EA Part 2-Passkey 1

Question 1

2012 Soc Sec Taxable Wage Base

Answer 1

$110,100

Employees only reduced from 6.2% to 4.2%

Question 2

2012 Soc. Sec. tax rate for self-employed

Answer 2

reduced from 12.4% to 10.4%
Therefore tax rate for SE is 13.3%
(10.4% Soc Sec + 2.9% Medicare)

Question 3

Sec. 179 Expense

Answer 3

$500,000 qualified expenditures,
phase-out at $2 million
up to $250,000 for leasehold improvement, restaurant & retail improvement property

Question 4

Bonus Depreciation

Answer 4

up to 50% for NEW assets placed in service in 2012

Question 5

Mileage Rates

Answer 5

55.5 cents/mile Business
23 cents/mile Medical or Moving
14 cents/mile Charitable purposes

Question 6

Exclusion for Employer-Provided Mass Transit

Answer 6

$240/month parking benefits

$240/month in combined highway vehicle transportation & transit passes

Question 7

Employer Contribution Limits to 401(k) Participant Plan

Answer 7

$17,000 maximum

Question 8

Estate & Gift Tax Exclusion Amount

Answer 8

$5,120,000

Question 9

Gift Tax Annual Exclusion

Answer 9

$13,000

Question 10

Reporting of Nontaxable Exchanges of Property

Answer 10

Stockholders that own 5% or more of a public company or

1% or more of a privately held company

Question 11

Employer-provided Cell phones are excludable, if provided primarily for noncompensatory business reason, as a

Answer 11

de minimis fringe benefit

Question 12

Form 1065

Answer 12

Form 1065 U.S. Return of Partnership Income

Question 13

A Limited Liability Partnership (LLP) is typically used for

Answer 13

specific professional services (EX: a law firm.)
A partner in an LLP generally would not be liable for the debt or malpractice of other partners & only at risk for his assets

Question 14

Form 1120

Answer 14

Form 1120 U.S. Corporation Income Tax Return

Question 15

Form 1120S

Answer 15

Form 1120S U.S. Tax Return for an S Corporation; required to be filed every year regardless of income or loss

Question 16

Limited Liability Company (LLC)

Answer 16

formed under state law

may choose to be taxed as a corporation, partnership or sole proprietorship.

Question 17

Personal Service Corporations (PSC)

Answer 17

corporation that performs services in the fields of health, veterinary, law, engineering, architecture, accounting, actuarial science, performing arts or consulting.

Question 18

a PSC is taxed at a flat rate of ____ and the majority of its stock is owned by ________

Answer 18

35%

employees, retired employees or their estates

Question 19

Form 1023

Answer 19

Form 1023 Application for Recognition of Exemption

Nonprofit request for tax-exempt status

Question 20

Form 990

Answer 20

Form 990 for Exempt organizations to report income and losses; usually informational only

Question 21

Form SS-4

Answer 21

Form SS-4 Application for Employer Identification Number

Question 22

Form 8832

Answer 22

Form 8832 Entity Classification Election

Filed by Sole Prop. or Partnership wishing to be a Corporation

Question 23

Form 8832 Entity Classification Election cannot take effect….

Answer 23

…more than 75 days prior to date the election is filed or 12 months after election is filed.
Business cannot change the election again within 5 years (60 months)

Question 24

A taxpayer must keep records for

Answer 24

3 year from when tax return was filed or within two years of when tax was paid, whichever is later

Question 25

If a business has employees, it must keep all employment tax records for …

Answer 25

at least 4 years

Question 25

Churches or nonprofits file Form 990-T when __

Answer 25

They have $1000 or more of unrelated gross business income.

Unrelated Business Income Tax (UBIT)