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REG > R1 Individual Tax- Income > Flashcards

R1 Individual Tax- Income Flashcards

1
Q

Extensions to Due Date

A

Automatic 6month extension -Oct 15
Avail to those who couldn’t file before. Must be requested by April 15. no extension on pmt

Out of the country automatic 2 month
need not file for extension but must include documentation

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2
Q

Filing Status Types

A 
Single
MFJ 
MFS
Qualif Widower
Head of Household
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3
Q

Head of Household requirements

A

have a dependent either child or parent
if non relative they must live with you HALF of the year
if in nursing home -half year - parent
child- have a home for them HALF year

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4
Q

Qualifying Widower Requirements

A

can use for 2 years after death
the year of death you use MFJ
must have a dependent child you live with for WHOLE year

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5
Q

Qualifying Child Requirements

A 
Close relative - child
Age - 19/24 full time student
Residency - US, MX, Can
Eliminate GI- not apply...kiddie tax
Support - provide >50%
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6
Q

Qualifying Relative Requirements

A

Support - >50% you provide
Under 3,800 (their income) - SS bens dont count if only income they receive.
Precludes MFJ - they cant MFJ unless just to get a refund
Only Citizens- US,MX,CD
Relative - must be OR
Taxpayer lives with person (if not relative)

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7
Q

4 Baskets of Income

A

Ordinary
Portfolio
Passive
Capital

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8
Q

Life Insurance Proceeds

A

EXCLUDE bens rec’d up to premiums paid
excess over premiums paid is taxable
exceptions: family member

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9
Q

Employer Paid Health,Medical,Accident Insurance

A

Premium pmts EXCLUDED from income BUT amounts paid to employee are included UNLESSS

reimbursement for medical exps actually incurred OR compensation for loss of member

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10
Q

Meals and Lodging

A

EXCLUDED from GI if for the convenience of employer.

50% excludable from Bus expenses (Sched C)

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11
Q

Employer Paid Educ Exps

A

EXCLUDIBLE up to 5250

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12
Q

Tuition Reductions

A

EXCLUDIBLE if teach/research and you get compensation for that separately. Then that is taxable and your reduction is NOT

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13
Q

Qualified pensions

A

Pmts by employer NOT taxable

benefits received TAXABLE

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14
Q

Flexible Spending Arrangements

A

Salary reduction deposited into account.
can be used to pay meical or dependent exps
deposited pretax

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15
Q

Tax Exempt interest income

A

State/local bonds or obls
US bonds
EE bonds (conditions apply)
Veterans Admin Insurance

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16
Q

Series EE -> educational expesnes -> Requirements for exemption (to not include in GI)

A

be used to pay for higher education (reduced by tax free scholarships)
there is taxpayer or joint ownership
taxpayer is >24yrs old
acquited afer ‘89

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17
Q

Series EE bonds exemption phase out

A

begins at 72850 Single &HH

109,250 MFJ

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18
Q

Kiddie Tax

A

0-950 -> 0%
950-1900 -> child’s
1901 and over - Parent’s %
parents can include in theirs if it’s solely dividends and interests and it is between 950&9500

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19
Q

Taxable Dividends

A

special rate
15% most ppl
0% if in 10/15 bracket

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20
Q

NONtaxable dividends

A

Return of capital
Stock Split
Stock Dividend
Life Insurance Dividend

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21
Q

Alimony

A 
Included & Deductible
Reqs:
legally required
in cash
not beyond death
designated as alimony
they dont file MFJ with each other
22
Q

Child Support

A

NOT included & NOT deductible

23
Q

Property Settlement

A

NOT included &NOT deductible

24
Q

Bus Expenses

A 
COGS
Saliers and commisions TO OTHERS
state/local taxes paid
actual car expenses &mileage
50% meal and entertainment
depr on bus assets
interest expense on bus loans (not deducted until the year that it applies to)
employee bens
legal and Prof fees
bad debts actually written off
25
Q

NON deductible Bus Exps

A

Salaries paid to proprietor
federal income tax
personal portion of:
car, travel, personal meals, interest expense (itemized if mtge interest of invmt interest), state/local tax expense (itemized), health insurance of proprietor ( adjustment NOT deduction)

26
Q

Net Business Income taxes

A 
2 taxes: Income tax & SE(federal) tax
7.65 of 110,100 
\+1.45 of rest
also
all income subj to 2.9 medicare  & 12.4 SS only up to 110,100
27
Q

Business Operating Loss

A

Back 2 years

FWD 20 years

28
Q

Uniform Capit Rules

A

applies to property produced for sale/use & acquired for resale
costs to capit DL, DM, OH
costs NOT capit SGA, R&D, Mkting

29
Q

LT contracts income recog

A

use %completion unless exception
exceptions: small contractors (<10M) & Home construction contractors
Allocate costs directly associated. NOT SG&A,RD,Mkting
dont have to allocate if if small of home contractor

30
Q

Production period

A

Starts: when incurred (cash ppl) OR earlier of when incurred or 5%incurred (accrual ppl)
ENDS when complete or when 95% costs incurred

31
Q

IRA income & penalty tax

A

req’d to receive by 70.5 yrs old
can receive after 59.5 yrs old
if withdraw before 10% penalty
it is taxable @receipt

ROTH IRA
bens rec’d up to invmt amouont are NOT taxable
TRADITIONAL
principal is NONtaxable. earnings taxable

32
Q

Penalty Tax exemptions

A 
HIMDEAD
house - up to 10k
Insurance - when SE or unemp for 12 mots
Medical exces of 7,5AGI
Diasibility
Education
Death
33
Q

Annuities

A

invmt amount/factor = amt excludible
amount above that number is taxable
if you die before you get all -> itemized deduction on ur dead return

34
Q

Rental Property when is it personal and when mixed?

A

rented 15 days and personal GREATER OF 14 days or 10%of rental days - personal/rental- allocate exps

  • – taxes and interest -> over annual
  • –util/depr/repair –> over usage
35
Q

PAL exemptions

A

MOM&POP
actively participate &own >10%activity
deduct 25k-> phase out after 100k-> reduce by 50% of excess over 100k
REAL ESTATE PROFESSIONAL
PAL not passive anymore. can deduct agains other income. more than 50% svces come from real estate & do more than 750 hrs in it

36
Q

SS icnome, includible or not?

A

INCLUDED depending on provisional income (AGI+taxempt int+50%SSbens)
34% -> 85% included
MFJ instead of 25 ->32. Instead of 34 ->44

37
Q

NONtaxable Misc items

A 
Life insurance proceeds -only interest part
Gifts&inheritance
medicare
workers comp- sick and injury
injury and illness
accident insruance premiums paid by you
Foreign income
38
Q

capital assets

A 
personal car
furniture and fixtures
stocks and secs (except those held by dealers)
personal prop NOT used in business
Real property NOT used in business
interest in partnership
Goodwill of corporation
copyrights PURCHASED
assets held for investment
39
Q

NONcapital Assets

A 
stuff in inventory OR held for sale
depreciable assets (S1231,1245,1250)
AR & Notes Receivable
Copyrights held by original person
Tstock
40
Q

Gifted property calculations

A

Basis = donor’s basis UNLESS fmvs basis

if that the case then it depends on Future SP

41
Q

Inherited Property

A

basis=FMV@death UNLESS Alt Val Date is chosen

that is either 6 mths after deaht OR distrib date. whatever comes first

42
Q

Related party transactions

A

Your basis depends on what you sold it for.

compare old basis, PP & SP

43
Q

Excludible GAINS

A

HIDEIT
Home exclusion -250 single, 500 MFJ
Involuntary - include portion not reinvested.
Divorece settlements - exclude
Exch Llike kind - gain only if booth rec’d
Installment sale - recog when cash rec’d using GP%
Tstock transactions

44
Q

Exch Like kind Prop basis & gain recog

A

basis= old basis +boot give - boot recd + gain recog

Gain recog = LESSER OF gain realized or boot recd

45
Q

NONdeductible Losses

A

WRaP
Wash sale Loss - you sell at a loss within 30 days you repurchase. Portion repurchased disallows loss. add disallowed loss to basis of repurch stock
Related Party Tran- losses when selling to reltive (not inlaws) are disallowed
Personal loss - no deduction- maybe itemized deduc for casualty or loss

46
Q

Cap gains & losses treatment for people

A

Net losses with Gains first within %group and then in order first agains high group and then lowest group
max deduction of 3K carryF forever

47
Q

Cap gains & losses treatment for corporations

A

only deductible agains capital gains NOT agains ordinary income
carryB 3 yrs, carryFWD 5 yrs

48
Q

Employee Stock Option Types

A 
NONQualified - taxed to empyee
-- value Ascertainable - taxed @grant
--value NOT ascertainable - taxed @exer
basis =exerprice +amt prev paid
Qualified - NOT taxed to employee
--ISO
--ESPP
49
Q

Incentive Stock Option (ISO) Reqs & Charac

A

-granted within 10yrs of EARLIER of appvd or adopted
-exerprice NOT 10%
-hold 2 yrs after grant and 1 yr after exer
-remain employee from grant to 3 months before exer
CHARACS
-no tax on employee
-G/L ord if HP reqs not met
-basis= exerprice +amt paid before
-lapse- no deduction, maybe loss if paid money before
-can exer UPTO100K
-excess FMV exer-PP= AMT preference

50
Q

Employee Stock Purchase Plan (ESPP) Reqs & Characs

A

REQS
- written and approved
-cant own >5%
-exer price NOT < LESSER OF 85%FMV@grant or @exer
-cannot exer after 27mths
-cannot purch >25k pr year
-hold 2 yrs after grant and 1 year after exer
-remain employee from grant date to 3 moths before
CHARACS
- NO TAX on employee
-G/L ord if HP reqs not met
-basis= exerprice +amt paid before
-lapse-no deduction, maybe loss if paid money
- if option price <FMV@grant then Ordinary income recog = lesser of diff bet FMV@sale&exerprice
OR diff FMV@grant&exerprice

REG (8 decks)

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