Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

REG > Becker REG 1 > Flashcards

Becker REG 1 Flashcards

1
Q

What is Gross Income made up of?

A

BIP WID SAC SO RUK

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What are ADJUSTMENTS to GI?

A

HE SIT MIA SE-FICA, SE-Health, SE-Retirement

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What are itemized deductions?

A

CIT MCM O

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

ID - Charity?

A

up to 50% of AGI

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

ID - Medical and Casualty/theft?

A

in excess of 10% of AGI

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

ID - Misc deduction?

A

in excess of 2% of AGI

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Define “Principal residence for dependent child”?

A

Maintain household for WHOLE taxable year, principal place home, AND entitled to the dependency exemption for child(s).

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Define “HoH” for dependent son/daughter, parents, or relatives?

A

Must be MORE than 1/2 taxable year

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Required time period for Widow/widower?

A

WHOLE year

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Required time period for HoH?

A

HALF a year (more than)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Who is required to live/not live with HOH?

A

Children/relatives = Yes

Parents = No

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

If a person is born or dies during the year, are they entitled to a personal exemption?

A

Yes, both.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What is non taxable income? (for dependent relatives)

A

SSB
Tax-exempt interest income (state and municipal)
tax-exempt scholarships

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Define Custodial parent

A

Time test, parent who has custody for greater part of the year

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Does it matter if the custodial parent provided more than 1/2 of the child’s support?

A

No

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

If the parents had equal (physical) custody during the year, who can claim the child?

A

Parent w/higher AGI.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Qualifying Relative.

If more than 2 people contribute to equal more than 50% of the support, what’s the lowest each can contribute plus must meet all other qualifications?

A

10% of person’s support

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Who gets an increased standard deduction?

A
  1. Old (age 65 or older)

2. Blind

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

What is the increased standard deduction amount?

A

$1,550 - unmarried

$1,250 - married

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

What basis should be used for non cash income?

A

FMV of the property or services received

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Define realization

A

Requires the accrual or received of cash, property, or services, or ah change in the investment

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Define recognition

A

Realized gain must be included on tax return

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Define Portfolio income

A

interest and dividends

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Define passive income

A

Activity taxpayer did not actively participate in.

Ex. 1. rental and royalties
2. beneficiaries of trust and investments in Ptrns, LLC, and S Corps (anything with a K-1)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

Define Capital Income

A

income from sales of capital assets, typically personal or business property.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

What are the 4 types of income?

A

P O P C

Portfolio
Ordinary
Passive
Capital

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

SE expenses on Sch C?

A
  1. COGS
  2. Salaries and commissions paid to others
  3. State and local bus taxes paid
  4. Office eps - supplies, equip, rent
  5. Actual auto expenses OR standard mileage rate
  6. Business meal and entertainment expenses at 50%
  7. Depreciation of bus assets
  8. Interest exp on bus loans
  9. EE benefits
  10. Legal and prof secs
  11. Bad debts write off by accrual basis taxp. (FYI - direct write off method is used for tax purposes)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

SE nondeductible expenses on Sch C?

A
  1. Salaries paid to sole proprietor
  2. Fed income tax
  3. Personal portion of auto, meals, interest exp, state local taxes, health ins of sole prop.
  4. bad debt expense of a cash basis taxp.
  5. charitable contributions
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

What are the two taxes on Net Business Income?

A
  1. Income tax

2. Federal SE tax.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

What happens to net taxable loss for a business?

A

2 year carry back

OR

20 year carry forward

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

What must a SE capitalize as inventory?

A

DM, DL, factory overhead

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

What must a SE expense as a period cost?

A

SG&A and R&D

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
33
Q

What method is required to determine income for LT contracts?

A

% of completion method required for tax for non-exempt LT contracts

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
34
Q

What types of LT contracts are exempt and may use other methods?

A
  1. Small contractors - projects
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
35
Q

What is the production period start date?

A

Cash basis - date on which the contractors incurs cost (besides startup engineering and design)

Accrual basis - LATER of date on which the contractors incur costs OR on the date the taxpayer has incurred at least 5% of the total costs estimated under the contract.

36
Q

What is the production end date?

A

Date on which the work under the contract is compete OR

date the taxpayer has incurred at least 95% of the total costs expected under the contract.

37
Q

Calculate cost to cost method

A

Cumulative costs to date / total expected costs for contract

38
Q

Calculate GI recogn

A

Take C2C % x contract price - amount of income previously recognized

39
Q

What else must use % of completion method?

A

Alternative Minimum Tax

Corp earnings and profits

40
Q

Is the income recognition method on a contract deemed be an accounting method?

A

Yes, therefore, requires IRS consent to change.

41
Q

What schedule is farming used on?

A

Sch F.

42
Q

What inventory valuation methods are acceptable for accrual basis farmers?

A

Cost
Lower of Cost or Market
Farmer-priced method
Unit-Livestock-price method

43
Q

What is farmer-priced method?

A

MP - disposition cost

Generally must be used for all items inventoried except for any livestock valued using the unit-livestock-price method

44
Q

Define unit-livestock-price method

A

Uses a value for each livestock class at a standard unit price for animals within a class

45
Q

Calculate Gross profit of farmers under accrual method

A

GP = net sales + EB inventories - BB inventories - inventories purchased

46
Q

When should gains and losses on disposition of property be recorded?

A

Trade date

47
Q

Formula for G/L realized on disposition of property

A

Amount realized - Adjusted basis of asset sold = G/L realized

48
Q

Are roth IRA distributions taxable?

A

No

49
Q

What type of income is IRA income?

A

Ordinary

50
Q

What is the tax penalty for premature distribution?

A

10%

51
Q

What are exceptions to the Penalty tax?

A

HIM DEAD

52
Q

Define H in IRA distribution

A

Home buyer - 1st time, $10K max and must buy within 120 days of distribution

53
Q

Define I in IRA distribution of acronym

A

I - Insurance (medical) - unemployed 12 consecutive weeks and SE

54
Q

Define M in IRA distribution of acronym

A

M - Medical expenses in excess of 10% of AGI

55
Q

Define D in IRA distribution of acronym

A

D - Disability - permanent

56
Q

Define E in IRA distribution of acronym

A

E - Education- college tuition, books, fees.

57
Q

Define A in IRA distribution of acronym

A

A - and (filler)

58
Q

Define I in IRA distribution of acronym

A

D - death

59
Q

What are excess contributions to IRA subject to?

A

6% excise tax each year until the excess is corrected

60
Q

Annuities - GR?

A

Investment amount / factor representing the # of months over which the investment will be recovered

Amt calculated is not taxable.

61
Q

What Schedule is used to calculate RENTAL INCOME?

A

Sch E

62
Q

What is rental income?

A 
Rental RE income
Royalties
Ptnership and LLC
S Corps
Estates
Trusts
63
Q

Formula for net rental income

A 
Gross Rental Income
Ppd rental income
Rent Cancellation Payment
Improvement in-lieu-of rent
(RENTAL EXPENSES)
Equals net rental income/loss
64
Q

How is a vacation home rented for LESS than 15 days treated?

A
  1. Personal Residence
  2. Rental income excluded from income
  3. Mortg interest and RE taxes are itemized deductions
65
Q

How is a vacation home rented for 15 days or MORE treated?

A
  1. personal/rental residence

2. Expenses must be prorated between personal and rental

66
Q

What happens to PAL when property is sold?

A

Becomes fully deductible

67
Q

Which taxpayers are subject to PAL rules?

A 
Individuals
Estates
Trusts
Personal Svc Corps
Closely held C corps
68
Q

What is the mom and pop exception for PAL?

A
  1. May deduct $25k of PAL from rental RE if actively participating
  2. Carryforward indefinitely - and estate can carry for 2 years after dependent’s death
  3. Phaseout - $25k allowance is reduced by 50% of excess of AGI over 100k. Allowance eliminated completely when AGI > $150K
69
Q

What is a RE Professional under PAL exceptions?

A

Two conditions to meet, then taxpayer can fully deduct losses from rental activities against other income:

  1. More than 50% of the taxpayer’s personal secs during the year are performed in RE business
  2. Taxpayer performs more than 750 hours of sac in RE business during the year.
70
Q

Define SSI Low Income

A

No SS benefits are taxable

71
Q

Define SSI lower middle income

A

Less than 50% of SS bene are taxable

72
Q

Define SSI upper middle income

A

Between 50% and 85% of SS bene are taxable

73
Q

Define SSI upper income

A

85% of SS bene are taxable

74
Q

What are taxable misc income?

A
  1. Prizes and awards
  2. Gambling winnings and losses
  3. Business recoveries
  4. Punitive damages
75
Q

What are partially taxable misc income items?

A

Scholarships and fellowships - excludable up to amounts spent on tuition, fees, books, and supplies.

Non degree seeking student = fully taxable

76
Q

What are non-taxable Misc Items?

A
  1. Life Ins proceeds
  2. Gifts and inheritances
  3. Medicare benefits
  4. Medical benefits
  5. Workers comp
  6. Personal injury or illness award
  7. Accident insurance - premiums paid by taxpayers
  8. Foreign earned income exclusion - must be resident for entire taxable year OR physically in foreign country for 330 full days out of any 12-consecutive-month period
77
Q

Define non qualified EE stock option

A

Taxed when ranted if the option has a readily ascertainable value when granted. Otherwise, option is taxed when exercised.

78
Q

Define “readily ascertainable value”

RAV

A
  1. traded on established market

OR

  1. If all below are met
    Transferable, exercisable immediately in full when granted, no conditions/restrictions, FV is readily ascertainable.
79
Q

What is EE taxation - RAV

A
  1. EE recognizes ORDINARY in year granted. if there is cost to EE, value - cost
  2. No taxation on date of exercise.
    BASIS of stock = exercise price + amy previously taxed on the date of grant. Any future sale of stock could result in Capital g/l.
  3. Holding period begins w/exercise date
  4. If EE allows options to lapse, there is a capital loss based on the value of the options previously taxed.
80
Q

What is EE taxation WITHOUT RAV

A
  1. Taxable event is exercise date, not grant date
  2. EE recognizes ordinary income at FMV less amts paid for option
  3. Holding period begins with the exercise date
  4. If option lapses, no tax consequences.
81
Q

ER taxation on EE stock options?

A

ER deductions value of stock as business expense

82
Q

What are the TWO qualified EE Stock options?

A
  1. Incentive Stock Options

2. EE stock purchase plan

83
Q

Who gets incentive stock options?

A

Key EE and is a right to purchase the stock at a discount

84
Q

What are the requirements of ISO?

A

1, Granted under a plan approved by shareholders, that sets total number of shares that may be issued and who may receive them

  1. Must be granted w/in 10 years of EARLIER of the date when the plan was adopted or approved
  2. Exercise price may not be less than the FMV of the stock at the date of grant
  3. EE may not own more than 10% of voting power of corp, parent, or sub as of the date of grant
  4. Stock must be held at least 2 years after grant date and at least one year after the exercise date.
  5. EE must stay from date of option granted until 3 months before the option is exercised.
85
Q

EE Taxation on ISO and ESPP

A

Generally no taxation.

Basis = exercise price + any amts paid for the option

Subsequent G/L = capital, if holding period not met = ordinary income

EE may exercise up to $100k in a year.

Excess of FMV of the stock on the exercise date less purchase price is a preference item for AMT.

86
Q

ER taxation on ISO and ESPP?

A

No tax deduction since it is not considered compensation income to EE.

87
Q

Requirements for EE Stock Purchase Plan?

A
  1. Must be written and approved by shareholders
  2. Cannot grant options to EE who has more than 5% combined voting power of corp, parent, or sub.
  3. All FT EEs
  4. Exercised price may not be less than 85% of FMV on grant or exercise date
  5. Cannot be exercised more than 27 months after the grant date
  6. No EE can purchase more than $25K/year
  7. Stock must be held at least 2 years after grant date and at least 2 year after exercise date
  8. EE must remain from date option is granted until 3 months before the option is exercised

REG (21 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions