% of due taxes PER MONTH capped at 25%

Question 42

Failure to pay penalty

Answer 42

1/2% of taxes due PER MONTH capped at 25%

Question 43

Estimated taxes

Answer 43

If under 150k, lesser of 90% of current year's taxes OR 110% of previous year's taxes You can choose either if over 150k

Question 44

Who files and what are the exceptions

Answer 44

Don't file if income is less than standard deduction plus exceptions UNLESS 1) >$400 self employment income 2) =>$110 if church income (if it doesn't pay SS) 3) rcv'd advance income credit from ER