R1 Individual Taxation

Question 1

Requirements to be qualified as Surviving Spouse aka qualifying widow(er)

Answer 1

1. can be claimed for the 2 years after the year of death

2. requires the presence of a dependent child

Question 2

Claim an exemption for qualifying child (CARES)

Answer 2

1. Close Relative
2. Age limit
3. Residency and Filing Requirements: same principal place of adobe as the taxpayer for more one 1/2 of the tax year.
4. Eliminate Gross Income Test
5. Support Test Changes

Question 3

Claim an exemption for qualifying relative (SUPORT)

Answer 3

1. Support test
2. Under exemption amount of taxable gross income
3. Precludes dependent filing a joint return
4. Only citizens of the US or residents of the US, Mexico, or Canada
5. Relative
   or
6. Taxpayer lives with the individual for the whole year

Question 4

Scholarships and Fellowships for Degree-Seeking Student, included in Gross Income or not?

Answer 4

Excluded only up to the amounts actually spent on tuition,fees, books, and supplies (not room and board)

Question 5

Social Security Income

Answer 5

5 categories

(1) Upper Income (Income >34,000/ single or >44,000/MFJ )=85% of SS benefits are taxable

Question 6

Social Security Income: when taxable

Answer 6

5 categories

(1) Upper Income (Income >34,000/ single or >44,000/MFJ )=85% of SS benefits are taxable

Question 7

Definition of accruable expense

Answer 7

The service has been received/ performed but have NOT been paid for by the end of the reporting period.

Question 8

Child support from ex spouse is not taxable

Answer 8

True

Question 9

Property settlement from divorce is not taxable

Answer 9

True

Question 10

For a cash basis taxpayer, gain or loss on a year-end sale of listed stock arises on the Trade Date.

Answer 10

True

Question 11

How to calculate Tax paid for early withdraw of IRA

Answer 11

Use marginal tax rate to multiply by the IRA amount and add 10% of penalty of IRA amount.

Question 12

Exception to Penalty Tax (Still subject to ordinary income tax) - HIM DEAD

Answer 12

1. Home buyer first time: $100,000 maximum exclusion applies
2. Insurance (Medical)
   - Unemployed with 12 consecutive weeks of unemployment compensation
   - Self-employed (who are otherwise eligible for unemployment compensation)
3. Medical expenses in excess of 10% of AGI
4. Disability (must not be temporary)
5. Education: College tuition, books and fees
6. And
7. Death

Question 13

The first $X amount of group term life insurance is a nontaxable fringe benefit.

Answer 13

50,000

Question 14

Annuity general rules for taxable/ non taxable income.

Answer 14

1. Calculate monthly payment.
2. Only the prorated amount of the cost recovery is not taxable.
3. Life expand longer than contract then fully taxable.

Question 15

Alimony includes only payments received in cash or its equivalent.

Answer 15

Giving a painting is not considered as alimony

Question 16

Taxable death benefit

Answer 16

Amount received this year -Total death benefit-amount/year

Question 17

Life insurance proceeds on the life of an officer when the corporation is the owner and beneficiary are not reported as taxable income of the corporation.

Answer 17

True.

Question 18

IRA withdraw as ordinary income

Answer 18

True

Question 19

Types of Property that applies to Uniform Capitalization Rules of Code Sec.263A

Answer 19

1. Produced for Use
2. Produced for Sale
3. Acquired for Resale: DM, DL and factory overhead (e.g. warehousing).

Question 20

How many days per year for renting for a residence would consider as a personal residence that rent is excluded from income

Answer 20

15 days

Question 21

UCR do not apply to inventory acquired for resale f the taxpayer’s average gross receipts for the preceding three tax years do not exceed what amount?

Answer 21

$10,000,000

Question 22

Uniform Capitalization method must be used by Manufactures of tangible personal property?

Answer 22

True.

Question 23

Schedule C doesn’t allow deduction of state income tax

Answer 23

True.

Question 24

Mom and Pop exception to passive activity loss rules

Answer 24

1. <25,000> deductible and Actively managing.
2. Carry-forward: indefinitely
3. Phase-out: The allowance is eliminated completely when AGI exceeds $150,000.