Reg Review Week 1

Question 1

What is Resource Conservation and Recovery Act (RCRA) empowered to do?

Answer 1

Identify and list hazardous wastes

Question 2

What is Power of Attorney?

Answer 2

Delegates authority from principal to agent. Must be signed by principal. Indefinite unless otherwise stated. Not effective after death of principal

Question 3

Trustee of Bankruptcy Estate?

Answer 3

Must handle all affairs of estate, can do itself or hire professionals. Seperate fees

Question 4

Requirements for holder in due course of a promissory note (Negotiable Instrument UCC)

Answer 4

Note must be negotiable, in good faith, and without notice that the debtor may have defenses to payment

Question 5

Rules regarding nonliquidating cash distributions by corp to its shareholders

Answer 5

Report div income (ordinary income) equal to earnings & profits. Reduce shareholders adj basis to zero as a return of capital. Report excess cap gains.

Question 6

Are contracts generally assignable?

Answer 6

Yes

Question 7

Standard Deduction for trust or estate in fiduciary income tax return is?

Answer 7

Zero. Personal exemption is $600 for estate, $300 for simple trust, $100 for complex trust.

Question 8

What is C.O.D.

Answer 8

The term “C.O.D.” stands for cash on delivery,” and means that the buyer gives up his right to inspect before paying, but does not mean he gives up the right to sue if the goods are not per the contract.

Question 9

How to have consolidated tax return?

Answer 9

For tax purposes, a consolidated return can be filed if the acquiring corporation acquires at least 80 percent of the voting power and 80 percent of each class of nonvoting stock of the other corporation. In tax rules, which are different than used for financial reporting purposes, 80 percent ownership is the minimum level where two companies are basically viewed as one entity.

Question 10

What is unilateral mistake?

Answer 10

If one of the parties to a contract acts under a mistaken belief, the mistaken party cannot avoid the contract unless the other party knew, or had reason to know of the mistake.

Question 11

Like-Kind exchange

Answer 11

Like-kind exchanges are normally tax-free. However, if the taxpayer receives boot (usually cash to even up the exchange), a gain is recognized that is the lower of the boot or the gain on the exchange

Question 12

What qualifies as tax free exchange between Corporation and owner?

Answer 12

The transferor must own at least 80% of the corporation’s stock immediately after the exchange. Also, there should be no boot received by the shareholder as a result of the transaction.