know off the bat

Question 1

who gets an additional standard deduction?

Answer 1

> 65 years old and/or blind

Question 2

when are interest income on Series EE bonds tax exempt?

Answer 2

when its used for higher education expenses

Question 3

when are state tax refunds taxable?

Answer 3

when itemized last year and a taxable benefit resulted

Question 4

what 7 expenses can be itemized?

Answer 4

medical expenses
state and local taxes
home mortgage interest paid
investment interest
charitable contributions
casualty and theft losses
gambling losses

Question 5

what’s the de minimus rule?

Answer 5

companies can deduct up to $5,000 per property if they have a written policy about it

if no written policy, then only deduct $2,500

Question 6

a parent sold land to its wholly-owned subsidiary for $100,000. the parent’s basis in the land was $102,000. the subsidiary then sold the land to an unrelated party for $105,000. how much gain is reported on the consolidated tax return?

Answer 6

$1,000

there’s a $2,000 loss between the parent and sub, and that’s used to offset the gain from the sale to the unrelated party
105,000 - 102,000 = 3,000 gain
2,000 loss reduces gain to $1,000

Question 7

are state franchise tax refunds included in taxable income?

Answer 7

yes

Question 8

how are excess net capital losses handled in C corps?

Answer 8

carried back 3 years, carried forward for 5 years

Question 9

what is subpart F income?

Answer 9

income from a CFC taxable to the US taxpayer

income was generated with no economic connection

Question 10

how should life insurance premiums (where the corp is the beneficiary) be addressed in an M-1 reconciliation

Answer 10

add back and include in taxable income

Question 11

how is a single member LLC taxed? more than one member LLC?

Answer 11

sole proprietorship
partnership

Question 12

Dad sells Son land for $100,000. Dad’s basis in land was $50,000. In Year 1, Son pays Dad $5,000 and agrees to pay the remaining amount in installments. How much gain does Dad recognize?

Answer 12

$2,500
gross profit = 50k = 100k - 50k
gross profit % = 50% = 50k gross profit / 100k proceeds
50% * $5,000 = $2,500

Question 13

how is compensation taxed in a partnership vs S corp?

Answer 13

compensation flows through and part of self employment income for a partnership

compensation is w-2 wages for shareholders in a S corp

Question 14

Harrison is a 25% shareholder in an S corp. His distributive share of loss is $20,000. His stock basis is $13,000 and debt basis if $5,000.

How much loss is deductible on his 1040?

Answer 14

$18,000 (stock + debt basis)

Question 15

do cash distributions impact stock basis, debt basis or both?

Answer 15

only impacts stock basis