Formulas

Question 0

Cost to cost method for % completion income recognition

Answer 0

Total cumulative cost/total expected cost

Question 1

Kiddie tax

Answer 1

Total interest income
(950)
(Greater of 950 or child’s itemize ded related to unearned income)
= amt to be taxed at parent’s highest rate

Question 2

Gross income recognition calculation (% completion income recognition)

Answer 2

(Total cumulative cost/total expected cost) * total contract price - recognized contract income

Question 3

G/l on disposition of property

Answer 3

Amt realized
(Adj basis of assets sold)
= g/l realized

Question 4

Net rental income/loss

Answer 4

Gross rental income
Ppd rental income (non refundable deposits)
Rent cancellation pmts
Improvement in-lieu-of-rent
(Rental exp)
= net rental income/loss

Question 5

Determine g/l (basic)

Answer 5

Amt realized
(Adj basis of asset sold)
= g/l

Question 6

What is amt realized?

Answer 6

Cash received (boot)
COD (boot)
Prop received at FMV
services received at FMV
Reduce the amt realized by any selling exp

Question 7

Realized but not recognized g/l

Answer 7

Amt realized
    Money received (boot)
    COD (boot)
    FMV prop
    (Sell exp)
(Adj basis of asset sold)
     Purchase = cost
     Gift = rollover cost 
     Inherit = step up/down to FMV
= gain (if you can HIDEIT you can exclude it from tax on gain)
      Homeowners exclusion
      Involuntary conversion
      Divorce prop settlement 
      Exchange of like kind
      Installment sale
      Treas cap & stock
Or loss (WRAP up and throw away)
      Wash sale losses
       Related party losses
      And
      Personal losses

Question 8

Adjusted basis

Answer 8

Cost - accum dep

Question 9

Amt realized

Answer 9

FMV new + boot recd

Question 10

Reportable installment sale gain/income

Answer 10

GP = sales - COGS
GP% = GP/Contract price 
       Contract price = SP - buyer liab
Earned rev (TI) = cash collections * GP %

Question 11

Net investment income

Answer 11

Gross investment income

Invest exp in excess of 2% AGI

Question 12

Deductible amount for casualty loss

Answer 12

Lower of: decrease in FMV of prop vs. basis
(Insurance proceeds)
($100)
(10% AGI)

Question 13

Keough net earnings

Answer 13

Business income
(Business expense)
=net business income 
(1/2 SE tax)
(Keough deduction) - 50,000 or 100% net earnings
=Keough net earnings

Question 14

Deductible medical exp

Answer 14

Qualified medical exp
(Insurance reimbursement)
= Qualified medical expense 'paid'
(7.5% AGI)
= Deductible medical exp

Question 15

Deductible casualty & theft loss

Answer 15

Smaller of - 1. Lost cost/adj basis or 2. Decreased FMV
(Insurance recovery)
=taxpayer loss
(100)
=eligable loss
(10% AGI)
= deductible loss

Question 16

Credit for elderly and/or permanently disabled

Answer 16

Single:
5000
(SS)
(1/2 excess AGI over 7500)
= balance 
*.15
= credit

Joint:
7500
(SS)
(1/2 AGI over 10000)
=balance
*.15
= credit

Question 17

Foreign tax credit

Answer 17

Lesser of:
Foreign taxes paid
OR
((TIfrom all foreign ops)/(TI + exemptions))*US tax

Question 18

AMT

Answer 18

Regular TI
\+/- adjustments
\+ preferences
= AMT TI
(Exemption)
= AMT tax base
*tax computations
= tentative AMT tax
(Tax credits)
= tentative min tax
(Regular income tax)
=AMT

Question 19

Shareholder tax consequences - boot

Answer 19

NBV assets
(Liab)
= excess liab = boot

Question 20

Net basis in stock (to shareholder)

Answer 20

Asset NBV
(Liab)

Detailed:
FMV services rendered 
\+ gain recognized by shareholder
(Cash recd)
(Liab assumed by corp)
(FMV of non money boot recd)
= basis of CS

Question 21

Qualified production activities income

Answer 21

Domestic production gross receipts
(COGS)
(Other directly allocable exp/loss)
(Proper share of other deductions)

Question 22

General business credit

Answer 22

Net income tax (reg tax + AMT - non refundable credits)
(Greater of:
    25% regular tax liab over 25000)
    Or
    Tentative min tax for yr)

Question 23

Cost depletion remaining basis

Answer 23

Remaining basis of property/remaining number of recoverable units

Question 24

Cost depletion deduction

Answer 24

Depletion unit rate * # units sold for year

Question 25

Corp AMT - adjustments - preferences - ACE

Answer 25

``` Adjustments - +/- to income Long term contracts Installment sale dealer Excess dep (post 1986) Preferences - add back to income Percentage depletion Private activity - post 86 Tax exempt int inc Pre 87 ACRS dep Adjusted Current Earnings (ACE) Muni interest income Tax exempt int inc Increase CSV life ins Non SL dep DRD - unrelated 70% exclusion ```

Question 26

Accumulated E & P

Answer 26

Accumulated E & P beginning +/- current E & P less and distrib deemed from current (Distrib from accumulated E&P)

Question 27

Corp property dividend

Answer 27

FMV property (NBV) = corp gain --> E&P

Question 28

Corp sells assets & distributes cash to shareholders

Answer 28

Tax 1. SP (Basis) = taxable gain/loss Tax 2. Proceeds (Stock basis) = taxable gain/loss

Question 29

Corp distributes assets to shareholders

Answer 29

Tax 1. FMV (Basis) = taxable g/l (to corp) Tax 2. SP (Stock basis) = taxable g/l (to shareholder)

Question 30

Shareholder basis in S corp stock

Answer 30

``` Initial basis + income items + additional shareholder invest in corp stock (Distrib to shareholders) (Loss/exp items) = end basis ``` BASE

Question 31

Partner's original basis

Answer 31

Cash - amt contrib Property - adj basis (NBV) (Liab) - assumed by other partners is reduction Services - FMV Liab - other partners liab assumed by incoming partner

Question 32

Partner basis formula

Answer 32

``` Beginning capital account + % all income (% all losses) (Withdrawals) = ending capital account +% recourse liab = year end basis ``` BASE like a bank account - withdrawal = nontaxable = NBV

Question 33

Partnership basis

Answer 33

Capital account + your share of liab

Question 34

Complete withdrawal - nontaxable liquidation | Partner basis

Answer 34

``` Beginning cap account % income/loss up to withdrawal = partners capital account % of liab = adj basis at withdrawal (Cash withdrawn) = remaining basis to be allocated to assets withdrawn --> zero out to get out ```

Question 35

Capital gain/loss of sale of partnership interest

Answer 35

``` Beg cap account % income (loss) up to sale = cap account @ sale date % of liab = adj basis (Amt received) - cash, COD, FMV property = capital gain/loss ```

Question 36

DNI

Answer 36

``` Estate gross income (Estate deductions) =adjusted total income +adjusted tax-exempt interest (Capital gains) =DNI ```

Question 37

Income distribution deduction (DNI)

Answer 37

Actual distribution to beneficiary Or DNI (less tax exempt interest)

Question 38

Federal estate tax

Answer 38

``` FMV assets (Liab) = net worth (Transfers) = remainder * tax rate =estate tax (Credits) = federal estate tax ```

Question 39

Estate transfer tax

Answer 39

``` Gross estate (Non discretionary deductions) =adj gross estate (Discretionary deductions) =taxable estate Adjusted taxable gifts =tentative tax base at death *uniform tax rtes =tentative estate tax (Gift taxes paid) =gross estate tax (Applicable credit) =ESTATE TAX DUE ```

Question 40

Tax due on current gifts

Answer 40

``` Gross gifts in calendar year (FMV) (Exclusions of $13000/donee/year) (Unlimited marital ded if gift to spouse) (Charitable gifts) =taxable gifts this year Taxable gifts of prior years =cumulative lifetime gifts ```

Question 41

Tax on cumulative gifts

Answer 41

Tax on cumulative lifetime gifts (calculate) (Gift tax pd on prior years) (Applicable credits) =tax due on current gifts