REG 2

Question 1

What is the basic deduction calculation for the QBI deduction?

Answer 1

20% x QBI

Question 2

The term active participation for passive activity loss is relevant in relation to:

Answer 2

Rental real estate activities

Question 3

How much capital loss deduction is a corporate taxpayer entitled to use to offset against ordinary income in a given year?

Answer 3

$0. a corporation can’t use capital losses to offset ordinary income. they can, however, carry the loss back 3 years and forward 5 years to offset net capital gains.

Question 4

What is the calculation for a taxpayer’s basis in new real property received in a like-kind transaction?

Answer 4

FMV of new property
Less: deferred gain
Plus: deferred loss

Deferred gain = gain realized - gain recognized

Question 5

What is the calculation for the Child and Dependent Care Credit a taxpayer can claim?

Answer 5

Only children under 13 qualify

20% (married filed joint)
Times: lowest paid spouse income

Question 6

What is the calculation for a SEP IRA deduction for a self-employed taxpayer?

Answer 6

Net income
Less: Self-employment tax x 50%
Times: 20%

Question 7

Net rental income from rental property calculation:

Answer 7

Must rent property for 15 days during the year.
Rental income
less: prorated mortgage interest and taxes
Less: Advertising

Question 8

What is the tax liability associated with the early withdrawal of a traditional IRA?

Answer 8

Amount withdrew
Times: The marginal tax rate
Plus: amount withdrew x 10% penalty tax

Question 9

Section 1245 (ordinary income) vs Section 1231

Answer 9

-1245 required the lessor of the depreciation taken or the gain-recognized recaptured. Total depreciation will be recaptured as ordinary income and the remaining depreciation will be section 1231.
- 1231 are assets used in a business and held for over 12 months

Question 10

Section 291 Depreciation Recapture rules

Answer 10

property must be sold at a gain and the taxayer is a C-Corp.
-the gain is ordinary income to the extent of 20% of the lesser of 1) prior depreciation taken or 2) the gain

Question 11

Child tax credit calculation? (different from child or dependent care credit)

Answer 11

Taxpayers may claim a $2,000 credit for each child under 17 subject to a phase-out limit.

Question 12

What is a corporation basis in property received in exchange for stock?

Answer 12

The basis is the same basis as the taxpayer’s basis immediately prior to it’s contribution.

Question 13

What amount of gain would be recaptured under Section 1245?

Answer 13

The lessor of
1) depreciation taken
or 2) gain recognized to be recaptured