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CPA Reg Tax Law > Individual Taxation > Flashcards

Individual Taxation Flashcards

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1
Q

Cash Basis. Note: This basis is NOT allowed for Corporations, Partnerships with a C-Corp partner, or for inventories.

A

Individual Taxation

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2
Q

*MSA/HSA contributions
*Investment penalties for early withdrawal
*Self-employed medical insurance premiums
*Self-Employment Tax (approx. 50%)
*IRA Contributions
*Student loan interest (can’t be another taxpayer’s dependent)
*Moving expenses
*Alimony
*Tuition - can’t take AOC/Lifetime Learning Credit for same expense
*Teacher expenses
*Attorney fees in discrimination lawsuit

A

Individual Taxation

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3
Q

Investment interest expense in excess of investment income
Charitable contributions
Excess Section 179
Capital losses
AMT Paid
Passive Activity Losses

A

Individual Taxation

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4
Q

No carryback

Can carry forward indefinitely

A

Individual Taxation

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5
Q

Carry forward to next year.

Use in any year is limited to taxable income.

A

Individual Taxation

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6
Q

Indefinitely.

A

Individual Taxation

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7
Q

Can be carried forward 5 years.

A

Individual Taxation

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8
Q

It can be carried forward indefinitely.

It may be applied against future regular income tax, but not against future AMT tax liability.

A

Individual Taxation

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9
Q

$3,000 net capital loss can be taken in each year, the rest is carried forward indefinitely.

The loss retains its character (STCL or LTCL).

A

Individual Taxation

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10
Q

Corporate capital loss carryovers may be carried back 3 years and forward 5 years. Individual capital losses are carried forward indefinitely.

Individual capital loss carryovers retain their character (STCL or LTCL). Corporate loss carryovers are carried forward as STCL only.

A

Individual Taxation

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11
Q

Gross Profit / Contract Price

A

Individual Taxation

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12
Q

Contract Price = Sales Price - Liability assumed by buyer

A

Individual Taxation

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13
Q

$1,000,000

A

Individual Taxation

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14
Q

$100,000

A

Individual Taxation

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15
Q

$25 per person for gifts

Service awards up to $400

A

Individual Taxation

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16
Q

They may only offset active business income.

Note: W2 wages are considered active business income.

A

Individual Taxation

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17
Q

Only passive income such as rental income or limited partnership income.

Note: Wages are ACTIVE (cannot be offset by passive) and Interest/Dividends are PORTFOLIO (cannot be offset by passive)

A

Individual Taxation

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18
Q

Neither. They are portfolio income.

A

Individual Taxation

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19
Q

Mid-year/Mid-quarter

A

Individual Taxation

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20
Q

For depreciation when 40% or more of all purchases occur in 4th quarter.

A

Individual Taxation

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21
Q

Mid-month

A

Individual Taxation

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22
Q

15 year straight line (S/L)

A

Individual Taxation

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23
Q

Up to $5,000

Amortized over 180 months

Reduced dollar-for-dollar by amount over $50,000

A

Individual Taxation

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24
Q

On Schedule A:

Amounts in excess of 10% of AGI may be deducted

A

Individual Taxation

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25
Q

Accident or disability insurance premiums are not deductible.

A

Individual Taxation

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26
Q

Must be a citizen of North America

Must live with you, or if they do not, must be mother/father or a relative closer than a cousin.

Benefactor must provide more than 50% support to the beneficiary.

A

Individual Taxation

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27
Q

Foreign INCOME and REAL ESTATE taxes are deductible.

Foreign personal property taxes are NOT deductible.

Foreign tax assessments are not deductible- they are added to the basis.

A

Individual Taxation

28
Q

Gross investment income - investment expense in excess of 2% of AGI = net investment income

Investment interest expense in excess of net investment income is deductible.

A

Individual Taxation

29
Q

Investment interest expense on tax-free securities is not deductible.

A

Individual Taxation

30
Q

They are deductible if they represent prepaid interest on purchase of a new home or improving a home.

Refinance points are amortized over the life of the mortgage.

A

Individual Taxation

31
Q

Deducted at fair market value (FMV), up to 30% of AGI

A

Individual Taxation

32
Q

Deduction is taken for adjusted basis in the property, up to 50% of AGI.

A

Individual Taxation

33
Q

No. It decreases the fair market value (FMV) of the property.

A

Individual Taxation

34
Q

Take the lower of either A) Decrease in FMV or B) Basis in property (call this number GROSS LOSS)

GROSS LOSS - insurance proceeds received - $100 - 10% of AGI = Deductible casualty loss

A

Individual Taxation

35
Q

Deductible in excess of 2% of AGI

Continuing Education - if required to keep your job
Business travel
50% Meals and entertainment
Union Dues
Tax prep fees
Legal fees to collect alimony
Appraisal fees to value casualty loss of charitable contributions

A

Individual Taxation

36
Q

Medical
Casualty
Gambling
Investment Interest Expense

A

Individual Taxation

37
Q

Must be resident of North America

Under age 19, or under age 24 if a student

A

Individual Taxation

38
Q

Must be citizen of North America

Must live with you, unless mother/father or relative closer than a cousin

You must provide more than 50% support to the individual

A

Individual Taxation

39
Q

Child’s unearned income
- early withdrawal penalties
- $950.00
- Greater than $950 or child’s itemized deduction related to unearned income
= Amount taxed at parents’ rate

A

Individual Taxation

40
Q

Yes, if they each own a small business. All non-business income is cash basis.

A

Individual Taxation

41
Q

15.3% of net earnings from self-employment

(Note: executor of an estate is NOT self-employment income)

A

Individual Taxation

42
Q

A tax credit which takes the taxpayer’s tax owed on the return below zero, resulting in a refund to the taxpayer.

Earned Income Credit (EIC), American Opportunity Credit and the Additional Child Tax credit.

Note: the REGULAR child tax credit is NOT refundable.

A

Individual Taxation

43
Q

American Opportunity Credit - per student

Lifetime Learning Credit - per taxpayer

Note: The American Opportunity Credit is refundable.

A

Individual Taxation

44
Q

The lesser of:

90% of current year’s total tax

100% of prior year’s total tax

110% of prior year’s total tax (if AGI is $150,000 or more)

A

Individual Taxation

45
Q

Deductible: Costs incurred to PRESERVE soil/water

Non-deductible: Costs incurred to drain wetlands or prep for irrigation (i.e. improve land)

A

Individual Taxation

46
Q

MACRS 150

A

Individual Taxation

47
Q

90 days

A

Individual Taxation

48
Q

10 days

A

Individual Taxation

49
Q

3 years, generally

6 years if 25% or more of gross income was omitted

The clock starts on the LATER of the due date or the filing date of the return.

There is NO STATUTE OF LIMITATIONS for either fraud or failure to file a required return.

A

Individual Taxation

50
Q

It is treated as a STCL

A

Individual Taxation

51
Q

Refunds must be claimed within 3 years of the return due date or within 2 years of being paid, whichever is later.

A

Individual Taxation

52
Q

Premiums paid by an employer for coverage in excess of $50,000 per employee are includable in income.

A

Individual Taxation

53
Q

When they are not in return for services rendered,

AND

The money is used only for tuition and books

Note: Scholarships for room and board are includable in income.

A

Individual Taxation

54
Q

State & municipal bond interest

US EE Savings Bond interest (note: HH bond interest is taxable)

A

Individual Taxation

55
Q

S-corporation (actually distributions)

Life insurance

A

Individual Taxation

56
Q

Up to 85%

A

Individual Taxation

57
Q

Yes.

A

Individual Taxation

58
Q

Payments made to make you whole are NOT taxable (i.e. to pay for losses of property, body parts or earning ability)

Any payments for punitive damages ARE taxable.

A

Individual Taxation

59
Q

No - similar to an award for damage to make a person whole.

A

Individual Taxation

60
Q

Alimony IS taxable.

Child support and divorce property settlements are NOT taxable.

A

Individual Taxation

61
Q

NO, they are not deductible. However tax benefits are available through the adoption CREDIT.

A

Individual Taxation

62
Q

2nd Year: (3rd year - 2nd year - $15,000)

1st Year:
1st Year Alimony Paid
- Avg alimony paid in 2nd & 3rd years
- $15,000
- Recapture from 2nd year
=1st Year Alimony Recapture

Total Recapture = 1st Year Recapture + 2nd Year
Recapture

A

Individual Taxation

63
Q

Can be carried back 2 years

If any left, can be carried forward 20 years.

A

Individual Taxation

64
Q

Traditional IRA = deductible

Roth IRA = not deductible

A

Individual Taxation

65
Q

They must be married at the end of the year.

If one spouse dies, they must be married at the end of the year.

A

Individual Taxation

66
Q

Must have a dependent child

Must provide more than 50% of the child’s support

Must live with them more than 50% of the year

A

Individual Taxation

67
Q

Must have a dependent child.

Essentially gets MFJ status for the year of death + 2 tax years

A

Individual Taxation

CPA Reg Tax Law (6 decks)

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