REG 3 Flashcards
On a S corporate formation, a gain is recognized to the extent that the liabilities assumed by the corporation exceed the basis in the assets contributed by the shareholder. The gain for this shareholder is $6,000 ($12,000 debt less $6,000 basis).
On a S corporate formation, a gain is recognized to the extent that the liabilities assumed by the corporation exceed the basis in the assets contributed by the shareholder. The gain for this shareholder is $6,000 ($12,000 debt less $6,000 basis).
If a person engages in a transaction with a partnership other than as a partner of such partnership, any resulting gain is generally recognized just as if the transaction had occurred with a nonpartner. Here, Cole’s gain of $16,000 − $10,000 = $6,000 is fully recognized.
If a person engages in a transaction with a partnership other than as a partner of such partnership, any resulting gain is generally recognized just as if the transaction had occurred with a nonpartner. Here, Cole’s gain of $16,000 − $10,000 = $6,000 is fully recognized.
In a property exchange transaction - if a mortgage is assumed, it is included as part of the “boot” calculation. Ex - cash paid of $30 and mortgage of $70K assumed by other party would yield a $100K boot received
In a property exchange transaction - if a mortgage is assumed, it is included as part of the “boot” calculation. Ex - cash paid of $30 and mortgage of $70K assumed by other party would yield a $100K boot received
The diamond necklace is classified as a capital asset because the definition of “capital asset” includes investment property and property held for personal use.
The diamond necklace is classified as a capital asset because the definition of “capital asset” includes investment property and property held for personal use.
For a condemnation of real property held for productive use in a trade or business or for investment, the replacement period ends three years after the close of the taxable year in which the gain is first realized. Since the gain was realized in 2018, the replacement period ends December 31, 2021.
For a condemnation of real property held for productive use in a trade or business or for investment, the replacement period ends three years after the close of the taxable year in which the gain is first realized. Since the gain was realized in 2018, the replacement period ends December 31, 2021.
The class of life for realty is 27.5 years for residential and 39 years for nonresidential. The general convention is "mid-month" meaning you would use the middle of the month to begin depreciation. Depreciation is done via the straight line method
The class of life for realty is 27.5 years for residential and 39 years for nonresidential. The general convention is "mid-month" meaning you would use the middle of the month to begin depreciation. Depreciation is done via the straight line method
No loss can be deducted on the sale of stock if substantially identical stock is purchased within 30 days before or after the sale. Any loss that is not deductible because of this rule is added to the basis of the new stock. If the taxpayer acquires less than the number of shares sold, the amount of loss that cannot be recognized is determined by the ratio of the number of shares acquired to the number of shares sold.
No loss can be deducted on the sale of stock if substantially identical stock is purchased within 30 days before or after the sale. Any loss that is not deductible because of this rule is added to the basis of the new stock. If the taxpayer acquires less than the number of shares sold, the amount of loss that cannot be recognized is determined by the ratio of the number of shares acquired to the number of shares sold.
You may claim someone as a dependent under the qualifying relative rules:
- Not qualify as somebody else’s qualifying child or qualifying relative
2, Live with you the entire year (365 days) or be one of these: - Your child, stepchild, foster child, or a descendant of any of them
- Your brother, sister, half brother, half sister, stepbrother, or stepsister or a descendant of any of them
- Your father, mother, grandparent, or stepparent, but not a foster parent
- Your son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law
- Your uncle, aunt, nephew, or niece
- Earn less than $4,150
- Receive more than half of his or her support for the year from you
To claim a dependent, these must also be true:
- He or she can only have filed jointly with his or her spouse to claim a refund of the taxes withheld. Also, if he or she were to have filed separately from his or her spouse, neither would have owed taxes.
- The dependent is one of these:
U.S. citizen
U.S. resident alien
U.S. national
Resident of Canada or Mexico
You may claim someone as a dependent under the qualifying relative rules:
- Not qualify as somebody else’s qualifying child or qualifying relative
2, Live with you the entire year (365 days) or be one of these: - Your child, stepchild, foster child, or a descendant of any of them
- Your brother, sister, half brother, half sister, stepbrother, or stepsister or a descendant of any of them
- Your father, mother, grandparent, or stepparent, but not a foster parent
- Your son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law
- Your uncle, aunt, nephew, or niece
- Earn less than $4,150
- Receive more than half of his or her support for the year from you
To claim a dependent, these must also be true:
- He or she can only have filed jointly with his or her spouse to claim a refund of the taxes withheld. Also, if he or she were to have filed separately from his or her spouse, neither would have owed taxes.
- The dependent is one of these:
U.S. citizen
U.S. resident alien
U.S. national
Resident of Canada or Mexico
Excess business losses are not deductible in the current year and are carried over and treated as part of the taxpayer’s NOL carryforward in future years. The amount deductible in the carryforward years is limited to 80% of taxable income before such deduction. Ex/ $500,000 of taxable income and an excess NOL of $440,000 from the prior year (500,000 × 80% = $400,000), so $400K could Be deducted in the current year
Excess business losses are not deductible in the current year and are carried over and treated as part of the taxpayer’s NOL carryforward in future years. The amount deductible in the carryforward years is limited to 80% of taxable income before such deduction. Ex/ $500,000 of taxable income and an excess NOL of $440,000 from the prior year (500,000 × 80% = $400,000), so $400K could Be deducted in the current year
The amount of a nonbusiness casualty loss is computed as the lesser of (1) the adjusted basis of the property, or (2) the property’s decline in FMV; reduced by any insurance recovery, and a $100 floor. If an individual has a net casualty loss for the year, it is then deductible as an itemized deduction to the extent that it exceeds 10% of adjusted gross income.
The amount of a nonbusiness casualty loss is computed as the lesser of (1) the adjusted basis of the property, or (2) the property’s decline in FMV; reduced by any insurance recovery, and a $100 floor. If an individual has a net casualty loss for the year, it is then deductible as an itemized deduction to the extent that it exceeds 10% of adjusted gross income.
An estate tax return must be filed if the gross estate exceeds $11.18 million.
An estate tax return must be filed if the gross estate exceeds $11.18 million.
A corporation will never recognize gain or loss on the receipt of money or other property in exchange for its stock, including treasury stock.
A corporation will never recognize gain or loss on the receipt of money or other property in exchange for its stock, including treasury stock.
Services rendered for partnership interest will go towards the basis of the person who rendered the services. EX/ Did $25,000 worth of service - all $25K will be in the new partners basis.
Services rendered for partnership interest will go towards the basis of the person who rendered the services. EX/ Did $25,000 worth of service - all $25K will be in the new partners basis.
When cash distributions are made by a corporation that exceed its Accumulated Earnings and Current Earnings, the excess cash distributed is recognized as a return of capital
When cash distributions are made by a corporation that exceed its Accumulated Earnings and Current Earnings, the excess cash distributed is recognized as a return of capital
Certain corporations are exempt from the accumulated earnings tax. These exempt corporations are: domestic and foreign personal holding companies; tax-exempt organizations; passive foreign investment companies; and S corporations.
Certain corporations are exempt from the accumulated earnings tax. These exempt corporations are: domestic and foreign personal holding companies; tax-exempt organizations; passive foreign investment companies; and S corporations.
