REG - 6/12 Part II Flashcards
An individual’s losses on transactions entered into for personal purposes are deductible only if
An individual’s losses on transactions entered into for personal purposes are deductible only if the losses qualify as casualty or theft losses in a Federally Declared Disaster Area.
True or False: Treasury stock cannot be resold at a price less than par value.
False
- Treasury stock may be resold without regard to par value.
- *treasury stock does not receive dividends.
- **treasury stock cannot be voted.
What is a cash tender offer?
A cash tender offer is simply a way to acquire the stock of a corporation.
What happens in a Leveraged Buyout?
In a leveraged buyout a firm acquires debt to buy all or the majority of its outstanding stock.
Which credit can result in a refund even if the individual had no income tax liability?
The earned income credit is a refundable credit and can result in a refund even if the individual had no tax withheld from wages.
For a Consolidated Return - what percentage of another corporation does the acquiring corporation need to own to file this return?
At least 80% of both the voting stock and FMV of the acquiree.
When does a Stock Redemption qualify for Exchange Treatment?
A stock redemption qualifies for exchange treatment generally resulting in capital gain or loss if the redemption is a partial liquidation, or reduces the shareholder’s interest in the corporation and after the redemption the shareholder owns (directly and constructively) less than 50% of the corporation’s stock.
How much of a Qualified Education Loan can be deducted?
The maximum annual deduction is limited to $2,500 and is reduced by modified adjusted gross income in excess of $60,000 if single, head of household, or a qualifying widow(er); $120,000 if married filing jointly.
What happens when a buyer fails to pay the price as it becomes due?
When a buyer fails to pay the price as it becomes due, the seller may recover the purchase price of the goods identified to the contract plus incidental damages if the seller is unable to resell them at a reasonable price after making a reasonable effort.
What is the doctrine of Anticipatory Repudiation?
The doctrine of anticipatory repudiation allows a party to either sue at once or wait until after performance is due when the other party indicates s/he will not perform.
What is Promissory Estoppel?
The legal principle that a promise is enforceable by law, even if made without formal consideration, when a promisor has made a promise to a promisee who then relies on that promise to his subsequent detriment.
The elements necessary for promissory estoppel are (1) detrimental reliance on a promise, (2) reliance on the promise is reasonable and foreseeable, and (3) damage results (injustice) if the promise is not enforced.
What is Accord and Satisfaction?
A legal contract whereby two parties agree to discharge a tort claim, contract or other liability for an amount or based on terms that differ from the original amount of the contract or claim.
What is Substantial Performance?
A term used in contract law to refer to a degree of performance of a contract which isn’t full and complete performance, but is so nearly equivalent that it would be unfair to deny the contractor the payment agreed upon in the contract.
What should be considered when deciding whether a covenant not to compete is enforceable?
It is irrelevant whether the employee voluntarily terminates his employment.
To be enforceable, the agreement must protect Salam’s legitimate interests and the geographic area covered must be reasonable.
In deciding the issue, the court will balance Wert’s ability to obtain other employment against Salam’s right to protect its business.
What is a Corporation’s Contribution base?
A corporation’s contribution base is its taxable income before the charitable contributions deduction, the dividends received deduction, and before deductions for capital loss carrybacks.
*Since Gero had operating income of $160,000 after deducting $10,000 of contributions, its contribution base would be $160,000 + $10,000 + $2,000 dividends = $172,000.
