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Regulation > Additional Notecards 1 > Flashcards

Additional Notecards 1 Flashcards

1
Q

Regulation D requires that the issuer take reasonable steps to:

A

see that the purchasers of the exempt offering are not underwriters and are buying for investment

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2
Q

Regulation D: Rule 504

A

Securities up to 1,000,000 sold in a 12 month period

Only to accredited investors

Notify SEC within 15 days of the first sale of securities

*general solicitaiton allowed under 504

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3
Q

Regulation D: 506

A

Private placement of an unlimited dollar amount of securities

Private placement is appropriate under 506

35 nonacreddited investors who are sophisticated. unlimited accredited

notify SEC within 15 day rule

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4
Q

Regulation D: 505

A

Up to 5,000,000

Sold during 12 month period

up to 35 nonaccredited investors

SEC notificaiton in 15-day requirement

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5
Q

Main distinction between subchater S corporations and subchapter C corporations:

A

tax treatment

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6
Q

A C Corporation can contract in its own name with:

A

shareholders and third parties

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7
Q

If the corporation goes public

A

There are substantial costs of compliance with federal securities laws

May be suject to hostile takeover

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8
Q

Statutory close corporation status allows:

A

shareholders to have limited liability

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9
Q

De facto corporation

A

Formed in fact but has not been formed properly under the law

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10
Q

De jure corporation

A

Has been formed correctly in compliance with the incorporation statute

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11
Q

A corporation and a limited partnership may be crated only under:

A

a state statute and each must file a copy of its organizational document with the proper governmental body

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12
Q

Authorized stock

A

Amount permitted to be issued in the Articles of Incorporation

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13
Q

Stated capital

A

Number of shares issued * par value

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14
Q

Earned surplus (retained earnings)

A

Cumulative amount of income (net of dividends) retained by the corporation during its existence or since a deficit was properly eliminated

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15
Q

Capital surplus

A

Entire surplus - earned surplus

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16
Q

net assets

A

excess of total assebs over total debts

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17
Q

surplus

A

excess of net assets over stated capital

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18
Q

Noncumulative preferred stock

A

If the dividend is passed, it will never be paid

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19
Q

Callable (redeemable) stock

A

May be redeemed at a fixed price by the corporation

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20
Q

Debenture is instrument for long-term ________ debt

A

unsecured

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21
Q

Bond is instrument for long-term _______ debt

A

secured

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22
Q

A corporation my resell what shares without regard to par value

A

treausury shares

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23
Q

Illegal acts

A

violation of statute or public policy

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24
Q

ultra vires acts

A

mrely beyond the scope of the corporate powers

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25
Q

Corporations and crimes

A

Corporations can be found liable for crimes

directors can face prison sentences for crimes committed by their corporations

employees can be found guilty of crimes they commit while working for their corporation

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26
Q

Business judgment rule

A

As long as director is acting in good faith he will not be liable for errors in judgment unless he is negligent

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27
Q

How can the Articles of Incorporation be ammended?

A

By the shareholder’s vote…not by board of directors

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28
Q

Who selects the officers?

A

directors

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29
Q

Corporation may indemnify directors:

A

true

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30
Q

Who elects the directors?

A

shareholders

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31
Q

Preemptive right of shareholders

A

Right to subscribe to new issues of stock (at fair market value) so that a stockholder’s ownership will not be diluted without the opportunity to maintain it

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32
Q

Merger

A

Union of two corporations where one is absorbed by other

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33
Q

Consolidation

A

Joining of two (ore more) corporations into a single new corporation

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34
Q

Short form merger

A

Parent corp is acquiring subsidiary of which the parent owns 90% ore more of the subsidiary

No vote required by either the parent or subsidiary shareholders

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35
Q

Majority shareholders owe a fiduciary duty to their corporation

A

TRUE

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36
Q

Derivative action

A

When a shareholder, or group of shareholders, sue on behalf of the corppration a director or corporate officer for damages caused to the corporation

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37
Q

Dissociation

A

When a partner is no longer affiliated with the partnership

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38
Q

Dissolution

A

The process of ending a partnership

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39
Q

Limited partner is not allowed:

A

to participate in the running of the business

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40
Q

Winding up

A

the liquidation of a partnership

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41
Q

Ultra vires (latin)

A

An action that goes beyond the power or the authority of the corporation.

Such actions violate the fiduciary duty of obedience

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42
Q

general standard of care for a bailee

A

reasonable care

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43
Q

standard a common carrier is held to as a bailee

A

strict liability

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44
Q

Are common carriers liable for acts of theft by unknown people?

A

yes

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45
Q

computer software:

A

is generally copywrightable

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46
Q

What protects computer technology rights?

A

Both copyright law and patent law

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47
Q

Copyright is valid when author puts work in:

A

tangible form

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48
Q

Duration of copyright

A

Life plus 70 years

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49
Q

Tenancy in common

A

A concurrent interest with no rights of survivorship (interest passes to heirs)

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50
Q

Joint tenancy

A

A concurrent interest with all rights of ownership going to the surviving joint tenants

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51
Q

Easement

A

Right to enter another’s land and use it in a limited way

ex. utility companies

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52
Q

Tenancy by default

A

Not a recognized interest in real estate

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53
Q

Marketable title

A

one tht is reasonably free from doubt

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54
Q

Quitclaim deed

A

Conveys only whatever interest in land the grantor has

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55
Q

Recording a deed

A

gives constructive notice to the world of grantee’s ownership

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56
Q

Notice-type statute

A

A good-faith purchasers, whether she records or not, wins over previous purchaser who did not record before that subsequent purchase

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57
Q

Race-notice statute

A

The subsequent bona fide (good faith) purchaser wins over a previous purchaser only if he also records first

example:

X sells some property to Y and then to Z, a good-faith purchaser. After the sale to Z, Y records the purchase and then Z. Y wins in a state having a race-notice statute, Z wins in a state havinga notice-type statute

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58
Q

Under a race statute

A

The first to record the deed wins

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59
Q

Adverse possession

A

Possessor of land who was not owner may acquire title if he holds it for the statutory period

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60
Q

Necessary elements of adverse possession

A
  1. open and notorious posession
  2. hostile possesion
  3. actual possession
  4. continuous possession
  5. exclusive possession
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61
Q

Take subject to the mortgage

A

The buyer accepts NO liability for mortgage and seller is still primarily liable

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62
Q

Novation and mortgages

A

Occurs when purchaser assumes mortgage and mortgagee (lender) releases in writing the seller from the mortgage

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63
Q

Right of redemption (foreclosure)

A

Affords mortgagor one last chance the redeem property

Pays off loan within statutory period

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64
Q

Tenancy at will

A

Property is leased for indefinite period of time

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65
Q

If premises of apartment building are destroyed:

A

No fault of either party, then contract is terminated

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66
Q

Constructive eviction

A

Allowing conditions which make property unusuable if lessor is liable for condition of premises

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67
Q

Bailor

A

Party who gives her goods to another to hold

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68
Q

Deed

A

A written instrument tha transfers ownership of real property

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69
Q

Fair use doctrine

A

Allows copyrighted material to be used without paying royalties

education, news, other not-for-profit purposes

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70
Q

Mortgagee

A

The party with the security interest in the real property

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71
Q

Tenancy by the entirety

A

A type of co-ownership of real property that is only available to married couples.

Helps to protect the property from claims of individual creditors

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72
Q

Title insurance

A

Insures against defects of title of the real property

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73
Q

What kind of forms of tenancy will be created if a tenant stays in possession of the leased premises without the landlord’s consent, after the tenant’s one-year written lease expires?

A

Tenancy at sufferance

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74
Q

What rights are given to a lessee of residual property?

A

Covenant of quiet enjoyment

An implied warranty of habitability

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75
Q

When does a mortgagor hae a right to redeem the mortgage property

A

After default and before a judicial sale by payment of all principal and interest due on mortgage note

Only if all mortgages are paid in full prior to judicial sale

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76
Q

X owns a building and assigns the rents to Y

A

The rents remain taxable to X, even though the rents are received by Y

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77
Q

Exclusions vs. deductions

A

Exclusions are income items which are not included in gross income

Deductions are amounts that are subtracted from income to arrive at adjusted gross income or taxable income

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78
Q

Deductions for AGI (above the line)

A

amounts deducted from gross inome to arrive at AGI

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79
Q

Itemized deductions (below the line)

A

amounts deducted from adjusted gross income to arrive at taxable income

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80
Q

Mr. Jones purchased an annuity contract for 3,600 that will pay him 1,500 per year beginning 2014. His expected return under the contract is 10,800.

A

Mr. Jone exclusion ratio is 3,600/10,800 = 1/3

Mr. Jones will exclude 1,500 x 1/3 = 500 and include 1000 in gross income

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81
Q

Group term life insurance premiums paid by employer

A

Are excluded (cost of up to $50,000 of insurance coverage is excluded)

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82
Q

Meals and lodging furnished for the convenience of the employer on employer’s premises

A

are excluded

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83
Q

Employer provided educational assitance (tuition books fees) derived from an employer’s qualified educational assistance program

A

excluded up to maximum of 5,250 a year

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84
Q

Employer payments to an employee for dependent care assistance

A

excluded from an employee’s income for maximum exclusion of 5,000 per year

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85
Q

Qualified adoption expenses

A

If paid by employer excluded from employee’s gross income

maximum exclusion is 13,190 for each child

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86
Q

Worker’s compensation

A

Fully excluded if received for an occupational sickness or injury and is paid under a worker’s compensation act or statute

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87
Q

Punitive damages generaly:

A

included in gross income

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88
Q

Cafeteria plans

A

Employer sponsored benefit packages that offer employees a choice between taking cash and receiving qualified benefits

Employees may select their own menu beneifts

If an employee chooses qualified benefits, they are excluded from the employee’s gross income

If an employee chooses cash, it is includible in gross income

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89
Q

state and municipal bond interest income

A

EXCLUDED

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90
Q

Interest on U.S. obligations

A

Included in income

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91
Q

Series EE US savings bonds

(savings bonds for higher education)

A

That are redeemed by the taxpayer is ecluded from gross income to the extent the redemption proceeds are used to finance the higher education of the taxpayer, taxpayer’s spouse, or dependents

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92
Q

During 2014, a married taxpayer redeems Series EE bonds receiving 6,000 of principal and 4,000 of accrued interest. Assuming qualified higher educaiton expenses total 9,000

A

Acrued interest of 3,600 (9,000/10,000 x 4,000) can be ecluded from gross income

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93
Q

Interest on state and federal incoem tax returns

A

included

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94
Q

interest on federal obligations

A

included

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95
Q

interest on state obligations

A

excluded!

96
Q

Interest on a possession of the US (puerto rico commonwealth bonds)

A

tax exempt!

97
Q

Scholarship used for room and board

A

included in income

98
Q

Amounts received that represent payment for teaching or research

A

included in income

99
Q

Bonafide residence test

A

US citizen who is a foreign resident for an uniterrupted period that inlcudes an entire taxable year

100
Q

Physical presence test

A

US citizen or resident present in a foreign country for at least 330 full days in any 12 month period

101
Q

An individual who elects to exclude the housing cost amount can exclude only the lessor:

A
  1. housing cost amount attributable to employer-provided amounts
  2. individual’s foreign earned income for the year
102
Q

Lease improvements and gross income

A

A lessor excludes from income any increase in the value of the property caused by improvements by lessee unless in lieu of rent

103
Q

Life insurance premiums paid by employer

A

Must be included in an employee’s gross income except for group term life insurance coverage of 50,000 or less

104
Q

Tips

A

Included in income:

  1. if 20 dollars or less do not have to be reported to employer but included in individual income
  2. if 20 dollars or more be included in income and notify employer by 10th day of following month
105
Q

Interest on Us obligations

A

included

106
Q

Interest on tax refunds

A

INCLUDED

107
Q

Imputed interest from interest-free and low-interest loans

included or excluded?

A

included

108
Q

Alimony

A

Included in recipient’s gross income and is deductible toward AGI by the payor

  1. made pursuant to a decree of divorce
  2. made in cash and received by or on behalf of the payee’s spouse
  3. terminate upon death of the recipient
109
Q

Alimony recapture

A

May occur if payments sharply decline in the second or third years.

This is accomplished by making the payor report the recaptured alimony from the first and second years as income

  1. recapture for the second year occurs to the extent that the alimony paid in the second year exceeds the 3rd year alimony by more than 15,000
  2. recapture for the first year occurs to the extent that the alimony paid in the first year exceeds the average alimony paid in the second year (reduced by the recapture for that year) and third year by more than 15,000
110
Q

Child support

A

Not treated as alimony

Child support is not gross income to the payee and is not deductible by the payor

111
Q

If both alimony and child support are required, but less is paid than required:

A

amounts are first allocated to child suppport, with any reminader allocated to alimony

112
Q

If a specified amount of alimony is to be reduced upon the happening of some contingency relating to a child

A

then an amount equal to the specified reduction will be treated as child support rather than alimony

113
Q

Social security

A

Up to 50% of social security may be included in gorss income

AGI + tax exempt income + 50% of ss benefits

  • threshold 25,000 for all other taxpayers

Take lesser of 50% of benefits

or 50% of excess of the taxpayer’s provisional income over the base amount

114
Q

Social security benefits for taxpayers with higher income

A

up to 85% of it is included

115
Q

Rule of thumb with Social security benefits and including them

A

Fully excluded by low-income tax payers (income less than 25,000)

85% of benefits ust be included in gross income by high-income taxpayers (income greater than 60,000)

116
Q

Income in respect of a decdent

A

Must be included in gross income by the person who receives it

117
Q

Nonqualified stock option

A

Included in income when received if option has determinable FMV

ordinary income to employee

118
Q

Prizes and awards are generally:

A

taxable

119
Q

Employee achievement awards

A

Are excluded from an employee’s income if the cost to the employer of the award does not exceed the amount allowable as a deduction (generally 400 - 1600)

120
Q

A refund will be excluded from gross income if an individual:

A

did not itemize deductions for the year the item was paid

121
Q

Gambling winnings

A

included in gross income

122
Q

unemployment compensation

A

must generally be included in gross income

123
Q

52-53 week year

A

Annual period always ending on the same day of the week

124
Q

C corporation may adopt

A

any taxable year

125
Q

personal service corporation must adopt

A

calender year

126
Q

S corporation must adopt a

A

calender year

127
Q

Trust must adopt a

A

calender year

128
Q

Change a taxable year

A

Substantial business purpose and IRs approval are required

test: taxpayer receives at least 25% of gross receipts in last 2 months of selected year and this has happended 3 consecutive years

129
Q

Cash method

A

Recognizes income when first received or constructively received

Expenses are deductible when paid

Constructive receipt means that an item is unqualifiedly available without restriciton (interest on bank deposit is income when credited to account)

130
Q

An entity if every year it has average annual gross receipts of $5 million or less for any prior 3 year period and does not have inventories for sales to customers

A

can use cash method

131
Q

Small business taxpayer with annual gross receipts of $1 million or less for any prior 3 year period

A

can use cash method

132
Q

When is expense deductible for accrual method

A

All events have occured that establish the fact of the liability and the amount can be determined with reasonable accuracy

Not satisified until economic performance has taken place

133
Q

Recurring items of expense

A

Exception to the economic perforance rule

Treats recurring items of expense as incurred in advance of economic performance provided

134
Q

Rents and royalties received in advance:

A

are included in gross income in the year received under both the cash and accrual methods

135
Q

Security deposits

A

Included in income when not returned to tennant

An amount called a “security deposit” that ay be used as final payment of rent is considered to be advance rent and included in income when received

136
Q

gifts or inherritance

A

specifically excluded from gross income

137
Q

What if you receive cash and property or service??

A

Include:

Cash

+ FMV of Cash or services

138
Q

Award for civic achievement

A

Can be exclude from gross income only if:

recipient was selected without any action on his/her behalf

Not required to render substnatial future services as a condition of receiving the award

Designates that the awar be directly transferred by payor to a governmental unit or a tax exempt charitable, educiational or religious organizattion

139
Q

Advance rental payments and lease cancellation payments

A

Both included in income when received

140
Q

Cash basis taxpayer should report gross income:

A

for the year in which income is either actually or constructively received, whether in cash or in property

141
Q

Inventory is generally valued at:

A

cost or market

whichever is lower

142
Q

All ordinary (customary and not a capital expenditure) and necessary (appropriate and helpful) expenses:

A

incurred in a trade or business are deductible

143
Q

Busines expenses must be reasonable

A

If salaries are excessive, they may be disallowed as a deduction to the extent unreasonable

144
Q

Uniform capitalization rules (UNICAP)

A

all costs incurred in manfg or constructing real or personal property must be capitalized as part of the cost of the property

ex. interest must be capitalized if debt is incurred to finance the construction or production of property

145
Q

Business meals, entertainment and travel

A

Receipts must be maintained for all lodring expenditures and for other expenditures of $75 or more

except for transportation expenditures where receiepts are not readily available

146
Q

50% reduction rule

A

The amount of the otherwise allowable deduction for business meals or entertainment must be reduced by 50%

147
Q

What kind of dues are deductible?

A

professional organizations, business leagues, trade associations, chambers of commerce

148
Q

Transportatin and travel expenses

A

Deductible if incurred in the active conduct of a trade or business

149
Q

Deductions for business gifts are limited to:

A

$25 per recipient each year

150
Q

Gifts of tangible personal property costing $400 or less

A

are deductible if awarded as an employee achievement award for length of service or safety achievement

151
Q

Gifts of tangible property costing $1600 or less

A

are deductible if awarded as an employee achievement award under a qualified plan for length of service or safety achivement

152
Q

Bad debts

A

Generally deducted in the year they become worthless

153
Q

Nonbusines bad debt Can only be deducted

A
  1. total worthless
  2. as a short-term capital loss
154
Q

Deduction of hobby expenses are limited to:

A

the amount of hobby gross income

155
Q

Hobby expenses are deductible as itemized deductions in the following order:

A

a. first deduct taxes, interest, and casualty losses pertaining to the hobby
b. then other hobby operating expenses are deductible to the extent they do not exceed hobby gross income reduced by the amounts deducted in a. Out of pocket expenses are deducted before depreciation. These hobby expenses are aggregated with other miscellaneous itemized deductions that are subject to the 2% of AGI floor.

156
Q

When is an activity presumed to be for profit:

A

if it produces a net profit in at least 3/5 consecutive years

2/7 for horses

157
Q

Uniform capitalization method must be used by:

A

Manufactuers of tangible personal property

Retailers of personal property with over 10 million in average annual gross receipts for 3 preceeding years

158
Q

UNICAP and inventory

A

If no exceptions met

All costs incurred in purchasing or holding inventory for resale must be capitalized

ex. purchasing, handling, processing, repacking and assembly, and off-site storage

*service costs are immediately deductible*

159
Q

Earl Cook, who worked as a machinist for Precision Corp loaned Precision 1,000 in 2011. Cook did not own any of Precision’s stock and the loan was not a condition of Cook’s employment by Precision. In 2014, Precision declared bankruptcy and Cook’s note receivable from PRecision became worthless. What loss can Book claim on his 2014 income tax return?

A

1,000 short term capital loss

160
Q

NOL may be carried back____ and forward_____

A

carried back two years

First made to second preceeding year

carried forward twenty years

*taxpayer can elect not to carry back and only carry forward

161
Q

Small business

A

Any trade or business with average annual gross receipts of $5 million or less for the 3 year tax period preceding the loss year

162
Q

Deduction for net capital loss in NOL

A

NO

163
Q

deduction for personal and dependency exemptions for NOL

A

NO

164
Q

Business use of home….to be deductible:

A

A portion of the home must be used exclusively and regularly as the principal place of business

or as a meeting place for patients, clients, or customers

165
Q

optional safe harbor method for deductinb business use of home expenses

A

$5 x square footage devoted to business use

limited to business gross income less business expenses

166
Q

Loss deductions incurred in a trade or business, or in the production of income, are limited to the amount the taxpayer has________

A

“at risk”

167
Q

Losses and credits from passive activities

A

May generally only be used to offset income from passive activities

CANNOT offset active income (wages, salaries, professional fees) or

CANNOT offset portfolio income (interest, dividends, annuities, royalties)

168
Q

Passive activity loss example

A

Can offset passive activity loss with income from limited partnership

169
Q

Closely held C corporation

A

5 or fewer shareholders owning more than 50% of stock

170
Q

Personal service corporation

A

An incorporated service business with more than 10% of its stock owned by shareholder-employees

171
Q

Passive activity

A

Any activity that involves the conduct of a trade or business in which the taxpayer does not materially participate, any rental activity, and any limited partnership interest

172
Q

Warehouser (bailee)

A

only liable when negligent

173
Q

Patent infringement includes both:

A

purposeful and inadvertent use of the patent

174
Q

Parties are legally allowed to discover a trade secret through:

A

independent reverse engineering

175
Q

Cash method not allowed for:

A

Accounting for purchase and sales of inventory

C corporations or partnerships with a C Corporation partner

Tax Shelters

Business with average gross receipts > 5,000,000

176
Q

Interest on Series EE bonds

A

Exclunded from income if:

redemption proceeds are used to finance the higher education of the taxpayer, spouse, or dependents

177
Q

Dividends excluded from income

A

Nontaxable stock dividends

Distributions received from an S corporation

Dividends on a life insurance policy

Dividends received from mutual funds investing in tax-exempt bonds

178
Q

Stock on which dividend is paid:

A

must be held for > 60 days during the 121 day period beginning 60 days before the ex-dividend date

179
Q

Nonrefundable deposits for rent

A

included in income

180
Q

State tax refunds if orginially claimed as an itemized deduction

A

included in income

181
Q

Alimony received in cash provided the payments will terminate upon recipient’s death

A

included in income

182
Q

unemployment compensation

A

included in income

183
Q

Federal tax refunds

A

excluded from incme

184
Q

Moving expenses that are deductiblr

A

Airfares

Shipping and temporary storage

Cost of traveling and transportation to new location

185
Q

Rent and Royalty Expenses

DMPI

A

Depreciation

Mortgage Interest

Property Taxes

Insurance and Maintenance

186
Q

Any real estate activity is:

A

a passive activity

187
Q

Rental and royalty properties are considered:

A

passive activties

188
Q

Self employment and retiremant plan contributions

A

May deduct up to lesser of 52,000 or 100% of earned income

189
Q

Traditonal IRA contributions

A

deduct up to 5,500 plus additional 1000 if 50 or over

190
Q

Education Savings Accounts (ESA)

A

Contribute up to 2,000 for each beneficiary

not deductible

distributions not taxable if used for qualified higher education expenses

191
Q

Jury duty deduction

A

When employer pays regular salary to employee during jury duty

employee recognizes both salary and jury duty fees as income

portion of jury duty fees remitted to employer are deducted in calculating AGI

192
Q

Additonal standard deduction allowed when:

A

Taxpayer is 65 or older

Spouse is 65 or older

Taxpayer is blind

Spouse is blind

193
Q

Maximum deduction for charitable contributions

A

50% of AGI

30% if appreciated capital gain property

*nondeductible amounts may be carried forward up to 5 years

194
Q

Gambling losses to extent of winnings

A

can be an itemized deduction

195
Q

Deductible investment expenses

A

Safe-deposit box rent

Subscriptions to investment periodicals

Fees paid to financial advisors

Cost of collecting income

*included in miscellaneous expenses

196
Q

State and local taxes are:

A

deductible

197
Q

NOL from casualty and theft losses

A

Can carry back 3 years instead of normal 2 years

198
Q

Qualifying Child Requirements

RASH

A

Relationship - child stepchild, sibling (or descentnt of any)

AGe - under 19 or under 24 if full time student

Support - child must not provide more than 1/2 of support

H - child must live with taxpayer for more than 1/2 of year

199
Q

Qualifying Relative

4 addtional requirements

A

not qualifying child

gross income less than 3950 exemption

support - taxpayer must provide more than half of dependent’s support

related than taxpaer (closer than cousin) or live in taxpayer’s household for a year

200
Q

Credit for Elderly or Disabled

A

Allowed for individuals with low income who are over 65 or permanently disabled

201
Q

Child Tax Credit

A

May be claimed for each child under 17

Credit $1,000 per child, but reduced for high-income taxpayers

202
Q

American Opportunity Credit

A

May be claimed for first 4 years of postsecondary education

Credit equals 100% of first 2,000 of tuition and fees plus 25% of next 2,000

Maximum credit 2,500 per qualified famliy member

203
Q

Lifetime Learning Credit

A

May be claimed for tuition and fees not elibilbe for amer opp credit

credit equals 20% of first 10,000 of tuition and fees

Maximum credit 2,000 per family

204
Q

Medicare tax

A

1.45% paid by both on 100% of wages

increased by 0.9% for wages in excess of 200,000

205
Q

FICA tax

A

6.2% paid by both on wages up to base amount (117,000 for 2014)

206
Q

Self employment tax

A

Net earnings from self employment x 15.3%

capped at 117,000

50% of self employment tax is deduction for AGI

207
Q

AMT paid

A

is allowed as a credit (minimum tax credit) that can be carried forward to reduce future regular tax liability

208
Q

AMTI is reduced by exemption amount

A

82,100 for joint filers

52,800 for individuals

41,050 married filing separately

209
Q

Resulting baseamount x tax rate = tentative minimum tax

A

26% x first 182,500

28% x rest

210
Q

Tax payments include:

A

Excess pyaroll taxes withheld

Federal income taxes withheld

Estimated tax payments

211
Q

Penalities for late payment of taxes unless

A

underpayment of year < 1,000

payments >= 90% of current year’s liability

Taxes paid >= 1100% of prior year’s liability

212
Q

Married couples have 2 choices

A

Married filing jointly

Married, filing separately

*must be married as of last day of year

**or date of death if one spouse died during the year

213
Q

Charitable contributions

A

No carryback

5 year carryforward

214
Q

Net operating losses

A

2 year carryback

20 year carryforward

*3 year carryback for theft and casualty or small business federal disaster losses

215
Q

Net capital losses carryback/forward

A

corporations - 3 years carryback and 5 years carryforward

individuals - no carryback and indefinitely carryforward

216
Q

investment interest - individuals

A

no carryback

indefinitely carried forward

217
Q

net passive losses - individual

A

no carryback

indefinitely carried forward, or deducted when investment sold

218
Q

net gambling losses - individuals

A

no carry back

no carryforward

219
Q

Schedule A

A

itemized deuctions

220
Q

Schedule B

A

Interest and Dividend Income

221
Q

Schedule C

A

Profit or Loss from business

222
Q

Schedule E

A

Supplemental income and loss

223
Q

Schedule D

A

Capital Gains and Losses

224
Q

Form 4797

A

Sale of Business Property

225
Q

Schedule 1116

A

Foregin Tax Credit

226
Q

Who must file?

individuals with:

A

Gross income > personal exemption + standard deduction

Net earnings from self-employment >= $400

Gross income > personal exemption (if married filing separately)

227
Q

Claims for refunds: overstatement of income on original return

A

Amended return on form 1040X

Must file within 3 years from when return was filed, or two yerars from payment of tax, whichever is later

Return filed early is treated as filed on due date

228
Q

Statute of Limitations for Taxes

A

Time IRS has to impose additional taxes and penalties on taxpayer

229
Q

Statute of limitations for taxes: simple negligence

A

3 years

230
Q

Statute of limitations for taxes: gross income exclusion >= 25% of income on return

A

6 years

231
Q

Statute of limitations for taxes: fraud or failure to file

A

no limit

232
Q

Recovery Period for Section 1250 property

A

27.5 years for residentialy real property

39 years for nonresidential real property

233
Q

Mid-month convention for 1250 depreciation property

A

Year of purchase and year of sale

Assumed purchased or sold in middle of month of transaction

1/2 month’s depreciation taken regardless of date of transaction

234
Q

Depreciable personal property 1245 recovery period

A

Equipment, office furniture and fixtures = 7 years

Cars, light trucks, computers, and office equipment - 5 years

small tools - 3 years

235
Q

Half year convention for 1245 property

A

Generally required

Assumes assets acquired or sold in middle of tax year

Half-year’s depreciation taken in year of acquisition and in year of sale

236
Q

Mid-Quarter Convention

A

Must be used if >40% of all personal property placed in service during last 3 months of year

  • assumes assets acquird or sold in midle of quarter in which transaction occurs
  • results in 1/8 of annual deduction if property placed in service during last quarter of year
237
Q
A

Regulation (23 decks)

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