Class 06 Flashcards

exclusions

1
Q

what are exclusions?

A

income not subject to tax

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2
Q

what are employee fringe benefits?

A

side dish benefits added to wages

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3
Q

what’s the catch with employee fringe benefits?

A

must be offered to all employees

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4
Q

what are child + dependent care fringe benefits?

A

up to $5K in benefits

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5
Q

what are athletic facilities fringe benefits?

A

non cash allowance open to employees + families

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6
Q

what are educational assistance fringe benefits?

A

as a scholarship up to $5,250

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7
Q

what are adoption fringe benefits?

A

up to $15,950 (but reduced when in the phase out zone)

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8
Q

what are cafeteria plan benefits?

A

choose cash (taxed) vs non tax benefits

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9
Q

what are flexible plan benefits?

A

pre tax dollars put in the plan and can apply to medical services

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10
Q

what are no additional cost benefits?

A

ie airline standby benefits tax free (except if a potential client prevented)

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11
Q

what is the employee benefit catch?

A

discount can’t exceed the employer’s unit cost

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12
Q

what are retirement planning services catch?

A

must be employee of the insurance

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13
Q

what are working condition fringe benefits?

A

tax free annual dues + subscriptions in professional organizations

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14
Q

what are de minimus fringe benefits?

A

benefits so small it’s impractical (i.e. company dinners)

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15
Q

what are transportation fringe benefits?

A

subsidized transportation ($300/month limit)

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16
Q

what are moving expenses fringe benefits?

A

limited to armed forced on active duty (everyone else is taxed)

17
Q

what is substantiation?

A

taxpayer is burdened to prove deductions

18
Q

what do you assume about deductions?

A

assume nothing is a deduction unless congress says so

19
Q

what is “for AGI”?

A

you automatically qualify and do not itemize

20
Q

what are categories of “for AGI”?

A

all are non deductible:
1. trade or business activities—sole proprietor, partnership, and farm
2. investment activities
3. personal activities

21
Q

“for AGI” vs. “from AGI”?

A

“for AGI” is before you get to AGI + “from AGI” are itemized deductions

22
Q

what is a schedule 1 1040?

A

a summary of taxpayer’s financial activities

23
Q

when do trade + business deductions apply?

A

expenses are ordinary AND helpful

24
Q

when do excessive executive compensation deductions apply?

A

reasonable + $1M deduction max

25
Q

when do qualified business income (QBI) apply?

A
  1. up to 20% deduction for sole proprietorship, partnership, S corp
  2. certain industries restricted (health, business, law, arts, athletics)
26
Q

what is cash method deduction timing?

A
  1. expenses deducted when paid
  2. prepaid expenses non deductible
27
Q

what is accrual method deduction timing?

A
  1. all events test (amount determined)
  2. economic performance event (event occured)