REG Random Deck Flashcards
Life Insurance Tax
First 50,000 of coverage provided by company is NOT taxable. The rest is
Rent Revenue under Accrual Basis
Deferred revenue counts
Cash received plus change in A/R plus deposits.
Expenses under Accrual Basis
Deduct expenses in year incurred IF they will be paid out within 2.5 months after YE.
Contributions can be deducted if declared and paid after the 15th day of the 4th month after YE - still subject to contribution 10% AGI limit.
Org Costs Deduction
Must be legal fees or org costs
5,000 in first year is fully deductible as long as it does not exceed 50,000. If it were 52,000, then only 3,000 would be allowed and the remaining 49,000 would be amortized.
The rest is amortized over 180 months and included in the total deduction.
Life Insurance Premiums
Expense:
Paid on behalf of employees where someone other than company is the beneficiary - DEDUCTIBLE
Paid on behalf of Officer who’s beneficiary is the company - NOT DEDUCTIBLE
Income:
Received from death of officer when company is the beneficiary - NOT INCLUDED AS INCOME
Capital Losses in Excess of Gains (Corp vs Individual)
Corp - No excess is allowed in current year, but is carried back 3 or forward 5
Individual - 3,000 for current year
C Corporations that must do accrual
Average annual income of over 29 million
Tax Shelter
Manufacturers
Qualified Business Income Deduction
0.2
basis of inherited property vs gifted property
Gifted - typically carryover
Inherited - FMV at time of death or at alternate valuation date if chosen.
Section 179 deduction
Maximum of 1,160,000.00 deduction. Is reduced by the assets value OVER 2,890,000.00
Example: 3,000,000 asset would be 1,050,000 since 3 mill is 110,000 greater than 2,890,000 so that reduces the 1,160,000 deduction to 1,050,000.00
Partnerships Income for Partners Tax Return
Return on capital (Distributions NOT in excess of basis) is not taxed as income but portion of income is.
If partner takes out loan from partnership, that is NOT included but is seen as a liability.
Guaranteed Payments ARE income
Separately stated items ARE included
For an Organization to qualify as publicly supported, org’s total support should be?
At least 1/3 from the governmental units and general public
Childcare/Dependent Credit
Maximum of 6,000 for two or more dependents. Can be 20-35% of the lesser of the expenses up to 3,000 each child or the lowest income for the parents.
Child must be 13 years or younger
Also can apply to a disabled spouse
Dependent test for a qualifying relative
The dependent must have lived with the parents/guardians for the FULL year and not have provided half of their living expenses.
Wash Sale
When someone sells stock at a loss before OR after 30 days of buying the same or substantially identical stock.
The loss is deferred and not recognized at the sale
It is ADDED to the basis of the newly purchased stock and is recognized once that stock is sold at a later date.
Capital Assets
Non depreciable assets not used in trade or business. Investments in treasury bonds would be an example. Land, when not owned and sold by a developer as “inventory”, is also a considered a capital asset.
IRA Deduction
If a spouse is NOT an active part in a retirement plan, then total AGI phase out begins at 218,000. If under, than that spouse can deduct the full 6,500. If spouse IS an active part, then total AGI phase out begins at 116,000 for that spouses portion.
Lets say couples AGI is 124,000. For the non part spouse, 6,500 is deductible. For part spouse, the 124,000 - 116,000 phase out must be included. This is 8,000 of the 20,000 range (116,000 to 136,000) so 40%. This 40% is applied to the 6,500 max deduction and reduces it by 2,600 (40%) resulting in 3,900.
Total deduction is 3,900 + 6,500 = 10,400
AGI over 218,000 disqualifies the deduction entirely.
PTIN Required when
preparing a substantial portion of a return for a client FOR compensation
Not required when doing a return for an employer.
Reportable Transaction
The term “reportable transaction” is any transaction that the Secretary of the U.S. Treasury Department has determined as having a POTENTIAL for either tax AVOIDANCE or tax EVASION
Non Residential Real Property MACRS
Uses the Mid-Month convention which uses only half of the month that it is acquired in the calculation of depreciation regardless of when it was put in service during the month
39 year life straight line
Life Insurance Tax
First 50,000 of coverage provided by company is NOT taxable. The rest is
Rent Revenue under Accrual Basis
Deferred revenue counts
Cash received plus change in A/R plus deposits.
Expenses under Accrual Basis
Deduct expenses in year incurred IF they will be paid out within 2.5 months after YE.
Contributions can be deducted if declared and paid after the 15th day of the 4th month after YE - still subject to contribution 10% AGI limit.
Org Costs Deduction
Must be legal fees or org costs
5,000 in first year is fully deductible as long as it does not exceed 50,000. If it were 52,000, then only 3,000 would be allowed and the remaining 49,000 would be amortized.
The rest is amortized over 180 months and included in the total deduction.
Life Insurance Premiums
Expense:
Paid on behalf of employees where someone other than company is the beneficiary - DEDUCTIBLE
Paid on behalf of Officer who’s beneficiary is the company - NOT DEDUCTIBLE
Income:
Received from death of officer when company is the beneficiary - NOT INCLUDED AS INCOME
Capital Losses in Excess of Gains (Corp vs Individual)
Corp - No excess is allowed in current year, but is carried back 3 or forward 5
Individual - 3,000 for current year
C Corporations that must do accrual
Average annual income of over 29 million
Tax Shelter
Manufacturers
Qualified Business Income Deduction
0.2
basis of inherited property vs gifted property
Gifted - typically carryover
Inherited - FMV at time of death or at alternate valuation date if chosen.
Section 179 deduction
Maximum of 1,160,000.00 deduction. Is reduced by the assets value OVER 2,890,000.00
Example: 3,000,000 asset would be 1,050,000 since 3 mill is 110,000 greater than 2,890,000 so that reduces the 1,160,000 deduction to 1,050,000.00
Partnerships Income for Partners Tax Return
Return on capital (Distributions NOT in excess of basis) is not taxed as income but portion of income is.
If partner takes out loan from partnership, that is NOT included but is seen as a liability.
Guaranteed Payments ARE income
Separately stated items ARE included
For an Organization to qualify as publicly supported, org’s total support should be?
At least 1/3 from the governmental units and general public
Childcare/Dependent Credit
Maximum of 6,000 for two or more dependents. Can be 20-35% of the lesser of the expenses up to 3,000 each child or the lowest income for the parents.
Child must be 13 years or younger
Also can apply to a disabled spouse
Dependent test for a qualifying relative
The dependent must have lived with the parents/guardians for the FULL year and not have provided half of their living expenses.
Wash Sale
When someone sells stock at a loss before OR after 30 days of buying the same or substantially identical stock.
The loss is deferred and not recognized at the sale
It is ADDED to the basis of the newly purchased stock and is recognized once that stock is sold at a later date.
Capital Assets
Non depreciable assets not used in trade or business. Investments in treasury bonds would be an example. Land, when not owned and sold by a developer as “inventory”, is also a considered a capital asset.
IRA Deduction
If a spouse is NOT an active part in a retirement plan, then total AGI phase out begins at 218,000. If under, than that spouse can deduct the full 6,500. If spouse IS an active part, then total AGI phase out begins at 116,000 for that spouses portion.
Lets say couples AGI is 124,000. For the non part spouse, 6,500 is deductible. For part spouse, the 124,000 - 116,000 phase out must be included. This is 8,000 of the 20,000 range (116,000 to 136,000) so 40%. This 40% is applied to the 6,500 max deduction and reduces it by 2,600 (40%) resulting in 3,900.
Total deduction is 3,900 + 6,500 = 10,400
AGI over 218,000 disqualifies the deduction entirely.
PTIN Required when
preparing a substantial portion of a return for a client FOR compensation
Not required when doing a return for an employer.
Reportable Transaction
The term “reportable transaction” is any transaction that the Secretary of the U.S. Treasury Department has determined as having a POTENTIAL for either tax AVOIDANCE or tax EVASION
Non Residential Real Property MACRS
Uses the Mid-Month convention which uses only half of the month that it is acquired in the calculation of depreciation regardless of when it was put in service during the month
39 year life straight line
