1 REG Surgent

Question 1

Max. deductible gift am’t of a corp?

Answer 1

$25 per individual

Question 2

Committees involved in writing tax law:

Answer 2

1. House Ways & Means Committee Report
2. Senate Finance Committee Report
3. Joint Conference Committee Report

Question 3

Contract elements:

Answer 3

1. Agreement
2. Consideration
3. Legal purpose
4. Competent parties

Question 4

Start up cost amortization:

Answer 4

1st yr up to $5000 - org. expenditures > $50k
+ Amortized am’t from 1st month of business
over 15 years

Question 5

AMT

Answer 5

state tax refund - exclusion item

Question 6

Costs capitalized to inventory:

Answer 6

1. DM
2. DL - payroll
3. Direct production
4. Indirect production
5. Service costs - recruiting & securities services

NOT MARKETING

Question 7

Business Judgment Rule

Answer 7

Protect directors from s/h's lawsuits
Applies when:
1. the board makes an informed decision
2. there is no conflict of interest
3. there is a rational basis for the board's decision

Question 8

S-Corp basis

Answer 8

• can never be

Question 9

Workers’ Comp Statute covers:

Answer 9

1. occupational disease

2. employment - aggravated preexisting disease

Question 10

Tax Estimates:

Answer 10

Income of $150k or less:
- 90% CY tax liab., timely pmts.
- 100% PY tax liab.
Income >$150k
- 90% CY tax liab., timely pmts.
- 110% PY tax liab.

Question 11

SM, LLC

Answer 11

disregarded as separate from owner; therefore, can file as a corp. or a disregarded entity

Question 12

When a secured creditor repossesses & sells collateral, the first obligations to be paid are:

Answer 12

the expenses of the sale

Question 13

Draft

Answer 13

a 3 party instrument in which one person (the “drawer”) orders a second person (the “drawee”) to pay a sum certain of money to a third person (the “payee”)

Question 14

Post-dated check

Answer 14

bears only one date

Question 15

Trade acceptance

Answer 15

similar to draft, except “drawer” is also “payee”

Question 16

Promissory note

Answer 16

two-party instrument & involves a promise (rather than an order) to pay

Question 17

Federal Fair Labor Standards Act regulates:

Answer 17

• minimum wage
• overtime
• # of hrs in the workweek (through the overtime requirement)

Question 18

Control groups of a corp

Answer 18

To be a member of an affiliated group:

- must hold at least 80% of corp stock

Question 19

Taxable interest income:

Answer 19

all interest rec’d is taxable unless exempt by law.
Exempt:
- interest on all state & local bonds (“municipal bond interest”)

Question 20

Trust accounting income

Answer 20

Amount an income beneficiary is entitled to receive from the trust; includes both taxable & nontaxable items of income