It's the Law Flashcards
when are contingent fees allowed to be charged?
- examination or challenge of an original tax return or an amended return or claim for refund. (not preparing one)
- where a claim for refund is filed solely in connection with determination of statutory interest or penalties
- when the accountant is representing the client in judicial proceedings
may a CPA provide a clients wps w/o client consent or subpeona to the IRS or FASB?
no
what is the penalty for late paying
5% of net tax due per month capped at 25%
what is the penalty amount for fraudulent understatement
75% of understatement
what tax form should be used to claim a refund of erroneously paid income taxes before the statute of limitations expires
Form 1040X Amended US individual income tax return
what is respondeat superior
“let the master answer” It is a doctrine that holds the principal liable for the torts of the agent
does the principal have the right to control the method and manner of an agents work?
yes - if a master/servant relationship exists
No - if an independent contractor relationship exists
Frolic and detour
acts and conduct by the agent outside of the scope of employment that are done while the agent is supposed to be working for the principal
What is the common law used for
services, real estate
what is the Uniform Commerical Code (UCC) used for
sale of goods
Define express contract
a contract formed wholly by oral and/or written words
what is a bilateral contract
a promise is exchange for a promise
what is a unilateral contract
a promise in exchange for an act
what is an executory contract?
a contract not performed by both sides (you agree to buy my watch in ten days)
what is an unenforceable contract
a valid contract that cannot be enforced due to a legal defense
what is a quasi contract
a contract imposed by law even when no contract was formed, to prevent unjust enrichment
what is an implied or an implied in fact contract?
a contract formed, at least in part, based on the conduct of the parties or based on the factual circumstances
what is an option contract?
a distinct contract in which the offeree gives consideration to keep the offer open
what happens under common law if the acceptance is not a mirror image and their are additional terms of the acceptance?
the acceptance is a counteroffer and rejection
what are the requirements for a consideration in a contract?
Each party to the contract has a benefit and detriment. The promises (detriment) are induced by the benefits and the benefits are induced by the promises (detriment). Bargained‐for exchange. Consideration must actually change hands.
promissory estoppel
Promissory estoppel acts as a substitute for consideration and renders the promise enforceable. The elements necessary for promissory estoppel are (1) detrimental reliance on a promise, (2) reliance on the promise is reasonable and foreseeable, and (3) damage results (injustice) if the promise is not enforced. EX. A promise to donate money to a charity which the charity relied upon in incurring large expenditures is a situation involving promissory estoppel
what contracts must be in writing?
Contracts involving real property sales, transfers, listing, and leases longer than one year.
Contracts to pay the debt of another.
Contracts that cannot be performed within one year.
Contracts for the sale of goods for $500 or more.
what is the parol evidence rule
A fully integrated contract clearly written cannot be contradicted, varied, or altered by evidence of the parties’ prior negotiations, agreements, or contemporaneous oral agreements.
What is required for modification of a contract under common law?
Additional consideration
what is a exculpatory clause?
a clause in a contract that disclaims any liability regardless of fault
what are the defenses that can invalidate the formation of a contract?
Mistake Misrepresentation Fraud Duress Undue influence
what is the basic difference between fraud and misrepresentation
the element of intent
what is undue influence
Undue influence is a defense that makes a contract voidable. Classic situations of this concept involve close relationships in which a dominant person has extreme influence over a weaker person, ie parent/child
what is novation
Novation is a contract involving three parties whereby a previous agreement is discharged by the creation of a new agreement. For example: A leases a house to B for one year. B wants out of the house after four months. B gets C to take over the balance of the lease. Both B and C will be liable under C’s assumption of the lease. However, if A, B, and C all agree (a novation), B can be released, leaving only A and C as parties to the lease.
what is anticipatory repudiation?
allows a party to either sue at once or wait until after performance is due when the other party indicates s/he will not perform.
what is sale on approval?
Risk of loss for the goods passes to the buyer when the goods are accepted after the trial period. allows the buyer to return the goods even if they conform to the contract.
when is rescission available?
in cases of misrepresentation
what are liquidated damages?
those agreed to in a contract to set the amount of damages in the event of breach of contract
The 10% charitable contribution deduction % of AGI is calculated before or after the dividends received deduction?
Before the DRD is taken.
Describe the criteria necessary for a security interest attachment when the collateral is not in possession of the secured party.
- a written agreement describing the collateral signed by the debtor
- secured party must give the debtor something of value
- the debtor must have rights to the collateral.
what must happen for a security interest to attach?
- the secured party must give value
- the debtor must have rights to the collateral
- there must be a security agreement (may be ORAL if the secured party has possession of the collateral - otherwise must be in writing and signed by debtor)
what is perfection?
Me. But also a means by which a secured party gains priority to a debtors collateral over other third parties who claim to have an interest in the same collateral.
when does a creditor have temporary perfection?
when a debtor has moved to another state, the creditor has 4 months perfection in the new state. which can be continued with filing a financing statement in the debtors new state
what is the order of distribution in a bankruptcy hearing
Secured parties
child support
bankruptcy admin costs
gap creditors
section 504 of securities act of 1933
exempts an issuance of securities up to $1M in a 12m period to any number of investors. the issuer must notify the SEC of the offering within 15 days after sale of the securities began.
1934
Under the Securities Exchange Act of 1934, a corporation’s officers (and all other insiders) are required to report any changes in ownership of the corporation’s stock within 15 days. Also under the 1934 Act, the proxy statement, the proxy itself, and any proxy soliciting material concerning securities required to be registered under the 1934 Act must be filed with and approved by the SEC before it can be sent to shareholders.
is a donor taxed on medical and tuition expenses paid on behalf of a donee?
no, unlimited exclusion
if goods are in transit to a buyer who is insolvent, what happens to the goods in transit?
the seller is entitled to stop the delivery of the goods in the hands of the carrier if an insolvent buyer who is not in the possession of the docuemnt of title refuses to pay cash
How are agreements not to compete of $60k to not compete for the next 6 years treated by recipient?
as 60k of ordinary income in year received
