REG 1

Question 1

Which individuals must file income tax returns even if their income is lower than the
“general rule” requirement?

Answer 1

Net earnings from self-employment > $400
Other’s dependants with gross income> $1000
Individuals who receive advance payments of earned income credit must file

Question 2

Individual Extension?

Answer 2

Although granted
automatically, the six-month extension must be requested by the taxpayer by filing
Form 4868 by April 15th.
Out of country- 2 month, no file needed

Question 3

Qualifying Widow(er) (Surviving Spouse) reqirements?

Answer 3

With dependent child-maintain household for the whole year
2 years after death year
not remarried

Question 4

Head of household reqirements?

Answer 4

not non-resident alien

maintains household 1/2 year for dependent ( children, parents- may not live together, relatives)

Question 5

personal exemption phse-out?

Answer 5

Starts at $254200-single
$305050-joint
reduce 2% for every $2500 excess

Question 6

Requirements for claiming dependency exemptions under CARES rule-child?

Answer 6

close relative,
age limit,
residency and filling requirements-live together 50% and no joint return,
eliminate gross income test, support test- child paid < 50%

Question 7

Requirements for claiming dependency exemptions under SUPORT rule- relative?

Answer 7

Support- supplied > 50% support (10% for multiple)
Under exemption amout ($3950)- taxable income
Preclude joint return filers
Only citizen( us mexico canada)
Relative
or Taxpayer live together with whole year

Question 8

Is employer paid life insurance premium taxable to employee?

Answer 8

Premiums > $50,000 coverage are partially taxable

Question 9

are employer paid educational expense excludable?

Answer 9

yes. up to $5250/ year towards degree

Question 10

When will you lose unused FSA money?

Answer 10

usually 2.5 month after year-end

Question 11

Series EE bond interest taxable?

Answer 11

Tax-exempt when used for higher education; phase-out starts when MAGI>76,000 or 113,950

Question 12

What’s MAGI?

Answer 12

Modified AGI is a

taxpayer’s AGI adjusted for certain foreign income exclusions. (add back)

Question 13

Unearned income of child < 18 tax rate?

Answer 13

First $1000 - exempt
Next $1000- child’s rate
Rest- parent’s rate

Question 14

Treatment of forfeited interest?

Answer 14

Adjustment above AGI

Question 15

Dividend income taxability?

Answer 15

from E&P (current or accumulated)- taxable
return of capital- none taxable
No E&P or Basis- Capital gain
Stock split, stock dividend- non taxable

Question 16

Is dividend income capital gain?

Answer 16

NO. But same tax rate, if held for more than 60 days during the 120-day period
that begins 60 days before the ex-dividend date

Question 17

1040 Schedule A, B, C, D,E,F

Answer 17

Itemized deduction
interest and dividend
business, self employment
capital gain/loss
supplemental income/loss- rental, K-1s
farming

Question 18

Nondeductible Schedule C expenses?

Answer 18

salary for self
fed income tax
personal portion of …bla bla
Health insurance- 100% adjustment to arrive at AGi

Question 19

Is state business income tax deductible on schedule c?

Answer 19

Yes. But personal portion is not–go to schedule A.

Question 20

Self employment tax rates?

Answer 20

12.4% FICA(ss)+2.9% medicare, but 50% is adjustment above AGI-(employer potion)

Question 21

Is NOL on schedule C deductable againtst other sources of income?

Answer 21

Yes. plus 2/20 carryover.

Question 22

What costs are required to be capitalized?

Answer 22

taxes paid in connection with acquisition of property.
capitalized as inventory- direct materials, direct labor, applicable indirect costs (overhead, utilities, etc.)
Only apply to manufatures and big resalers.

Question 23

What costs are not required to be capitalized?

Answer 23

selling, general, administrative, R&D

inventory acquired for resale- if gross receipts < 10M for 3 years

Question 24

Who is NOT required to use percentage-of-comletion method for long contracts income recognition?

Answer 24

small contractors(less than 10M reciepts)，Home construction contractors, land(90%) constructions,
services-architects, enginees, software implementation
services under warranty

Question 25

Who’s not required to maintain inventory(accrual)?

Answer 25

Sole propriatary farmers- expense inventory. schedule F

Question 26

Can sole propriatory business use cash basis for inventory?

Answer 26

NO

Question 27

IRA age limit for withdraw? and penalty?

Answer 27

59.5. 10%

Question 28

Exception to IRA early withdraw penalty tax?

Answer 28

HIMDEAD
Home buyer (1st time)-10,000
Insurance-medical
Medical expense >  10% AGI
Disability
Education And
Death.

Question 29

Who send out K-1s?

Answer 29

S corp
Partnerships LLCs
Estates
Trusts

Question 30

When is rental income recognized?

Answer 30

Income- received if nonrefundable

Question 31

How is rental of vacation home taxed? deduct expense?

Answer 31

Less than 15 days- no tax
more than 15 days, but personal used >14 day and > 10% of rental days– recognize income, prorate expense( to the extent of income, no net loss except mom and pop rule-$25,000)

Question 32

Is net passive loss carried over?

Answer 32

Yes. Rolls with land forever/sold

Question 33

Can passive activity loss be deducted againt other income?

Answer 33

NO, but Mom and Pop $25,000 exception- phased out starts 100,000-reduced by 50% excess AGI

Question 34

Is SS income taxable?

Answer 34

income34,000-85% taxable

Question 35

Is unemployment comp taxable?

Answer 35

Yes

Question 36

Is worker’s comp taxable?

Answer 36

NO

Question 37

Is mdicare taxable?

Answer 37

NO

Question 38

Is accident insurance proceeds taxable?

Answer 38

Paid by individual- NO

Paid by employer- Yes, unless for medical expense.

Question 39

Is foreign-earned income taxable?

Answer 39

NO if passed physical presence test-330 days/ 12 month

Question 40

When is employee option taxed?

Answer 40

Non-qualified: When value can be determined. At grant or at exercise.
Qualified: ISO and ESPP- not taxable as compensation, may have capital gain/loss when sold.