Final Review Specifics

Question 1

What are the big things to remember about 1244 worthless stock?

Answer 1

It is for qualified business only
It CAN NOT BE INHERITED. MUST BE ORIGINAL OWNER
Can deduct ORDINARY loss up to 50,000

Question 2

What are some of the specifics surrounding the statute of frauds for employment contracts?

Answer 2

You are mainly looking to see if they are over one year, BUT there is a caveat because if there has been SUBSTANTIAL OR FULL PERFORMANCE of the employment like the one example it would be considered valid even though they did the contract orally

Question 3

Medical expenses insurance premium specifics

Answer 3

You can DEDUCT BOTH THE PREMIUMS and the DEDUCTIBLES on SCH A. MANDATORY MEDICARE is NO GOOD. VOLUNTARY-GOOD

Question 4

What are the specifics to remember for life insurance proceeds?

Answer 4

You are looking to see that the corp, partnership, or individual is the BENEFICIARY first off. THEN YOU NEED TO SEE IF IT IS PREMIUM OR PROCEEDS when you are trying to calculate tax income on 1120

Question 5

What is a specific for the number of exemptions/dependents that you can claim on your tax return?

Answer 5

When you are trying to think about social security look for words like NONTAXABLE or LOW INCOME (and tax exempt interest and scholarships) because even though you may be over 3250 you DON’T INCLUDE IT

Question 6

What is the secret difference between estimated payments for corporations and individuals?

Answer 6

For individuals if you have a zero tax liability in the year before you do not have to just use the current year 90% method, you can use the LESSER of the two. If you are a corporation it is 100% of last year OR THIS YEAR BOTH 100%.

Question 7

What are specifics to Section 179

Answer 7

The deduction is 25,000, which will never be a question, too easy. You do need to know that after 200,000 the amount goes down DOLLAR FOR DOLLAR.

Question 8

What is the difference between avoid and evade?

Answer 8

Evasion is BADDD. Avoidance is more relating to the tax shelter and other doctrines.

Question 9

Remember the one about avoid and evade. What is the difference between IRS proving beyond reasonable doubt and preponderance of evidence.

Answer 9

Preponderance of evidence is required for the CIVIL cases and the reasonable doubt is required for the CRIMINAL CASES. BOTH OF THEM ARE WORRIED ABOUT TAX EVASION, NOT AVOIDANCE