R1

Question 1

What are the requirements for Qualifying Child?

Answer 1

CARES…1. Close Relative 2. Age limit(19 OR 24+college) 3.Residency test (same principal abode as taxpayer 4.Exclude gross income test 5. Support test (child does not support over 50%)

Question 2

What are the requirements for Qualifying Relative?

Answer 2

SUPORT… 1.Support Test 2. Under gross income limitation (less than $4200)3.Precludes dependency filing 4. Only US Citizens 5.Relative OR Taxpaxer lives with individual for whole year

Question 3

When is the qualifying widower status used?

Answer 3

Two years after the spouses death & have to have dependent for WHOLE tax year. In the year of spouses death still MFJ

Question 4

What is the interest earned on Series EE bond?

Answer 4

Interest used to pay tuition & fees from taxpayer, spouse, or dependent enrolled in higher education

Question 5

What in the interest exclusion on Series EE bond reduced by?

Answer 5

Interest exclusion is reduced by qualified scholarships that are exempt from tax and other nontax payments for edu expenses

Question 6

What is an Accruable expense?

Answer 6

Services have been received/performed but have not been paid for by end of reporting period

Question 7

On what date does the G/L on y/e sale of listed stock occur on?

Answer 7

Trade date

Question 8

What is the equation for an annuity and what amount is taxable income?

Answer 8

Equation: Investment/years= “x”…. anything over “x” amount is included in income

Question 9

How are early withdrawal penalties calculated from IRA?

Answer 9

1. amount is taxed at marginal tax rate 2. Add additional 10% penalty tax for early withdrawal UNLESS it is apart of HIMDEAD: (Homebuyer- first $10k to first home, Insurance- medical, Medical expenses in excess of 10% AGI, Disability, Education, and Death)

Question 10

What is special about interest on U.S. obligations & interest on income on Fed tax refund?

Answer 10

The interest income on refund is taxable income but the refund itself is not

Question 11

How is prepaid interest allocated?

Answer 11

Prepaid interest must be prorated for which payment is made… deduct when both incurred and paid

Question 12

How are personal expenses treated?

Answer 12

Nondeductible from Schedule C, Adjustment to AGI

Question 13

Name some examples of business expenses

Answer 13

Work uniforms for taxpaxer & their employees, subscriptions for periodicals for patients and continuing edu expenses

Question 14

What are the uniform capitalization rules applied to?

Answer 14

DM,DL,MOH, off-site storage, repackaging costs

Question 15

Define a Guaranteed Payment

Answer 15

Salary or other payment to a partner that is not calculated w/ respect to partnership income

Question 16

What is the formula for QBI?

Answer 16

1. Lessor of: 20%TI OR QBI20%| 2. Limitation= Greater of: 50%W2 OR 25%W2 +2.5%* qualified property| 3. P/O= taxable income - threshold(160700S,321400MFS) = “x”, “x” / P/o(50k S, 100k MFJ)

Question 17

How is ordinary income from S corporation treated?

Answer 17

Ordinary income from S corp is taxable income to the individual or their own tax return but not to SE tax

Question 18

Define Passive Activity

Answer 18

Passive activity is any activity in which the tax payer does not materially participate. A Net passive activity loss generally may be deducted against other types of income.

Question 19

What is the mom& pop exception?

Answer 19

Taxpayers may deduct up to $25k per year of net passive losses attributable to rental real estate if they own more than 10% of the rental activity. P/o= 100k-150k. reduced by 50% of excess AGI over 100k.

Question 20

How is the PAL Cfwd treated?

Answer 20

Any excess would be CFWD indefinitely as a suspended PAL.

Question 21

The rule limiting the allowability of PAL and credits applies to what org structure

Answer 21

PSC

Question 22

What are the 2 rules for the inclusion of Social Security benefits?

Answer 22

1. If combined income (AGI plus interest on tax-exempt bonds and 50% of SS) > threshold amount –> the amount taxed is the lessor of 1) amount above + 85% of excess of combined income OR 85% of benefits
2. If combined income (AGI plus interest on tax exempt bonds and 50% of SS) < Threshold amount –> 1)50% of the benefits OR 50% of the excess of the combined income over the threshold.

Question 23

Which is included in taxable income?

Unemployment Vs Workers comp

Answer 23

Unemployment

Question 24

What are the conditions that must be met for tax exemption of accumulated interest on Series EE bonds?

Answer 24

1. Purchaser of the bonds must be the sole owner of the bonds (or joint w/ spouse)
2. post- 1989 bonds–> the taxpayer is over the age of 24 when issued and used to pay for higher edu
3. reduced by tax-free scholarships of taxpayer, spouse, or dependents

Question 25

If you receive a state tax refund that is greater than the taxes paid, how much is included in income for the CY?

Answer 25

Under the tax benefit rule, the refund up to the amount of taxes paid in the PY will be able to be included on the CY tax return

Question 26

Is consideration for canceling the lease counted towards rental income?

Answer 26

Yes, counts as prepaid rent

Question 27

What are examples of costs not required to be capitalized under uniform capitalization rules?

Answer 27

selling, advertising, marketing, research, officer comp

Question 28

What are the following types of property that the uniform capitalization rules apply to?

Answer 28

1. Real or tangible personal property produced by the taxpayer for use in a trade or business 2. Real or tangible personal property produced by the taxpayer for sale to customers 3. Real or personal property acquired by taxpayer for resale 4. . property acquired for resale if taxpayer's annual gross receipts for preceding 3 yrs exceed 25 mill

Question 29

What form can a Guaranteed Payments be deducted on?

Answer 29

1065

Question 30

What form are guaranteed Payments included on as income?

Answer 30

K-1

Question 31

What is the overall limitation to the QBI deduction?

Answer 31

Lessor of: combined QBI or 20% of the taxpayer's taxable income in excess of net capital gain

Question 32

Which is subject to self-employment tax: Guaranteed payments or ordinary income from an Scorp?

Answer 32

GP

Question 33

What is the tax treatment of net losses in excess of the at-risk amount for an activity?

Answer 33

Any losses in excess of the at-risk amount are suspended and CFWD w/o expiration and deductible against income in future years from that activity. At risk amount = basis

Question 34

When is income realized in an nonqualified stock?

Answer 34

Individual reports ordinary income at the date of grant (if has readily ascertainable value) - as if traded on established market Individuals Basis in stock = exercise price +recognized ord income Individuals LTCG = SP - adj basis Employer can deduct ord income that individual recognized

Question 35

When someone recoeves an ISO, will they have to report compensation in the yr received?

Answer 35

No, no recognition of comp with ISO

Question 36

Is S corporation income subject to self- employment taxes?

Answer 36

no

Question 37

What is the individual income tax formula?

Answer 37

``` Gross income - Adjustments ____________ Adjusted gross Income -STD or Itemized deduction (Greater of 2) ______________________ Taxable income before QBI deduction - QBI deduction _______________________ Taxable income ```

Question 38

what is the requirement of surviving spouse?

Answer 38

same as qualifying widow(er): can be claimed the 2 years after spouse death and must have dependent child

Question 39

What is the exclusion for prizes and awards so that they are not included in income?

Answer 39

The exclusion from income applies when the winter is selected for the award without entering into a contest and then assigns the award directly to a governmental unit or charitable organization

Question 40

What is an example of active participation in passive activity

Answer 40

Rental real estate

Question 41

How are employer contributions treated in respect to AGI?

Answer 41

only amounts distributed are taxable income

Question 42

is interest income from US obligations taxable?

Answer 42

yes (like treasury certificates)

Question 43

How does the employee receiving s nonqualified stock option recognize ord income?

Answer 43

the value of the option if traded on established market

Question 44

What is not included in income in a defined contribution plan?

Answer 44

Employer contributions and earnings

Question 45

How much income should be included for rental residence for less than 15 days?

Answer 45

none. prorate if over 15

Question 46

What is an example of non deductible expense for Schedule c?

Answer 46

no personal expenses are allowed (personal use of automobile, health insurance for owner and family)

Question 47

What is the excess business loss limitation amount?

Answer 47

259k anything over is carryforward