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Undeleted > Federal Taxation > Flashcards

Federal Taxation Flashcards

1
Q

Gifted Property Basis (not for gift tax purposes)

A
  1. Gain - Adjusted Basis of Donor

2. Loss - lower of FMV @ date of gift or Adjusted Basis of Donor

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2
Q

Sale of Equipment or Inventory in the ordinary course of business is what type of income?

A

Ordinary

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3
Q

Land Held For Investment is what type of asset?

A

Capital

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4
Q

Property received at death has what basis for the recipient?

A

FMV

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5
Q

Max Capital Loss for an individual in a single year?

A

$3,000

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6
Q

Max Capital Loss loss deduction for Corporation?

A

Zero, capital losses can only offset capital gains

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7
Q

Carryback/Carryforward of Capital loss for individual

A

no carryback, indefinite carry forward

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8
Q

Carryback/Carryforward of Capital loss for Corporation

A

3 years back, 5 years forward

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9
Q

Capital gains tax rate for most indivduals

A

15%

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10
Q

Capital gains tax rate for wealthy individuals

A

23.8%

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11
Q

What is a Section 1244 asset?

A

Stock in a copy that

  1. Had less than $1mm original issuance
  2. Holder is original holder
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12
Q

Sections 1244 deduction is what?

A

deduct losses as ordinary income

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13
Q

Section 1244 limitations

A

Individuals - $50,000

Married Filing Jointly - $100,000

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14
Q

Capital Losses Carried forward and back for corporations are classified as what?

A

Short-Term

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15
Q

Section 1245 recapture applies to what?

A

Depreciation of Personal Property

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16
Q

Section 1250 recapture applies to what?

A

Depreciation of Real Property

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17
Q

Section 1245 recapture applies what tax rate to recaptured depreciation?

A

Ordinary Tax Rate

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18
Q

Section 1250 recapture applies what tax rate to recaptured depreciation?

A

Straight-Line at 25% with excess over straight-line as ordinary income

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19
Q

Tangible assets owned for less than a year are what type of asset?

A

Ordinary

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20
Q

Residential Real property is depreciated over how long?

A

27.5 years

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21
Q

Section 179 deduction is eligible for both new and used assets (T/F)

A

True

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22
Q

Salvage value is ignored for MACRS (T/F)

A

True

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23
Q

How long is the Amortization of Intangibles?

A

15 years

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24
Q

Casualty Loss Equation

A 
Less of Decline in FMV and Adjusted basis
< Insurance Reimbursement>
< $100 per casualty>
< %10 of AGI>
Equals: Casualty Loss Deduction
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25
Q

What is the difference between casualty losses for personal assets and business assets

A

Personal are itemized deductions, and business is a full business deduction

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26
Q

5 Major types of itemized deductions subject to the 2% floor

A
  1. Un-reimbursed Business Expense
  2. Investment expense (not royalty or rental)
  3. Tax Return Prepare
  4. Home office expense of an employee
  5. Hobby Expense
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27
Q

Section 179 amount and phase out

A

$25k amount

$200k phase out dollar for dollar

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28
Q

Section 179 limits

A

$25k or business income

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29
Q

Amount of Child/Dependent Credit

A

$1,000 per qualifying child

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30
Q

Phase out amount for Child/Dependent Credit and how it’s phased out

A

$75,000 unmarried
$110,000 married
$50 for each $1,000 over

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31
Q

Hope Credit amount, and how it’s calculated

A

$2,500 a year

100% of the first $2,000 and 25% of the next $2,000

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32
Q

Requirements to get the Hope Credit

A

First four years of college in degree program & qualified education expense

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33
Q

When are Materials and Textbooks qualified education expense?

A

When required to be purchased from the University

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34
Q

Lifetime Learning Credit amount and how it’s calculated

A

$2,000

20% of $10,000 of qualified education expense

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35
Q

What is the minimum Dependent Care Credit?

A

20% of qualified expenses

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36
Q

Bequeathed property has what type of basis?

A

Long-Term

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37
Q

Is bonus depreciation the same as Section 179?

A

No

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38
Q

6 types of Personal Itemized Deduction

A
  1. Medical Expense
  2. Interest
  3. Taxes
  4. Charity
  5. Casualty Losses
  6. Miscellanous
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39
Q

Standard Deduction Amounts

A

Single = $6,200
HOH = $9,100
Married Joint = $12,400
Married Sep = $6,200

40
Q

What is the benefit to filing Married Surviving Spouse?

A

Can file Married Filing Jointly Rate for two years after the year of death of the spouse

41
Q

Addition Standard deduction for Blind and Over 65 (Unmarried & Married)

A 
Unmarried = $1,550
Married = $1,200
42
Q

AGI limits for itemizing Medical Expenses

A

Under 65 = %10

Over 65 = 7.5%

43
Q

Taxes not allowed to be Itemized (4)

A
  1. Federal
  2. Death
  3. Excise
  4. Sales Tax, in general
44
Q

Deduction Limits for Charitable Contribution

A

Overall - 50% of AGI
LTCG for A Charities - 30% of AGI
LTCG for B Charities - 20% of AGI

45
Q

How is legal expense in connection with an attempt to produce or collect income deducted?

A

Misc Itemized deduction subject to the 2% floor

46
Q

How are custodial fees for an IRA deducted?

A

Investment Expense misc itemized deduction subject to the 2% floor

47
Q

How is the floor for Itemized deductions applied?

A

Add up all deductions and the apply the floor

48
Q

2 ways an individual can deduct a loss in a transaction for personal purposes

A
  1. Casualty

2. Theft

49
Q

Limitation of Hobby Loss Expense and how it’s deducted

A

Limited to Hobby revenue, misc itemized deduction subject to 2% floor

50
Q

How is Social Security income used in the gross income test for a dependent?

A

No included

51
Q

Qualifying Relative Test (4)

A
  1. Support
  2. Gross Income
  3. Joint Return
  4. Citizenship/Residency
52
Q

NOL carryback and carryforward

A

2 back, 20 forward

53
Q

4 Things that can’t create an NOL for individuals

A
  1. Personal Exemption
  2. Standard Deduction
  3. Excess non-business capital loss (limit $3,000)
  4. A NOL from another year
54
Q

Head of Household applies if a taxpayer provides what 2 things?

A
  1. Provides over 1/2 Support for

2. Qualifying Child or Relative

55
Q

What is the Mini Standard deduction and what is the amount?

A

Taxpayer is claimed as a dependent by someone else, $1,000

56
Q

Is Tax-Exempt interest from Private Activity Bonds issued after 1986 a Preference for AMT?

A

Yes

57
Q

How is Self-Employment Tax included in Schedule C to calculate net-earnings from self employment

A

It is not used in the Calculation and is not on Schedule C

58
Q

What are the max amounts of eligible Child and Dependent Care expenses

A

1 child = $3,000

2 or more = $6,000

59
Q

What is the amount of the Foreign Tax Credit

A

Lower of…

  1. Foreign Tax Paid
  2. (Foreign Taxable Income/Worldwide Income) x U.S. Source Taxable Income
60
Q

What is the amount of the Work Opportunity Credit?

A

40% of the first $6,000 wages, max $2,400

61
Q

What amount of gain is recognized on a corporate formation what includes liabilities and assets

A

The amount that liabilities exceed the basis in the assets contributed

62
Q

What is the ownership percentage required of a stockholder to recognize no gain on a corporate formation?

A

80%

63
Q

Basis in Corporate Formation for shareholder

A

Adjusted Basis in Property Given-Up
+ Recognized Gain (lower of)
a. Realized Gain
b. Boot Received

64
Q

Gain and Basis on a corporate formation are 2 different things (T/F)

A

True

65
Q

Is there a gain or loss on the complete liquidation of a subsidiary that a corporation owns 80% or more?

A

No

66
Q

Are distribution of Roth IRAs first made from interest or capital?

A

Capital

67
Q

IRA contribution limit

A

$5,500

68
Q

Support for Dependent Include (7)

A
  1. Food
  2. Clothing
  3. Lodging
  4. Medical
  5. Recreational
  6. Educational
  7. Certain Capital Expenditures
69
Q

How long must a corporation own stock to get the Dividends Received Deduction?

A

46 days

70
Q

Charitable Contribution Rate for Corporations, and what it’s calculated off of?

A

10%, Business Income plus dividends, before DRD

71
Q

Corporate AMT Exemption amount

A

$40,000 - (25% of AMT Taxable Income over $150,000)

72
Q

Who is Accumulated Earnings Tax imposed on?

A

Corporation that do not distribute Earnings

73
Q

2 Accumulated Earnings Tax downward Adjustments?

A
  1. $250,000 from Accumulated Earnings

2. Dividends paid within the first 2 1/2 months of the next year

74
Q

Deduct the following to determine undistributed earnings from a Personal Holding Company (2 items)

A
  1. Federal Income Tax

2. Net Long-Term gain less related FIT

75
Q

What amount of dividend income does the shareholder receive when land, or other property, is distributed as a dividend?

A

Fair Market Value (FMV)

76
Q

Property Dividend of land from a Corporation to a Shareholder
Basis = $30,000 FMV = $38,000 Liability = $3,000
What is Dividend Income and Basis to Shareholder

A

Dividend Income = $35,000 ($38,000-$3,000)

Basis = $38,000 (FMV)

77
Q

Order of distributing appreciated property and then calculating taxable dividend

A
  1. Add gain to E&P

2. Determine if Distribution at FMV is taxable

78
Q

What type of transaction is the redemption of stock in a partial liquidation to the Shareholder?

A

Entirely Capital Gain

79
Q

What test do you use to determine if it’s a reorganization?

A

80% control test

80
Q

Is Exchange of Stock for Stock in an reorganization a taxable event?

A

NO

81
Q

Exchange of Stock for Stock in an reorganization would be a taxable gain if what occurred?

A

Boot is received

82
Q

What is a Type B reorganization

A

Stock for Stock

83
Q

Stock ownership test to determine if a company is a “Personal Holding Company”

A

More than 50% ownership directly or indirectly by 5 shareholders

84
Q

What is the passive income limit for S-Corps that will terminate an S-Corp Election?

A

Passive investment income exceeding 90% of gross receipts in each of the three consecutive years

85
Q

Shareholder losses from S-Corp are limited to what?

A

Shareholder’s Basis

86
Q

Ordering Rules for Partnership and S-Corp

A
  1. Increase for Income
  2. Decrease for Distributions
  3. Decrease for Losses
87
Q

What type of Tax Payer gets a 6 month extension?

A

Individual
C-Corporation
S-Corporation
Estate Tax Return

88
Q

What type of taxpayer has an different extension due date and what is the difference?

A

Tax-Exempt, 3 months plus another 3 if approved

89
Q

Regular Return Due Date of 4 months and 15 days after year end for who?

A

Individuals
Partnerships
Fiduciaries (Estates and Trust)

90
Q

Regular Return Due Date of 3 months and 15 days after year end for who?

A

C-Corporations

S-Corporations

91
Q

Regular Return Due Date of 5 months and 15 days after year end for who?

A

Tax-Exempt Organizations

92
Q

What is the Due Date for and Estate Tax Return?

A

9 months

93
Q

What type of Tax Payer gets a 5 month extension?

A

Partnerships

Fiduciaries (Estates and Trust)

94
Q

When is a Non-filing penalty imposed?

A

Taxpayers, who must file, do not file a return by the due date

95
Q

What is the Non-Filing Penalty

A

5% per month on tax due, not to exceed 25%

96
Q

Passive Activity Limits are applied to what entities?

A
  1. Individuals
  2. Estates
  3. Trust
  4. Personal Service Corporations
  5. Closely-Held Personal Service Corporations

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