R2

Question 1

What is the Student loan interest expense limitation?

Answer 1

Allows up to 2500 of loan interest to be taken per year. any excess is “personal interest” & not deductible. No limitation on number of years int may be deducted. Int deducted when paid

Question 2

What is the Keogh deduction?

Answer 2

1. NBI - 50%SE tax= SE before Keough| 1. *20% = Keough deduction

Question 3

What are the rules for Home Mortgage interest?

Answer 3

Interest on up to 750k to buy/build/ substantially improve 1st or 2nd AND secured by the home are fully deductible

Question 4

Examples of nondeductible interest

Answer 4

interest on home equity loans, auto loans,muni bond income, or credit cards are not deductible

Question 5

What is the treatment of LT/ST property for Charitable Contributions?

Answer 5

LT = take at FMV
ST = take lower of cost OR FMV

Question 6

What are the conditions for payment of Estimated Taxes?

Answer 6

1. Amount of taxes owed is 1K or more(if not then no penalty for underpayment)| 2. if taxpayers withholding is less than the lessor of: 90% of CY tax OR 100% of PY tax(if AGI>150k then 110% of PY tax)

Question 7

Name the 5 types of refundable credits

Answer 7

Child tax credit, EIC, W-2 Withholding taxes, Excess SS paid, AOC(40% refundable)

Question 8

What is the calculation for income of a child under 18 that applies to trust and estate rate?

Answer 8

1. Take child’s total interest income and reduce by Std deduction
2. The next $950 is taxed @ child’s rate
3. The remaining balance is taxed @ rates of estates and trusts

Question 9

What are the Adjustments to AMT? (all added back except for taxes or Std )

Answer 9

PALs
A/D (MACRS - AMT depreciation) 
NOL
Installment income
Contracts
Taxes OR Std deduction

Question 10

How does state income tax differ from regular tax vs AMT purposes?

Answer 10

Allowed as Itemized deduction for regular tax purposes while it is not for AMT

Question 11

How is the AMT Credit CFWD treated?

Answer 11

Can be CFWD indefinitely

Question 12

What is the CFWD on Charitable contributions?

Answer 12

5 yrs CFWD for any amount in excess of 60% of AGI

Question 13

Which of the following are taxable income?

-Interest on FIT refund, Int on SIT refund, Int on Fed govt obligations, int on state govt obligations

Answer 13

FIT, SIT, and Fed govt obligations

Question 14

What are deductible expenses for cash basis taxpayers?

Answer 14

deductible taxes for cash basis are deductible when paid

• real estate
• income taxes
• personal property(valorem tax on personal automobile)

Question 15

What is the additional deduction for Age 65+ and/or blind?

Answer 15

Single and 65+ or blind =1650
Single and both = 3300
Married and 65+ or blind = 1300(per spouse)
married and both = 2600

Question 16

What is the rule for the deduction for investment interest expense?`

Answer 16

Limited to net taxable investment income

Question 17

Are you allowed to deduct a charitable contribution for value of services?

Answer 17

no stoopid

Question 18

What is the limitation on charitable contributions?

Answer 18

60% for cash 30%for property of AGI, 5 yr carryforward

Question 19

Define the SS credit

Answer 19

if excess is withheld from 2 or more employers, the excess is a credit against income
If excess is withheld from one employer, the excess is just refunded

Question 20

What is not an eligible expense for the Adoption credit?

Answer 20

medical expenses

Question 21

What is the difference in itemized deduction for AMT and regular?

Answer 21

not allowed to deduct real estate property taxes on AMT

Question 22

What are the preferences for AMT?(all added back)

Answer 22

Private activity bond interest income
Percentage depletion deduction
Pre-1987 AD

Question 23

Define the de minimis rule

Answer 23

If a company has a written policy and applicable F/S –> then they are allowed to deduct up to $5k per item
If a company has a written policy but does not have applicable F/S–> then can only deduct up to $2500 per gift (if gift is >2500 then nothing is deducted)

Question 24

What is interest paid on debt not used to acquire or substantially improve a home?

Answer 24

Nondeductible interest

Question 25

Is Self - employment tax deductible?

Answer 25

Yes, one-half deductible from gross income in arriving at adjusted gross income

Question 26

What is the deduction for interest expense on investment indebtedness?

Answer 26

limited to taxpayers net investment income for the year

Question 27

Is qualified education loan interest an adjustment or deduction?

Answer 27

adjustment to agi

Question 28

How are foreign taxes treated?

Answer 28

Taxpayer may claim credit against FIT paid to a foreign country OR in lieu of credit could tax itemized deduction

Question 29

What is an allowed deduction for AMT?

Answer 29

Casualty losses

Question 30

How do you calc child and dependent care tax credit?

Answer 30

First:
- take lessor of:
1.Earned income of lesser earning spouse.
2. actual expenses incurred
3. maximum allowable amount (3/6k) if 13 or less yrs
Second:
- if AGI 15k or less -> 35% of allowable expense
- if AGI over 15k –> decreases 1% per 2k
- AGI over 43k –> 20% of expenses

Question 31

What itemized deductions are allowed for AMT?

Answer 31

Medical expenses in excess of threshold, qualified int, , CC, casualty loss

Question 32

what are deductible taxes for itemized deductions?

Answer 32

Real estate
income
personal property(valorem &automobile)

Question 33

How do you find SEP contribution amount?

Answer 33

Lessor of:

1. 57k
2. 20% (NBI LESS 50% * self employment tax)

Question 34

Are private activity bonds included in AGI?

Answer 34

no - tax-exempt issued by, or on behalf of, a local or state government