Individual Taxation

Question 1

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

Answer 1

Individual Taxation

Question 2

*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

Answer 2

Individual Taxation

Question 3

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

Answer 3

Individual Taxation

Question 4

No carryback

Can carry forward indefinitely

Answer 4

Individual Taxation

Question 5

Carry forward to next year.

Use in any year is limited to taxable income.

Answer 5

Individual Taxation

Question 6

Indefinitely.

Answer 6

Individual Taxation

Question 7

Can be carried forward 5 years.

Answer 7

Individual Taxation

Question 8

It can be carried forward indefinitely.

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

Answer 8

Individual Taxation

Question 9

$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).

Answer 9

Individual Taxation

Question 10

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.

Answer 10

Individual Taxation

Question 11

Gross Profit / Contract Price

Answer 11

Individual Taxation

Question 12

Contract Price = Sales Price - Liability assumed by buyer

Answer 12

Individual Taxation

Question 13

$1,000,000

Answer 13

Individual Taxation

Question 14

$100,000

Answer 14

Individual Taxation

Question 15

$25 per person for gifts

Service awards up to $400

Answer 15

Individual Taxation

Question 16

They may only offset active business income.

Note: W2 wages are considered active business income.

Answer 16

Individual Taxation

Question 17

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)

Answer 17

Individual Taxation

Question 18

Neither. They are portfolio income.

Answer 18

Individual Taxation

Question 19

Mid-year/Mid-quarter

Answer 19

Individual Taxation

Question 20

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

Answer 20

Individual Taxation

Question 21

Mid-month

Answer 21

Individual Taxation

Question 22

15 year straight line (S/L)

Answer 22

Individual Taxation

Question 23

Up to $5,000

Amortized over 180 months

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

Answer 23

Individual Taxation

Question 24

On Schedule A:

Amounts in excess of 10% of AGI may be deducted

Answer 24

Individual Taxation

Question 25

Accident or disability insurance premiums are not deductible.

Answer 25

Individual Taxation

Question 26

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.

Answer 26

Individual Taxation

Question 27

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.

Answer 27

Individual Taxation

Question 28

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.

Answer 28

Individual Taxation

Question 29

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

Answer 29

Individual Taxation

Question 30

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.

Answer 30

Individual Taxation

Question 31

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

Answer 31

Individual Taxation

Question 32

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

Answer 32

Individual Taxation

Question 33

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

Answer 33

Individual Taxation

Question 34

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

Answer 34

Individual Taxation

Question 35

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

Answer 35

Individual Taxation

Question 36

Medical Casualty Gambling Investment Interest Expense

Answer 36

Individual Taxation

Question 37

Must be resident of North America Under age 19, or under age 24 if a student

Answer 37

Individual Taxation

Question 38

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

Answer 38

Individual Taxation

Question 39

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

Answer 39

Individual Taxation

Question 40

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

Answer 40

Individual Taxation

Question 41

15.3% of net earnings from self-employment (Note: executor of an estate is NOT self-employment income)

Answer 41

Individual Taxation

Question 42

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.

Answer 42

Individual Taxation

Question 43

American Opportunity Credit - per student Lifetime Learning Credit - per taxpayer Note: The American Opportunity Credit is refundable.

Answer 43

Individual Taxation

Question 44

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)

Answer 44

Individual Taxation

Question 45

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

Answer 45

Individual Taxation

Question 46

MACRS 150

Answer 46

Individual Taxation

Question 47

90 days

Answer 47

Individual Taxation

Question 48

10 days

Answer 48

Individual Taxation

Question 49

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.

Answer 49

Individual Taxation

Question 50

It is treated as a STCL

Answer 50

Individual Taxation

Question 51

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

Answer 51

Individual Taxation

Question 52

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

Answer 52

Individual Taxation

Question 53

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.

Answer 53

Individual Taxation

Question 54

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

Answer 54

Individual Taxation

Question 55

S-corporation (actually distributions) Life insurance

Answer 55

Individual Taxation

Question 56

Up to 85%

Answer 56

Individual Taxation

Question 57

Yes.

Answer 57

Individual Taxation

Question 58

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.

Answer 58

Individual Taxation

Question 59

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

Answer 59

Individual Taxation

Question 60

Alimony IS taxable. Child support and divorce property settlements are NOT taxable.

Answer 60

Individual Taxation

Question 61

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

Answer 61

Individual Taxation

Question 62

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

Answer 62

Individual Taxation

Question 63

Can be carried back 2 years If any left, can be carried forward 20 years.

Answer 63

Individual Taxation

Question 64

Traditional IRA = deductible Roth IRA = not deductible

Answer 64

Individual Taxation

Question 65

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

Answer 65

Individual Taxation

Question 66

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

Answer 66

Individual Taxation

Question 67

Must have a dependent child. Essentially gets MFJ status for the year of death + 2 tax years

Answer 67

Individual Taxation