Taxes Flashcards Preview

Series 7 > Taxes > Flashcards

Flashcards in Taxes Deck (33):
1

Progressive tax

Variable rate, low income - low rate, high income - high rate

2

Regressive tax

Flat rates, everyone pays the same

Gas, alcohol, tobacco taxes

3

Long term cap gains tax rate

15%, unless income 400k or more, then 20%

4

Capital losses

An investor can claim 3k each year as a write off, can be carried over

5

Qualified dividends

Taxed at 15%, cash dividends received on stock held more than 60 consecutive days

6

Wash sale rule

If stock sold at loss, cannot by same stock for 30 days prior or after sale and claim the write off

Can't use convertibles, warrants, rights or options of the same stock either.

Can use preferred of the same stock or bonds of the same company.

7

Tax bond swap

Sell a bond at a loss, but a different bond of another issuer to improve portfolio and get write off, must have at least 2 of 3 differences
Issuer, coupon, maturity

8

Corporate taxes

70% of cash divs are tax free, if company owns 20% or more of the company

9

Gift taxes

14k annual gift exclusion, lifetime exclusion 5.43mm

Actual gift tax is 40% (amounts beyond the exclusion

10

Gifting securities

Recipient assumes donor's cost basis - that is, they are on the hook for the capital gains taxes

11

RMD

Must begin April 1st year after 70.5, otherwise 50% penalty

12

Taxes on non-qualified plans

LIFO

13

Keogh plan

Self employed income, max contrib 20% gross but no more than 53k

14

Ira contribs

$5500, if over 50 1k catchup

15

Ira assets

US mint coins and securities

Cannot include - commodities, stamps, coins or LI

16

Ira w/d exclusions

1st time home buyers, college, qualified medical expense

17

Roth w/d

Held at least 5 yrs and 59.5 age

18

Education (Coverdell) savings acct ESA

Roth-like, annual 2k contrib for kids under 18,tax free if used for educational expenses, must be used before age 30 or rolled to another family member, if not 10% penalty

19

529 contrib

14k annual or 5 yr accelerated 70k

20

SEP

Simplified employee pension, ER contribs (pretax) fully vested, max contrib 53k or 25% gross income whichever is less

21

Simple

100 ee's or less, no other plan, pretax contribs from ER and ee, max contrib $12,500, plus 3k 50yr catch up

ER contrib 3% or 2%

22

403b

Public schools and non-profits, ee contribs 18k, ER 35k total of 53

6k catch up

23

ERISA

Employee retirement income security act 1974, covers qualified plans, participation, vesting, funding, communication, and non-discrimination

24

401k

18k ee, 35k ER, total of 53k, 6k catch up

25

Profit sharing

ER contribs only, required to contrib specific% of corp profits, max 53k

Contribs are discretionary

26

Money purchased plan

See profit sharing except MPP is mandatory contrib

27

ESOP

Similar to profit sharing, except cash used to purchase stock

28

Non-qualified corporate plans

Ee defers taxes and ER defers deductions

29

R/O

Must be completed w/in 60 days to avoid taxation, 1 yr wait btwn r/o's

Trustee to trustee transfer does not count

30

HSA

Must have high deductible plan, can't be covered by Medicare, tax fre w/d if for qualified medical expenses, otherwise 20% penalty

31

How are bonds taxed?

Ordinary income on interest, LT/ST cap gains if sold before maturity

No cap gains if held to maturity

32

Accretion

Used on discount bonds, pay ordinary income tax on annualized interest earned, need to add what you get back to your basis, see example

33

Amortization

Used for premium bonds, tax write off for annual losses on a premium bond, cost basis reduced each yr by amount of annual write off, used as deduction from ordinary income