REG Deck 3

Question 1

True or false: Sometimes a farmer can be involuntarily petitioned into bankruptcy

Answer 1

FALSE

Question 2

True or false: A sale of collectibles is a separately stated item on a K-1.

Answer 2

TRUE

Question 3

True or false: Generally there is recognition of compensation income for incentive stock options

Answer 3

FALSE

Question 4

Student loan interest expense is limited to $__500, and it is phased out for Single at $_________ and for married at $175000

Answer 4

2,500 and 85,000

Question 5

A nonliquidating cash distribution is not taxable income to the partner unless it is greater than the partner’s basis. A nonliquidating distribution of property is ________ taxable.

Answer 5

NEVER

Question 6

Do capital gain Dividends count for the netting of long-term and short-term capital gains?

Answer 6

YES, you would STILL net them against other capital gains

Question 7

Don’t forget, capital losses can only be taken to the extent of a partner’s tax basis!

Question 8

Apparently, limited partnership losses are not included in Adjusted Gross Income!

Question 9

For the dividends received deduction, the investing coporation has to have the stock for a minimum of ____ days

Answer 9

45

Question 10

True or false: Oral contracts for the sale of SPECIFICALLY manufactured goods are enforceable, even when above $500

Answer 10

TRUE

Question 11

True or false: Cash distributions from a partnership do NOT affect AGI unless they go past the partner’s basis

Answer 11

TRUE

Question 12

When a liquidation of an 80% or more owned subsidiary happens, the parents takes the _____________ basis in the assets it receives from the subsidiary

Answer 12

CARRYOVER

Question 13

Child and Dependent Care Credit is only for children under ____, and is limited to the spouses with least wages

Answer 13

13

Question 14

Married taxpayers may deduct $100,000 of loss on Section 1244 stock as _____ loss, any amount above this is considered capital and is subject to normal capital loss limitations for individuals

Answer 14

ORDINARY

Question 15

Section 1245 recapture only requires that either the lesser of the depreciation taken or the _____ recognized be recaptured. Excess depreciation is IRRELEVANT for 1245.

Answer 15

GAIN

Question 16

Extension payments DO count towards overpayment of taxes

Question 17

For stock ownership tests, neither in-laws nor ______ are considered family members

Answer 17

COUSINS

Question 18

If the FMV at the time of a gift is used as the Tax Basis, then they holding period starts from the date the gift was received instead of the donors holding period

Question 19

Don’t forget that S Corporation Shareholders can have DEBT basis in an S corp. So if they loan money to the company, that DOES matter because that gives them debt basis to take losses against

Answer 19

Loan’s 13,000 to a the company, and company pays off 3000 by end of year. That would give the shareholder 10,000 remaining DEBT BASIS to take losses against along with the normal tax basis

Question 20

For the qualifying relative test, is Social Security included in the $4,000 income limitation?

Answer 20

NO

Question 21

True or false: The ability to deduct student loan interest expenses CANNOT be taken if the taxpayer is claimed as a dependent of another taxpayer.

Answer 21

TRUE

Question 22

Distributions are allocated Pro Rata to Current E&P

Answer 22

Current E&P of 30,000
Distribution 1 = 42,000
Distribution 2 = 33,000
42,000 + 33,000 = 75,000
42,000 / 75,000 = 56%
56% * 30,000 = 16,800 of Distribution 1 is applied to Current E&P

Question 23

True or false: Premiums on disability insurance count as unreimbursed medical expenses that can be itemized

Answer 23

FALSE, since insurance it to give him income while he’s injured and is not for any specific medical need currently

Question 24

If an LLC has elected to be classified as a corporation, a change in number of shareholders DOESN’T CHANGE it’s classification as an LLC

Question 25

A chapter 11 filing of bankruptcy has to provide for ______ payment of the administration expenses

Answer 25

FULL

Question 26

The holding period of a partnership interest acquired in exchange for a contributed capital asset begins on the date the partner’s holding period of the capital asset ______

Answer 26

BEGAN