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REG > R1 > Flashcards

R1 Flashcards

1
Q

What are the requirements for Qualifying Child?

A

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%)

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2
Q

What are the requirements for Qualifying Relative?

A

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

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3
Q

When is the qualifying widower status used?

A

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

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4
Q

What is the interest earned on Series EE bond?

A

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

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5
Q

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

A

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

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6
Q

What is an Accruable expense?

A

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

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7
Q

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

A

Trade date

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8
Q

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

A

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

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9
Q

How are early withdrawal penalties calculated from IRA?

A
  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)
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10
Q

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

A

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

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11
Q

How is prepaid interest allocated?

A

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

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12
Q

How are personal expenses treated?

A

Nondeductible from Schedule C, Adjustment to AGI

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13
Q

Name some examples of business expenses

A

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

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14
Q

What are the uniform capitalization rules applied to?

A

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

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15
Q

Define a Guaranteed Payment

A

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

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16
Q

What is the formula for QBI?

A
  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)
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17
Q

How is ordinary income from S corporation treated?

A

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

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18
Q

Define Passive Activity

A

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.

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19
Q

What is the mom& pop exception?

A

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.

20
Q

How is the PAL Cfwd treated?

A

Any excess would be CFWD indefinitely as a suspended PAL.

21
Q

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

A

PSC

22
Q

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

A
  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.
23
Q

Which is included in taxable income?

Unemployment Vs Workers comp

A

Unemployment

24
Q

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

A
  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
25
Q

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

A

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

26
Q

Is consideration for canceling the lease counted towards rental income?

A

Yes, counts as prepaid rent

27
Q

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

A

selling, advertising, marketing, research, officer comp

28
Q

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

A
  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
29
Q

What form can a Guaranteed Payments be deducted on?

A

1065

30
Q

What form are guaranteed Payments included on as income?

A

K-1

31
Q

What is the overall limitation to the QBI deduction?

A

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

32
Q

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

A

GP

33
Q

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

A

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

34
Q

When is income realized in an nonqualified stock?

A

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

35
Q

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

A

No, no recognition of comp with ISO

36
Q

Is S corporation income subject to self- employment taxes?

A

no

37
Q

What is the individual income tax formula?

A 
Gross income
- Adjustments
\_\_\_\_\_\_\_\_\_\_\_\_
Adjusted gross Income
-STD or Itemized deduction (Greater of 2)
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
Taxable income before QBI deduction
- QBI deduction
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
Taxable income
38
Q

what is the requirement of surviving spouse?

A

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

39
Q

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

A

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

40
Q

What is an example of active participation in passive activity

A

Rental real estate

41
Q

How are employer contributions treated in respect to AGI?

A

only amounts distributed are taxable income

42
Q

is interest income from US obligations taxable?

A

yes (like treasury certificates)

43
Q

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

A

the value of the option if traded on established market

44
Q

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

A

Employer contributions and earnings

45
Q

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

A

none. prorate if over 15

46
Q

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

A

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

47
Q

What is the excess business loss limitation amount?

A

259k anything over is carryforward

REG (16 decks)

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