REG 5 Flashcards
C corporations cannot use the cash method of accounting unless their average annual gross receipts for the previous three years do not exceed $25,000,000. Once the $25,000,000 test is failed the accrual method must be used for all future tax years.
C corporations cannot use the cash method of accounting unless their average annual gross receipts for the previous three years do not exceed $25,000,000. Once the $25,000,000 test is failed the accrual method must be used for all future tax years.
Expenses related to a liquidation are deductible by the liquidating corporation.
Expenses related to a liquidation are deductible by the liquidating corporation.
For charitable contributions - The deduction for the gift of land is limited to 30% of AGI (30% × $35,000 = $10,500) because the land is appreciated capital gain property.
For charitable contributions - The deduction for the gift of land is limited to 30% of AGI (30% × $35,000 = $10,500) because the land is appreciated capital gain property.
A complex trust permits accumulation of current income, provides for charitable contributions, or distributes principal during the taxable year.
A complex trust permits accumulation of current income, provides for charitable contributions, or distributes principal during the taxable year.
purchase money security interest in consumer goods is automatically perfected upon attachment of that interest.
purchase money security interest in consumer goods is automatically perfected upon attachment of that interest.
For purposes of computing an individual’s AMT, no deduction is allowed for personal, state, and local taxes or for home mortgage interest if the loan proceeds were not used to buy, build, or substantially improve the home. Additionally, unreimbursed medical expenses are allowed only to the extent in excess of 10% of adjusted gross income.
For purposes of computing an individual’s AMT, no deduction is allowed for personal, state, and local taxes or for home mortgage interest if the loan proceeds were not used to buy, build, or substantially improve the home. Additionally, unreimbursed medical expenses are allowed only to the extent in excess of 10% of adjusted gross income.
Under Section 18 of the Securities Exchange Act of 1934 -Section 18(a) establishes a presumption of liability for false statements in filed documents, but allows defendants to escape liability if they prove that they “acted in good faith and had no knowledge that such statement was false or misleading.”
Under Section 18 of the Securities Exchange Act of 1934 -Section 18(a) establishes a presumption of liability for false statements in filed documents, but allows defendants to escape liability if they prove that they “acted in good faith and had no knowledge that such statement was false or misleading.”
A taxpayer’s own spouse is never a dependent of the taxpayer.
A taxpayer’s own spouse is never a dependent of the taxpayer.
To be classified as a personal holding company, a corporation must meet both a “stock ownership test” and an “income test.” The “stock ownership test” requires that more than 50% of the stock must be owned (directly or indirectly) by five or fewer individuals.
To be classified as a personal holding company, a corporation must meet both a “stock ownership test” and an “income test.” The “stock ownership test” requires that more than 50% of the stock must be owned (directly or indirectly) by five or fewer individuals.
The elements needed by a plaintiff to prove negligence against a defendant (including a CPA) are:
- proof of the standard of due care
- breach of that standard of due care
- injury
- cause, including both cause-in-fact and proximate cause.
The elements needed by a plaintiff to prove negligence against a defendant (including a CPA) are:
- proof of the standard of due care
- breach of that standard of due care
- injury
- cause, including both cause-in-fact and proximate cause.
If both cash and noncash property are received in a liquidating distribution, the basis for the partner’s partnership interest is first reduced by the cash, before being reduced by noncash property. This is important because a distributee partner must recognize gain to the extent that the cash received exceeds the basis for his partnership interest. Here, Reid recognizes a gain of $61,000 cash – $60,000 basis = $1,000. The basis for the land that Reid received will be zero.
If both cash and noncash property are received in a liquidating distribution, the basis for the partner’s partnership interest is first reduced by the cash, before being reduced by noncash property. This is important because a distributee partner must recognize gain to the extent that the cash received exceeds the basis for his partnership interest. Here, Reid recognizes a gain of $61,000 cash – $60,000 basis = $1,000. The basis for the land that Reid received will be zero.
bylaws set forth the authority of corporate officers.
bylaws set forth the authority of corporate officers.
Corporations and partnerships may go through a Chapter 7 liquidation, but do not qualify for a general discharge from all remaining debts as natural persons do.
Corporations and partnerships may go through a Chapter 7 liquidation, but do not qualify for a general discharge from all remaining debts as natural persons do.
The eligibility requirements restrict S corporation shareholders to individuals (other than nonresident aliens), estates, and certain trusts. Partnerships and C corporations are not permitted to own stock in an S corporation.
The eligibility requirements restrict S corporation shareholders to individuals (other than nonresident aliens), estates, and certain trusts. Partnerships and C corporations are not permitted to own stock in an S corporation.
A business may repossess a security interest from a secondary buyer, if the security interest is perfected BEFORE the secondary buyer purchases the good.
EX/ Jim purchased a computer using the proceeds of a loan from MJC Finance Company. Jim gave MJC a security interest in the computer. Jim executed a security agreement and financing statement, which was filed by MJC. Jim used the computer to monitor Jim’s personal investments. Later, Jim sold the computer to Jacobs for Jacobs’ family use. Jacobs was unaware of MJC’s security interest. Jim now is in default under the MJC loan.
May MJC repossess the computer from Jacobs? YES, BECAUSE MJC’s SECURITY INTEREST WAS PERFECTED BEFORE JACOBS’ PURCHASE
A business may repossess a security interest from a secondary buyer, if the security interest is perfected BEFORE the secondary buyer purchases the good.
EX/ Jim purchased a computer using the proceeds of a loan from MJC Finance Company. Jim gave MJC a security interest in the computer. Jim executed a security agreement and financing statement, which was filed by MJC. Jim used the computer to monitor Jim’s personal investments. Later, Jim sold the computer to Jacobs for Jacobs’ family use. Jacobs was unaware of MJC’s security interest. Jim now is in default under the MJC loan.
May MJC repossess the computer from Jacobs? YES, BECAUSE MJC’s SECURITY INTEREST WAS PERFECTED BEFORE JACOBS’ PURCHASE
Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934 govern material misstatements and omissions that are related to the sale of any security. To win a case against a CPA based on one of these theories, the plaintiff must show that:
- (s)he relied on the misstatements
- that the misstatements were material
- that the CPA knew of the misstatements (acted with scienter).
Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934 govern material misstatements and omissions that are related to the sale of any security. To win a case against a CPA based on one of these theories, the plaintiff must show that:
- (s)he relied on the misstatements
- that the misstatements were material
- that the CPA knew of the misstatements (acted with scienter).
A personal holding company (PHC) is a C corporation in which more than 50% of the value of its outstanding stock is owned (directly or indirectly) by five or fewer individuals and which receives at least 60% of its adjusted ordinary gross income from passive sources. Because the top corporate tax rates have historically been lower than the top individual tax brackets, some shareholders of closely held corporations have sought to retain earnings within the corporation as a strategy to avoid the higher individual tax rates. To prevent this, Congress enacted a penalty tax on certain C corporations–the personal holding company (PHC) tax.
A personal holding company (PHC) is a C corporation in which more than 50% of the value of its outstanding stock is owned (directly or indirectly) by five or fewer individuals and which receives at least 60% of its adjusted ordinary gross income from passive sources. Because the top corporate tax rates have historically been lower than the top individual tax brackets, some shareholders of closely held corporations have sought to retain earnings within the corporation as a strategy to avoid the higher individual tax rates. To prevent this, Congress enacted a penalty tax on certain C corporations–the personal holding company (PHC) tax.
MACRS 5 Year Property:
Automobiles, taxis, buses, trucks, computers and peripheral equipment, office equipment, any property used in research and experimentation, breeding cattle and dairy cattle, appliances & etc. used in residential rental real estate activity, certain green energy property
MACRS 5 Year Property:
Automobiles, taxis, buses, trucks, computers and peripheral equipment, office equipment, any property used in research and experimentation, breeding cattle and dairy cattle, appliances & etc. used in residential rental real estate activity, certain green energy property
MACRS 7 Year Property:
Office furniture and fixtures, agricultural machinery and equipment, any property not designated as being in another class, natural gas gathering lines
MACRS 7 Year Property:
Office furniture and fixtures, agricultural machinery and equipment, any property not designated as being in another class, natural gas gathering lines
Residential rental property is depreciated for 27.5 years. It is any building or structure where 80% or more of its gross rental income is from dwelling units
Residential rental property is depreciated for 27.5 years. It is any building or structure where 80% or more of its gross rental income is from dwelling units
Nonresidential real property is depreciated for 39 years. It is an office building, store, or warehouse that is not residential property or has a class life of less than 27.5 years
Nonresidential real property is depreciated for 39 years. It is an office building, store, or warehouse that is not residential property or has a class life of less than 27.5 years
