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Yaeger REG > Cram Review > Flashcards

Cram Review Flashcards

1
Q

According to Circular 230, practitioners must not sign a tax return if the return takes a position that does not have…

A

Reasonable basis

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2
Q

Reasonable basis has what probability of being sustained?

A

20%

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3
Q

When an accountant knows the 3rd party will rely on the financial statements and the financial statements contain material misstatements, the 3rd party must show…2

A

1 CPA negligent in audit

2 relied on financial statements

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4
Q

A loss sustained from a Nonbusiness bad debt is is always classified as…

2) where are they deducted?

A

Short term capital loss

2) schedule D

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5
Q

Any stock that is distributed from preferred stock results in…

2) what is the basis?

A

A taxable stock dividend

2) FMV of shares on date of distribution

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6
Q

Accrual method tax reporting is mandatory fora sole proprietor when there are…

A

Year end merchandise inventories

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7
Q

Accounts receivable for services rendered by a sole proprietor is…

A

Not mandatory for accrual method tax reporting

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8
Q

Uniform capitalization method must be used by…

A

Manufacturers of tangible personal property

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9
Q

The Uniform capitalization rules do not apply to a small retailer or wholesaler who acquires personal property for resale if the retailer’s or wholesaler’s average annual gross receipts for the 3 preceding tax years…

A

Do not exceed $10 million

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10
Q

Under the uniform capitalization rules marketing costs are…

A

Not capitalized with respect to inventory

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11
Q

Under MACRS if over 40% of the equipment is put into use in the last quarter…

A

The mid quarter convention may be used

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12
Q

MACRS for furniture and fixtures

A

7 year double dealing balance (2/7)

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13
Q

Premiums paid on insurance for loss of income due to accident are…

A

Not deductible

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14
Q

Cost of maintaining the household for 50% head of household status include…

A

Insurance on home

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15
Q

To compute AMT before AMT exemption, what 2 items are added back to taxable income?

A

1 state and local income taxes

2 miscellaneous deductions that exceed 2% of AGI

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16
Q

Home mortgage interest in an AMT problem

A

Not added to taxable income

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17
Q

What is net earnings from self employment multiplied by to compute the self employment tax?

A

92.35% (100% - 7.65% FICA)

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18
Q

Shareholder’s share of ordinary income from a S-corp is…

A

Not included in self employment income

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19
Q

Self employment tax is partially deductible from…

A

Gross income in arriving at AGI

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20
Q

Executor’s fee received from estate of deceased sister is…

A

Not considered self employment income

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21
Q

The credit for adoption expenses is…

A

A nonrefundable credit

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22
Q

American opportunity credit is available on a…

A

Per student basis

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23
Q

To be eligible for the American Opportunity Credit, an eligible student must be enrolled for at least…

A

A half time basis for one academic period during the year

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24
Q

Lifetime Learning Credit is available in a…

A

Per tax payer basis

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25
Q

High income individuals can base their estimated payments on…2

A

1 90% current year’s tax liability

2 110% prior year’s tax liability

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26
Q

6 year statute of limitations applies if you omitted gross income in excess of…(calculation)

A

25% x (gross income + capital gains)

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27
Q

What is the holding period of stock received from a bequest of a decedent?

A

Long term

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28
Q

Section 1245 only applies to…

A

Gains

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29
Q

If a shareholder owns 50% of a corporation and no more than 50%, when the corporation sells a trailer for loss to the shareholder, what kind of loss is recognized?

A

Section 1231 loss

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30
Q

If a shareholder owns over 50% of a corporation and the corporation sells to the shareholder, the loss is…

Why?

A

Disallowed because it’s a related party transaction

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31
Q

For a cash basis tax payer, gain or loss on a year end sake of listed stock arises on…

A

The trade date

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32
Q

What kind of loss is recognized for machinery sold at a loss…

A

Sec. 1231 loss

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33
Q

Property held for use in a trade or business is specifically…

A

Not a capital asset

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34
Q

For sale of a building, Section 1250, what does it do?

A

Recaptures gain as ordinary income to extent of excess depreciation

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35
Q

For sale of a building, Total gain less any depreciation recapture is…

A

Sec. 1231 gain

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36
Q

When a building is sold, Sec. 291 is treated as…

A

Ordinary income

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37
Q

When a building is sold and there has been $40,000 of depreciation and a profit of $60,000. What is the proper treatment of the $60,000 gain?

A

Sec. 291 ordinary income = $8,000 (20% x $40,000)

Sec. 1231 gain = $52,000

38
Q

Andria, owns 50% of a partnership and her sister owns 50%, therefore Andria…

A

Constructively owns 100% of the partnership

39
Q

Andria, owns 50% of a partnership and her sister owns 50%, therefore if Andria sells anything to the partnership, this is…

A

A related party transaction

40
Q

When a corporation distributes marketable securities at a loss in a complete liquidation, what is the nature of the loss recognized?

A

Long term capital loss

41
Q

When a stock pays a dividend, when is DRD not allowed?

A

stock has been held less than 45 days

DRD not allowed

42
Q

3 entities that pay dividends, where no DRD is allowed?

A

1 REIT (real estate investment trust)

2 mutual funds

3 money market funds

43
Q

No federal income tax deduction is allowed for corporate…

A

Dividend payments to its own shareholders

44
Q

Net business income per share calculation

A

Net business income per share=

Net business income/shares outstanding/360 days

45
Q

If net business income per share is $.30/share, what is net business income for 50 shares bought on January 30th?

A

$.30/share X 335 days X 50 shares = net business income

46
Q

If the Executor’s fees are already deducted on the fiduciary return…

A

They can’t be deducted on the estate tax return

47
Q

Under Rule 504 of Regulation D, general offerings and solicitations are…

A

Permitted

48
Q

Under Rule 504 of Regulation D, an issuer need not restrict…

A

The purchaser’s right to resell

49
Q

No general offering or solicitation is permitted and the issuer must restrict the purchaser’s right to resell the securities are both required under…

A

Regulation D, 505 and 506

50
Q

Making a partnership a surety requires…

A

Unanimous consent of partners under partnership law

51
Q

Death of a joint venture will…

A

Not dissolve the joint venture

52
Q

In a corporation, managers do not have…

A

Do not have limited liability

53
Q

What name is included in the Articles of incorporation?

A

Name of registered agent

54
Q

Limited partnerships and corporations both…

A

Must file statute with proper state authorities

55
Q

The Board of directors does not have the authority to…

A

Amend the articles of incorporation

56
Q

What entails canceling a contract and placing the parties in the position they were in before the contract?

A

Rescission

57
Q

What is an agreement between 3 parties whereby a previous agreement is discharged by…

A

The creation of a new agreement

58
Q

What is used by an offeror to terminate an offer?

A

Revocation

59
Q

What is a means of discharging a contract, without placing the parties within the same position before the contract?

A

Release

60
Q

Article 2 of UCC applies to…

A

Sales of goods

61
Q

Common law generally applies to…

A

Contracts for services and real estate

62
Q

Under the UCC, an acceptance containing additional terms is…

A

A valid acceptance

63
Q

Under the UCC, an acceptance containing additional terms is a valid acceptance unless the…

A

Acceptance is expressly conditional to terms

64
Q

Under common law, an acceptance must be…

A

In exact compliance with contract terms

65
Q

Can an injured party collect any amount of liquidated damages provided for in the Sales article of the UCC contract?

Why?

A

No

Any amount = punitive

66
Q

An instrument that says “pay to Adam” is negotiable if it is…

2) otherwise to be negotiable it must say…

A

A check

2) pay to the order of Adam

67
Q

Under the Negotiable Instruments Article of the UCC, for a note to be negotiable it must…

A

Be payable to order or to bearer

68
Q

A note that says “pay to Corbin company” is…

A

Not a negotiable instrument

69
Q

A check that says “pay to Corbin Company” is…

A

A negotiable instrument

70
Q

Under the Negotiable Instruments Article of the UCC, which of the following 2 requirements must be met for a transferee of order paper to become a holder?

A

1 Delivery and endorsement by transferor

2 possession

71
Q

Checks are…

Why?

A

Negotiable

They don’t have to be payable to order or bearer

72
Q

A draft is not negotiable if it is…

A

Not payable to order or to bearer

73
Q

Real defenses include…3

A

1 bankruptcy

2 material alteration of instrument

3 changes in interest rate

74
Q

Personal defenses include…3

A

1 breach of contract

2 breach of warranty

3 fraud in the inducement

75
Q

The maker of a note has…

A

Primary liability on that note

76
Q

Post dating a check does not…

A

Not destroy negotiability

77
Q

Post dating a check does not destroy negotiability, but makes the check…

A

Properly payable on or after the date written on the check

78
Q

If a check is post dated November 20th, it will…

A

Cease to be demand paper and is payable November 20

79
Q

A trade acceptance is a special type of draft where the…

A

Seller orders the buyer/designee to make payment

80
Q

Which of the following is not a warranty make by the seller of a negotiable warehouse receipt to the purchaser of the document?

A

Not = Warehouseman will honor the document

81
Q

Under the UCC, a warehouse receipt is negotiable if by its terms the goods are…

A

Delivered to bearer or order of named person

82
Q

Under the Revised UCC Secured Transaction Article, which of the following after acquired property may be attached to a security agreement given to a secured lender? 2

A

1 inventory

2 equipment

83
Q

If a security interest on a computer is perfected before being sold to a customer…

A

Creditor may repossess

84
Q

A voluntary bankruptcy petition may be…

A

Filed jointly by husband and wife

85
Q

Does a debtor need to be insolvent to file a voluntary bankruptcy petition?

A

No

86
Q

A cash payment for a car 2 months before bankruptcy is not preferential because the payment was…

A

A contemporaneous exchange for new value

87
Q

Principals are not responsible for misrepresentations of…

A

Independent contractors

88
Q

An undisclosed principal cannot…

A

Cannot ratify a contract of an agent

89
Q

A common carrier Bailee generally would avoid liability for loss of goods entrusted to its care if goods are…

A

Improperly packed by party shipping them

90
Q

A mortgagor’s opportunity to redeem will be terminated by a judicial foreclosure sale unless…

A

The jurisdiction has enacted s statutory right of redemption

91
Q

What is it called when a tenant stays in possession of the leased property after the expiration of the lease without the landlord’s consent?

A

Tenancy at sufferance

Yaeger REG (77 decks)

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