REG 1/7/2017

Question 1

Payments received on an inherited installment obligation are

Answer 1

taxable to the beneficiary at the same gross profit percentage used by the decedent

Question 2

Section 179 max deduction

Answer 2

250 or 500 MFJ

Question 3

In order to limit or revoke apparant authority

Answer 3

the principal must communicate revocation and/or limitation of authority to third parties

Question 4

An involuntary bankruptcy petition, one filed by creditors of the bankrupt under the Federal Bankruptcy Code, places a

Answer 4

freeze or automatic stay on further actions taken by creditors

Question 5

The statute of frauds applies only to

Answer 5

contracts for the sale of goods,
a transfer of interest in land,
promises to pay for the debts of another,
contracts that cannot be performed within one year.

Question 6

What is parole evidence rule

Answer 6

Extrinsic (oral or written) evidence (i.e., outside the contract) is not admissible to add to, alter, or vary the terms of a written contract. All preliminary negotiation should have been merged into the writing.

Question 7

Despite the parol evidence rule, oral evidence may be admitted as proof when:

Answer 7

1) of fraud, misrepresentation, duress, undue influence, lack of consideration, or illegality of the subject matter (constitutes proof, which destroys the contract).
of an oral condition precedent to the written contract:
2) proof that the parties agreed orally to a condition that had to be fulfilled before the contract became effective.
3) to explain an ambiguity or omission: evidence cannot contradict the terms of the contract but can explain them.
4)of a subsequent modification (oral or written) made to the contract. (Oral modification is acceptable if it is supported by consideration and does not violate the statute of frauds.)

Question 8

How is LTCG property donated to charity deducted?

Answer 8

may be eligible for deduction of its fair market value rather than its lower cost basis.

Question 9

How is STCG property doanted to charity deducted?

Answer 9

Limited to its basis

Question 10

MAX AGI percentage for appreciated capital gain property donated to charity?

Answer 10

30% of AGI

Question 11

Are death benefits received from term life insurance policy on parent taxable?

Answer 11

Not taxable

Question 12

When should a corporation make estimated tax payments?

Answer 12

By the 15th day of the 4th, 6th, 9th, and 12th months of a corporation’s tax year;
Installment payments are required if the estimated tax is $500 or more.

Question 13

When is a bill of lading negotiable?

Answer 13

when goods are “delivered to the bearer”

Question 14

What effect does a state and local tax refund have on AMT?

Answer 14

The state tax refund is not included in income for AMT purposes. Also, state and local taxes are not deductible for AMTI purposes.

it will decrease AMTI

Question 15

Are property settlements included in gross income?

Answer 15

No - it’s a tax free exchange

Question 16

Is a rollover of a traditional IRA into a Roth IRA taxable?

Answer 16

YEs - because the contribution to a traditional IRA is deductible and withdrawals from a Roth IRA are tax-free, the rollover is a taxable event.

Question 17

The uniform capitalization rules apply to:

Answer 17

real or tangible personal property produced by the taxpayer for use in a trade or business or in an activity engaged in for profit,
real or tangible personal property produced by the taxpayer for sale to customer, or
real or personal property (both tangible and intangible) acquired by the taxpayer for resale.

Question 18

The uniform capitalization rules do not apply to tangible or intangible personal property acquired for resale if the taxpayer’s annual gross receipts for the preceding three tax years do not exceed

Answer 18

$10 million.

Question 19

How much can you deduct from S Corp

Answer 19

is limited to amounts “at risk” in a trade or business or income-producing activity under IRC Section 465 losses. The amount at risk is the total of the taxpayer’s basis in the S corporation plus any loans that the taxpayer has made to the S corporation.

Question 20

When can C corp use cash basis?

Answer 20

$5 million or less

Question 21

FASAB the organization that will establish GAAP principles for:

Answer 21

federal reporting agencies

Question 22

Individuals may generally avoid the penalty for failure to pay estimated tax by:

Answer 22

paying at least 90% of the tax shown on the current year’s return or
paying 100% of the tax shown on the prior year’s return (for individuals with AGIs of less than $150,000 in the previous year).

Question 23

What is the doctrine under which a corporation is made liable for the torts of its employees, committed within the scope of their employment?

Answer 23

Respondeat superior

Question 24

What is the ultra vires act?

Answer 24

is a doctrine that forbids an act by a corporation that is beyond the scope of its powers as specified in its articles of incorporation and under state law

Question 25

What is the shelter of defense

Answer 25

The shelter rule is a doctrine in the common law of property under which a grantee who has received an interest in property from a bona fide purchaser will also be protected as a bona fide purchaser, even if the grantee would not legally qualify for this status.

Question 26

What is accord and satisfaction?

Answer 26

The “accord” is the agreement of the parties to modify a contract so as to require a different kind of performance from one of the parties than was originally expected. The “satisfaction” component is the completion of the modified performance, thus discharging the new obligation.

Question 27

When it’s a consumer item and more than 60% of the purchase price has been paid, the creditor is under a general obligation to

Answer 27

dispose of the asset.

Question 28

What amount of this capital loss can an individual offset against ordinary income?

Answer 28

$3,000

Question 29

What would be a tax deferred transaction?

Answer 29

A Type A statutory merger is usually completed as a stock-for-stock swap without a payment of cash, qualifying as a like-kind exchange.

Question 30

When does the wash sale rule apply?

Answer 30

Within 30 days

Question 31

What is ch. 9 bankruptcy?

Answer 31

debts of a municipality

Question 32

What is ch. 13 bankruptcy?

Answer 32

adjustment of debts (repayment)

Question 33

What are the requirements of a financing statement?

Answer 33

names of the debtor and the secured party,
signed by the debtor,
secured party’s address,
debtor’s mailing address, and
a statement indicating the types, or describing the items of collateral.

Question 34

What are considered capital assets?

Answer 34

Property held for resale (inventory)
Real or depreciable property used in a trade or business (e.g., operational or fixed assets) (see IRC Sections 1231, 1245, and 1250)
Accounts or notes receivable acquired in the normal course of business
Copyrights; literary, artistic, or musical compositions; letters or memoranda; or similar property other than patents or inventions in the hands of the creator, anyone who assumes the creator’s basis (e.g., the property was received as a gift), or in the case of letters and memoranda or similar property, a person for whom the property was prepared or produced
U.S. government publications received from the government at a reduced price
Commodities derivative financial instruments held by commodities derivatives dealers
Hedging transactions enacted by a taxpayer in his or her normal course of business
Supplies used or consumed regularly by a taxpayer in his or her ordinary course of business

Question 35

Capital assets DO NOT include

Answer 35

inventory,
any depreciable property,
a copyright, a literary, musical, or artistic composition, or
accounts or notes receivable acquired in the ordinary course of trade or business for services.

Question 36

Non cash charitable contributions are deductible at

Answer 36

the lower of 30% AGI or FMV

Question 37

Are services performed for a charitable organization deductible?

Answer 37

No.