REG Deck 1

Question 1

What is the QBI Deduction Limitation IF the taxpayer’s taxable income is below the threshold of 175,050?

Answer 1

20% of the QBI

Question 2

Self-employment income subject to self-employment tax ONLY comes from unincorporated sole proprietorships (Schedule C income) and _________ Partnerships. NOT S CORPS, W-2, INTEREST and DIVIDENDS OR RENTAL REAL ESTATE INCOME

Answer 2

GENERAL PARTNERSHIPS

Question 3

This income qualifies for 100% dividends received deduction (hint: dividends paid by a foreign corporation to a ______ % or more US Shareholder

Answer 3

10%

Question 4

The basis of inherited property to the beneficiary is the ______ _______ _______ at the date of the decedent’s death (or the the alternate valuation date if elected)

Answer 4

FAIR MARKET VALUE

Question 5

An accruable expense is an expense for which services have been performed/received but NOT ________

Answer 5

PAID FOR BY END OF PERIOD

Question 6

Limitation to the QBI Deduction is: Lesser of calculated QBI Deductions OR __% of Taxpayers’ Taxable income in excess of net capital gain

Answer 6

20%

Question 7

Calculation of Casualty Losses - Casualty losses are pretty much only in federally declared disaster areas.
First, take the decline in value. If the decline in value is LARGER than the adjusted basis before the property was destroyed, then the decline in value is equal to the adjusted basis.
Next, subtract any insurance proceeds from the decline in value.
Then subtract $100 (each individual thing destroyed gets this $100 reduction)
Then take 10% of AGI. Whatever amount is OVER 10% of AGI, is the allowed casualty loss.

Answer 7

EXAMPLE:
Decline in Fair Market Value - $175,000
Adjusted Basis - $150,000
Used decline in value - $150,000
Insurance Proceeds - $130,000
AGI - $60,000
Casualty loss = $150,000 (decline in value) - $130,000 (insurance proceeds) - $100 - $6,000 (10% threshold of AGI) = $13,900

Question 8

True or false: Dividends, short-term gains, and long-term gains are passive income just like rental income.

Answer 8

FALSE, they are PORTFOLIO INCOME

Question 9

What are the two tests for that define a personal holding company?
1. __% of the stock is owned by __ owners or less
2. __% of AGI must be from investment income

Answer 9

1. 50% OF THE STOCK IS OWNED BY 5 OWNERS OR LESS
2. 60% OF AGI MUST BE FROM INVESTMENT INCOME

Question 10

Base Erosion and Anti-Abuse Tax (BEAT) with average annual gross receipts of $500 million or more for the preceding ___ years

Answer 10

3 YEARS

Question 11

Social Security Benefits do NOT include ________.

Answer 11

MEDICAID (not medicare)

Question 12

Unlike partnerships, LLCs have profit and loss percentages that are based on the proportion of their _________, whereas with partnerships, unless stated otherwise, it is ________.

Answer 12

CONTRIBUTIONS, EQUAL

Question 13

Childs standard deduction is $1,150 + $1,150. Then subtract this from Unearned Income. This is the amount taxed at the child’s PARENTS tax rate, then the rest of income is taxed at child’s marginal tax rate.

Question 14

An individual with more than $220,050 of taxable income DOES NOT QUALIFY FOR QBI DEDUCTION

Question 15

How do you calculate the basis for new real property in a trade of real property?
FMV of property received - ________ _______ + ____________ ____________

Answer 15

DEFERRED GAIN + DEFERRED LOSS

Question 16

Losses between a controlling partner (over 50% interest in capital and profits) and his controlled partnership from the sale or exchange of property are not allowed.

Question 17

A shareholder who contributes property to a corporation in exchange for common stock TYPICALLY doesn’t recognize a gain or loss if they own more than 80% after the contribution. UNLESS they received BOOT! If they received boot, then they do recognize a gain that is the lesser of: the _______ gain or the boot

Answer 17

REALIZED

Question 18

Taxpayers are allowed to deduct the FMV of property donated to charity. What is the limit? ____% of _____

Answer 18

30% of AGI

Question 19

Are losses on the sales of personal/principle residences deductible as capital losses?

Answer 19

NO

Question 20

Net Investment Income Tax is 3.8 percent of the ______ of (1) the taxpayer’s net investment income or (2) the excess of modified AGI over the threshold amount

Answer 20

LESSER

Question 21

Capital Loss carrybacks for C Corporations are limited to ________ _________

Answer 21

TAXABLE INCOME

Question 22

Specific performance for contracts is usually for ______ or _______ property.

Answer 22

RARE, UNIQUE

Question 23

True or False: Ordinary Income from a partnership includes Long Term Capital Gains?

Answer 23

FALSE

Question 24

True or False: There is no gain or loss recognized when a partner contributes property to a partnership in exchange for a partnership interest.

Answer 24

TRUE

Question 25

True or False: A title insurance policy would be included in the basis for newly purchased land.

Answer 25

TRUE

Question 26

Short Term Capital Losses Netting Procedures:
1. Short Term Gains
2. Long Term 28%
3. Long Term 25%
4. Long Term 15%
Essentially, you net it starting with Short Term, then Long Term Highest Tax Rate to Lowest Tax Rate

Question 27

Up to $______ may be excluded from gross income for payments made by the employer on behalf of an employee for an employee’s educational expenses.

Answer 27

$5,250

Question 28

True or False: Property or cash received as a gift is taxable.

Answer 28

FALSE

Question 29

True or False: Inherited cash or property is not taxable to the recipient.

Answer 29

TRUE

Question 30

For a fixed annuity (10 year annuity), you have to figure out the exclusion percentage to find out what is taxable and what is excluded from taxes.
Original Investment / The expected value of the annuity (monthly payments * months of the annuity) This is the amount that is NOT taxable of the payments received in the current year.

(Do the same thing for Life Annuities, the length of time should be given to you, basically the persons life expectancy)

Answer 30

10 Year annuity, paid $120,000
Months of annuity = 10 * 12 = 120 Months
$1250 payment per month
Expected value of annuity is $1250 * 120 months = $150,000
So, take $120,000 / $150,000 = 80%
The 80% is the amount that is NOT taxable each year
Current year = $1250 * 12 = $15,000
80% of the 15,000 is NOT taxable, so the other 20% IS taxable
$3000 is taxable in the current year