REG 1D

Question 1

Qualifications for qualifying dependent?

Answer 1

C-IRS-Jack you: Citizen(of USA) or resident of usa, mexico or canada;Income-less than$3950; Relationship or household member–not a cousin;Support - over half of annual support;no Joint return

Question 2

summarize adoption credit

Answer 2

Child must be under 18, or mentally or physically handicapped;expenses can be deducted after adoption is finalized, even in a subsequent year;max is 1
$13,190;credit is nonrefundable

Question 3

For a cash-basis self employed worker, how is salaried employment used in figuring total self-employment income?

Answer 3

Self-employment pay would be received in cash from customers,salary would be added and deductible expenses subtracted on to that to arrive at total self-employment income.

Question 4

Where can special city or county levied assessments be deducted(sewer)?

Answer 4

Assessments of this type are added to property basis only, and not deducted.

Question 5

What is the difference between the annualization and seasonal tax filing method?

Answer 5

The seasonal method is available only to corporations; annualization is available to individuals.

Question 6

Can a person always avoid a tax penalty by making sure this year’s tax payment is 100% of last years?

Answer 6

No, if he earns over $150,000 he must pay at least 110% of the prior years taxes owed.

Question 7

If a customer dies before payment of a bill, how does the accounting method of the contractor affect the tax treatment?

Answer 7

If accrual-based, money is collected when work is done. IF cash-based, money is collected when received. If the customer dies before payment, a cash-based business could not collect because they have not “received the income”.

Question 8

What are mid-year and mid-quarter conventions?

Answer 8

Methods on applying MACRS depreciation. If 40% or more of all business purchases are made in last quarter of the year, then the mid-quarter convention must be used.

Question 9

Which classes use MACRS 200% and which use 150%?

Answer 9

3, 5, 7, and 10 yr classes use the 200%. 15 and 20-yr property use 150%.

Question 10

How much capital loss is one person allowed annually?

Answer 10

Any one taxpayer can claim up to $3,000; amounts higher than that are allowed to be offset by passive income.

Question 11

What is the mnemonic for Schedule A deductions? What does it stand for?

Answer 11

COMMITT - Charitable contributions; Other miscellaneous; Misellaneous expenses(2%); Medical expenses; Interest; Taxes; Theft or Casualty loss

Question 12

Property donated to charity is subject to what limitations?

Answer 12

Long term held property (over 1 year) may be sold at higher FMV but is limited to 30% AGI in that tax year.

Question 13

What is AMT computed as?

Answer 13

Excess of tentative AMT/regular tax

Question 14

Charitable contributions are limited to 50% AGI. If one gives more, is it carried forward? If so how far forward?

Answer 14

5 years

Question 15

Taxpayer accrues income in yr 1, estimates too low; receives it in the next year, but is more than reported. How much time does he have to report it to IRS?

Answer 15

With an accrual based taxpayer, he can just include it in his 2015 filing or quarterlies.

Question 16

Regardless of proportional and phase out rules, what is the amount that anyone can contribute to an IRA?

Answer 16

$200 per person/$400 total if married

Question 17

What are rules for a 179 deduction?

Answer 17

1.) Allowed to expense up to $500,000 in one year. 2. Deduction reduced dollar-for-dollar once total equipment purchases pass $2 million.

Question 18

Are any type if taxes deductible even if deficient?

Answer 18

Yes, state and local taxes are, but no the penalties and interest associated with them. Federal taxes are NEVER deductible, even if deficient.

Question 19

Why is MACRS called a “Modified” type of depreciation?

Answer 19

Because it differs from standard GAAP depreciation.

Question 20

How does MACRS differ from GAAP depreciation

Answer 20

1.) Useful life of the property is shorter, in most cases. 2.) New and Used property treated the same. 3.) Salvage value is ignored.

Question 21

Describe Section 1250 depreciation.

Answer 21

REAL property-residential rental depreciated over 27.5 yrs, business or investment over 39 years. Straight line. Salvage value ignored. MID-MONTH convention used: all property treated like it is purchased or sold in middle of month.

Question 22

Describe Section 1245 property.

Answer 22

Tangible non-realty - can be depreciated over 3, 5, 7, 10, 15 or 20 yrs. STRAIGHT line or MACRS.

Question 23

DESCRIBE Section 197 depreciation.

Answer 23

Intangibles - For the most part, intangibles are depreciated straight-line over 15 years.

Question 24

Describe MACRS depreciation.

Answer 24

3-10 year life property use 200% double-declining balance MACRS depreciation. 15 & 20 yr life propert use 150% MACRS depreciation.