R1 - Individual Taxation - Gross Income

Question 1

What are the two criteria that must be met in order for a gain to be taxable?

Answer 1

Realized and recognized

Question 2

How much of an employer’s educational expenses are excludable from employee income?

Answer 2

$5,250 for both undergraduate and graduate

Question 3

What is the limit for merchandise discounts? Service discounts?

Answer 3

Merchandise discounts are limited to the employer’s gross profit percentage (i.e. only down to cost) and service discounts are limited to 20%

Question 4

What is the kiddie tax exclusion graduated table amount?

Answer 4

Under $1,000 = 0%
$1,001 - $2,000 = child’s rate
$2,001 + = parent’s rate

Question 5

What is the carryback/forward time periods for a net operating loss?

Answer 5

2-year carryback and 20-year carryforward

Question 6

For long term contracts, what is the default method required to be used?

Answer 6

Percentage-of-completion

Question 7

What are the exceptions to the IRA early withdrawal 10% penalty tax?

Answer 7

HIM DEaD
Home buyer (1st time) - $10K max
Insurance (medical)
Medical expenses in excess of 10% of AGI
Disability - not temporary
Education
and
Death

Question 8

What is the phase-out amount for the Mom and Pop PAL exception?

Answer 8

$25,000 and is reduced by 50% of the excess over an AGI of $100,000 (gone @ $150,000)

Question 9

The Uniform Capitalization Rules of Code Sec. 263A apply to retailers whose average gross receipts for the preceding three years exceed what amount?

Answer 9

$10,000,000

Question 10

What amount of group life insurance premiums are not included in wages?

Answer 10

The premiums on a policy up to $50,000; any premiums on a policy over $50,001 are included in wages

Question 11

Is a limited partner allowed to take a loss?

Answer 11

No

Question 12

T/F: Guaranteed payments are subject to self-employment taxes

Answer 12

True

Question 13

How should passive losses be allocated between activities?

Answer 13

A ratio of losses to total losses