FR5 Flashcards
indicate whether the following is subject to book,tax, both, or neither:
- US Treasury bond int income
- FIT
- BDE - books
- BDE - tax
- Gain on sale of land
- Gain o sale of stock
- Int exp - mortgage loan
- Int exp - purch muni bonds
- Int exp - credit loan
- business entertainment
- recovery of PY BDE
- refund on state tax
- Muni bond income
- Key man insurance proceeds
- US Treasury bond int income = both
- FIT = books
- BDE - books = books
- BDE - tax = tax (only amount written off)
- Gain on sale of land = both
- Gain of sale of stock = both
- Int exp - mortgage loan = both
- Int exp - purch muni bonds = books
- Int exp - credit loan = both
- business entertainment =books
- recovery of PY BDE = tax
- refund on state tax = both
- Muni bond income = books
- Key man insurance proceeds = books
When are Key-man life insurance fully deductible?
only when the corporation I not a beneficiary, directly or indirectly
Is vacation pay deductible?
Vacation pya earned by employees that vested under a plan and was paid within 3 months after y/e is deductible
Is state franchise tax liability deductible?
State franchise tax liability that was accrued during the year and paid on march 15 the next year is fully deductible
How do you determine the basis of property received by a corp?
GR: the Greater of basis of transferred asset of transferor/shareholder OR debt assumed by the corporation
How is the gain determined in a corp liquidation through property liquidation?
Property distributed in a complete liquidation will be deemed to have been sold by the corporation at its FMV and any G/L will be recognized by the liquidating corp as CG/CL
In an S corporation, How do you calculate an individual’s share if sold during the taxable year?
- divide amount over 365 = On a per share basis
- then multiply by amount of days stock was held
- then multiply by the percentage of ownership
What increases a partnerships income?
a partners basis is increased by the partners share of pship ord income, separately stated income and tax-exempt income
What is the partner basis of land/other assets in a nonliquidating distribution?
the partner takes the partnership basis for assets distributed. the basis cannot exceed the partners basis in the partnership
Is unrelated Business income 100% taxable?
No, there is a $1k business deduction
What items are excluded from UBI?
- income from research of a college or hospital
- activities limited to exempt organizations by state law,
- G/L on sale/exchange of property not held primarily for sale to customers in ord course of busniess
What is form 990?
Annual information return stating gross income, receipts, contributions, disbursements, etc.
required of most orgs under Sec. 501
What does an organization that has less than $50k in gross receipts file?
not 990 or 990EZ but 990N
What is one way the tax-exempt status of an organization will be revoked?
if the organization fails to file the required return for the consecutive years
In a sale of a partners partnership interest, what determines if it is a capital or ordinary G/L?
Are there hot assets involved (unrealized receivables or substantially appreciated inventory)?
- – if yes –> ordinary
- – if no –> capital
