gimme dat R6 Flashcards
You file form 1041 which is an annual income tax return, what are the requirements surrounding annual income
to file form 1041, the annual income has to be 600 bucks or more
give the definition of distributive net income
Estate (trust) gross income including cap gains LESS: estate deductions =Adj. Total Income \+ Adj. Tax-exempt interest LESS: Capital Gains allocated to corpus =DNI
What is the income distribution deduction
the deduction is the lesser of: Total distributions to beneficiary less tax-exempt income.
OR
DNI (less adj. tax-exempt interest)
tell me about simple trusts please
Simple trusts are distriuted out of current income, the income is taxable to the beneficiary, all the income has to be distributed, and no deductions are allowed for Charitable contributions, exemption is 300.
tell me about complex trusts please
distributions may be out of principal (corpus), income may be accumulated within the trust, deductions are allowed for charity, exemption is 100
can you name some nondiscretionary deductions for an estate
medical expenses, admin expenses, funeral costs, and outstanding claims of debt,
whats teh amount of the applicable credit for estate and gift tax
lifetime is 11,400,000 and this year is 4,505,800
State the formula for determining the estate tax
Gross estate
-Nondiscretionary and discretionary deductions
=Taxable estate
+Agg. Adj. Taxable gifts made during life
how much can you gift to someone without gift tax ramifications
15,000 S or 30,000 MFJ or “gift splitting”
there is an unlimmted exclusion for payments made directly to hospitals/healthcare and tuition, charitable gifts, and maritable deduction.
how is UBI taxed for an exempt corp
it is taxed at the regualr corporate rate, but only if the UBI is over 1,000
can you tell me what the circular 230 is
its a publication stating who can be a tax practiioner before the IRS and the duties and regualtions of the practice
Can a tax practioner charge a contingent fee?
YES under 3 situations….IRS Audit, Claim solely for a refund of interest/penalties, or a judicial proceeding under the IRC
how long to written dees need to remain active? how long do you have to keep advertisements?
30 days for fees…keep advertisements for 36 months.
What are the best practices for the tax advisor
communicating with the client regarding the terms of the engagement and the purpose
Establishing the facts and arriving at a conclusion supported by laws/facts
advising client about important conclusions
taking stpes to make sure proper steps are followed
acting fairly and ethically
