R2 Flashcards
What is the Student loan interest expense limitation?
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
What is the Keogh deduction?
- NBI - 50%SE tax= SE before Keough| 1. *20% = Keough deduction
What are the rules for Home Mortgage interest?
Interest on up to 750k to buy/build/ substantially improve 1st or 2nd AND secured by the home are fully deductible
Examples of nondeductible interest
interest on home equity loans, auto loans,muni bond income, or credit cards are not deductible
What is the treatment of LT/ST property for Charitable Contributions?
LT = take at FMV ST = take lower of cost OR FMV
What are the conditions for payment of Estimated Taxes?
- 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)
Name the 5 types of refundable credits
Child tax credit, EIC, W-2 Withholding taxes, Excess SS paid, AOC(40% refundable)
What is the calculation for income of a child under 18 that applies to trust and estate rate?
- Take child’s total interest income and reduce by Std deduction
- The next $950 is taxed @ child’s rate
- The remaining balance is taxed @ rates of estates and trusts
What are the Adjustments to AMT? (all added back except for taxes or Std )
PALs A/D (MACRS - AMT depreciation) NOL Installment income Contracts Taxes OR Std deduction
How does state income tax differ from regular tax vs AMT purposes?
Allowed as Itemized deduction for regular tax purposes while it is not for AMT
How is the AMT Credit CFWD treated?
Can be CFWD indefinitely
What is the CFWD on Charitable contributions?
5 yrs CFWD for any amount in excess of 60% of AGI
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
FIT, SIT, and Fed govt obligations
What are deductible expenses for cash basis taxpayers?
deductible taxes for cash basis are deductible when paid
- real estate
- income taxes
- personal property(valorem tax on personal automobile)
What is the additional deduction for Age 65+ and/or blind?
Single and 65+ or blind =1650
Single and both = 3300
Married and 65+ or blind = 1300(per spouse)
married and both = 2600
What is the rule for the deduction for investment interest expense?`
Limited to net taxable investment income
Are you allowed to deduct a charitable contribution for value of services?
no stoopid
What is the limitation on charitable contributions?
60% for cash 30%for property of AGI, 5 yr carryforward
Define the SS credit
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
What is not an eligible expense for the Adoption credit?
medical expenses
What is the difference in itemized deduction for AMT and regular?
not allowed to deduct real estate property taxes on AMT
What are the preferences for AMT?(all added back)
Private activity bond interest income
Percentage depletion deduction
Pre-1987 AD
Define the de minimis rule
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)
What is interest paid on debt not used to acquire or substantially improve a home?
Nondeductible interest
Is Self - employment tax deductible?
Yes, one-half deductible from gross income in arriving at adjusted gross income
What is the deduction for interest expense on investment indebtedness?
limited to taxpayers net investment income for the year
Is qualified education loan interest an adjustment or deduction?
adjustment to agi
How are foreign taxes treated?
Taxpayer may claim credit against FIT paid to a foreign country OR in lieu of credit could tax itemized deduction
What is an allowed deduction for AMT?
Casualty losses
How do you calc child and dependent care tax credit?
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
What itemized deductions are allowed for AMT?
Medical expenses in excess of threshold, qualified int, , CC, casualty loss
what are deductible taxes for itemized deductions?
Real estate
income
personal property(valorem &automobile)
How do you find SEP contribution amount?
Lessor of:
- 57k
- 20% (NBI LESS 50% * self employment tax)
Are private activity bonds included in AGI?
no - tax-exempt issued by, or on behalf of, a local or state government
