REG ROUND 2

Question 1

Annuities formula

Answer 1

Investment amount/#of months from life expectancy then take that amount X amount of payments made within the year
Then take that amount and subtract it by the full amount that was paid to purchase the annuity

Question 2

Scholarships

Answer 2

Not taxable - just must be used on tuition dorms and books

Question 3

Schedule C

Answer 3

Only business related items

Question 4

In a Year in which a taxpayer disposed of a passive activity any current or suspended PALs for that activity

Answer 4

May be offset against any of their sources of income

Question 5

Qualified Mortgage Interest

Answer 5

Itemized deduction

Question 6

IRA Deduction Phase Out Range

Answer 6

109k
204K for spouse who is not an active particant

Question 7

Additional standard deduction for above 65

Answer 7

2800 - married
1400- single

Question 8

Medical Expense AGI Floor

Answer 8

7.5%

Question 9

Retirement Savings Contribution

Answer 9

Non refundable credit

Question 10

Taxes paid by an individual to a foreign country

Answer 10

Credit against federal income taxes due

Question 11

Child Tax Care Credit

Answer 11

Income under 400K / children under 17 / then you get 2K per child

Question 12

Earned Income Credit

Answer 12

Refundable

Question 13

NII- net investment income tax

Answer 13

3.8% of the lesser of the taxpayers NII or excess of modified AGI over a threshold amount

Question 14

The employee receiving a non qualified stock option

Answer 14

must recognize as ordinary income the value of the option of traded on an established market

Question 15

Gifted Property

Answer 15

Donee receives property with a rollover basis. An exception exists where the fair market value of the property at the time of the gift is less than the donors basis. If the fair market value of the property is lower than the cost basis, then the basis depends on the donees future selling price. If the future selling price is higher than the donors basis, then the donees basis is the donors cost basis. If the future selling price is lower than the fair market value of the property at the time of the gift, then the donees basis is fair market value.

Question 16

Gifted property holding period

Answer 16

Always rolls over

Question 17

Basis of inherited property

Answer 17

Fair market value at the date of death, unless the alternative valuation date is elected

Question 18

The basis for a building for determining the loss on involuntary conversion is

Answer 18

The adjusted basis plus removal plus clean up

Question 19

No taxable gain or loss will be recognized on a like kind exchange if

Answer 19

Both assets are real estate property
Losses are never recognized
What you give up versus what you are getting

Question 20

Loss deferred

Answer 20

equals loss, realized minus lost recognized for Jane realized minus gain recognized

Question 21

Section 12,44 worthless stock is

Answer 21

Ordinary loss

Question 22

Nonbusiness, bad debt losses are treated as

Answer 22

Short term capital losses in the year that the death becomes worthless.

Question 23

Section 1245

Answer 23

Something that’s also personal property sold again, and the game is less than the accumulated depreciation. Then it is recaptured as an ordinary game.

Question 24

Section 1231

Answer 24

Depreciable assets, and all real property used in a trade or business held over 12 months

Question 25

Installment sales

Answer 25

Sale on installment-adjusted basis= total gross profit
Step two gross profit /sale on installment=%
Step 3 collections X %

Question 26

Residential real property

Answer 26

27.5

Question 27

Non-residential real property

Answer 27

39 yr

Question 28

Half year convention is used unless

Answer 28

More than 40% of depreciable personal property is placed in service in the last quarter of the year

Question 29

Section 179 rules

Answer 29

1.dollar for dollar phase out begins when purchases exceed 2.7 million
2. Max section 179 deduction equals 1.080 million
3. Can’t use section 179 to create a loss.
4. Buildings do not qualify but qualified improvement. Property must be non-residential, and must be placed into service after the building was placed into service.

Question 30

What type of corporation has the most flexibility and choosing an accounting.

Answer 30

C-corps

Question 31

C Corps

Answer 31

Must pay federal income taxes
The formation of a C Corp. is a non-taxable event
Use adjusted basis, one forming the corporation for buildings and property

Question 32

C Corps Basis

Answer 32

General rule for basis of property received, is the lesser of the adjusted net book value of the transferor plus any gain recognized by the transferor or debt assumed by the corporation
If a shareholder has an 80% control, then it is non-taxable for the basis. If it’s less than 80% then you use the fair market value.
If liabilities are more than the adjusted basis, then you recognize the difference between the adjusted basis, and a liability

Question 33

Accrual Basis

Answer 33

27 million or greater gross receipts

Question 34

Proceeds from life insurance on the death of an officer where the corporation is the owner and the beneficiary

Answer 34

Are not included in taxable income

Question 35

Bad Debts

Answer 35

Corporations that are not small banks or thrift institutions are required to use the direct charge off method

Question 36

Charitable contributions for corporations

Answer 36

10% of AGI you can take the contribution if it’s authorized by the end of the year and paid by the 15th day of the fourth month from the first of the year