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Regulation > Chapter 1 > Flashcards

Chapter 1 Flashcards

1
Q

Adjustments (deduction to arrive at AGI)

A

Educator expense, IRA, Student loan interest expense, tution and fee deduction, HSA, moving expense, 1/2 self employment FICA, self employeed health insurance, self employeed retirement, interest withdrawl penalty, alimony paid

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2
Q

Itemized deductions (below the line)

A

medical, taxes state and local, interest expense, charity, casualty and theft, misc, other misc

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3
Q

Medical threshold (itemized ded)

A

in excess of 10% AGI

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4
Q

Charity threshold (itemized ded)

A

up to 50% of AGI

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5
Q

Casualty and theft threshold

A

in excess of 10% AGI

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6
Q

Miscellaneous

A

in excess of 2% AGI

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7
Q

Payment of tax with extension

A

October 15- however the due date for payment of taxes remains april 15

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8
Q

Qualifying widow(er)

A

File jointly for two years after spouse’s death, the surving spouse must maintain a household for the dependent (son, stepson, daughter or stepdaughter blood or adoption) for the WHOLE taxable year

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9
Q

Head of household

A

not married/ can be legally spearated or is married and lived apart from spouse for the last six months, not a qualifying widow, maintains a home for HALF the taxable year for son or daughter stepchildren- a dependent parent is not required to live with they can be in nursing home but taxpayer must pay over 1/2 the cost to upkeep their palace, or dependent relatives (cousings, foster paretns do not count)

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10
Q

Widow/widower

A

Whole year

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11
Q

Head of household

A

more than half a year

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12
Q

2015 exemption

A

$4k

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13
Q

IF a person is born or dies during the year

A

he or she is entitled to a personal or dependency exemption for the entire year

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14
Q

Qualifying Child

A

“CARES”
Close relative
Age Limit (>19/24 college)
Residency and filing requirements (mor ethan 1/2 tax year - cannot file joint return)
Eliminate Gross income test
Support test changes (child does no cotnribute more than 1/2 of support)

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15
Q

Qualifying Relative

A

“SUPPORT”
Support (over 50%) test
Under a sepcific amount of taxable gross income test (dependent cannot exceed taxable income of $4k - nontaxable income is OK social secruity, state and muni interest income, tax exempy scholarships)
Precludes dependent filing a joint tax return test
Only citizens (residents of US Canada or Mexico) test
Relative test (children, grandchildren, parents, grandparrents, brothers, sisters, stepchilden, in laws)
or
Taxpayer lives with individual whole year test (a non relative who lives with taxpayer entire year)

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16
Q

Multiple support agreements (qualifying relative exemption test)

A

a contributor must have contributed more than 10% of the person’s support and the joint contributors are required to file a multiple support declaration

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17
Q

Taxable

A

FMV

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18
Q

Passive income

A

only passive losses can offset passive income

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19
Q

Cancelleation of debt

A

all debts cancelled are included in gross income

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20
Q

Partially taxable fringe benefits-portions of life insurance premiums

A

premiums above the first $50k of coverage are taxable income to the recipient

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21
Q

Bargain purchase

A

if an employee sells property to the employee for less than FMV , the difference is income to employee

22
Q

Non-taxable fringe benefits

A

life insurance proceeds - however, the interest income element on a deferred payout arrangement is fully taxable

23
Q

Accident, medical and health insurance

A

Premium payments are excluded from employees income when the employer paid the insurance premium

24
Q

Employer payment of employee education expenses

A

Up to $5,250 may be exlcuded from gross income (undergrad and grad)

25
Q

Interest paid by the federal or state govt for a late payment of a tax refund is

A

TAXABLE INCOME

26
Q

State and local govt bonds/ obligations

A

interest on state and local bonds are tax exempt.

27
Q

mutual fund dividends for funds invested in tax free bonds

A

are also tax exempt

28
Q

Series EE interst

A

education expenses- interest is tax exempt when it is used to pay for higher education (reduced by tax free scholarships) of the taxpayer, spounds ,depdendents (the taxpayer is over 24 when issued) - there is a phaseout

29
Q

Uneared income of a child under 18 (kiddie tax)

A

the net unearned income of a dependent child under 18 or 24 who does not provide over half of his support and is full time student) is taxed at the parents higher tax rate

30
Q

Any uneared child income over 2100 is taxed at parents rate

A

1

31
Q

Qualified dividends holding period

A

stock must be held for more than 60days during 120 day period that begins 60 days before the ex dividend date

32
Q

Tax free distirbutions

A

Return on capital, stock split, stock dividend, life insurance dividend

33
Q

State and local tax return refunds

A

Itemized in PY=state or local refund is taxable
Std deduction used in prior year - nontaxable refund
INTEREST INCOME IS TAXABLE

34
Q

Gifts and inheritence

A

are tax free to receiver

35
Q

If second residence is personally used more than XXX days, any net los from the rental of the property will be dissallowed

A

14 days - and all related expenses must be prorated between the personal use portion and the rental activity potion

36
Q

Requirements for payments of alimony are th efollowing:

A

payment must be in cash or CE, payment canot extend beyond death, payments must be legally required,

37
Q

alimony is

A

income to the spouse and deductible to arrive at AGI for contributing spouse

38
Q

Child support is

A

nontaxable to wife and not deductible by payee

39
Q

Uniform capitalization rules for capitalizing inventory

A

direct materials, direct labor, FOH should be capitalized

warehouing cost, quality control, taxes= factor overhead items

40
Q

Damages for personal injury (workers compnesation) are

A

excluded from gross income

41
Q

cash basis taxpayers deduct interest in the year paid or the year to which the interest relates- whichever is later

A

3

42
Q

prepaid interest

A

mudt be prorated over the time for which the payment is made,.

43
Q

Forumla to determine net rental income or loss

A 
Gross Rental Income
Prepaid rental income
Rent cancallatoon payments
Imporvments in lieu of rent
(rental expenses)
Net Rental Income (loss)
44
Q

Vacation home rented less than 15 days

A

treated as a personal residence, and rental income is excluded from income - - - mortage interest and real estate taxes are allowed as itemize deductions - - - depreciation, utilities and repairs are not deductible

45
Q

Vacation home rented more than 15 days (and is used for personal purposes for greater of 14 days or 10% of rental days) it is treated as personal residence.

A

Expenses must be pro rated between personal and rental

46
Q

Gains and losses of stock must be recognized on the

A

trade date

47
Q

If you withdraw retirement money before 59 1/2 what is the penalty

A

10%

48
Q

IS the marginal rate or effective tax rate used?

A

Marginal rate

49
Q

Passive activity losses are fully deductible in year of sale

A

true

50
Q

HIM DEAD - retirement distribution exceptions

A

Home buyer (first time $10,000 max if used towards first home
Insurance (medical)
Medical expesnes in excess of 10% of AGI (7.5% if 65 over)
Disability
Education
and
DEATH

Taxable as ordinary income

51
Q

What is taxable of group term life insuarnce?

A

The first $50k is non-taxable fringe benefit

52
Q

Property settlements

A

If a divorce settlement provides for a lump sum payment or property settlement by a spouse, that spouse gets no deduction for payments made and the payments are not includable in gross income of the spouse receiving the payment

Regulation (9 decks)

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