Exam Questions I F'd Up Flashcards
For Section 179 pieces of property was is the max deduction you can take? and what is the phase out amount
there is a 1,020,000 deduction, MAX….BUT if you put into service stuff over 2,550,000 the amount over is a dollar for dollar phase out of the 1,020,000 deduction.
How does the 15,000 deduction work for gifts?
so each person you give shit too, you report anything over 15,000…if the gift is less than 15,000 you dont report it
So talking about contracts, what is the accronym for contracts that can be enforced WITHOUT writing
SWAP Specifically Manufactured Goods Written contract by ONE party (assumed to be agreed to) Admitted contract into court Performance of contract
are non reimbursed business meals/expenses deductible
no
What is the distributions character out of current and accumulated E+P, and then what is the character for anything over?
out of current and accumulated it is a dividend and is income
Anything distributed over is a return of capital which is not taxed but reduces basis.
what is the % that corporations can deduct from charitable contributions
10% of taxable income
So for an estate..the person dies…what happens to their medical expenses?
if incurred 12 months or less after death, it goes on personal return…if after 12 months it goes out of their estate.
So you sell you interest in a partnership…whATs the equation to find the total realized or ordinary gain
Amount sold for
LESS: Basis of capital
LESS: Basis of liability
=Total realized ord. gain
HOWEVER it is only ordinary to the extent of hot assets (usually just AR, maybe they throw in inventory) anything over there share of hot assets is a CAPITAL GAIN!
So you sue because of your reputation getting hurt…is anything you get either punative or compensatory taxable?
Yes they are fully taxable
So you are paying moms medical expenses, and she is over the income requirement for a dependent….can you still claim the medical expenses
YES for medical expenses, the income requirement is not taken into account.
What schedule for Rent expenses show up on and are they For or From AGI
Show up on Schedule E and are For AGI
Who can take NOL’s?
Individuals, C Corps, and Trusts/Estates
When distributions to shareholders are occuring, do you include tax-exempt income (like muni bonds) being distributed just as you would the ordinary business income?
YESSSS it increases basis just like income
For fraud penalties how much evidence must the court have?
beyond a reasonable doubt
What is the election of tax year for trusts and estates?
Estates may elect to adopt either a calendar or fiscal tax year…Trusts have to adopt a calendar year
So you have organizaitonal start up expenses…what is NOT included when you are doing the write off?
anything having to do with the stock issuance or printing…
add up all the costs..subtract the 5000 and then amortize over 180 months..
Do you recognize income for a qualified stock option
noooo
what does the mailbox rule applies to?
for acceptances only!!
So you give land to a corporation and then they sell it for a gain along with reporting regular income during the year what do you do
your basis increases as you recognize your % of income like usual…but the land has to do with a built in gain…so you take the FMV at contribution and subtract the basis at contribution…you take 1005 of that gain PLUS your share of the increase in FMV from contribution to selling date.
For multiple suppport agreement what are the rules with %
all must be relatives who provide more than 50%, but to claim you must provide MORE THAN 10%
Like kind exchange: how do you find gain/loss realized, recognized, and new basis
realized: Amount realized - Adjusted basis of property given up…Where amount realized is the FMV of new property + boot received - boot given up..and Adjusted basis is the cost less accumulated depreciation.
Recognized: Lesser of realized gain or boot received…iif realized gain more than the recognized then there is a deferred gain. You can never recognize a loss
Basis: FMV of new prop - Deferred Gain + Deferred Loss
Looking at schedule M-1 which is essentially difference between book and tax, what are general items added back and subtracted
Added: Federal income tax, capital losses over gains, book depreciation, meals over 50%, warranty, Bad Debt expense
Subtracted: tax-exempt interest, life insurance proceeds, section 179,
Partnership K-1 and seperately stated items…lists some seperately stated items
Active or passive real estate income/loss, interest income, dividend income, cap G/L, charitable contribution, section 179
Partnership K-1 and seperately stated items…lists some items on form 1065, or the oridnary business incoem
Basically this formula: Business income LESS: business expenses (includes health ins. and keogh) LESS: Guarenteed payments =Net business income or loss.
What is the DNI formula for estates and trusts
Estate (trust) gross income (includes all capital gains) LESS: Estate (trust) deductions =Adj. Total Income \+Adjusted Tax Exempt Interest LESS: Capital Gains for corpus =DNI
For an estate or trust there is a Income distribution deduction, whats that entail
lesser of actual distribution to beneficiary (less tax exempt income) OR DNI (less adjusted tax-exempt interest)
For an individual what are the itemized deductions
TICC MMD
Taxes
Interest
Charitable
Casualty loss
Misc. Deduction
Medical
Dental
So look at the “Child Tax Credit”…what is the amount of credit per child and what is the refund limit the lesser of…
May calim $2,000 for each qualfiying child (under 17) starts to phase out when AGI is over 400 MFJ or 200 S… fund is the lesser of: excess child tax credit over tax liability, Earned income less 2,500 multiplied by 15% OR 1400 per qualifying child
QBI…first bucket threshold rule
Single under 160,700 or MFJ 321,400
is full 20% QBI deduction for both SSTB and QTB
QBI Second and third bucket for QTB
between 160,700-210,700 S or 321,400 - 421,400 (MFJ)
QTB: GREATER of 50% W-2 wages OR 25% W-2 wages plus 2.5% qualified property
QBI for third bucket for SSTB
no deduction
What is the mom and pop excemption from passive activity losses
deduct up to 25k from net passive losses annually if they actively manage and own at least 10%…if they have an AGI over 100k they lose 50% of the 25k and lose it completely if over 150k AGI
Deminimus rule
has to do with expensing items you buy as a business…company can set their expense threshold if they have a written statement and financial statement for the year.
If only have financial statement max is 5,000 deduction per asset
if dont have financial statement, max deduction is 2500 for each piece
Theres an S corporation and ownership changes throughout the year, how often is ownership allocation calculated
one a per-days, per-share basis
If more than this % of property is placed into service I nthe last quarter of the year this method is used…what is the percent and the method
40% of assets placed into service in the last quarter of theyear means using mid-quarter convention
What is the depreciable life for residential rental property vs. non residential property
residential rental property has a 27.5 year straighline life
Nonresidential rental property has a 39 year straightline life
What is included in 5 year depreciable property
automobiles, light trucks, computers and copiers
what is included in 7 year depreciable property
office furniture and equipment
your company is going public and is having an offering, at what date can you start offering to sell your shares
you can start to sell them at the EFFECTIVE DATE
You have an S corp that is teerminated, how long must you wait before you can Re-elect S corp status
5 fucking years brad
Can you name the 5 elements needed to prove constructive fraud (literally the worst kind of fraud)
misrepresentation of material fact acts of gross negligence/recklessness intent to induce the plaintiffs reliance actual reliance by the plaintiff damages
So theres this thing called accuracy related penalties…talk me through the difference between a substancial one or not and what it looks like for an individual and corporation
- Is the understatement less than the greater of 10% of the correct tax or $5,000? If YES than it is not substanicial and is just 20% of the understatement
- If it is GREATER than either listed in #1 than it 20% penatly but is considered Substantial!
- If it is a CORPORATION it is substancial if it exceeds the LESSER of 10,000,000 or the greater of 10,000 or 10% of the correct tax
So theres a Wash Sale, aka sold and bought within 30 days, what do you do with losses or gains associated with it
losses are ADDED to the basis…gains are capital gains and new price is the basis
in complete liquidation waht does the corporaition do? what about the shareholders? in terms of recognition
corporation must recognize a gain/loss as if sold the assets for FMV (so FMV-basis)
Then the shhareholders recognize a gain or loss by doing the FMV less their adjusted basis in the stock
what is one thing that makes aperson a tax preparor
THEY IS PAID
how are distributions made with the year allocated between the current and allocated E&P areas
you allocate proportionately by % of distriutions
like april was 60% of the total distirubtions so multiply current E&P by that and then find accumulated
you have excess FICA (social security) withheld during the year…what do you do if you have more than 2 employers? what about only one employer
two employers than you can file a claim for the xcess to be used as a credit
if you only have one employer the employer must give you a refund
What is the MAXIMUM American Oppurtunity Credit, can part of it be refunded?
Students first 4 years of college…
100% of the first 2,000 in qualified expenses (tuition, fees and course materials)
25% of the next 2,000 xpenses paid during the year
40% of the credit is refundable!!! who knew?
What is the MAXIMUM Lifetime learning credit?
used for unlimited years after the first 4 years of college
max is 20% of qualified expenses NOT GOING OVER 10,000 meaning a max credit of 2,000 for JUST TUITION AND FEES
Only used per TAXPAYER…so if you have MULTIPLE People in school that wana claim it, TOUGH SHIT ONLY CAN DO IT PER TAXPAYER.
You are given an income statement, bunch of accounts which I will list…please break them out into what would be used to calculate ordinary income and what would be seperately stated on K-1
Sales COGS Charitable Contributions Rent Expense Interest Expense Officer Compensation MACR Depreciation Section 179 Depreciation LTCG Dividends Section 1231 & 1245 Gains
Ordinary Income:
Sales, COGS, Rent Expense, Interest Expense, Officer Compensation, MACR Depreciation, Section 1245 Gain (because its considered ordinary income)
Sep. Stated: Charitable Contributions, Sect. 179, LTCG, Dividends, Section 1231
NOTE: seperately stated items include interest income, rental income, dividend income, INVESTMENT interest expense
Explain how a stock split happens bro?
you have an original amount of stock….multiply the basis times the amount of stock to get the total basis amount….go through the stock split…you now have these new shares…take that total basis and allocate it over the new amount of shares to get the new basis
stock option is qualified if it follows what 3 rules…Who can be granted employee stock purchase plan…Who can be granded incentive stock option?
plan was approved by shareholders, granted and excersised within 10 years, at the end of it the employee does not own more tahn 10%
Employees can be granted an ESPP if they own more than 5%
ISO is granted if the option price is greater than/equal to the FMV
