Individual Taxation: Part 2 Flashcards
what is the formula to calculate a simplified employee pension (SEP) IRA deduction?
net business income (50% of SE taxes) \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ SE earnings before Keogh x 20% \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ calculated SEP IRA deduction
compare to 57,000 max and take the lesser
what would preclude a TP from deducting student loan interest expense?
if the TP is claimed as a dependent of another TP
what is the maximum Traditional IRA contribution deduction that can be taken per TP? When does the deduction get phased-out?
6,000 per TP. the 6,000 gets phased-out when the TP is an active participant in another qualified plan
what is the max Roth IRA contribution that can be made by a TP in a year?
6,000
how many years can charitable contributions that are not fully deductible in the year made be carried forward?
5 years
what is the deduction for interest expense on investment indebtedness limited to?
net investment income (investment income - investment expense)
formula for calculating itemized deduction for casualty loss
lesser of adjusted basis or decrease in FMV (insurance recovery) \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ TP's loss (100) \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ eligible loss (10% of AGI) \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ deductible loss on Schedule A
when is the only time home equity debt is deductible?
when its used to substantially improve the TP’s home that secures the loan
interest on mortgage up 750,000 is fully deductible
charitable contributions of LT property vs ST property, is the FMV or cost the deductible amount?
LT property (owned more than 1 yr) = FMV
ST property (owned 1 yr or less) = lower of cost or FMV
*the 30% or 50% AGI limitation applies
is transportation to a physician’s office for required medical care a deductible medical expense?
YES
what are the only refundable tax credits?
child tax credit, earned income credit, withholdings taxes, American Opportunity credit (40%), and excess SS taxes paid
do medical expenses qualify for the adoption credit?
NO
if taxes are due after withholding, when would there not be a penalty for underpayment of estimated taxes?
the taxes due after withholding are not over $1,000
what are the minimum payments required for a TP to avoid the penalty for underpayment of estimated taxes?
90% of current year’s tax paid in 4 equal installments or 100% (110% if AGI above $150,000) of prior year’s tax liability paid in 4 equal installments
for who is the child tax credit available fully?
TPs with AGI up to $400,000 (joint return), children under 17.
full credit is $2,000 per child
how much is the failure to pay penalty?
200
starting in 2013, a 3.8% Medicare tax is levied on the lesser of…
the TP’s net investment income or the excess of modified AGI over a threshold amount
how do you calculate the amount that is taxed at the parent’s marginal tax rate (kiddie tax)?
unearned income - 1,100 allowable standard deduction - 1,100 taxed at the child’s marginal tax rate
*2,200 total deduction
what is the carry forward rule for the AMT credit?
can be carried forward indefinitely and applied only to regular tax
T or F, only AMT attributable to timing differences is allowed as a credit against future regular tax?
T e.g., amount attributable to LT construction contract