REG 1 Flashcards
Calculation when money is pulled from a Roth IRA before age 59 1/2.
- Current income tax brack % Ex: ( 25% * Entire Withdrawal amounts) = IINCOME TAX PAYABLE
- Any portion of the distribution that was not rolled over to the Roth IRA -
(10% Early Witdrawal Penlty * Portion of The Distribution that was Not Rolled Over to Roth IRA) – ($20,000 * 10%) = PENALTY AMOUNT
What items can be included in a Shareholders of an S-CORPS Gross Income?
% OF OWNERSHIP * TAXABLE INCOME = CURRENT YEAR S-CORP INCOME
NOT INCLUDED: DISTRIBUTIONS THAT DO NOT EXCEED CURRENT YEAR SHAREHOLDER BASIS
CALCULATION FOR DIVIDEND INCOME FOR STOCKHOLDER OF A C-CORP
3 - TREATED AS A LIQUIDATING RETURN OF CAPITAL
ORDER OF DIVDEND INCOME DISTRIBUTION:
- CURRENT YEAR EARNINGS & PROFITS
- ACCUMULATED (E&P)
- ANY AMOUNT LEFT OVER AFTER CY E&P & ACCUMULATED E&p HAVE BEEN DEPLETED
1&2 TAXED AT DIV INCOME TAX RATE
CALCULATION FOR RENT REVENUE FOR ACCRUAL TAXPAYER
RENT PAYMENTS + INCREASE IN RENT RECEIVABLE + NONREFUNDABLE RENT DEPOSITS
WHEN IS THE ACCUMULATED EARNINGS TAX FOR A C-CORP BE IMPOSED?
If accumulated retained earnings is Greater Then $250,000
Less for pesonal service Corps
& For which no justified reason for the retention exists.
Involuntary Conversion
a transaction that results from a condemnation of property or a destruction or loss from the theft or casualty
Is QBI Deduction allowed for income above the taxable income limitations for an SSTB?
No - QBI deduction is allowed for an SSTB that have taxable income > Taxable income limitation amounts
Itemized Deductions:
Qualified Medical Expenses
- The Date Amounts are CHARGED TO A CC - Does not matter when actually paid
- expenses paid for the medicate care of a decendent’s spouse - included whrn medical expenses are paid
Section 1231 Asset
Asset used in a TaxPayers Trade or business
Must be held longer than a year to get Section 1231 treatment
Inside Basis for a Partnership:
Basis of Assets OWNED BY THE PARTNERSHIP
Basis of assets in the hands of the partnership and is EQUAL to the BASIS of the assets in the HANDS OF THE CONTRIBUTING PARTNER
Partnership assumes the holding period of the Contributing PArtner
Outside Basis for a partnership
Partner’s Basis in the partnership Interest
Increase by Liabilities assumed or Decrease by liabilities assumed by other partners
Individual Partner Level Elections:
to take a deduction or a credit for taxes paid to foreign countries
Parntership Level Elections:
1.Not to recognize involuntary conversion gains
- Election to Expense Sec 179 Property
- Election to Amortize organizational costs
Schedule M-1 Calculation
+ Reported Book Income
- Muncipal Bond Interest Income
+ Federal Income Taxes
+ Interest Expense to Cary municipal bonds
= Taxable Income
Basic Formula for Net Rental Income/Loss
Cash Basis
Gross Rental Income + Prepaid Rental Income + Rent Cancellation Payments + Improvements in liey of rent - Rental Expenses = Net Rental Income (Loss)
Calculation for Liquidation of interest of a Partner
Considered a Distribution
(Beg Basis + Share Of Liabilities)
Minus: Monthly Payments * Months in year
Minus: Relief from share of partnership liabilities
Minus: Remaining Cash Payments * 12 months
If Negative Basis, Partner must recognize difference as a Capital Gain to iliminate Negative Basis
What % Of business meals is deductible?
50%
Does a Shareholder who is a 2% or less shareholder include health insurance paid by the company?
No.
Fringe Benefits is includable in gross income of S-Corp Shareholdesr who Own more than 2% of the stock
Which of the following groups may elect to file a consolidated corporate return?
Members of an affiliate group
Intercompany gains and losses are eiliminated
Willfull or Reckless Conduct
- A willful attempt to understate the tax liability
- reckless or intentional disregard of tax rules and regulations
ex: Knowingly deducting personal expenses as business expenses could constitute such “willful or reckless” conduct
What does the due deligence requirement for the earned income credit address?
Addressses eligbility checklists, computation worksheets, record retention, and reasonable inquiries to the tax payer
What re the four elments must a plaintiff make to makea course of negligence against a CPA?
Plaintiff must prove:
1. Defendant owed a duty of care to the plaintiff
2. The defendant breached that duty of care
3. The breach of duty was the actual and proximate cause of the Plaintiff’s Losses
4. The Plaintiff Suffered damages
What are the 5 Common Law Frauds
- Misrepresentation of material fact
- Itent to deceive
- Actual and justifiable reliance by the plaintiff on the misrepresentation
- an intent (also known as scienter) by the defendant to induce the plaintiff’s reliance on the misrepresentation
- Damages
When an accountant acted with scienter:
Suit for common law may succeed only if the accountant knew that the statement was wrong or recklessly disregarded the truth
What are the four elements of Negligence?
- Duty of Care
- Breach (Which is Lack of Due Care)
- Casualty
- Injury
Actual Authority
Authority the agnt reasonably believes that he or she has based on communications with the Principal.
Under Agency Law, which of the following sets of categories refer to principals?
Disclosed, PArtially Disclosed, and undisclosed
Types of agency relationships
Formal, mutual, informal
Types of Agent Authority to Act on Behalf of a Principal
Actual, Express, Implied
Types of Agency Relationships
General, Special, and Gratuitous
