Entities (R3) Flashcards
charitable contributions rule for corps
max deduction is up to 10% of taxable income
insurance premiums paid by a corporation
not deductible if corp is the beneficiary (directly or indirectly)
organizational and start up costs
can elect to deduct up to $5000. then do organization costs - 5000 deduction = remaining. divide remaining by 180 months and add that on top of 5000 deduction for the year. - costs associated with distributing own stock is not included - “commission paid to underwriters - ignore!”
dividend received deduction (on qualified dividends)
0-20% owner = 50%
20-80 = 65
80+ = 100
temporary book to tax differences
depreciation, gain or loss on sale of assets, bad debt expense, or business interest expense
permanent differences examples
-interest income and life insurance proceeds on key employees are both nontaxable
-DRD is only for tax purposes
-fines, penalties, political contributions and entertainment exp are all nondeductible
-federal taxes are not deductible for tax purposes, but state taxes are.
estimated payments of C corps
lesser of 100% of: current year or preceding year
general business credit for C corps
credit cannot exceed net income tax less 25% of net regular tax liability over 25000
accumulated earnings tax for c corp
20%
personal holding companies
50% owned by 5 or fewer people and has 60% ordinary gross income from: net rent, interest, royalties, and dividends
when calculating basis for a partnership, how is interest treated
tax exempt interest income: is not taxable
US treasury interest: is included
how are cash distributions treated
not included in calculating a partners AGI, but it is on the K-1 to use in basis calculation (decreases basis)
guarenteed payments
partner recognizes it as income, and the partnership deducts that amount when determining ordinary business income
S Corp requirements
-must be individuals, estates, or trusts
-cannot be a resident alien (must be US)
-qualified retirement and 501c can be
-corporations and partnerships cannot (single member llc are treated as individual)
depreciation - separately stated or not for S Corps
MACRS regular is a part of ordinary business income, so it is not separately stated, but section 179 is separately stated.
