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REG > Final Review > Flashcards

Final Review Flashcards

1
Q

Adjustments

When would a taxpayer’s contributions to a traditional IRA not be subject to AGI phase-out limitations?

A

If taxpayer and spouse do not participate in another qualified retirement plan

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2
Q

Adjustments

What is the maximum deduction amount for educator expenses?

A

$300

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3
Q

What is the maximum deduction amount for student loan interest?

A

$2,500

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4
Q

Which IRA contributions are not deductible? Contributions to a traditional IRA or a Roth IRA?

A

Roth IRA

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5
Q

What is the carryback and/or carryforward rules for the Foreigh tax credit?

A

Excess is carried back 1 year and carried forward 10 years

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6
Q

What is the carryback/carry forward rules for NOL happening prior to 2018? How much of the NOL is used to offset future taxable income?

A

Carryback 2 years, carryforward 20 years, and 100%

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7
Q

What is the carryback/carry forward rules for NOL happening between 2018 and 2020? How much of the NOL is used to offset future taxable income?

A

Carryback 5 years, carryforward indefinitely, and 100% and 80% of taxable income after 2018

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8
Q

What is the carryback/carry forward rules for NOL happening 2021 to the present ? How much of the NOL is used to offset future taxable income?

A

No Carryback, carryforward indefinitely, and 80%

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9
Q

What does the Lifetime Learning credit (LLC) provide?

Lifetime = unlimited number of years for qualified expenses

A

20% of qualified expenses up to $10,000

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10
Q

How many years is the American Opportunity Credit (AOC) available to taxpayers for educational costs?

A

The first 4 years of post-secondary education

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11
Q

What does the AOC provide?

A

100% of the first $2,000 of qualified expenses plus 25% of the next $2,000 if expenses for the year ($2,500)

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12
Q

What does the Lifetime Learning credit (LLC) provide?

Lifetime = unlimited number of years for qualified expenses

A

20% of qualified expenses up to $10,000

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13
Q

What do client records include?

A
  1. Materials prepared by the client or third party and provided to practitioner
  2. Returns, claims for refund, or other documents prepared by the practitoner
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14
Q

What is the key difference between actual fraud and constructive fraud?

A

Actual fraud is when the defendant knows and disregards the truth
Constructive fraud is when the defendant doesn’t know if true or false, but acts recklessly

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15
Q

What is the most common court for taxpayers to dispute an IRS deficiency notice?

Note: A taxpayer does not need to pay the disputed amount before suing

A

U.S. Tax Court

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16
Q

If a taxpayer pays the tax in question and wishes to dispute it, what court(s) are available to them?

A
  1. Federal District Court 2. U.S. Court of Federal Claims
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17
Q

If a taxpyaer or the IRS is dissatisifed with the decision from the U.S. Tax Court, Federal District Court, or Court of Federal Claims, what can the taxpayer do?

A

Appeal to the U.S. Court of Appeals through the regular U.S. Tax Court and U.S. District Court

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18
Q

What is the highest court in the U.S. and can choose which cases it wants to hear?

A

The U.S. Supreme Court

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19
Q

True or False

Advertisments and price quotes are offers opposed to deals

A

False; they are deals (i.e. an invitation to deal)

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20
Q

What does the statue of frauds require?

A

The statue of frauds requires contracts for the sale of goods of $500 or more to be in writing

Note that if contracts are below $500, writing is not required and the contract may still be binding

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21
Q

True or False

To ratify a contract, the principal (i.e. boss) must have knowledge of all material facts

A

True

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22
Q

When can an agent revoke his/her agency duty?

A

When coupled with interest

This means

This means the agent not only has a job to do, but they also will benefit from their duty such as selling stock

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23
Q

Is a principal liable for an agent’s torts if committed outside of the scope of employment?

A

No, the agent is personally held liable

24
Q

How should suretyship promises be evidenced?

A

In writing under the Statue of Frauds

25
Q

What rights does a surety have against his or her principal?

A

The right of exoneration (to be free from blame/guilt)
The right of reimbursement (recover)
The right of subrogation (subsitution of parties)

26
Q

What does attachement require?

A
  1. An agreement between the creditor and debtor (through possession or autheticated record of agreement)
  2. Creditor must give value
  3. Debtor must have rights in the collateral
27
Q

What are the five methods of perfecting under secured transaction of the UCC?

A
  1. Filing a financing statement (can be used for intangibles)
  2. Taking possesion of the collateral (cannot be used for intagibles)
  3. Automatic perfection
  4. Control
  5. Temporary
28
Q

True or false

A spouse may jointly file a voluntary petition under the chapter 7 liquidation proceeding

A

True

29
Q

How long must a debtor wait before receiving another discharge in bankruptcy

A

At least 8 years

30
Q

Is there consideration?

A promise to pay a minor $500 to paint a garage

A

Yes, because there is something that is being bargained for in exchange for a value

31
Q

Is there consideration?

A person’s promise to pay a real estate agent $1,000 in return for the real estate agent’s earlier act of not charging commission for selling the person’s house.

A

No, because it was a past act that the person was already obligated to do

32
Q

Are the employer portion of self-employment taxes deductible? If so, from AGI or to arrive at AGI?

A

Yes, to arrive at AGI

33
Q

What increases the accumulated adjustments account of an S corp?

A

Interest and Dividends

34
Q

True or False

For income to be taxable on a tax return, it must be either realized or recognized.

A

False, BOTH realized and recognized

35
Q

When does federal law impose an income tax on net income?

A

When at a minimum there is physical presence in a state, the income is taxable

36
Q

When does federal law prohibit a state from imposing an income tax on net income?

A

If orders are taken within the state and accepted at corporate HQ outside the state and shipped from a location outside of the state

37
Q

Which one(s) increase a shareholder’s basis in an S Corp and a partnership?
* Tax-exempt Interest
* Taxable Interest
* Non-deductible expenses
* Losses

A
  • Tax-exempt interest
  • Taxable interest
38
Q

Which one(s) decrease a shareholder’s basis in an S Corp and partnership?
* Tax-exempt Interest
* Taxable Interest
* Non-deductible expenses
* Losses

A
  • Non-deductible expenses
  • Losses
39
Q

What is the purpose of a U.S. Tax Court?

A

The U.S. Tax Court is a specialized trial court (bottom level) that initially hears only federal tax cases, and the trials are by judge and not by a jury

40
Q

How would you calculate the depreciable basis of equipment?

A

Costs associated with purchase of asset - accumulated depreciation

41
Q

What is the exception for a TRP to avoid a penalty for a position disclosed on the return?

A

Reasonable Basis standard

>20% or more chance of winning in court

42
Q

What is the exception for a TRP to avoid a penalty for a position undisclosed on the return?

A

Substantial authority standard

40% or more chance of winning in court

43
Q

What is the exception for a TRP to avoid a penalty for tax shelters and reportable transactions?

A

More likely than not standard

50% or more chance of winning in court

44
Q

Statue of frauds requires contracts with sales of goods to evidenced in writing if the price is $500 or more unless what?

SWAP

A

The contract is for specially manufactured goods, written confirmation, admitted in court, or performed

45
Q

What convention(s) do/ does real property use?

A

Mid-month

46
Q

What convention(s) do/does personal property use?

A

Half-year (default)
or
Mid-quarter

47
Q

Individual Tax Formula

A

Gross Income - Adjustments = AGI - Standardized Deduction or Itemized Deduction = Taxable Income before QBI Deduction - QBI Deduction = Taxable Income

48
Q

Is workers’ compensation taxable or tax-exempt

A

Tax-exempt

49
Q

Is unemployment compensation taxable or tax-exempt?

A

Taxable

50
Q

Can a contingent fee be charged in the situation?

An IRS examination or audit

A

Yes

51
Q

Can a contingent fee be charged in the situation?

An audit or review of financial statements

A

No

52
Q

Can a contingent fee be charged in the situation?

Claim solely for a refund of interest and/or penalties

A

Yes

53
Q

Can a contingent fee be charged in the situation?

A judicial proceeding arising under the IRC

A

Yes

54
Q

True or false

Personal reputation awards and punitive damages are both excluded from taxable income

A

False, both are included

55
Q

What organization test products for public safety?

A

501(c)(3) Public Charities

REG (14 decks)

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