REG mod 35c Flashcards
Describe the alternate valuation date for an estate.
The executor may elect to use an alternate valuation date to measure the fair market value of the decedent’s estate. The alternate date used is up to six months after the date of death.
Describe the Alternative Minimum Tax calculation for an S-Corporation.
AMT does not apply to an S-Corporation. It only applies to C-Corporations.
Describe the calculation of personal holding company tax.
Taxable Income
+ Dividend Received Deduction
+ Net Operating Loss Deduction
(Federal & Foreign Income Taxes Paid)
(Charitable Contributions in excess of the 10% limit)
(Net Capital Losses)
(Net LT Capital Gains over Net ST Capital losses – NET OF TAX)
Describe the carryforward and carryback rules for a passive activity loss.
Passive activity losses cannot be carried back, and they can be carried forward indefinitely.
Describe the circumstance where a stock dividend is taxable.
A stock dividend is taxable if the stockholder is offered an option between a cash dividend or a stock dividend.
Describe the circumstances when a CPA is permitted to omit an answer on a tax return.
The information is not readily available and information does not materially affect taxable income or taxable liability. Uncertainty of the meaning of question. The documentation is voluminous—in which case the CPA should state that the information will b
Describe the exclusion related to life insurance premiums for employees.
The IRC allows for an exclusion for employees who receive life insurance coverage from their employer. Costs of premiums for coverage amounts that exceed $50,000 are taxable to the employee. Note: This rule applies to life insurance where the employer is
Describe the features of the American Opportunity Credit.
The credit is calculated at 100% of the first $2,000 of qualified expenses; 25% of the next $2,000 of qualified expenses.
Must be enrolled at least half time.
Describe the filing requirements to use the filing status Head of Household.
The taxpayer must have a dependent child, provide more than 50% of the child’s support, and the child must live with the taxpayer for more than 50% of the year.
Describe the five tests used to determine if a person qualifies for treatment as a qualifying relative. (CRAIS)
CRAIS
C—Citizen or Resident
R—Relationship test (or live with you for the entire year)
A—Absent a joint return
I—Income test
rt: The taxpayer must provide more than one half of the person’s support.
Describe the Lifetime Learning Credit.
Non-refundable
20% credit for up to $10,000 of qualified expenses
The credit can be claimed every year.
Describe the requirements that must be met in order to be considered a qualifying child. (SARA)
S—Support: The child must not have provided more than half of their support.
A—Age: The child must be younger than the taxpayer; under 19 years old (under 24 years old if the child is a full time student).
R–-Relationship: The child must be the taxpayer’
Describe the Section 179 expense election.
This is an election that is made to treat the cost of personal property used in a trade or business as an expense rather than as a capital asset.
Describe the shareholder’s requirements related to deducting the loss on the sale of Small Business Corporation Stock.
In order to deduct the loss, the shareholder must be the original purchaser of the stock, and must have obtained the stock through payments of cash or property.
Describe the tax implications for an individual who provides services to a partnership in exchange for a partnership interest.
This is considered to be a taxable event. When an individual provides services in exchange for a partnership interest this is considered to be compensation.
