REG 6-8 Flashcards
What is the difference between revocation and renunciation?
Termination of an agency can occur through the acts of either the principal (revocation) or the agent (renunciation)
Which events result in the automatic termination of actual authority?
- Death of either party
- Incapacity of the principal (only the principal is required to be capable)
- Discharge in bankruptcy of the principal
- Failure to acquire a necessary license
- Destruction of the subject matter of the agency
- Subsequent illegality
(heavily tested)
In a bankruptcy, what are examples of nondischargeable debts?
Bankruptcy discharges most pre-petition debts. Nondischargeable debts include:
- Debts incurred by fraud
- Unscheduled debts
- Debts arising from crimes
- Fines and penalties
- Alimony/child support debts
- Student loans
Unsecured creditors may petition a debtor INVOLUTANTARILY into bankruptcy proceedings under 7 or 11. Who must join the petition?
Fewer than 12 creditors: one or more owed $16,750
12 or more creditors: three owed $16,750
**Claims must be unsecured and undisputed
Note: Farmers and nonprofit charities cannot be petitioned involuntarily.
What is an exception to the Statute of Frauds?
If one party has fully performed, the contract can be enforced despite lack of writing if they can convince the court that the oral term was part of the contract.
What is the third party (primary) beneficiary rule and when does it apply?
It states that accountants are liable to 3rd parties for NEGLIGENCE if the accountant had reason to know the 3rd party would rely on their work
Note: it is the exception to the privity defense
What is the privity defense and when does it apply?
Accountants are not liable to 3rd parties for negligence because there is no privity of contract
Does not apply to actions for fraud or for constructive fraud
Generally, if income is lower than state median, filing under Ch. 7 is ok. If over, must do the mean test. When is a Chapter 7 filing converted to a Chapter 13 filing?
If a debtor’s net monthly income is $13,650 or more over a five-year period
Not eligible for Chapter 7
What types of education payments qualify for the unlimited gift tax exclusion?
ONLY payments for tuition to an institution.
Pymts for books, supplies, and dormitory fees are not eligible for the unlimited exclusion.
What is a difference in common law and UCC regarding acceptance?
Under common law, an acceptance must mirror the original offer.
Under the UCC (sales article), an acceptance can be effective even though it states additional or different terms than were included in the offer.
*Between MERCHANTS, additional terms that do not significantly change the offer generally become part of the contract.
What is the difference between tax preparers and tax practitioners?
A tax practitioner (attorney, CPA, enrolled agents & actuaries) can practice before the IRS, whereas a tax return preparer does not practice before the IRS
What is Circular 230?
Circular 230 is the IRS publication that addresses the practice before the IRS of practitioners with regard to rules, duties & restrictions, sanctions and disciplinary proceedings
What is a tax shelter?
A tax shelter is any (1) partnership or other entity; (2) investment plan or arrangement; or (3) other plan or arrangement if a significant purpose is the avoidance or evasion of federal income tax. There are legal ones and there are abusive ones.
Note: A reportable transaction, while similar, is different in that it is not specifically an entity.
Which assets are included in a debtor’s bankruptcy estate in a liquidation proceeding?
Property received within 180 days after the filing by divorce, inheritance, or insurance
Note: Debtor keeps most property earned after filing (i.e. wages)
What is the mailbox rule?
If the offer does not state that acceptance is effective upon receipt and does not specify the means of acceptance, then acceptance is effective upon dispatch
It is irrelevant when the acceptance is received
