Misc Subjects

Question 1

MACRS Tables

Answer 1

MACRSStraight Line

5 year__7 year__5 year__7 year

Year 1 20% 14.29% 10% 7.14%

Year 2 32% 24.49% 20% 14.29%

Year 3 19.2% 17.49% 20% 14.29%

** From the book: You may need to know the first two years of MACRS

Question 2

How many years can a NOL be carried forward?

Answer 2

20

Question 3

How much in active participation real estate losses can a taxpayer deduct in one year?

Answer 3

$25,000

The remainder can be carried forward.

(phaseout between 100k-150k, 2-1 basis)

Question 4

Alimony Recapture

Answer 4

When the alimony payments are front loaded in first 2 years and nothing in the third year, add them together and subtract $37,500. The answer is the recapture amount and subject to ordinary income.

If the third year is more than $15k less than the second year, take the third year, double it and add it to the default $37,500.

Question 5

Definition of 1244 Stock

Answer 5

• 1st million dollars of stock issued after incorporation
• Loss of $100,000 per year on a joint return ($50,000 otherwise), considered ordinary income, not capital loss

Question 6

Liability for payment of GSTT

Answer 6

Direct skip - transferror

Taxable termination - trustee

Taxable distribution - transferee

Answer 7

Gain X Tax Rate (40%) + Basis = Adjusted Basis