Deck 40 Flashcards
Self-employed health insurance is what kind of deduction?
Adjustment for AGI
A net operating loss (NOL) for a corporation is equal to the excess of:
Deductions over gross income (first add back the DRD)
To participate in the preparation of audit reports, a cpa firm must register with the:
PCAOB
Non qualified stock option must be recognized as:
Ordinary income for the value of the option if it is traded on an established market
Passive activity losses are normally only deductible against:
Passive activity income (unless the losses are fully disposed of; then they are fully deductible)
At-risk limitation provisions may limit:
A partner’s deduction for his or her share of partnership losses (Not a partnership’s NOL carryover)
The deduction for interest expense on investment indebtedness is limited to:
Net investment income
What disqualifies an individual from the earned income credit?
If the taxpayer files as married filing separately
If an individual inherits stock and then it becomes worthless under section 1244, what amount may be deducted by the individual?
Zero; only the original owner of the stock can deduct it as an ordinary loss up to $50,000
When must form 1041 be filed (Fiduciary Income Tax Return)?
Due on the 15th day of the 4th month after the close of its taxable year
A trade acceptance is an instrument drawn by:
A seller ordering the buyer or designee to make payment
How will a NOL carryover effect taxable income?
Decreases taxable income
Exoneration
Right of a surety “prior to payment” to get a court order demanding that the debtor pay
How can an S-corporation election be terminated?
Has passive investment income greater than 25% of gross receipts for 3 consecutive years
To qualify as an exempt organization other than a church or an employee’s qualified pension, the applicant must:
File a written application with the Internal Revenue Service
