Corporate Tax Flashcards
What is the AMT calculation?
Regular taxable income
+ or - Adjustments
+ Tax preferences
= AMTI
- Exemption amount
= AMT base
x 26% under threshold (28% over threshold)
= Tentative tax before foreign credit
- Foreign tax credit
= Tentative minimum tax
- Regular tax (less foreign tax credit)
= Alternative minimum tax
What are the 2019 AMT exemption amounts?
MFJ & Qualifying Widow - $117,700 Single - $71,700 MFS - $55,850 Estates & Trusts - $25,000 Phaseout Single - 510,300 MFJ - 1,020,600
What are the AMT adjustments?
(a) Itemized deductions+
(b) Standard deduction+
(c) Excess ACRS deductions (accelerated depreciation)
(d) Circulation expenditures (magazines and newspapers)
(e) Research and experimental expenditures
(f) Mining exploration and development costs
(g) Passive activity losses+
(h) Certain installment sales
(i) Long-term construction contracts
(j) Incentive stock options
(k) Alternative tax net operating loss +
What are the AMT Preferences?
(a) Percentage depletion
(b) Intangible drilling costs
(c) Seven percent (7%) of excluded gain on qualified small business stock
(d) Accelerated depreciation
(e) Certain tax-exempt interest
What are the upward and downward adjustments to an S-corp Shareholder’s basis?
Upward adjustments:
(1) Taxable income
(2) Separately stated income items
(3) Depletion in excess of the property’s basis
Downward adjustments:
(1) Loss from operations
(2) Separately stated loss items
(3) Nontaxable distributions (return of capital)
(4) Nondeductible loss items
QBID has no effect either way.
What entities are exempt from DRD’s?
- REIT’s - Real Estate Investment Trusts
- 501 or 521 Companies
- Wash Transactions in Corps:
(Stock or preferred Stock held less than 46 days during the 91 day period beginning 45 days before the stock became the ex-dividend.) - Any Corp that is under an obligation to make related payments with respect to positions in substantially similar or related property.
What is the tax formula for a C-Corp?
Total income
- Exclusions
= Gross income
- Deductions (other than charitable contributions and the dividends-received deduction)
= Taxable income before special deductions
- Charitable contributions (limited to 10% of taxable income before charitable contribution deduction)
= Taxable income before the DRD.
- Dividends-received deduction
= Taxable income
x Tax rate - 21% flat
= Tax liability before additions and credits
+ Additions to tax
- Credits against tax
= Tax liability
What institutions can use the Reserve Method for bad debts?
Small Banks
and Thrift Institutions.
Every other entity/institution uses the direct charge-off method.
What entities have to use PAL’s restrictions on losses and credits?
Individuals Estates Trusts Personal Service Corps Closely Held C-corps
The passive activity loss rules are not applicable to partnerships, widely held C corporations, or S corporations. For partnerships and S corporations, the passive activity loss rules apply at the partner/shareholder level.
How are lobbying expenses legal?
Generally, lobbying expenses are not deductible.
However, there is a limited exception which allows a deduction for local lobbying expenses and up to $2,000 of in-house lobbying expenses.
Expenses incurred by a taxpayer engaged in the business of providing lobbying services are deductible by that taxpayer. (ex. $5,000 travel expense incurred by a professional lobbyist to lobby Congress)
Dues paid to a tax-exempt organization are generally not deductible to the extent they are used to fund lobbying activities (ex. $3,000 paid to a professional lobbyist to lobby Congress)
What are the dates and rates for the exclusion amounts for qualified small business stock (QSBS)?
What section?
Section 1202: can exclude gain if:
- Holds more than 5 years.
- Gain excluded is greater of 10M or 20x basis
Before Feb 18 2009 50%
Up to Sept 27. 2010 75%
After Sept 27, 2010 100%
