REG mod 39 Flashcards
If a there is an underpayment of taxes due, caused by negligence or disregard for the IRC, what is the accuracy related penalty?
The penalty is 20% of the underpayment of tax.
The netting of short-term capital gain / loss and long-term capital gain / loss must be calculated in a specific order. Describe the order.
All short-term capital gains are netted against all short-term capital losses. All long-term capital gains are netted against all long-term capital losses. The total short-term capital gain / loss is then netted against the total long-term capital gain /
Identify the two types of trusts.
Simple & Complex
What is the treatment of an estate’s unused net operating loss?
It flows through to the beneficiary of the estate. Note: this is the same as the treatment for a trust.
What is unrelated business income?
Income produced by an exempt organization that is (a) regularly carried on and (b) is unrelated to the organization’s exempt purpose.
What type of trust is described below?
The trust is required to distribute all of its income each year, but cannot make any charitable contributions. The trust is also unable to distribute the corpus.
The information describes a simple trust. Note: a complex trust is any other trust that is not a simple trust.
Describe the minimum tax credit.
This is a tax credit that may be used in the future, but only against regular taxable income. The credit may be carried forward for an indefinite period of time, but may not be carried back.
Describe the Domestic Production Activities Deduction (DPAD).
This is a deduction against income earned from the manufacturing of tangible personal property, film production, or construction of buildings or construction of infrastructure.
What is Distributable Net Income (DNI)?
This is the maxim amount that may be deducted by a trust for distributions to the beneficiaries. Trusts are not taxed on the amounts that are distributed to the beneficiaries.
Following rules of UDITPA, nonbusiness income derived from capital gains or losses from sale of intangible personal property should be allocated to what state?
These are allocated to the state of the taxpayer’s commercial domicile.
What is an individual’s tax basis in a property distribution from a corporation?
The fair market value on the date of distribution is the individual’s tax basis.
May a Registered Tax Return Preparer represent a client before an appeals officer?
No. The RTRP does not have this authority.
Qualified dividends are not desirable because the receipt of qualified dividends results in an additional tax liability. True / False
False. Qualified dividends are taxed at a lower rate than regular dividends. Therefore, qualified dividends are desirable.
Describe the acquiescence policy used by the Internal Revenue Service.
The policy is to use past court cases to decide current court cases, if the circumstances are similar.
What does UDITPA stand for?
Uniform Division of Income for Tax Purposes Act
