Incorrect Flashcards
How much is the QBI deduction?
20% of qualified business income
How much $ can be excluded from gross income for payments made by an employer for educational expenses?
Up to $5,250
Is interest received on state and local bonds/obligations taxable?
No, tax exempt
Is scholarships for room and board taxable?
Yes
What is the SEP IRA deduction?
The lessor of $69,000 or
20% of net earnings
When deducting medical expenses what do you use and how do you calculate it?
You use a AGI floor by multiplying AGI by 7.5%. Add up the total expenses and subtract by AGI floor to get the deduction
Are state taxes paid an itemized deduction
Yes
What is the limit when deducting long term capital gain property at the FMV
30% of AGI
What are the two broad categories for above the line deductions?
- Profit motive deductions (business expenses)
- Adjustments
Does gross income matter for the definition of dependent for the medical expense deduction?
No
Is interest on qualified education loans deductible for or from agi?
For as an adjustment
Is a personal automobile a capital asset?
Yes
What is the maximum IRA deduction
$7000 for single
How much depreciation is taken for the month that real property is disposed of?
One half month
What is the maximum time you are able to file for a refund?
Up to 3 years after the original due date including extensions or 2 years after actual payment.
How to qualify for the Section 179 expense deduction?
-The property must be used in the taxpayers business
-Purchased from an unrelated party
What does a personal holding company consist of?
Considered a personal holding company if 60% of adjusted ordinary gross income consists of:
-dividends
-taxable interest
-royalties
-net rent
What is adjusted taxable income (ATI)
Income for the year excluding all interest income and interest expense
What is floor plan financing?
Debt used to acquire motor vehicles held for sale or lease where the debt is secured by the acquired inventory
When can a business deduct all of their interest expenses?
When AVG gross receipts is less then $30 million
How are dividends received by a partnership treated?
Treated as separately stated income by the partnership, taxable to the partner
What is the net section 123 gain(loss) ?
An asset that was used in the business that held for at least 3 years and sold.
A CPA may receive a contingent fee for…
successfully concluding an internal revenue service examination of an original tax return
A covered opinion includes…
any written or electronic ADVICE concerning transactions as listed transactions
What are the requirements for written advice (Circular 230)
The practitioner must use reasonable efforts to identify and ascertain the facts relevant to written advice on each federal tax matter
Is workers comp included in gross income?
No
On which date does the holding period of a partnership’s interest acquired in exchange for a contributed capital asset begin?
The date the partner’s holding period of the capital asset began.
If a situation involves a “guarantor of collection,” the creditor is required
to proceed against the debtor first, and only when the creditor is unable to collect from the debtor, is the creditor allowed to go after the surety.
The three-factor formula is based on
property, payroll, and sales factors
Under the liability provisions of Section 10, Rule 10b-5 the plaintiff must prove that:
- Loss was suffered as a result of the misstatements
- Information was relied upon
- Error - grossly negligent or scienter.
kiddie tax rules prevent parents and grandparents in high tax brackets from
shifting income (especially from investments) to children in lower tax brackets. Kiddie tax is applicable for:
- A child who is 17 years or younger at year end; or
-A child is 18 years of age at year end and the child doesn’t have earned income that exceeds half of his or her support; or
-A child with age 19 to 23 at year-end, he / she is a student (attends college for five months during the year) and doesn’t have earned income that exceeds half of his or her support.
The Sherman Antitrust Act prohibits
contracts, combinations, and conspiracies that restrain trade and monopolize.
For partnership basis distributed property is calculated at its
basis
If an individual paid income tax in year 1 but did not file a year 1 return because his income was insufficient to require the filing of a return, the deadline for filing a refund claim is
Two years from the date the tax was paid
Any exempt organization must file a business income tax return and pay income taxes on
unrelated business income (UBI) in excess of $1,000
What is Anticipatory repudiation?
The renunciation of a bilateral contract before performance is due is an anticipatory breach which gives the non-breaching party several options (one of which issuing immediately for anticipatory repudiation
What is Promissory estoppel
is an equitable remedy used in situations where your remedy at law is unjust (there is no indication from the facts in this problem that promissory estoppel would apply).
What is accord and satisfaction?
applies in circumstances where there is an unliquidated debt and there is a good faith offer to settle this disputed debt.
What depreciation method do residential and nonresidential real property use?
Mid-month convention
Are consulting fees and director fees included in self employment income?
Yes
In an S corporation is a loan included in calculating basis?
No
What are the two cases where you have to pay the deficiency before the trial?
In cases tried in the federal district court and the US court of federal claims
This form can be used to amend returns or claims of refund taxes that were erroneously paid
1040x
who is responsible for electing officers?
The board of directors
Who is responsible for electing board members?
Shareholders
When are rental losses from active participation partially deductible?
When AGI is less than $150000
For income to be taxable on a tax return, it must be…
both realized and recognized
What is taxable income and how is it related to charitable contributions?
Taxable income is calculated before the deduction of: any charitable contributions, the drd, and any capital loss carryback. Its related to charitable contributions because you use the taxable income for the 10% maximum deduction of their taxable income
he primary activity of most 501(c)(3) private foundations is
making grants to other charitable organizations and individuals.
Are compensatory damages taxes?
Yes
If a member of an LLC dies what happens to the LLC?
It is dissolved unless the other members consent to continue
What is strict liability?
The concept of strict liability normally applies to merchant sellers. Strict liability provides that a merchant seller is strictly liable for the physical harm or property damage experienced by the ultimate consumer if the product was in a defective condition and unreasonably dangerous to the user.
When disposing of personal property are losses allowed?
No, losses are not deducted but gains are fully taxable
