choppy feet

Question 1

under a non-accountable plan, how are expenses reported by the employer? what amount does the employee include as income?

Answer 1

expenses are not reported by the employer
gross amount received (regardless of reimbursements) is taxable

Question 2

what is the education loan interest adjustment limited to?

Answer 2

lower of $2,500 or amount paid

Question 3

what are the 4 proofs needed to sue a CPA for ordinary negligence?

Answer 3

1. the CPA had a duty
2. the duty was breached
3. cause and effect results
4. monetary damages

Question 4

what are the 4 proofs needed to sue a CPA for fraud?

Answer 4

1. material misrepresentation of facts
2. scienter (intent to deceive) - bad faith
3. justifiable reliance on the FS
4. monetary damages

Question 5

when a CPA is reckless, they could be sued for:

Answer 5

gross negligence or constructive fraud

Question 6

why is it easy for a CPA to be sued under the 1933 Act?

Answer 6

the injured party only needs to prove that:
1. they bought the stock
2. there was a material misstatement in the financial statements
4. they lost money

Question 7

what is a CPA’s burden of proof against the 1933 Act?

Answer 7

due diligence (they followed PCAOB, GAAP, and GAAS)

Question 8

what did the 1934 Act require public companies to do?

Answer 8

register the company
annual and quarterly financial statements

Question 9

which proof under the 1934 Act makes its harder to sue a CPA?

Answer 9

fraud

Question 10

what are the 5 proofs needed to sue a CPA under the 1934 Act?

Answer 10

1. material misrepresentation
2. material misrep was connected to a purchase or sale
3. scienter
4. reliance on missstatement
5. monetary damages

Question 11

ultramares rule limits liability for negligence to:

Answer 11

parties in privity
3rd party beneficiaries

Question 12

though an accountant has ownership over working papers, they may not disclose unless

Answer 12

with the client’s consent OR court order

Question 13

healthcare, law, accounting, actuarial services, consulting, performing arts, financial services, investment management all fall under:

Answer 13

specified service trade or business

Question 14

Jen had a net self employed income of $52,000. Her SE tax was $4,000. what is the max amount she can deduct for SEP IRA contributions?

Answer 14

10,000

4,000/2 = 2,000
52,000-2,000 = 50,000
50,000 * 20% = 10,000