REG

Question 1

How is cash deducted for charitable contributions?

Answer 1

All cash contributions are deductible for excess amount over the fair value of anything received. ie, $100 given, receive $20 shirt and bag, $80 is deductible.

Question 2

Are services performed deductible for charitable contributions?

Answer 2

No, but expenses incurred during the volunteer work are deductible. ie, gas to and from the charity, and supplies to carry out volunteer work.

Question 3

When is rental income taxable?

Answer 3

When cash is received, even when collected for advanced payment.

Question 4

How are unreimbursed medical expenses deducted?

Answer 4

Medical expenses are itemized and deducted by the excess of 10% of AGI. ie, $100 AGI, $12 in medical expenses, only $2 is deductible. 10% of 100 is $10, 12-10=2.

Question 5

What are the three tiers to unearned revenue for a child?

Answer 5

1st tier- Standard deduction amount is not taxed.
2nd tier- Standard deduction amount is taxed at the child’s tax rate.
3rd tier- remaining balance is taxed at the parents rate.
EX: $2300 in unearned revenue. $1050 is not taxed at all. $1050 is taxed at parent’s rate. $200 is taxed at parents rate. (1050+1050=2100, 2300-2100=200)

Question 6

When can a C-Corporation use cash basis?

Answer 6

Any C-Corporation that has less than $5 million in revenue can use cash basis. Otherwise, they must use accrual basis.

Question 7

Which type of corporate reorganization, as defined by the Internal Revenue Code, involves an acquirer using voting stock to acquire at least 80% of the target’s net assets?

Answer 7

Type C

Question 8

How is an incoming partner’s basis affected?

Answer 8

Increases by cash and adjusted basis of property contributed.
Decreases by the amount of the incoming partner’s liabilities assumed by other partners. (Like a mortgage on property)

Question 9

How are dividends limited for a C corp?

Answer 9

To the extent of earnings and profit.

Question 10

How is a partner’s basis affected by a liquidating distribution?

Answer 10

Basis of distributed asset is always equal to the partner’s basis in the partnership before the distribution.

Question 11

What form are farm expenses deducted on?

Answer 11

Schedule F

Question 12

What is the formula for casualty losses? (How much can be deducted?)

Answer 12

Change in FMV-Insurance proceeds-$100 per event-10% of AGI

Question 13

How many shareholders must elect for a C-corp to become an S-corp?

Answer 13

The vote must be unanimous, 100% of shareholders.