REG

Question 1

Tax Filing Requirements
Qualifying Widower- 2 years FOLLOWING death
-Year of death is Married filing Joint
-Must hold principle residence for a child for the WHOLE year

Head of Household
-Must hold as principle residence for at least HALF the year
-Dependent (not parent) must live with you

Surviving Spouse - First 2 years
-Must pay over half the cost of maintaining a
household where a child lives for the whole taxable
year.

Question 2

CARES (QC qualifying child)

Close Relative
Age limit
Residency and filing requirements
Eliminate gross income test
Support test

Answer 2

Close Relative
-children, step children, brothers and sisters, step siblings,
descendants of prior mentioned
Age limit
-Younger than 19 or fulltime student through 24.
- No age limit if total and permanent disabled
Residency and Filing Requirements
-Child must have the same principal
place of abode as the taxpayer for
more than one half of the tax year
Eliminates Gross Income Test
-Gross income test does not apply to a
qualifying child
Support Test
-Qualifying child must not have contributed more than half
of his or her own support.

Question 3

SUPORT (QR qualifying relative)

Support test
Under a specific amount of (taxable) gross income test
Precludes dependent filing a joint tax return test
Only citizens (residents of US/Canada/Mexico) test
Relative test
Taxpayer live with individual for whole year test

Answer 3

Support Test
-Taxpayer must have supplied more than one half of the
support of a person in order to claim him or her as a
qualifying relative.
Under Gross Income Limitation
-A person may not be claimed as a qualifying relative unless
the qualifying relative’s gross income is less than $4,700.
Precludes Dependent Filing a Joint Return
-A taxpayer does not meet the definition of qualifying
relative if the taxpayer is a married dependent who files a
joint return, unless there is no tax liability on the couple’s
joint return and there would not have been any tax liability
on either spouse’s tax return if they had filed separately.
Only Citizens of the US or Residents of the US, Mexico or Canada
-The qualifying relative must be either a citizen of the US or
a resident of the US, Mexico or Canada.
Relative
-Only foster parents and cousins are not considered to be
relatives.
Taxpayer Lives With the Individual for the Whole Year

Question 4

Deductible Alimony

Answer 4

-Payment must be in cash or its equivalent.
-Payments cannot extend beyond the death of the payee-spouse.
-Payments must be legally required pursuant to a written divorce (or separation) agreement.
-Payments cannot be made to members of the same household.
-Payments must not be designated as anything other than alimony.
-The spouses may not file a joint tax return.

Question 5

HIM DEAD mnemonic

Answer 5

Home Buyer $10,000 max if used toward first home
Insurance (medical)
Medical expenses in excess of percentage of AGI floor

Disability
Education
Adoption or birth of child made within one year
Death

Question 6

Charitable Contributions- 60% AGI
Capital Gain Property (stock and land)- 30% AGI (5 year carryforward)
Casualty Loss- Less ($100) and 10% of AGI
Deductible Medical Expenses- Amount exceeding 7.5% of AGI

Question 7

A loss on the sale of a personal-use asset is a nondeductible loss

Question 8

Capital loss deduction for an individual is limited to $3,000 per year and remainder carried forward indefinitely

Question 9

Net capital loss deduction for a corporation can be carried back 3 years and forward 5 years

Question 10

MACRS 5 year property includes

Answer 10

Automobiles
Light Trucks
Computers
Typewriters
Copiers
Duplicating Equipment

Question 11

Intangible assets are amortized over 180 months with use of the full month convention upon acquisition

Question 12

Acquisitions of goodwill, covenants not-to-compete, franchises, trademarks, and trade names must be amortized on a straight-line basis over a 15-year period (180 months) beginning with the month of acquisition.

Question 13

Section 179 election to dispense certain depreciable business assets, the taxpayer may expense the cost of qualifying depreciable property up to $1,160,000 in 2023.

Question 14

C Corporations are allowed a maximum charitable donation of 10% of taxable income before allowing the following deductions:

-Any charitable contribution
-Dividends received deduction
-Any net operating loss carryback
-Any net capital loss carryback

Question 15

Organizational costs are amortizable over a 15 year period
-a $5,000 deduction is allowed in year 1.
-Remainder is divided by 180 (months) then added to the $5,000

Question 16

Dividends-received deductions is 50% of dividends received if under 20% owned
-65% if owning 20%+

Question 17

Business gifts are deductible up to a $25 max

Question 18

In order to use a corporate dividends received deduction the investor must own for more than 45 days

Question 19

Eligible S Corporation shareholders must be individuals, estates or certain types of trusts.

Question 20

Fines & Penalties

Tax Return Preparer fails to sign: $60 (Max $30,000)

Question 21

Elements that make a case for negligence against a CPA:

1.The defendant owed a duty of care to the plaintiff (duty of care)
2. The defendant breached that duty by failing to act with due care (breach)
3. The breach of duty was the actual and proximate cause of the plaintiffs loss (casualty)
4. The plaintiff suffered damages (injury)

Question 22

Common law fraud requires proof of five elements:
1. A misrepresentation of material fact
2. Intent to deceive (scienter)
3. Actual and justifiable reliance by the plaintiff on the misrepresentation
4. An intent (also known as scienter) by the defendant to induce the plaintiff’s reliance on the misrepresentation
5. Damages

Question 23

An accountant is prohibited from showing the workpapers to anyone without the client’s permission, except:

1. Lawful subpoena.
2. Prospective purchasers, as long as the prospective purchasers do not disclose the confidential information.
3. Quality control panel.
4. AICPA/State Trial Board.
5. Court proceedings.
6. When GAAP requires disclosure of such information in the financial statements.

Question 24

Educator Expenses
Eligible educators can deduct up to $300 of qualified expenses paid.

Question 25

Individual IRA contributions
Unmarried and under 50- $6,500 or earned income
over 50- $7,500 or earned income

Married and under 50- $13,000 or earned income
over 50- $15,000 or earned income

Question 26

Scienter = Intent to deceive

Question 27

S Corporations
-Debt does not tie to capital

Question 28

C Corporations
-Losses are carried back 3 years and forward 5 years

Question 29

Ultramares Rule:
Limits accountant liability for negligence to:
-Parties in privity
-Intended third party benificiaries
-Parties who are merely “foreseen”
cannot recover

Question 30

Rule: Capital assets include property (real and personal) held by the taxpayer for investment, such as:

-Personal automobile of the taxpayer
-Furniture and fixtures in the home of the taxpayer
-Stocks and securities of all types (except those held by dealers)
-Personal property of a taxpayer not used in a trade or business
-Real property not used in a trade or business
-Interest in a partnership
-Goodwill of a corporation
-Copyrights, literary, musical, or artistic compositions purchased
-Other assets held for investment

Question 31

Bankruptcy

Chapter 7- Liquidation (no hope)
Chapter 9- Municipal Debt Adjustment
Chapter 11- Debt Reorganization (For businesses)
Chapter 13- For adjustment of debts of individuals with regular income (For Individuals)

Farmers and nonprofit charities can not be petitioned involuntarily into bankruptcy
Involuntary can happen when a debtor owes $18,600+

Question 32

MACRS Property Class
● Five-year class:
○ Computers, printers, copy machines, vehicles, etc.
● Seven-year class:
○ Office furniture and fixtures, desks, chairs, etc.
● 15-year class:
○ Leasehold improvements, land improvements,
fencing, landscaping, etc.
● 27.5-year: Residential rental property
● 39-year: Nonresidential real property (business
buildings)

Question 33

NOL Carryforward Rules
-NOL can offset only 80% of taxable income

NOL - $100,000
Taxable Income- $100,000
After deducting $80,000 carry the other $20,000 forward

Question 34

Duties of an Agent
1. Duty of Loyalty
2. Duty of Obedience
3. Duty of Care and Skill
4. Duty to Inform
5. Duty of Accounting
6. Duty of Good Conduct

Question 35

Liabilities of an Agent
-Contractual Liability
-Tort Liability
-Liability for Breach of Duty
-Criminal Liability
-Liability for Misrepresentation
-Liability for Negligence

Question 36

Duties of Principals
-Duty to Compensate
-Duty to Reimburse
-Duty to Indemnify
-Duty to Cooperate
-Duty to Provide Safe Working Conditions

Question 37

Liabilities of Principals
-Contractual Liability
-Liability for Agent’s Torts
-Liability for Failure to Perform
-Direct Liability
-Liability for Agent’s Misrepresentation
-Liability for Wrongful Termination

Question 38

Social Security Tax: 6.2%
Medicare: 1.45%

Employers must contribute an equal amount for a total of 15.3% (7.65%+7.65%)