4. Tax Planning Flashcards
Tax bills are introduced in the ___________________ and are referred to the ________________.
Tax bills are introduced in the House of Representatives and are referred to the House Ways and Means Committee.
Which is Cash-Method Accounting & which is Accrual-Method Accounting?
Income is reported in the year the taxpayer receives the income rather than in the year the income was earned.
Income is reported in the year the taxpayer earned it.
Cash-Method Accounting: Income is reported in the year the taxpayer receives the income rather than in the year the income was earned.
Accrual-Method Accounting: Income is reported in the year the taxpayer earned it.
Net income from business such as sole proprietor, S-Corp, partner in LLC or partnership.
Qualified Business Income (QBI)
It is interest, STCG and non-qualifying dividend income minus investment-related expenses.
Net Investment Income (NII)
Qualifying Child Dependency Exemption must pass which test?
A Relationship Test, Sn Age Test, An Abode Test & A Support Test
Non-business bad debts are deductible as a short-term capital loss (subject to $3,000/year limitation).
Upon Section 1244 stock (Small Business stock) becoming worthless, each shareholder may deduct up to $50,000 ($100,000 on a joint return) as an ordinary loss.
None
C-Corp/Partnership & S-Corp
________ can NOT own a _______ but a _______CAN own stock in _______.
C-Corp/Partnership can NOT own a S-Corp but a S-Corp CAN own stock in C-Corp.
S-Corp income must be allocated based on the __________ on a daily basis (no special allocations are permitted). Partnership income must be allocated based on __________, with special allocations being permitted.
S-Corp income must be allocated based on the percentage of stock owned on a daily basis (no special allocations are permitted). Partnership income must be allocated based on the partnership agreement, with special allocations being permitted.
An S-Corp may elect a maximum ___-month deferral if it agrees to make a special tax payment each year.
3-month
The accumulated earnings tax rate is __% on excess accumulated earnings above the $250,000 threshold ($150,000 for a personal service corporation).
20%
If a tax-exempt organization has unrelated business taxable income (UBTI) exceeding $______ in 2022, it must pay income tax on that income.
$1,000
If sale of gifted asset is _______ the donor’s basis, the donor’s basis is used to calculate the gains AND will inherit the donor’s holding period.
If sale of gifted asset is _______ the donor’s basis, the fair market value (FMV) on the date of the gift to calculate the gains AND use the date of receiving the gift as the start of the holding period.
If sale of gifted asset is ________ the donor’s basis and the FMV on the date of the gift, there will be no loss/gain and the holding period is a non-factor.
If sale of gifted asset is ABOVE the donor’s basis, the donor’s basis is used to calculate the gains AND will inherit the donor’s holding period.
If sale of gifted asset is BELOW the donor’s basis, the fair market value (FMV) on the date of the gift to calculate the gains AND use the date of receiving the gift as the start of the holding period.
If sale of gifted asset is IN BETWEEN the donor’s basis and the FMV on the date of the gift, there will be no loss/gain and the holding period is a non-factor.
Office furniture, equipment, machinery
Cars, trucks, computers
7-year MACRS depreciation
5-year MACRS depreciation
Residential Rental Property Depreciation (80%+ income from rent): ____ Years
Non-Residential Real Property Depreciation: ____ Years
Must use straight-line method
27.5 Years
39 Years
If the following items are used more than __% of the time for business purposes, use MACRS. If less than __%, use Alternative Depreciation System (ADS). Those Listed Property items are:
Automobiles
Computers and Peripheral Equipment
Cell Phones
Property generally used for purposes of entertainment, recreation, or amusement
50%
Depreciable Section 1231 business property receives ______ treatment on a gain from sale and ________ treatment if the sale results in a loss.
*Depreciable Section 1231 business property receives capital gain treatment on a gain from sale and ordinary loss treatment if the sale results in a loss.
The amount of Unrecaptured 1250 gain that is attributable to depreciation is taxed at a rate of __%.
25%
Non-business bad debt losses are deductible as ___________.
Short-Term Capital Losses
To qualify for non-recognition of gain treatment in an involuntary conversion, the converted property generally must be replaced within _______ years after the close of the first taxable year in which any part of the gain upon the conversion is realized.
Two Years
Exchanges of property between related parties are not like-kind exchanges under the current law if either party disposes of the property within _____ years of the exchange.
Two Years
