Chapter 1 Flashcards
Which itemized deductions are NOT subject to phase outs?
Gambling losses, investment interest, medical expenses, and casualty losses (GIMC).
How is an incentive stock option (ISO) treated for AMT purposes?
ISOs are taxed when exercised
A claim for a refund must be filed when?
Within 3 years from the date the return was filed and 2 years from the date the tax was paid, whichever is later.
When must Form 1040X be filed?
Within 3 years of the original return due date or 2 years after actual payment of tax.
Which tax credits are refundable?
EIC, child tax credit, and the American Opportunity Tax Credit is partially refundable.
Does an individual have to recognize a gain on the sale of a personal residence?
Not if they lived in it for 2 out of the last 5 years. The first $250k on the gain on sale is not recognized ($500k MFJ).
When are dividends recognized as income for an individual?
Dividends are recognized when received, not when declared.
What can the AOTC and lifetime learning credit be applied to?
Tuition, fees, books, and direct supplies.
How much can a business owner contribute to a Keogh plan?
20% of SE income b/f the Keogh deduction.
When is rent received in advance taxable?
Rent is taxable in the period received, but rent paid in advance is not deductible until incurred.
When are dividends taxable?
In the period received
When is a dwelling unit considered a home?
If personal use exceeds the greater of 14 days or 10% of the days rented
When would rental income and/or rental deductions be excluded from gross income?
When a home is rented for less than 15 days during the tax year.
Who may not use the cash basis?
C corps with gross receipts in excess of $25M, tax shelters, partnerships that have a C corp as a partner exceeding $25M, and where inventory is used in the determination of income.
How is the receipt of stock as compensation included gross income?
Included in gross income at FMV.
