REG22

Question 1

What is the max above the line deduction for Student Loan Interest?

Answer 1

$2,500/year
Phase out S $65k and $80K
Phase out M $135k and $165K

Question 2

What is the max above the line deduction for Coverdell Education Savings Accounts (CESA)?

Answer 2

$2,000/year
Phase out S $95k and $110K
Phase out M $190k and $220K

Question 3

What are the itemized deducts and the AGI Thresholds?

Answer 3

Medical = 7.5% of AGI
Taxes = $10K max
Interest = no max
Investment interest = only to Investment income
Charity = Mostly 60% of AGI
if services, tangible property = 50% or capital gain property = 30%
Mainly private non-50% org = 30% AGI

Question 4

What are QBI thresholds?

Answer 4

$315K to $415K
If < $315 then 20% of QBI
In-between = Reduction Ratio: (TI - threshold) / $100K, then Excess take the > of 50% of W-2 or 25% W-2 + 2.5%of basis…then 20% of QBI - (Reduction ratio x Excess)
If > $415K is < of 20% QBI or W-2 limit

Question 5

Personal Holding company (PHC) 2 tests?

Answer 5

50% owned by 5 or fewer people and 60% or more is PHCI of AOGI.

Question 6

Will personal services income constitute personal holding company income (PHCI) if it is earned by a 25%-or-more shareholder?

Answer 6

Yes, It will constitute PHCI if it is earned by a 25%-or-more shareholder.

Question 7

Will a throwback dividend, a dividend paid during the 3 1/2 months following the tax year for the preceding year, be deductible from TI in computing PHCI?

Answer 7

Yes, they are deductible from taxable income in computing undistributed personal holding company income (UPHCI). It cannot exceed 20% of dividends paid for the year.

Question 8

Is there a loss basis and a gain basis when given a gift?

Answer 8

Yes and if sold in between those amounts, not gain or loss.

Question 9

Are nonbusiness bad debts treated as short-term capital losses?

Answer 9

Yes, they are treated as short-term capital losses under Sec. 166.

Question 10

Is marketing part of COGS?

Answer 10

NO and must use absorption costing for tax.

Question 11

Does the death of a partner cause dissociation for both general and limited partnerships?

Answer 11

Only in a General Partnership

Question 12

What is the basis for stock sold to a related party?

Answer 12

The cost of the stock…no loss allowed and there is no carryover of holding period.

Question 13

In an involuntary conversion (fire) is the loss fully recognized?

Answer 13

Yes, the basis in the new asset is the cost.

Question 14

How much ownership % is needed to not recognize a loss on stock contributed?

Answer 14

More than 50%

Question 15

If insurance proceeds are more than the AB of property destroyed and the cost of the new asset is less than the proceeds, how do you figure the basis in the new?

Answer 15

Proceeds - AB = Unrecog Gain
Cost of new - Proceeds = Recognized Gain
Unrecog - Recognized = Deferred Gain
Cost of deferred gain = BASIS

Question 16

Can you deduct expenses from the cash in an exchange to reduce the gain recognized?

Answer 16

YES

Question 17

When is interest imposed on deferred tax on obligations from nondealer installment sales?

Answer 17

When there are more than $150,000 installment sales that occurred during the year. This interest is applied if the taxpayer has nondealer installment receivables of over $5 million at the close of the tax year.

Question 18

To figure the contract price with installments, mortgage and selling expenses what is it?

Answer 18

Installment + (mortgage -AB) - selling expenses

Question 19

Does a guarantee increase the basis in the stock of an S Corp?

Answer 19

No, guarantee does not increase basis in the stock.

Question 20

Limits for American Opportunity Credit?

Answer 20

AGI S between $80K and $90K. $2,000 + 25% of next $2,000 in education expenses.

Question 21

Limits for the Life Time Learning Credit?

Answer 21

AGI S between $57K and $67K. 20% of $10,000, max $2,000 credit/year.

Question 22

Credit limits for the Work Opportunity Credit?

Answer 22

40% of first $6k in first year and 50% of first $10K in 2nd year. MAX both years = $9k. (If LT Family it is 40% of first $10K)

Question 23

Max Adoption Credit?

Answer 23

$13,810, max AGI $207,140…eliminated at $247,140.

Question 24

Common law constructive fraud needs what?

Answer 24

Gross Negligence.

Question 25

What amount of loss realized on disposition or worthlessness of Sec. 1244 stock is treated as an ordinary loss?

Answer 25

Up to $100,000 (if filing a joint return). The remaining is a capital loss.