Random Flashcards

1
Q

Capital Assets

A

Investment assets and personal use assets - ie: stocks, bonds, real estate, and goodwill

Assets other than inventory, accounts receivable, notes receivable, assets used in a trade or business owned for more than 1 year, or creative works (in the hands of the creator), or certain misc assets (such as gov publications or obligations). Self created musical works are treated as capital assets even though these are creative works

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2
Q

Collectible

A

Tangible personal property like coins, art, and antiques purchased for investment purposes. Gold and silver are also classified as collectibles subject to the 28% rate

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3
Q

Normal LTCG rate

A

15%

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4
Q

Rate on net capital gain on real estate/straight line depreciation

A

25%

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5
Q

Rate on collectables

A

28%

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6
Q

Form 8929

A

Gains or losses on sale of capital assets (ST & LT)

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7
Q

Schedule D

A

Where capital G/L summaries from 8949 are carried to

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8
Q

Form 4562

A

Depreciation and Amortization

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9
Q

Section 179 election

A

election to expense a limited amount of tangible personalty if used in a trade activity (cannot be for investment)

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10
Q

MACRS 7 yrs property

A

office furniture and fixtures

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11
Q

MACRS 5 yrs property

A

automobiles, trucks, computers, equip

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12
Q

Section 1250 Recapture vs Section 1245 Recapture

A

1250: Recaptures realty (land and assets permanently attached to land)
1245: Recaptures gains on personality as OI to the extent of AD (assets other than realty)

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13
Q

Section 1231 Assets

A

Assets that are used in trade or business and have been owned for more than a year

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14
Q

List the qualifying property for like-kind exchanges.

A

Business or investment property;
Not inventory or receivables;
Must be “like-kind;”
Cannot be across US borders;
Special rules when related taxpayers.
In these exchanges losses are never recognized and recog gain is the lesser of the realized gain or boot

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15
Q

Form 1040

A

Interest (lines 1-4) and dividends (lines 5-6)

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16
Q

Gross Income

A

Amount of realized income after eliminating deferred and excluded income

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17
Q

Form 8606

A

Conversions of 401k plans into Roth plans

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18
Q

Schedule C

A

All trade or business income and deductions of a self-employed individual are reported on Schedule C—Profit or Loss from Business. Retainer fees received from clients is reported in Schedule C as trade or business income.

19
Q

Schedule E—Supplemental Income and Loss.

A

Income derived from royalties is reported in Schedule E—Supplemental Income and Loss. Schedule E also is used to report the income or loss from rental real estate, partnerships, S corporations, estates, and trusts.

20
Q

What to deduct when donating stock

A

the lower of FMV or 30% of AGI

21
Q

Limit for deducting losses from rental

A

$25,000 - Excess of AGI over $100k * .5

22
Q

If shares are gifted and you sell - how to report G/L

A

If amount is in between FMV and original price - then zero
A donee basis in property acquired by gift usually equals the lower of the donor’s basis in the property plus the gift tax paid or the fmv

23
Q

Most legal expenses incurred in attempts to produce or collect taxable income or paid in the association with the determination, collection, or refund of any tax are usually deductible as an itemized deduction subject to the ____

A

2 percent of adjusted gross income floor

24
Q

taxpayer who has elected to amortize the premium on a bond

A

The bond’s basis is reduced by the amortization.

25
Q

Are alimony, child support, or property settlements included in income?

A

only alimony is for the person receiving it and is deductible to payee

26
Q

ordinary assets

A

AR, NR, inventory, trade and business assets owned for less than a year or a year

27
Q

§1231 assets

A

trade/bus assets owned for more than year. Assets netted to a gain are a LTCG and subject to lookback limit of 5 years for losses. Loss is deductible as an ordinary loss - best of both worlds

28
Q

Ordinary losses vs capital losses

A

Capital losses have a $3,000 limit and excess cap loss is carried foward

29
Q

Gift basis rule of gain vs loss

A
Gain = adj basis of donor
Loss = lower of fmv @ date of gift or adj. basis of the donor
30
Q

net capital loss and corporations

A

can’t deduct net capital loss but can use to offset capital gain 3 years back, and 5 years forward

31
Q

§1245 depreciation recapture

A

the realized gain is §1245 OI to the extent of straightline depreciation and remaining is §1231

32
Q

constructive receipt

A

cash basis TP has to include value of prop in income in the period they have the right to or control of property

33
Q

assignment of income

A

income is taxed to the ind. who earns it

34
Q

tax benefit rule

A

requires TP to include prop in income in the period in which an apparent claim to the property materializes

35
Q

buying bond at premium vs discount

A

discount: the amtz. increases interest income (effective interest rate)
premium: the atmz. offsets the interest rate (constant yield to maturity)

36
Q

taxation of life ins. due to death

A

proceeds of life ins. due to death of insure excluded from income bc life ins proceeds are subject to estate taxes

37
Q

Formula for provisional income

A

AGI + Tax exempt interest + 50% SSB

generally ssb not included in income unless TP’s PI exceeds 85% of benefits

38
Q

ded of life insurance

A

A taxpayer may not deduct life insurance premiums in which the taxpayer is directly or indirectly the beneficiary. However, a taxpayer may deduct the group term life insurance premiums if the insured employee or his/her beneficiaries would get the insurance proceeds.

39
Q

Fact: Jimet also donated stock, valued at $3,000, to his church. Jimet had purchased the stock four months earlier for $1,500. $1,500 is ded because The stock was purchased for $1,500 and not held for one year to be capital gain property, therefore the deduction for the stock is the lower of cost or FMV with the cost of $1,500 being the lowest.

A

Fact: All inheritances are LTCG no matter how long prop is held for

40
Q

time frame for the carryback/carryforward of the foreign tax credit

A

1 year/10 years.

41
Q

primary Securities and Exchange Commission transactions that are exempt.

A

Small Offerings;
Private Placements;
Intrastate transactions.

42
Q

What are the duties of a fiduciary?

A

Act with reasonable care and discharge duties solely in interests of plan’s participants.

43
Q

What is the purpose of the Employee Retirement Income Security Act of 1974 (ERISA)?

A

Protect employee rights in existing pension plans;

Offer tax incentives to employers and employees to fund employee benefit plans.