wiley points Flashcards
1
Q
fee simple
A
max amount of ownership & rights
2
Q
EPA is responsible persons
EPA CANNOT
A
any relation to hazardous waste production; joint and several liability (all or partial liability)
Rank Risk
3
Q
179 exclusion and type pf property
A
related party & only for business property
4
Q
grantor of a revesionary trust who is taxed
A
grantor
5
Q
coal capital mining depletiin rate
A
10%
6
Q
1934 suspension
A
1- less than 300 SH
2 - less than 500 SH & total assets less than 10 milliom over 3 consecutive years
1 or 2 APPLIes only if not traded nationally
7
Q
179 does not include
A
LAND (never included in depreciable property)
8
Q
pmsi preference & grace period
A
noninventory (inventory mist file) filed within a 10 day gface period takes preference over another perfected
9
Q
taxable dividend & property distribution to SH cannot exceed what threshold
A
E&P of a corporation on transaction (property gain fmv-basis)
10
Q
trust income
1) Indirect expenses allocation formula
2) personal deduction amount
3) Capital contributions to corpus - allowed/disallowed
A
1) (ex fees, distributions) allocation of % of taxable versus non taxable income
2) $300
3) allowed
11
Q
1231 specific exclusion & holding period
A
inventory & LT (1year +)
12
Q
179 threshold
A
over 200K dollar for dollar amount reduction of 25K
13
Q
capital gains tax payment
1) 0 - 15 =
2) 25 - 35
3) 39.6
4) Section 1250 gain (MUST BE HELD 1+)
5) Collectibles
6) can they be netted
A
1) 0
2) 15
3) 20
4) 25
5) 28
6) YES
14
Q
Losses are disallowed on sale or exchange of property between individuals who own what % of a partnership
A
50%+
15
Q
Pay to order or bearer versus
I promise to pay
A
1) draft
2) promissory note
16
Q
S corps individual tax returns can recognize loss up to
A
basis zero out OR 3K
17
Q
Contigent Fees
A
not allowed to prepare a tax return ONLY allowed to represent a client in tax examination or US tax court
18
Q
Due Diligence is met by
A
seeking consul NOT obtaining additional accreditation
19
Q
Empowerment Zone Employment Credit
A
1) 20% or 15K of qualified wages from each employee
20
Q
Investment income deduction rules
A
The amount of investment interest deduction for a current year cannot exceed NET investment income
21
Q
Secured creditor has a deficit after sale; rules on collection of the deficit
A
The deficit can be collected after all secured creditors have been paid; the amount paid is allocated by the percentage owed/total amount owed * remainder of cash
22
Q
Check certification
A
equates to acceptance
23
Q
1933
Exemption
Reports needed
Prospectus
A
1) Trucking Company
2) K-10 annual report
3) Required registration materials
24
Q
Shelf registration
A
continuous and future (ex benefit plans)
must be regularly updated
25
Equal Pay & Civil Rights deals with
| Civil Rights does not prohibit
SEX
| AGE
26
1934 act excludes from the definition of securities
CDS
27
Clean water act key word
point source
28
Articles of Incorporation covers
shares issued
29
Private Foundations are not subject to what taxes
ACCUMULATED EARNINGS
30
What level must all tax cases start?
Trail Court (includes Tax Court, District Court,& Federal Claims court)
31
Excluded fro PHC income
capital gains
32
inherited property when sold is treated as gain
LT
33
affliated groups/corporation controllership %
80%
34
consolidated returns
offset abilities
| DONT NEED TO ISSUE CONSOLIDATED FS
35
Bankruptcy involuntary claim leads to
court order of relief
36
agency coupled w/ interest termination
only agent
37
controlling interest/board of directors making personal gains from company transactions are
disallowed & any profit made must be returned to the corporation
38
operational agreements are used to
diffuse conflicts before they begin
39
fees not connected to bankruptcy are prioritized as
unsecured claims
40
who cannot ratify a contract
UNDISCLOSED PRINCIPLE
41
Revised Uniform Partnership Act
partners share in losses based on percentage of profits
42
joint ventures resemble what type of business structure
general partnerships
43
Type of security a bond is
debt security NOT AN INTEREST in entity!!
44
before reorganization plan is confirmed what must be done
provisions for full payment of admin. expenses
45
commingling of funds discludes
corporations taking loans from SHs
46
articles of incorporation versus court ruling
court ruling takes preference
47
perferential treatment time frame and other
| secured preferential
90 days before insolvency & ANTECEDENT DEBTS
| SECURED is not a preference
48
only time debts are not discharged
willful or fraudulent acts by the debtor to obtain the money; negligence is discharged
49
those hired by a buisness - ALWAYS answer
MUST act in business's best interest
50
consolidation and old company status
completely new corporation is formed
51
LLC versus S Corp appreciated property distribution
LLC tax free (same as partnership rules)
| S Corp - taxable to corporation
52
ultra vires
beyond normal scope of activities
53
bankruptcy fees procedures
must be filed and approved by the COURTS
54
effect of piercing corporate veil
shareholders pick up liability
55
lp is disolved when
only gp leaves
56
respondeat superior
employer iis liab'e for employee torts in the scope of buosness
57
director wants to have a transactions with corporation it directs
1
2
3
Either the transaction is fair or it is disclosed and approved by the SHAREHOLDERS or it is known to board and approved by DISINTERESTED members
58
Foreign Corporation
business run in any stare aside from where it was incorporated
59
statutory liens, when can a trustee set aside
when a bankruptcy is filed; anything that exists before cannot be set aside
60
Bankruptcy taxes
any amount preceding 3 years of bankruptcy not discharged
61
type of dividend not considered a distribution
stock
62
lp certificate must show name of
general partners only
63
involuntary petition stops
judgement liens
64
who can't own shares in an s corp
C corp
65
bankruptcy of a corporation is owner liable
no
66
who cannot file for voluntary bankruptcy or be charged with involuntary bankruptcy
railroads
insurance
banks
savings
67
purpose of cumulative voting
let minority shareholders have a say
68
lp profits and losses
based on contribution
69
general warranty
| quitclaim
grantor has most rights nothing is encumbered
| no warranty of title made by the grantor; just interest given
70
tender by a debtor not accepted effects a surety how
releases them
71
lien creditors rights
field warehousing arrangement/ bill of lading/neg. receipts are prefected how
takes preference over unsecured & any secured interests AFTER the lien is attached
filing or TAKING POSSESSION
72
damages for a breach are calculated by
difference between contract price and price AT DATE OF BREACH times units
73
firm offer requirements
merchant to create is own separately written agreement
74
trademarks last versus coptyrights
as long as the company wants them
| authors life +70
75
UCC who bears the risk of loss
look in terms of contract
76
CF SHIPPING
seller loading dock
77
UCC applies to
consumer goods by a nonmerchants
78
co surety is removed what happens to his share of debt
| creditor releasing a cosurety
is removed from debt owed
| cosureties liability is reduced by amount of release party
79
does a mortgage need to be recorded
BUT
reason why it should be recorded
no
to protect 3rd parties from taking possession of it; no record 3rd party automatically gets title
80
1st and 2nd mortgager who has rights
1st mortgager goes 1st
81
trade secrecy law
| fair use doctrine
power to protect intellectual property rights
| minimal copyright protection
82
terms of a lease agreement
parties, amount, term, description, exclusive possession
83
contribution cannot be made
before the loan is paid
84
deed title of real property to transfer (mortgage)
deed delivery to purchaser
85
joint tenanacy versus tenant in common
tenant in common when the other tenants do not consent on the new tenant
86
possessory interest
leases and mortgages; not full title
87
mortgagor
| mortgagee
getting mortgage
| giving mortgage
88
race statue
notice statue
race notice
recording
good faith - no recording
good faith takes perference
89
easement
written permission to use land
90
title insurance policy
only things that are recorded
91
major exception to UCC written contract
possession of goods
92
warranty against infringement protects who ; time frame to disclaim
the seller ; before contract i form
93
warranty of title is excluded when
the seller clearly expresses it does not have the title
94
sale of goods by a creditor when debtor has paid 60% is mandatory for only
PMSI only not business equipment
95
discovering nonconforming goods after delivery
allowed to refuse if in a reasonable time frame
96
do lessees possess insurable interest
yes
97
PMSI defeats personal use good faith purchaser how
filing a financing statement
98
statutory liens take preference against what other creditors
perfected security interests
99
private litigation reforms act
amends 1933 & 1934
100
under common suits the minimum that must be proved
| unforseen 3rd parties
negligence
| gross negligence
101
unemployment to emploer
can take a credit
102
accountants do not need to notify clients of disclosure of records when
the records are outsourced
103
IRC applies to preparers; prepares are defined as
individual or firm who prepares returns for compensation
104
non contributory pension plans
all funds provided by employer
105
exempt issuers traded on the national exchange
must register with 1934
106
auditor is responsible to SEC up until
effect date of registration statement
107
1933 buyer recission
when seller fails to meet disclosure requirements
108
1934 securities not national but need to be reported
10 million in assets 500+ shareholders
109
1933 required filing
prospectus & registration
110
1934 proxy statements
require in conjunction a financial statement to be issued
111
client alters tax return cpa
discontinues relationship
112
penalties for tax return preparers exclude
conflicts of interest & disclosing info to third parties
113
s-1
s-2
s-3
1933
long form
short form
short form
114
not likely to be considered on 1933
General Partnership
115
strict liability is for
manufactured goods/employers for workers comp.
116
foreseen third parties cannot collect due to
NEGLIGENCE
117
accountants common law liability to a CLIENT include
negligence, fraud, breach of contract
118
private reform securities litigation act defendants have what type of liability
proportionate
119
1933 intrastate exemption
| 3 OTHER EXEMPTIONS
80% of business in the state and buyer must be resident
| government banks insurance, certificates issued by bankruptcy trustee
120
common law usually deals with what type of liability
non criminal
121
negligence need not include
RELIANCE
122
1933 stock warrants issuance
required to file
123
preparers declaration
important to remain in tact
124
1933 offerors who must file
issuers, underwriters, dealers
125
1933 exempts what securities
BANK
126
monopoly accusation must have
intent; discludes a superior product
127
cpas are premitted to leave blank on tax return
reasonable grounds exists
128
alimony recapture formula
2nd year = 3rd year - 2nd year -15K
1st year = year 1 - (average year 2 & 3) - 15K - year 2 recapture
Total Recapture = 1year + year 2
129
medical expenses exception ONLY! (DOES NOT APPLY TO FILING STATUS)
can make over 3900 and still claim if more than half support and family relationship
130
exception to IRA proportional phaseout
$200 always deductible
131
qualified education loans include
room & board
132
passive income management rule
deductible 25K up to 100K; in between 100 -150 deductible is reduced by 50%
133
IRA early withdrawal formula
10% penalty tax & higher tax rate
134
rental income excludes
improvements NOT in lieu of rent
135
dependant care formula
35% reduced by # of exemptions * total expenses
136
items excluded from personal NOL
exemptions, capital losses, standard deduction
137
to be a non taxable fellowship candidate
must be using $ for tuition
138
itemized property discludes
special assessment
139
health insurance reimbursements are included in income
no
140
why estimated taxes necessary
not sufficiently covered by withholding
141
no underpayment penalty exists when
1- withheld + estimate payments = 90% of current year TR or 100% of the previous year TR (110% for individuals with AGI 150K+)
142
annualized method versus seasonal method
seasonal only for CORPS
143
nonrefundable credits
adoption
144
general buisness credit carryover
1 year back 20 years forward
145
ss withheld greater than it should be
credit against if from 2+ employers
146
individuals tax rate is applied when
after either SD/itemized deduction is taken & personal exemption is taken * tax rate
147
personal interest itemized? WHAT NOT TO CONFUSE
non deductible (auto loan) PERSONAL PROPERTY TAX IS DEDUCTIBLE (auto related tax)
148
accrual
earned & amount is REASONABLY ACCURATE
149
100 floor trick
applies to all losses
150
filing statue is starts from
whichever is later the due date or the payment date
151
health insurance premium versus other premiums
others are not deductible itemized expense
152
moving adjustment allows
moves for new jobs to stop being unemployed or if the employee is fired
153
spouse dies and has no dependants; filing status
single
154
refund claims
later of 3 years after the due date or 2 years after payment date
155
MACRs formula
type of property determines the years/ time period which to depreciate over
156
charity in land LT versus short term
long term FMV; short term purchase price
157
students can deduct
loans and cash support from parents
158
gross income excludes
COGS and deductions
159
federal income tax
non-deductible for both corps and self-employed individuals
160
interest forfeiture
itemize deduction
161
American opportunity; Hope scholarship credit
only for 1st four years of post secondary
162
fees paid for compensation than remitted to employer
deduction to arrive at AGI
163
limitations on passive activity losses apply to
PHC, individuals, estates, trusts, and CLOSELY held C Corps
164
what is boot
cash and anything that is not considered like property (ex exchange of land for land a bike; bike is boot)
165
like kind exchanges do not apply to what
bonds, stocks, notes, convertible securities, interests
166
```
parent corps (80+) treat sub losses as
qualified small buisness stock gains
```
ordinary losses
| if held for 5yrs+ (not more than 10X original basis) gain can be reduced by 50%
167
when you received stock dividends holding period
same as ORIGINAL STOCK
168
involuntary conversion replacement period
| ADDITIONAL FACT TO CONSIDER
2 tax years after refund is issued
| does not exclude involuntary conversions
169
291 depreciation gains
only for corporate sales
amount of ordinary income (not 1231) *.2 = A (ordinary)
(SP - basis) - A = section 1231
170
wash sales and repurchase rule & LT/ST
the wash sale is added to the repurchase price to determine allowed gain or loss; time period goes back to orginal sale date
171
nonliquidating distribution on stock or property
| Corp.'s gain or loss treatment
gain yes loss DISALLOWED
cash dividend - distrubution no gain
Property dividend (gain) = fmv - basis
172
liquidating distributions
long - term capital loss full amount
173
taxation of dividend to SH
FMV- purchase price (taxable)
174
corp foreign tax credit
foreign taxable income/total us taxable income * US tax
175
S Corps & Partnership pass-through items (not included in corp
0
1 - Capital Gains/Loss
2 - TAX EXEMPT interest income
3 - INVESTMENT interest expense (reg interest exp. nonseperate)
4 - Dividend, interest, royalties income
5 - Depletion (NOT DEP. - DEP IS BUISNESS EXP.)
6 - 179 expense
7 - Charitable Income
8 - Foreign Income
9 - Real Estate & other rental income (rent EXPENSE nonsep)
10- bad debt received that was previously written off
11- misc income divided differently then stated allocation
176
Corps gain on asset with a liability formula
greater of FMV or liability - basis
177
Built in gain formula
unrealized gain (FMV - basis)
178
1244 losses
1 - apply to
2 - requirements
3 - applicable deduction
1 - original stockholder (individuals and partnerships)
2 - 5 years preceding less than 50% of gross receipts
3 - 50K - S/ 100K - M
179
income recognized for inputs to a corporation
1 - cash
2 - services
3 - property
1 - no income
2 - FMV of what is received
3 - FMV - basis
180
corporation recognizes income from
| 1 - property
1 - 80% ownership no recognition; only boot received in recognized
2 -less than 80% (TRANSFERRING PROPERTY OWNERS MUST JOINTLY OWN 80%) ownership transferor basis + gain recognized by tranferor = (FMV - BASIS)
181
M-1 VERSUS M-2
M-1 whats on the tax return
| m-2 per the books UNAPPROPRIATED
182
S Corp Shareholder restriction
only individuals and certain trusts and estates
183
S CORP borrows from a bank, what is shareholder affect
does not affect S/H
184
Redemption treated as dividends versus capital gain
5 qualities preventing dividend treatment
IMPORTANT
```
1- not equivalent to dividend
2- disproportionate (STOCK OWNERSHIP CHANGES)
3- terminates SH interest
4 - noncorp. SH in partial liquidation
5 - payment of death taxes
```
185
PHC tax
| PHC exclusion from income
1 - income at corp rate
2 - undistributed income at a 20% penalty
Capital gains
186
preceding year estimated taxes excludes
years where there is an operating loss
187
C corp to S Corp dates
before/on march 15th - retroactive
| after march 15th - the 1st day after end of C corps FISCAL year
188
recapitalization
bondholders exchange old bonds for stock or new bonds
189
CORP treasurury stock sale treatment
NO GAIN OR LOSS; treated as an additional to paid in capital
190
what entities have NOL
C Corps; trust & estates; npos with ubi
191
at risk loss & passive activity losses limitation applies
at the partner level
192
partnership taxable year is determined by
| EXCEPTIONS
the tax year of the partner owning 50%+ of P&L
Exceptions
maximum deferral period doesnt exceed 3 months
valid buisness purpose with IRS approval
193
gains and losses to partners of a partnership
gains always recognized
| losses not recognized for partners owning over 50%
194
What is a disporportionate distribution?
How does it affect the partner?
Proportionate distribution
applies only to complete liquidation with money, unrealized, receivables or inventory
- partnership doesn't zero out difference is a capital loss
- partnership zeroes out no G/L
195
partnership ; individual partners gain on the land
FMV - basis + SP - FMV * ownership %
196
SCorp versus partnership liabilities
scorp - decreases basis
| partnership only - increases basis
197
partnership ordinary losses effect on partnership
reduces up until basis is zeroed out; remained loss can be carried forward
198
partnership must hold property how long so it won't be subject to built in gains tax
7 years
199
partnership basis in an asset
| partner receives a non-liquidating property distribution
basis ignoring any mortgage
| use BASIS not FMV
200
S Corp consent rules
termination - 50%
| beginning - 100%
201
S Corp Tax liability lesser of
realized gain or built in gain
202
50% owner of an S Corp can recognize what type of losses
only losses related to nonseperately stated items
203
Trust and estate SD
NONE its an exemption
204
trust DNI taxable
whatever is distributed not taxable to trust
| whatever DNI received is taxable to beneficiary (only DNI taxable)
205
whose taxed in a trust
person who has the power to REVOKE
206
NOL and DRD versus charitable
DRD is added to NOL
| Charitable is not included in NOL
207
advertising cost amortization period
not amortized expensed as business
208
executive pay $1 million cap
publicly held C Corps
209
installement estimated payment
| time frame to pay
preceding and current BOTH 100%
| 4 months 15 days after year end
210
Current negative E&P if distrubution made halfway through the year formula
allocate half the negative E&P the accumulated; this is the amount that can be distributed
211
E&P GAINS AND LOSSES
REMEMBER TO FACTOR INTO E&P
212
qualified and ordinary dividends
same thing
213
organizational expenses
legal, accounting, filing
214
articles of incorporation amended by
shareholders
215
Like kind Exchanges
1 - realized
2- recognized
3 - basis of new
1 - FMV new (+boot/-liability assumed) - basis old
2 - lesser of realized or FMV of boot (no loss) BOOT isn't netted
3 - basis of property given up + recognized gain + boot paid - boot received
216
accumulated earnings tax and federal income
allowed to deduct federal income tax
217
distribution
current earnings
accumulated earnings
1 - pro rata
| 2 - chronological (beginning with the earliest distribution)
218
not considered 193 security
gp interest not warrant
