R1&R2

Question 1

What does an employee receiving nonqualified stock option recognize?

Answer 1

Ordinary income

Question 2

What types interest income are taxable?

Answer 2

interest on:

• US treasury certificates
• refund of prior years federal income tax

Question 3

What are the 5 refundable tax credits?

Answer 3

1. Child tax credit
2. Earned income credit
3. Federal income tax withheld (from W-2)
4. Excess Social security tax paid
5. American opportunity credit (40% refundable)

Question 4

What type of interest is taxable?

Answer 4

Interest received from general investment (checking/money market account)
Interest on federal obligations

Question 5

What is an accruable expense and provide example?

Answer 5

Where services have been received/performed but not paid by the end of the reporting period

Ex) A repair completed prior to year end but NOT invoiced

Question 6

How are state tax refunds determined to be included in taxable income?

Answer 6

IF itemized in the PY –> refund is included,

IF NOT itemized in PY –> no refund included

Question 7

When are federal tax refunds included in gross income?

Answer 7

THEY ARE NEVER INCLUDED

Question 8

Which of the following is included in SE tax:

• Guaranteed payment
• Ordinary income from S corporation

Answer 8

Guaranteed payment

Question 9

What are the limitations for QBI?

Answer 9

Single = $164,900 - 214,900
MFJ = $329,800 - $429,800