Chapter 1

Question 1

What portion of life insurance proceeds is taxed?

Answer 1

Death benefit (insurance policy amount) 150,000 % yearly payout 15 = Return of principal 10,000. Anything over this is taxed.

Question 2

CARES

Answer 2

Close: Child or Sibling
Age: 19/24=college
Residency: Live with parent 1/2 year
Eliminate income
Support: 1/2 supported

Question 3

SUPORT

Answer 3

Support: 1/2 supported
Under: $3,900 taxable income
Partners: NO joint returns
Only US citizens
Take Advantage: Relative or random person that lives with you the WHOLE year

Question 4

Exceptions to IRA early withdraw penalties

Answer 4

H: First time Home buyer
I: Medical Insurance
M: Medical Expensesin excess of 10% AGI
D: Disability
E: Education
And
D: Death

Question 5

Does an university sponsored research project count as income?

Answer 5

Yes

Question 6

What income is subject to self-employment tax?

Answer 6

Guaranteed payment from services rendered to a partnership

Question 7

additional standard deduction

Answer 7

individual must be age 65 or older or blind by the end of the tax year.

Question 8

itemized deductions for alternative minimum tax

Answer 8

Medical expenses (exceeding 10% of AGI)
Qualified housing and residence interest
Charitable contributions (no difference)
Traditional IRA contributions
One half of the self-employment tax
Passive activity losses.
Individual taxpayer net operating losses.
Remove state tax from income -> not a deduction

Question 9

casualty loss itemized deduction

Answer 9

Smaller loss (lesser of cost or decrease in FMV) 
Less: Insurance Recovery 
Less: Floor Amount of $100
Less: 10% of AGI
  = Deductible Loss

Question 10

section 1244 small business stock

Answer 10

When a corporation’s stock is sold or becomes worthless, an original stockholder can be treated as having an ordinary loss (fully deductible), instead of a capital loss, up to $50,000 ($100,000 if married filing jointly) for the year. Any loss(es) in excess of this amount is (are) a capital loss.

Question 11

MACRS 5-year property

Answer 11

automobiles, light trucks, computers, typewriters, copiers, duplicating equipment, and other such items.

Question 12

An executor of a decedent’s estate that has only U.S. citizens as beneficiaries is required to file a fiduciary income tax return, if the estate’s gross income for the year is at least:

Answer 12

$600