REG Deck #2 Flashcards
Ways in which Actual Authority is cancelled?
1) Death of principle
2) Incapacity of principle
3) Bankruptcy of principle
4) Failure to acquire a license
5) Destruction of subject matter
6) Illegality after the fact
What is the % deductions for Dividend-Received Deductions?
If Dividends/Taxable Income is
0%-20% = 50%
20%-80% = 65%
80%> = 100%
Six nondischargeable debts?
WAFTED:
1) Willful and malicious injury
2) Alimony/child support
3) Fraud
4) Taxes
5) Educational loans
6) Debts undisclosed in petition
Priority rules for distribution of Debtors Estate?
1) Secured Creditors
2) Priority Creditors (Alimony, Admin fees, ordinary course of business, wages earned 180 days $15,150, benefits, farmers/fishers $7,475, deposits $3,350, tax claims, DIUs injury)
3) General Creditors
What are the qualifications for child tax credit?
1) $2k per child
2) Reduce $2k by $50 for each $1k over tax limit ($200k/400k AGI tax limit for Single/MFJ)
Rules for calculation on the Kiddie Tax?
1) Under 18 year of age (or 18-24 >half of their support or full time student)
2) Net Unearned Income is deducted by $2,500
3) Earned Income > $1,250 then Standard Deduction = Earned Income + $400
Rules for Child and Dependent Care Credit?
1) Child under age 13, Disabled dependent or spouse
2) $3k for one dependent, $6k for two or more dependents
3) Expenses limited to the lowest earned income, actual expenses incurred, or maximum allowable amount
4) AGI > $43k = 20% of AGI or deduction
AGI >$15k = credit decreases by 1% for each $2k above $15k
AGI <$15k = 35% or AGI or deduction
Exceptions for IRA premature distributions?
“HIMDEAD”
Home buyer
Insurance
Medical expenses
Disability
Education
Adoption or birth of child (1 year)
Death
What is the Deductions rules for SEC 179 Depreciation?
1) Allowance is $1.16M for 2023
2) Max Amount is $2.89M for 2023 - any amount over this limit is deducted in place of the allowance of $1.16M
3) SUV limit of $28,900
What is the allowable tax limit for gifts and lifetime tax exclusion?
$17,000/$34,000 Single/Married
$12.920M (gifts over the allowed amount deduct this lifetime exclusion)
What are the rules for American Opportunity Tax Credit?
1) 100% of the first $2k + 25% of the next $2k for the year.
2) Max credit is $2.5k
3) $1k may be refunded
What are the rules for Lifetime Learning Credit?
1) 20% of qualified expenses ($2k limit)
2) Max credit is $10k per year
What are the exceptions for Statute of Frauds?
Sale of good for $500> must be written, except for SWAP:
1) Specifically manufactured goods
2) Written confirmation
3) Admitted in court
4) Performance (if performance was accepted)
What are the different Bankruptcy Chapters?
Chapter 7 - liquidation (trustee)
Chapter 9 - municipal debt (farmer cannot seek debt)
Chapter 11 - reorganization
Chapter 13 - adjustment of debt (trustee)
Chapter 15 - foreign
Social Security contains what benefit programs?
1) OASI (old age and survivors insurance)
2) DI (disability insurance)
3) Medicare
4) SSI (supplemental security income)
How to calculate Section 291 Recapture?
1) Only for corporations and Gains
2) Lessor of 20% of depreciation or Gain
What is the additional standard deduction?
65 or Blind - $1,500/$3,000 - Single/Married
Tax Penalty Definitions?
- Substantial Understatement of Tax has to be greater of 10% of tax liability or $5k (individual) - if not then no penalty. If so then 20% of underpayment
- Negligence Penalty - 20% of underpayment
- Failure to pay = .05% per month of unpaid amount
NOL Rules?
NOLs before 2018 - 100% 2 back and 20 forward
NOLs after 2017 - 100% 5 back and Indefinitely forward
NOLs after 2020 - 80% future taxable income - Indefinitely forward (2018-2020 100% deductible)
Difference between ISO, NQO, ESPP?
ISO - <10% shareholder, Option price>FMV at grant date
NQO - Can be >10% shareholder
ESPP - <5% shareholder, Option price > 85% of the stock price at grant date or exercise date. Held at least 2 years from grant, 1 year from exercise
Miscellaneous Non-Taxable Income?
1) Life Insurance Proceeds
2) Gifts/Inheritances
3) Medicare benefits
4) Worker’s Comp
5) Personal (Physical) Injury Awards
6) Accident Insurance
7) Foreign Earned Income
Miscellaneous Taxable Income?
1) Prizes and Awards
2) Gambling winnings/losses
3) Damages Awards (lost income)
4) Punitive Damages
5) Cancellation of Debt Income
Calculate Capital Gain/Ordinary Income when Partner sells interest?
Sales Price
(Basis = capital+liabilities)
=Total Profit
(Hot Assests = A/R x share base)
=Capital Gain
What is the exception for passive losses to offset nonpassive losses?
1) 10% of ownership property
2) Actively participates
3) $25 threshold, but AGI >$100k, 50% taken for amount over $100k
Calculate Amount “Realized” on the sale of a Partnership interest?
Sales Price + FMV of Property + % share Liabilities assumed
