Final 2 Weeks Flashcards
How do you calculate sep ira problems
Take the lesser of 58,000 or 20% of net earnings
Net earnings equals net self employment income minus 50% of self employment tax
Section 1231 assets are
Depreciable personal property and real property used in business and held for more than 12 months
The accumulated earnings tax does not depend on
The number of stockholders in a corporations
If you owe less than $1000 after withholdings there is no penalty
For underpayment of taxes
Built in gains tax only applies if the corp was at one point a ____ Corp
C
Scholarships used for tuition, fees and books are (included or not included) in gross income
Not included
Basis of new building is in a destruction situation
Purchase price of new building minus deferred gain
Recognized gain is insurances proceeds above cost of new building
Deferred gain is cost of new building above cost of old building
New basis is old basis
Debt must be blank in order for the debtor to be taken through involuntary bankruptcy
Unsecured.
Built in gain tax is calculated based on fmv WHEN
At beginning of year
Partnerships recognize gain or loss on distributions to partners?
No!
For a general partnership distribution problem, reduce basis by amount of ALL DEBT (recourse and non recourse)
For llps or other limited arrangements, only reduce basis by share of non recourse debt
You know these problems brian cmon
Capital gains are (included or not included) in self employment income
Not included
Net earnings from self employment multiplied by blank% gives net self employment income
7.65
So, multiply total self employment income by 92.35% to get net self employment income
Self employment tax is the .9235 amount times 15.8 %
Adjustment to self employment tax is just BLANK if the top number
Half
Gambling winnings are included on form BLANK and gambling losses are deducted up to gambling winnings where
1040 above the line
Below the line as itemized deductions
A non taxable stock dividend’s holding period begins on
Date stock was originally purchased (as opposed to date dividend was issued)
If fmv is less than nbv (holder’s basis), and stock is sold for less than fmv, then the holding period starts BLANK and basis is BLANK
At the date of the gift
Fmv
For gift tax purposes, the value is
Fmv at date of gift
The taxable amount to a shareholder from a corporation’s e and p is
Cash received or fmv of property received
Percent of yearly taxable income you can’t deduct more than for depletion scenarios
50%
Percentage depletion is just total sales times BLANK
The given depletion rate (limited to 50% of yearly taxable income)
For a wash sale (within 30 days), whichever stocks they buy back do what to the loss from the within 30 day sale transaction
Disallow them.
So, if they sold 30 for a loss but bought back 20, 10 shares (at the loss rate, or alternatively, just the total amount not allowed to be deducted) is disallowed to be recognized and that deferred loss is added to the second purchase’s basis
The 10% amount limit for charitable contribution deductions applied to which amount on the income statement
Taxable income before charitable contributions and dividends received deductions
If you have a ‘remove items at consolidated level’ column, what you do is….
Sum up the whatever row the answer cell is on and negate the total as your answer
Ordinary business income is the same as
Net income
Interest expense is operational, interest income is a BLANK
Separately stated item
Salary has what effect on partnership basis in an s Corp
No effect
If there is a problem with charitable contribution and s corp, do what to the charitable contribution when calculating partner’s share of ordinary business income
Add it back. Separately stated items like charitable contributions are dealt with later
A self check for basis in s Corp problems is
Capital account balance
Do guaranteed payments to partners factor in when calculating net income?
Yes
Are qualified dividends taxable?
Yes
Are inventory sales eligible for installment sale recognition
No
3 steps for installment sales
1) calculate: sale price minus basis
2) get gross profit percentage ( equals gross profit divided by sales price)
3) multiply gross profit percentage by cash received
Is recaptured ordinary income (like depreciation recapture or excess depreciation over straight line) eligible for installment sales?
No
If you have installment sale and a 1231 gain, the 1231 gain portion over the TOTAL sale price gives you BLANK
Gross profit percentage, to be multiplied by cash collected, BUT THEN ADDED TO ORDINARY INCOME RECAPTURED
In year 2, multiple cash received by same gross profit percentage
If a person donates services to the formation of a c Corp, do those service increase basis?
Yes
When there is no mortgage, what is the basis to both sides of the transaction
Net book value aka basis
If mortgage assumed by a company is greater than the basis, then the shareholder has a BLANK
Gain to recognize of the difference
When a corporation receives donated property with a mortgage, what is the corporation’s basis in the property
The higher of mortgage assumed or basis
An s can hold c stock no problem. Can a c hold s stock and the s Corp remain in operation?
No
Articles of incorporation include
Name of registered agent and number of authorized shares
The ‘inside’ in inside basis refers to the BLANK
Basis of assets owned by the partnership
An s election made by when is retroactively effective as of the first day of the taxable year
15th day of the third month (just think March 15th for calendar year)
NOLs from 2017 and backward can only be carried back BLANK years and forward BLANK years
NOLs from 2018, 2019, and 2020 can be carried back BLANK years and forward BLANK years
NOLs arising 2021 and after can’t be carried back but can be carried forward BLANK TIME
2 and 20
5 and infinity
Infinity
The oldest NOL is always used BLANK
FIRST
Taxable interest and dividends from unrelated organizations go towards BLANK of a personal holding company
Determining income requirements
When suing a general partnership, must go after BLANK’s assets first then BLANK’s
The partnership’s first
Then any individual partner
S corporation debt is or is not included in stock basis
Is not included. Sorry for the the question Becker academic support
Express warranty is created
By the description of the goods which forms part of the basis
Warranty of title mean
No fuckin liens against the property. Means you can’t sell shit you don’t have full rights to
Scholarships do or do not have to be reported in the students gross income
Do not
Coverdell education savings account interest accumulated
With it without tax?
Tax free
Medical expenses are deductible when
To the amount they’re above 7.5% of agi
Scholarship amounts do what to the total expense amount able to be counted for American opportunity credit
Reduce total expense amount that can be counted
Cars, light trucks, computers, copiers are what year property in macrs
5 year
Typically use mid year convention unless the 40% in final quarter applies
Residential and non residential always use the what convention
Mid month convention
For year of sale, use mid month convention which means if sold in September (month 8, and middle of month) so it’s 8.5/12 x the total year percentage amount (2.564%)
For personal property (not buildings) use mid year convention unless BLANK
More than 40% of the personal property placed in service for the year was place in service in the final quarter of the year
If the mid quarter convention applies because of the 40% thing, use BLANK quarter to start depreciating
Whichever quarter that particular property was bought in. Ie, not all in same quarter
C CORP
How to calculate a shareholder’s realized gain
How to calculate recognized gain
To calculate basis in shares it’s just
Fmv of property minus basis in property
To the extent of boot received. No boot, no gain
Net book value reduced by debt relieved plus cash contributed (minus any stupid cash received) plus gain recognized
Income reported on form 1120 f is
Income earned by a u.s. branch
Under UCC
Even if they demand a scale there is a contract formed
PROPERTY USED IN BUSINESS GAIN ON SALE IS FUCKING ORDINARY IF ITS LESS THAN ACCUMULATED DEPRECIATION
I AM SO FUCKING FURIOUS AND FRUSTRATED
If a group owns more than 80% s or c, property contributions
ARENT TAXABLE
CARL HAS TO RECOGNIZE 150k cuz basis was 150 and liability was 300
His adjusted basis is reduced by what (HINT ITS ABOVE)
the liabilities assumed by the formed corporation
Basis corp has in property then is greater of: liability assumed or contributor’s basis in property plus gain recognized by contributor
Property received by a corp’s basis equals
The person who contributed it’s basis
Is there depreciation recapture for real property owned by an individual?
No!
Section 291, real property owned by a corporation, means recapture as ordinary income BLANK
20% of the lesser of recognized gain or accumulated straight line depreciation
Old basis PGR PBP minus WHAT
Boot received
Aaa included which accounts in its calculation
Beginning aaa balance plus all ordinary, separately stated, non deductible (like fines and penalties), and distributions
Does a contribution to a Roth account do shit to the calculation of agi?
No, not shit. Doesn’t factor in
Can you write off a worthless non business loan when calculating agi?
You can. Deduct the loss of the value of the worthless non business loan
For commercial real estate actively participated in, at risk amount is cash plus
Recourse debt
For limited partnership, at risk amount is cash WHAT
Invested
At risk amount decrease by amount of
Investor share of activity loss
Dividends paid do or do not generate a book tax difference, and on what form are they reported
Do not generate a book tax difference
Form m2
For a c Corp, investment losses are only deductible up to
Investment gains
If on the books it seems like they’ve deducted more than investment gains, add back the gain on form m1
At risk amount for rental real estate problem is cash plus what type of debt
Recourse debt
If the contributor is a non shareholder, the basis in the land the non shareholder contributed is
Zero
But don’t forget to add to that anything that must be done to the land to get it in to useable condition
For the formation of a corporation, gain for the shareholder for contributed property is recognized as fmv minus their basis FOR REALIZED
FOR RECOGNIZED, JUST DEPENDS ON THE PRESENCE OF WHAT
The only thing needed to compare in this situation is basis vs fmv of the property. No cash, no liabilities, none of that
BOOT
For Jones example forming a Corp with a majority ownership group
Basis 100
Liability 60
Fmv 120
Cash paid to shareholder 10
What are
Realized
Recognized
Basis
Realized 120-100 = 20
Recognized= 10 of boot cuz there is an amount realized
Basis = 100-60-10 paid to shareholder+ 10 cuz the shareholder had to recognize 10
Carey example Basis 20 Liability 20 Fmv 40 Cash PAID BY SHAREHOLDER 30
For shareholder:
Realized
Recognized
Basis
Realized = 40-20 basis = 20 Recognized = no boot so 0 Basis= 20 - 20 +30 = 30 (no recognized gain so nothing to add back)’
Sub part f income example
Us parent, Irish company in England
E and p problem flow of dividend/ordinary/capital is:
Dividend up to current and accumulated ep, then return of capital up to shareholder’s basis, then capital gains
When a partner sells his portion of the partnership, realized gain is (for cash, liability and property)
Amount of cash, their portion of liabilities, and the FMV of the property given up
In an auction without reserve, goods must be sold if an offer is what
Made
Social security tax is based on what
Self employed person’s (the employer, if it asks) net profit from self employment
How are capital gains carried for a corporation
Back 3 years and forward 5. Cap losses can only be used to offset cap gains
Portfolio income (such as a temporary investment) cannot be used to offset passive income. Just a stand-alone fact.
Stand-alone fact
Non qualified option doesn’t meet criteria to be either a blank or blank
ISO or ESPP
ISO qualifications: not more than 10% shareholder, option price less than fmv at date of grant, and stock was held two years from grant date and 1 from exercise date
ESPP qualifications: less than a 5% shareholder, and option is less than 85% of stock price when granted or exercised
For a partnership problem, if someone contributes property after formation for a partnership share, do they recognize gain? If not, when do they recognize gain and how much.
No
They recognize gain later if the partnership sells the asset. They get all the gain up to the fmv at time of entry, then gain beyond that (based on sale price) is divided amongst partners proportionately
Charitable contribution carries over for how many years
5
Patnership, nonliquidating distribution, basis of building received by partner can’t exceed partner’s WHAT
Basis
Are capital losses included in the total of separately stated items
Yes
