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Yaeger REG > Mod 35: Individual Taxation Pt. 3 > Flashcards

Mod 35: Individual Taxation Pt. 3 Flashcards

1
Q

Mortgage points:

If you used the loan to buy, build or improve your home you…

A

Can deduct whole loan that year

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2
Q

Qualified residence interest:

Home equity indebtedness is the lesser of…2

A

1 $100,000 interest or

2 FMV - acquisition indebtedness

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3
Q

Investment interest exp, define

A

Borrow money to buy investments

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4
Q

Investment interest expense can be…

A

Deducted up to net investment income

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5
Q

Where are gross investment income expenses deducted?

A

Miscellaneous expenses (excess of 2% of AGI)

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6
Q

Qualified dividends and net long term capital gains are not considered…

2) unless…

A

Net investment income

2) elect to tax them at ordinary rate

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7
Q

For a charitable contribution in cash or property of $250 or more, to get deduction you must…

A

Get written acknowledge,net stating what they got from you

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8
Q

Cost of appraisal for charitable contribution can be…

A

Deducted under miscellaneous 2% itemized deductions

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9
Q

Charitable contributions:

Cash amounts donated…

A

Cannot exceed 50% of AGI

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10
Q

Charitable contributions:

Donate securities held over 12 months, your deduction is…

A

FMV up to 30% of AGI

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11
Q

Charitable contributions:

Donate securities held 12 months or less, your deduction is…

A

Adjusted basis limited to to 50% of AGI

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12
Q

Charitable contributions:

Donate securities declined in value, your deduction is…

A

Adjusted basis limited to 50% of AGI

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13
Q

Charitable contributions:

Tangible personal property (art), in which LT capital gain and donated to related industry (art museum) your deduction is…

A

FMV = 30% of AGI

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14
Q

Charitable contributions:

Tangible personal property (art), in which LT capital gain and donated to unrelated industry (Salvation Army) your deduction is…

A

Adjusted basis limited to 50% of AGI

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15
Q

If you elect adjusted basis, your limit will…

A

Go from 30% of AGI to 50% of AGI

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16
Q

Any charitable deduction that remains after maximum deduction is taken is…

A

Carried forward up to 5 years

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17
Q

Mortgage points:

If you did not use the money to buy, build or improve your home you must…

A

Amortize loan amount over its useful life

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18
Q

No deduction is used for prepaid interest, it must be…

A

Amortized and deducted over future periods

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19
Q

Personal interest…

A

No deduction is allowed for personal interest

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20
Q

Credit card interest, deductibility 2

A

1 not deductible for personal purchases

2 deductible for interest expenses

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21
Q

Qualified residence interest

A

Can deduct interest on primary and secondary residence

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22
Q

2 types of qualified residence interest

A

1 acquisition indebtedness

2 home equity indebtedness

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23
Q

Under Acquisition indebtedness, interest is…

A

Deductible up to $1 million

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24
Q

Acquisition indebtedness is interest of loans secured by residence if loans were used to…3

A

1 acquire

2 construct

3 substantially improve the home

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25
Q

Home equity indebtedness, interest is…

2) what is the use of this loan?

A

Deductible up to $100,000

2) loan can be used for anything

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26
Q

Net investment income includes…5

A

1 interest
2 rents
3 dividends (other than qualified dividends)
4 royalties in excess of any related expenses
5 ST capital gains

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27
Q

Investment expenses remaining after 2% AGI limitation used in computing net investment income. 3

A

1 rental fees for safety deposit box rental

2 investment counseling fees

3 subscriptions to investment periodicals

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28
Q

Charitable contributions:

A pledge is…

A

Not a payment

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29
Q

Charitable contributions:

Charging the contribution on credit card…

A

Does constitute a payment

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30
Q

Charitable contributions:

No deduction will be allowed for contributions of cash, checks or other monetary gifts unless the donor maintains a cancelled check, receipt or letter or other written communication from…

A

Donee

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31
Q

Charitable contributions:

No deduction will be allowed for contributions unless donor has written documentation from donee indicating…3

A

1 donee’s name

2 contribution date

3 amount

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32
Q

No charitable deduction is allowed for any contribution of $250 or more unless donor obtains written acknowledgement of contribution from donee organization including a good faith estimate of the value of any goods or services…

A

Provided to donor in exchange for contribution

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33
Q

A canceled check is not sufficient substantiation for…

A

Contribution of $250 or more

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34
Q

For any noncash property donation exceeding $500 in value, the tax payer must maintain a written record containing…2

A

1 date and manner of acquisition of property

2 cost or other basis of property if held less than 12 months

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35
Q

For any noncash property donation exceeding $500 in value, the tax payer must include in the tax return…

A

A description of the donated property

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36
Q

If donated noncash property exceeds $5,000 in value, the taxpayer is required to…2

A

1 obtain qualified appraisal

2 attach summary of appraisal to return

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37
Q

If donated noncash property exceeds $500,000 in value, the taxpayer is required to…

A

Attach qualified appraisal to the return

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38
Q

Political contributions are…

A

Nondeductible

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39
Q

For a casualty loss calculation:

FMV BEFORE - FMV AFTER = Decrease in FMV, next you use…

A

The lesser of decrease in FMV or adjusted basis

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40
Q

For a casualty loss calculation:

After starting from decrease in FMV or adjusted basis what is subtracted…3

A

1 insurance proceeds

2 $100/casualty

3 10% of AGI

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41
Q

If you have a casualty gain of $2,000 and a personal casualty loss (after a $100 floor), you do…

A

Not net them

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42
Q

Casualty insurance premium on personal residence is…2

A

1 personal expense

2 not deductible

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43
Q

If you pay appraisal fee to get insurance policy for casualty loss, the appraisal fee is…

A

Deductible as Misc. 2%

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44
Q

Mortgage insurance policy

A

If anything happens to you, insurance company will make your mortgage payments

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45
Q

Mortgage insurance premiums are considered…

A

Interest that you pay

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46
Q

Itemized deductions started to get phased out is…

A

2013

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47
Q

Casualty loss must be…3

A

1 identifiable

2 damaging to property

3 sudden, unexpected or unusual

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48
Q

Casualty loss that are deductible:

Includes damage from…5

A 
1 fire
2 storm
3 accident
4 mine cave in 
5 loss from vandalism
49
Q

Casualty loss that are deductible:

Damage to trees and shrubs if there is a…

A

Decrease in total value of real estate

50
Q

Casualty loss that are deductible:

Includes a loss on personal residence that has been rendered unsafe by reason of disaster…2

A

1 declared by president and

2 ordered demolished or relocated by state/local gov

51
Q

Losses not deductible as casualties include…2

A

1 losses from breakage of China or glass ware through handling or family pet

2 disease, termite or moth damage

52
Q

Unreimbursed employee expenses are…

A

Miscellaneous 2% deductions

53
Q

Miscellaneous 2% AGI deduction:

Employee education expenses are deductible if incurred to…

A

Maintain or improve skills required in employee’s present job

54
Q

Miscellaneous 2% AGI deduction:

Deductible employee education expenses include…5

A 
1 unreimbursed transportation
2 travel
3 tuition
4 books
5 supplies
55
Q

Miscellaneous 2% AGI deduction:

Education expenses are not deductible if…

A

Required to meet minimum educational requirements in employee’s
job

56
Q

Miscellaneous 2% AGI deduction:

If education qualifies employee for new job, even if new job is not sought. This is…

2) give example

A

Not deductible

2) ex. CPA review course expense

57
Q

Other deductible unreimbursed employee expenses (from 2% AGI):

Transportation and…2

A

1 transportation and travel = 100% deduction

2 meals and entertainment = 50% deduction

58
Q

Other deductible unreimbursed employee expenses (from 2% AGI):

Uniforms…

A

Not adaptable to general use

59
Q

Other deductible unreimbursed employee expenses (from 2% AGI):

Employment agency…

A

Employment agency fees to secure employment in same occupation

60
Q

Other deductible unreimbursed employee expenses (from 2% AGI):

Subscription to…

A

Professional journals

61
Q

Other deductible unreimbursed employee expenses (from 2% AGI):

Dues to…3

A

1 professional societies

2 union dues

3 initiation fees

62
Q

Other deductible unreimbursed employee expenses (from 2% AGI):

Malpractice…

A

Insurance premiums

63
Q

Other deductible unreimbursed employee expenses (from 2% AGI):

To deduct custodial fees of investment account…

A

You have to write out separate check

64
Q

Other deductible unreimbursed employee expenses (from 2% AGI):

Tax related 3

A

1 tax council

2 assistance

3 tax return preparation fees

65
Q

Other deductible unreimbursed employee expenses (from 2% AGI):

Expenses for production of income other than those incurred in trade or business or for production of rents and royalties. 3 examples

A

1 investment council fees

2 safe deposit box rent

3 legal fees to collect alimony

66
Q

Legal fees to collect child support are…

A

Not deductible

67
Q

Other deductible unreimbursed employee expenses (from 2% AGI):

If stock brokerage gets…

A

Fees for custody of stock certificate

68
Q

Income in respect to decedent

A

Collect money for services performed before death

69
Q

Following miscellaneous expenses are not subject to 2% floor and are fully deductible:

Gambling

A

Gambling losses to extent of gambling winnings

70
Q

Following miscellaneous expenses are not subject to 2% floor and are fully deductible:

Estate tax related to…

A

Income with respect of decedent

71
Q

Following miscellaneous expenses are not subject to 2% floor and are fully deductible:

Amortizable bond premium on bonds acquired…

A

Before October 23, 1986

72
Q

Following miscellaneous expenses are not subject to 2% floor and are fully deductible:

Casualty and theft losses of…

A

Income producing property (business property)

73
Q

Examples of no deductible expenses 5

A 
1 fees and licenses
2 personal legal expenses
3 life insurance
4 burial expenses
5 political contributions
74
Q

Nondeductible expenses:

Fees and licenses 3 examples

A

1 auto licenses

2 marriage licenses

3 dog tags

75
Q

Nondeductible expenses:

Personal legal expenses example

A

Expenses to prepare a will

76
Q

Itemized deductions subject to high income phase out reduction include…4

A

1 taxes
2 qualified residence interest
3 charitable contributions
4 miscellaneous itemized deductions

77
Q

Itemized deductions not subject to high income phase out reduction include…4

A

1 medical
2 investment interest
3 casualty and theft losses
4 gambling losses

78
Q

Husband and wife get personal exemptions, they are not…

A

Not Dependents

79
Q

To be a qualifying relative, the cousin must…

A

Live with you for entire tax year

80
Q

Qualifying relative neumonic

A

CRAIS

81
Q

Qualifying relative neumonic:

What does CRAIS stand for?

A 
1 Citizen or resident of US, Canada or Mexico
2 Relationship 
3 Absence of join return
4 gross taxable Income 3,950
5 more than half their Support
82
Q

There is no income limitation as far as…

A

Qualifying child

83
Q

A husband and wife can file a joint return even if spouses have different accounting methods. Example 2

A

1 self employed schedule C with inventory uses accrual method

2 W-2 wages use cash method

84
Q

Personal exemptions are similar to itemized deduction in that they are…

A

Deducted from adjusted gross income

85
Q

Personal exemptions are allowed for taxpayer, spouse and dependent if dependent is…

A

A U.S. citizen or resident

86
Q

Personal exemption for 2014 is

A

$3,950

87
Q

A personal exemption is allowed for a dependent who is either a…

A

1 qualifying child or

2 qualifying relative

88
Q

Exemption for a dependent:

Birth or death of dependent during year

A

A full exemption is allowed for year

89
Q

To be a dependent an individual must be a citizen, national or resident of…

2) or a resident of…

A

The U.S.

2) Mexico or Canada

90
Q

What additional tests must an individual satisfy to be classified as a qualifying child…4

A

1 relationship
2 age
3 abode
4 support

91
Q

Qualifying Child:

Relationship 2

A

must be taxpayer’s child or adopted

92
Q

Qualifying Child:

Age 2

A

1 must be younger than taxpayer and under age 19 or

2 must be full-time student at least 5 months during the year and
under age 24

93
Q

Qualifying Child:

Abode 2

A

1 Must have same principal place of abode as taxpayer

2 for more than half of taxpayer’s tax year

94
Q

Qualifying Child:

Support

A

Child must not have provided more than 1/2 of their own support
During calendar year

95
Q

A qualifying child must not have…2

A

1 Filed a joint return with his or her spouse

2 unless filed solely for refund of tax withheld

96
Q

A qualifying child can not be claimed as a dependent on…2

A

More than one return

2) even though child satisfies qualifying child test on more than
One taxpayer’s return

97
Q

An individual must satisfy 5 additional tests to be classified as a qualifying relative:

Must not be…

A

a Qualifying child

98
Q

An individual must satisfy 5 additional tests to be classified as a qualifying relative:

Joint return 2

A

1 Dependent can’t file a joint return

2 unless filed solely for refund of tax withheld

99
Q

qualifying relative:

Member of household 2

A

1 Dependent must either live with taxpayer for entire year or

2 be relative (closer than cousin) to be related

100
Q

Temporarily absent person meets member of household test for following 4 possible reasons

A

1 vacation
2 school
3 sickness
4 indefinitely confined in nursing home

101
Q

qualifying relative:

Has gross income…

2) gross income does not include…

A

Less than $3,950

2) tax exempt income (nontaxable social security)

102
Q

qualifying relative:

Support

A

Tax payer must furnish over 1/2 of support

103
Q

qualifying relative:

Support from tax payer includes…6

A 
1 food
2 clothing
3 FV of lodging
4 medical
5 education
6 recreation
104
Q

qualifying relative:

Support from tax payer excludes…2

A

Excludes life insurance premiums and funeral expenses

105
Q

Multiple support agreement may be used if…

A

No person furnishes more than 50% support of dependent

106
Q

Multiple support agreement says that…

A

Only one supporter will claim person as a dependent

107
Q

Multiple support agreement:

Person claimed as dependent on multiple support agreement is treated as…

A

Qualifying relative

108
Q

Multiple support agreement:

The person can be treated as providing more than half the dependent’s support if…3

A

1 more than 10% of support provided

2 signed agreement by those who provided over 10%, that they
Won’t claim exemption

109
Q

Filing status:

Married persons (married at end of year or time of death of spouse) can file…2

A

1 joint or

2 separate returns

110
Q

Filing status:

Qualifying widow(re) with dependent children (surviving spouse) may use…

A

May use joint tax rates for 2 years following date spouse died

111
Q

Surviving spouse requirements:

Surviving spouse must have been eligible to…

A

File joint return in year of spouse death

112
Q

Surviving spouse requirements:

Dependent son, stepson, daughter or stepdaughter must…

A

Live in household with surviving spouse

113
Q

Surviving spouse requirements:

Surviving spouse must provide…2

A

1 More than 50% of costs of maintaining a household

2 that was main home of child for entire year

114
Q

Head of house hold status applies to…3

A

1 unmarried person
2 with dependent child
3 provides more than 50% of costs of maintaining household that
Is principal abode

115
Q

3 people who qualify you for head of household

A

1 qualifying child

2 relative, where taxpayer entitled to dependency exemption

3 tax payer maintains parent’s household

116
Q

Head of household qualifications:

Qualifying child must not…

A

Not be married by end of tax year

117
Q

Head of household qualifications:

Parents need not live with tax payer, but parent’s household must be maintained by taxpayer (nursing home) and parents must…

A

Qualify as tax payer’s dependents

118
Q

Costs of maintaining a household includes…7

A 
1 rent
2 mortgage interest
3 taxes
4 insurance on home
5 repairs
6 utilities
7 food eaten at home
119
Q

Cost of clothing, education, medical expenses, vacations, life insurance, transportation, rental value of home and value of taxpayer’s services are…

A

Excluded from cost of maintaining a hosuehold

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