REG R5

Question 1

Are personal capital losses allowed on business returns?

Answer 1

No- zero deductibility

Question 2

Requirements of Fraud: MAIDS

Applies to Securities act of 1934

Answer 2

M: Material Misstatement
A: Actual Reliance
I: Induced to buy/sell
D: Damages
S: Scienter

Question 3

Requirements of antifraud section of the 1933 act

Answer 3

LAM
L: Loss
A: Acquired Stock
M: Material Misstatement

Question 4

Requirements of 1934 continuous monitoring

Answer 4

Traded on a national exchange
Has at least 500 unaccredited shareholders/2000 total
Over 10MM in assets

Question 5

Rule 504 of Reg D

Answer 5

5MM in 12 mo

Question 6

Rule 506 of Reg D

Answer 6

Unlimited amount in 12 mo
“Private Sale”
to Accredited investors - no prospectus required
Max 35 unaccredited sophisticated investors
No general solicitations
Right to resell restricted to 2 years

Question 7

Quarterly reports of the 1934 act

Plus, extra items that need to be reported - 5% TIP

Answer 7

8-K Material events that occurred
10-Q Quarterly Report
10-K Annual Report

Additional information: 5% TIP

5%: Ownership with 5% or more
T: Tender Offers of 5% or more
I: Insiders w/ more than 10%
P: Proxy Statements

Question 8

Exemption for Registration under the 1933 Act

Answer 8

BRINGS
Banks
Railroads
Insurance Policies
Non Profit Organizations
Governmental Units
Short term commercial paper due in 9 mo or less

Question 9

How do you calculate the maximum amount deductible for a keogh plan?

Answer 9

Net income
- 1/2 of self employment tax

X 20%

Question 10

Adjustments to arrive at AMTI

PANIC TIME

Answer 10

Passive activity losses
Accelerated depreciation post 1986
NOL of individual
Installment income
Contracts - percentage completion value completed contract
Tax deductions
Interest deductions
Miscellaneous deductions
Exemptions - personal and standard

Question 11

Calculation of recognized gain on exchange

Answer 11

FMV of new property
+boot received
- adj basis of property given
= gain REALized

Recognized = lesser of realized gain or boot

Basis is adj basis of old + recognized gain - boot

Question 12

Corporate contribution limit rate

Answer 12

10% of net income

Question 13

Individual contribution tax rates

Answer 13

50% limit on cash

30% limit on appreciated property

Question 14

Tax period for deducting goodwill

Answer 14

15 years

Question 15

What is the minimum income an estate must have to file a return?

Answer 15

$600

Question 16

What requires a written contract under the statutes of frauds?

MYLEGS

Answer 16

Marriage as a result of a contract
Contracts that cannot be performed in a year
Contracts involving land
Contracts by executors to pay expenses out of personal funds
Contracts for sale of goods over $500
Contracts to act as surety

Question 17

Difference between a unilateral contract and a bilateral contract

Answer 17

Unilateral - promise exchanged for act

Bilateral - two promises exchanged

Question 18

Order of dissolution for general partnership

Answer 18

Partner loans
Capital accounts
Partner profits

Question 19

What do shareholders have the right to approve?

Answer 19

Can vote on all fundamental corporate changes. Hiring of officers and declaring dividends are the responsibility of directors

Question 20

What is subpart F income?

Answer 20

Taxable income included by a US taxpayer from a controlled foreign Corp, typically not economically connected to the country of origin

Question 21

What is a capital asset?

Answer 21

Real and personal property held for investment or personal use

Question 22

What is the minimum support percentage to qualify in a multiple support agreement?

Answer 22

Over 10% and over 50% collectively

Question 23

How is income divided out between s Corp ownership when transferred during the year?

Answer 23

On a per share per day basis

Question 24

Who qualifies as a related party in relation to losses from sales and exchanges?

Answer 24

Brothers and sisters, husband-wife, lineal descendants and entities need more than 50%