R1&2

Question 1

Qualifying Surviving Spouse w/ Dependent Child - how long after spouse’s death?

Answer 1

Can file for the 2 years following spouse’s death

Question 2

Head of Household requirements

Answer 2

1) Unmarried, divorced, or married and living apart for the last 6 months of the year.
2) Not a “qualifying surviving spouse”
3) Not a nonresident alien
4) Maintains a home that is the principal residence of a qualifying child/parent/relative for half the year.

Question 3

Only qualified person that doesn’t have to live with the taxpayer

Answer 3

Parents

Question 4

Principal residence time requirement for qualifying surviving spouse vs. HOH

Answer 4

Surviving Spouse: whole year
HOH: half the year

Question 5

Qualifying Child Requirements (CARES)

Answer 5

Close relative
Age limit: younger than 19/24 (full time student during 5 months of year)
Residency/Filing Requirements: child has same principal residence as taxpayer for 1/2 the year. Also U.S. citizen or resident of NAFTA
Eliminate Gross Income Test: GI is irrelevent
Support Test: provide over 1/2 support. Welfare included in total support (denominator), scholarships not included if child, included if brother/sister or descendant.

Question 6

Qualifying Relative Requirements (SUPORT)

Answer 6

Support Test
Under $5,050 Gross Income
Precludes Dependent MFJ status: dependent cannot file MFJ return
Only U.S. citizens or NAFTA residents
Relative
Taxpayer lives w/ the individual for the whole year (if non-relative)

Question 7

Multiple Support Agreement Form

Answer 7

2120

Question 8

Conditions for Series EE bond interest to be excluded from income

Answer 8

1) interest is used to pay educational expenses of the taxpayer, spouse, or dependents;
2) taxpayer is older than 24 at bond issuance;
3) married taxpayer files MFJ
Limitation: interest that is excluded from income is reduced by the amount of nontaxable “qualified” scholarships that are received.

Question 9

Max amount of Social Security benefits that can be included in gross income (due to MAGI threshhold)

Answer 9

85%

Question 10

Amount of income included on a deceased taxpayer’s return

Answer 10

Income earned before death

Question 11

Only punitive damages that are excludable

Answer 11

Those awarded for wrongful death

Question 12

State tax refund received in the following year is taxable when and to what extent:

Answer 12

1) Taxable if itemized deductions in year of refund
2) Taxable to the extent itemized deductions exceeded standard deduction

Question 13

Amount of alimony that’s taxable (for agreements executed prior to 2019)

Answer 13

Only cash received/paid

Question 14

Gain/Loss on sale of stock is recognized on what date?

Answer 14

Trade date (for both cash and accrual taxpayers)

Question 15

Life insurance proceeds collected are taxable (yes/no)

Answer 15

No, not included in taxable income

Question 16

How much of employer reimbursement for education expenses can be excluded from gross income?

Answer 16

$5,250

Question 17

Amount included in income/deductions for Rent (based on # of days rented)

Answer 17

<15 days: Exclude all rental income/deductions
15+ days: If also used personally, prorate deductions, can only be used to the extent of rental income.
No personal use: include all rental income and deductions

Question 18

SEP IRA Contribution deduction limitation for SE taxpayers

Answer 18

Lesser of:
20% of SE net income after deducting 1/2 of SE tax
$69,000
FOR AGI Deduction

Question 19

Charitable Contribution Limitation by Asset class

Answer 19

Cash: 60% Public/Private Operating, 30% Private Nonoperating
OI: 50% Public/Private Operating, 30% Private Nonoperating
LTCG: 30% Public/Private Operating, 20% Private Nonoperating

Question 20

Casualty Loss Formula

Answer 20

Lesser of:
a) Loss amount
b) AB - insurance recovery - $100
Loss allowed = a) or b) - 10% of AGI

Question 21

Real property charitable contributions require written appraisal if the property value exceeds what amount?

Answer 21

$5,000

Question 22

Components of SUPORT dependent test not required for validating medical expenditures for a dependent

Answer 22

Under gross income limitation
Preclude MFJ (dependent can file MFJ)

Question 23

Max deduction for interest payments on qualified education loans

Answer 23

$2,500 FOR AGI

Question 24

Max state and local taxes that can be deducted on Sch. A

Answer 24

$10,000

Question 25

Wage cutoffs for QBI Deduction

Answer 25

Single/HOH: >$241,950 MFJ: >$483,900

Question 26

Child must be under the age of _ for the child and dependent care credit

Answer 26

13

Question 27

Child & Dependent Care Credit Formula

Answer 27

Eligible amount = lesser of: 1) earned income of poorer spouse 2) actual spendings 3) $3,000 for 1 kid, $6000 for 2+ Credit = Eligible amount * 20-35% based on AGI 35% (AGI<$15,000) 20% (AGI>$43,000)

Question 28

Minimum amount of annual estimated tax payments (to avoid penalty)

Answer 28

1. 90% of current years tax liability 2. 100% of prior years tax liability (110% if AGI>$150,000)

Question 29

Net Investment Income Tax is equal to

Answer 29

3.8% of the lesser of (1) the taxpayer’s net investment income; or (2) the excess of MAGI over a threshold amount.

Question 30

Order depreciation is applied

Answer 30

1) 179 expense 2) Bonus Depreciation 3) MACRS

Question 31

179 expense limitation & phase out

Answer 31

Max $1,220,000 reduced dollar for dollar for property over $3,050,000 placed in service during the current year

Question 32

Qualified property for Bonus Depreciation

Answer 32

Personal property with a recovery period of 20 years or less. Can't be property not acquired via purchase, or acquired from a related party (gifts/inheritence)

Question 33

Additional 1st year depreciation allowed for vehicles

Answer 33

$8,000

Question 34

Property ineligible for Sec. 179 expense

Answer 34

Intangibles, land & improvements, elevators & escalators, tangible personal property used <50% for business, nonqualified real property, property not acquired by purchase, property acquired from a related party.

Question 35

Mid Quarter convention applies when:

Answer 35

Over 40% of depreciable personal property is placed in service in the last quarter of the year.

Question 36

MACRS Conventions applying to personal vs. real property

Answer 36

Personal: Half year or Mid quarter Real: Mid Month

Question 37

Basis of gifted property for Gain/Loss purposes

Answer 37

AB = donors AB + gift tax paid If BIL property, AB is based on selling price. Use basis closest to sellling price (AB or FMV @ time of donation). If sale price is between AB & FMV, no gain/loss recognized.

Question 38

Basis for depreciation of gifted property

Answer 38

Lesser of rollover AB or FMV at date of gift

Question 39

Tax basis for Gain/Loss purposes (property converted from personal to business use)

Answer 39

If gain, use AB If loss, lesser of: 1) AB (basis - depr. taken) 2) FMV on conversion date - depr. taken

Question 40

Amount nontaxable on sale of Qualified Small Business Stock

Answer 40

Greater of: 1) $10 million 2) 10 x taxpayer's basis in the stock

Question 41

De minimis safe harbor rule to deduct purchase of tangible personal property that has a rule to expense immediately on books

Answer 41

Can immediately deduct items that cost below a threshhold amount, amt depending on if company has audited F/S (AFS) No AFS: $2,500 AFS: $5,000

Question 42

What tax year is interest deducted in

Answer 42

The later of: 1) the year paid 2) the year the interest relates

Question 43

Max credit for IRA contributions (Roth or Traditional)

Answer 43

$2,000 nonrefundable

Question 44

Kiddie Tax (child interest, dividends, rents, royalties income): amount taxed at child's rate and amt taxed at parent's marginal rate

Answer 44

Child's: $1,300 (after std deduction of 1300 is taken) Parent's = income amt - 1,300 (std ded) - 1,300 (taxed at kid's rate)

Question 45

Real Property MACRS lives

Answer 45

Residential: 27.5 yrs (straight line) Nonresidential: 39 yrs (straight line)

Question 46

MACRS 5 year property

Answer 46

cars, light trucks, computers, copiers

Question 47

MACRS 7 year property

Answer 47

furniture & fixtures, machinery & equipment

Question 48

Percent of care required to provide to claim dependent in multi-support agreement

Answer 48

over 10%

Question 49

American Opportunity Credit Amount

Answer 49

First $2,000 + 25%(next $2,000) = max $2500 must be Undergrad, not Graduate student 40% is refundable

Question 50

Lifetime Learning Credit Amount

Answer 50

20% of qualified education expenses, max $2,000 per taxpayer (not per student). Graduate students apply.

Question 51

IRA distribution exceptions to 10% penalty

Answer 51

Is distributed 5 yrs after Jan 1 of the year of first contribution, and 1) over 59.5 yrs old 2) used to purchase first home (up to $10,000) 3) disabled 4) distribution is made to a beneficiary after IRA holder's death

Question 52

Scholarship inclusion/exclusion in AGI

Answer 52

Excluded unless grad student who is also teaching

Question 53

Amount deducted for donated ordinary income property vs LTCG property (charity deduction)

Answer 53

Ordinary: Lesser of AB or FMV at time of donation LTCG: Greater of AB or FMV at time of donation

Question 54

Investment interest expense is limited to:

Answer 54

Net investment income, which includes taxable interest, dividends, annuities, and royalties (not rental income).

Question 55

QBI Deduction over T.I. threshhold

Answer 55

Lesser of: a) 20% of QBI b) 20% of [T.I. - net LTCG] c) Greater of: 1) 50% of share of W2 wages 2) [(25% of W2 wages) + (2.5% of basis in property)] * % share

Question 56

Accumulated Earnings Tax Calc

Answer 56

T.I - Fed. income tax - Dividends paid = Accum. T.I. Accum. T.I. - remaining credit = Current Accum. T.I. Current * 20% = Accum. Earnings Tax *Remaining credit = 250k - Excess E&P

Question 57

AGI limit to prohibit deduction of IRA contributions

Answer 57

240k MFJ

Question 58

Medicare & Soc Sec tax amt

Answer 58

Medicare: 1.45% Soc Sec: 6.2% Both are doubled (to total 15.3%) if SE!