PE 2 Flashcards
Foreign tax credit
Step 1: (Qualified foreign taxes) = Amount of foreign tax paid
Step 2: (Foreign tax credit limitation) = Worldwide taxable income * US tax rate
Ratio of foreign sources = Foreign taxable income/ Total income
Foreign credit limitation * Ratio of foreign tax credit
Step 3: Lessor of 1 and 2
If a company elects to not take the foreign tax credit.
They can deduct them instead in the current year
if not the tax credit carries forward 10 years
Capital assets
Are held or used for
investments (Marketable securities, bonds)
Personal use ( Personal car, home)
Non Capital assets are
Inventory
ARs arising from the sale of inventory
Used in taxp[ayers business real property or personal property
Underpayment of tax
If under 500
don’t pay delinquency fines
But do have to pay interest on this amount.
filing of an involuntary bankruptcy petition under the Federal Bankruptcy Code:
Stops debt collectors from enforcing their collection.
Stops the enforcement of judgment liens against property in the bankruptcy estate.
The statute of limitations for an alleged breach of contract:
Generally commences on the date of the breach.
apportionment factor
Includes
Payroll
Property (Average)
Sales
Threshold for QBI
Level 1 = 191,950 or less
A contract requiring writing (Are also requirements to be classified as a statute of fraud)
MYLEGS
Marriage
Year or more
Land interest
Executors
Goods sale of 500 or more
Surety
What credit can result in a refund even if the individual has no income tax liability
Earned income credit
Worthless securities is considered sold
On the last day of the year it became worthless
Stockholders
Have the power to elect directors but
don’t have the power to hire or remove officers.
Shareholder approval is required for
DAMS
Dissolution
Amendments to the articles of incorporation
Mergers
Sale fo substantially all corp assets
Who is elegible for a DRD
C corps
