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Review Flashcards

1
Q

Corporation is liable for torts of employees during the course of business

A

Respondent Superior

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2
Q

Debtor pays debt to original creditor without being notified that their debt had been assigned. Are they no longer liable?

A

Yes, No Longer Liable

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3
Q

S-Corp distributions in excess of their stock basis, and no E&P is what?

A

Capital Gain

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4
Q

Rule 505 Regulation D

A
  1. $5 million 12-months

2. 35 unaccredited

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5
Q

What is available to a principal when an agent breaches a fiduciary duty?

A
  1. Termination

2. Constructive Trust

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6
Q

Requirement of a partnership agreement that can not be completed in 1 year

A

Must be in writing

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7
Q

Discharge of the maker of an instrument in bankruptcy is what type of defense?

A

Real Defense

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8
Q

Who can take property free of any security interest whether or not it was perfected?

A

Buyers in the ordinary course of business

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9
Q

Formula for Foreign Income Tax Credit

A

(Foreign Taxable Income/Worldwide Income) x US Tax

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10
Q

Are debts from the negligence of a debtor discharges in bankruptcy?

A

Yes

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11
Q

Are debts from willful or malicious misconduct discharged in bankruptcy?

A

No

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12
Q

Real estate Rental Activities are generally what type of activities?

A

Passive

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13
Q

What is the Material Rental Activity deduction?

A

Can offset $25,000 non-passive income with Rental Passive losses, phased out between $100,000 and $150,000 by 50% on the dollar.

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14
Q

What amount can a common carrier limit their liability for?

A

Dollar amount specified in the contract for the goods

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15
Q

Merger of 2 Corporations requires approval from who?

A

Both Board of Directors

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16
Q

What is the affect to a corporation on a non-liquidating distribution of appreciated property?

A

Recognize gain, just like property was sold

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17
Q

Passive loss carried forward and back rules

A

Carried forward indefinitely, or until property is disposed of, no carry back

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18
Q

If their is two perfected security interest who has priority

A

The first that was perfected

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19
Q

Is the only way to ratify a contract is by writing?

A

NO, can be ratified by action

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20
Q

Is selling goods “As Is” adequate to disclaim?

A

No

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21
Q

When is a loss in a transaction of property between a partner and a partnership disallowed?

A

Partner owning more than 50% capital or profits in the partnership

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22
Q

What is the name of a partnership that does not have a specified duration?

A

Partnership at Will

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23
Q

When can a party sue regarding an Anticipatory Breach?

A

On the date of the Anticipatory Breach

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24
Q

What type of organizations can distribute appreciated property tax free?

A

Partnerships and LLC

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25
Q

What type of organization must recognize a gain on the distribution of appreciated property?

A

C-Corp and S-Corp

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26
Q

What is the treatment of Real Estate taxes paid by a business?

A

Deduction as ordinary business expense

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27
Q

No penalty will be imposed on a corporation for underpayment of estimated tax in what instance?

A

Tax for that year is less than $500

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28
Q

What must happen for title to transfer in real property?

A

Deed delivered to purchaser

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29
Q

Must file a fiduciary income tax return in what instance?

A

Income equal to or greater than $600

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30
Q

Limited Partnerships Units fall under what?

A

SEC 1933 as a security

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31
Q

3 Type of Assets for tax purposes

A
  1. Ordinary
  2. Section 1231
  3. Capital
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32
Q

3 characteristics of Ordinary assets

A
  1. Inventory & AR
  2. Depr Property used in Business owned less than 1 year
  3. Copyrights, music, literacy, etc
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33
Q

3 characteristics of Section 1231 assets

A
  1. Depr property used in business/trade
  2. Realty owned by a business
  3. Owned for more than 1 year
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34
Q

3 characteristics of Capital Assets

A
  1. Assets that are not Ordinary or Section 1231
  2. Held for Investment
  3. Personal Use
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35
Q

Basis for Gifted Property

A
  1. Gain = AB of Donor

2. Loss = lower of FMV at date of gift or AB of Donor

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36
Q

What is the depr basis for gifted property?

A

Gain basis

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37
Q

What is the value for gifted property for Gift Tax?

A

FMV

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38
Q

Netting Process (3 Steps)

A
  1. Net ST
  2. Net LT
  3. Net ST and LT Net, Greater amount determines of ST or LT
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39
Q

What is the result of Netting Process having more LT and ST?

A

Capital Gain/Loss

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40
Q

What is the result of Netting Process having more ST and LT

A

Ordinary Income/Loss

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41
Q

Assume what capital gain rate unless given another?

A

15%

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42
Q

What is Section 1245 recapture?

A

Gain resulting from Accumulated Depreciation is recaptured as ordinary income

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43
Q

What is Section 1250 recapture?

A

Amount of Gain or SL depreciation is Ordinary income, amount of Gain from SL is taxed at 25%

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44
Q

What is the lookback period for Corporate 1231 losses?

A

5 years

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45
Q

Section 1231 losses are deductible as what?

A

Ordinary Income

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46
Q

Depreciation period for most business property under MACRS?

A

5 years

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47
Q

Depreciation for Furniture & Fixtures under MACRS

A

7 years

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48
Q

Business use property uses what Depreciation method under MACRS?

A

200% declining balance

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49
Q

In excess of what amount of Unearned Income by a child under 18 is taxed at their parent’s rate?

A

$2,000

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50
Q

Any transfer for value of an order instrument gives the transferee what?

A

Unqualified endorsement from the transferor

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51
Q

Who may assert the Ultra Vires doctrine?

A

Shareholder of a Corporation

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52
Q

A CPA who intentionally violates the provisions of Section 10(b), Rule 10(b)-5 can be what?

A
  1. Civil Liable for monetary damages

2. Criminal liable of a fine

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53
Q

How will a court decided risk of loss on a contract?

A

Intent of the parties when the contract was manifested

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54
Q

Limited Partnerships are created by what?

A

State Statute

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55
Q

How is debt relief involved in the sale of a home?

A

Part of the amount Realized

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56
Q

Exclusion amounts for the sale of Personal Residence

A 
Unmarried  = $250,000
Married = $500,000
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57
Q

Which of the following was an issuer not prefer to file:

S-1, S-2, S-3

A

S-1

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58
Q

How does tax-exempt interest affect a partner’s basis?

A

Increases their basis

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59
Q

A seller of a product and the party that sold them the product have what type of liability for defective products

A

Strict Liability

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60
Q

Criteria for a qualifying child for the Child Tax Credit

A
  1. Dependent son, daughter, stepchild, grandchild
  2. Under the age of 17
  3. Social Security Number on Tax Return
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61
Q

Does every estate have to file an estate tax return?

A

No

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62
Q

Amount to qualify estate to not have to file a return

A

Estate less than $5.34 million due to the lifetime exclusion

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63
Q

Who is exempt from registration with the SEC when selling securities?

A

Anyone who is not a

a. Issuer
b. Underwriter
c. Dealer

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64
Q

Can Chapter 11 be commenced voluntarily or involuntarily?

A

Both, Voluntarly and Involuntarly

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65
Q

Difference between an easement and a license of real property?

A

Easement - Writing

License - Oral, can be revoked any time

66
Q

What exempt must be used under regulation D for a offering of $5 million?

A

Rule 506 - Private Placement

67
Q

What amount of cash will a partner receive in a liquidation of a partnership?

A

Capital account plus or minus the gain/loss of partnership assets

68
Q

A debtor must file with court attorney fees for bankruptcy proceeding and have them approved (T/F)

A

True

69
Q

A mortgage on real property must be delivered to the mortgagee (T/F)

A

True

70
Q

What method of accounting would a tax payer use if they had inventory on hand at year end?

A

Accrual Method

71
Q

Does having accounts receivable require a tax payer to use accrual accounting?

A

No

72
Q

What is the dollar limit that C-Corp’s can use Cash Method of accounting?

A

$5 Million Gross Receipts

73
Q

When is the 10% penalty applied for early withdraw of retirement savings?

A

Before 59 1/2

74
Q

Estimated Tax Prepayment Options

A
  1. 90% of current year tax
  2. Prior Year’s Tax Liability
    a. AGI $150,000 or less = 100%
    b. AGI over $150,000 = 110%
75
Q

How are amounts received for non-competes treated?

A

As ordinary income

76
Q

Is an issuer fails to meet the disclosure requirements of SEC 1933, the buyer may ask for what?

A

Recession of the sale

77
Q

How are liquidating damages created?

A

Listed in the contract

78
Q

Does an oral agreement modifying an existing contract for the sale of goods need new consideration to be binding?

A

No

79
Q

Treatment of medical expense of a decedent within 1 year of their death?

A

Deducted on final income tax return if waiver is attached to not claim on estate tax return

80
Q

2 ways Foreign Income Taxes can be deducted

A
  1. Credit against US Income Tax (limited)

2. Itemized Deduction (NOT subject to 2% floor)

81
Q

Income and distribution order for S-Corps and Pass-Throughs

A

First, income increases basis.

Second, Distribute Income based on new basis

82
Q

FMLA Covers who (3 criteria)

A
  1. Employer with 50+ employees
  2. Employed 12 months
  3. Worked 1250 hours
83
Q

Material modification of a real estate contract requires what to be binding?

A

Consideration

84
Q

Is a modification of a service contract valued over $500 required to be in writing

A

No

85
Q

Any modification to a service contract requires what to be binding?

A

Consideration

86
Q

4 Parts of RICO 1962 (c)

A
  1. Conducted or Participated
  2. In an Enterprise
  3. Through a Pattern
  4. Of Racketeering Activity
87
Q

What must an accountant do to not be liable under RICO 1962

A

Stick to Accounting Acitivites

88
Q

Risk of loss for a FOB destination contract transfers to the buyer when?

A

Goods are tendered to the buyer

89
Q

How can implied warranty of merchantability be disclaimed by a seller?

A

Statement mentioning merchantability

90
Q

What type of buyer can get implied warranty of merchantability?

A

Any buyer buying from a merchant

91
Q

What must occur for Replivin or Specific Performance to apply?

A

Goods must be identified

92
Q

What party would a payee go to first to get paid?

A

Drawee (Bank)

93
Q

UCC Negotiable instruments article Governs what?

A
  1. Commercial Paper

2. Negotiable Instruments

94
Q

What type of instrument is it if the instrument only has to parties?

A

Promissory Note

95
Q

When can a drawee of a time draft be held liable

A

Only after acceptance

96
Q

Perfecta security interest gives the secured party priority over who?

A

Most, but not all, creditors that also have interest in the collateral

97
Q

A surety can not do what?

A

Compel the creditor to collect from the principal debtor or collateral

98
Q

What type of deed gives the purchaser the most protection

A

General Warranty

99
Q

How is debt relief used in the sale of property?

A

Amount realized

100
Q

Order of Bankruptcy distribution (12)

A
  1. Perfected
  2. Child Support/Alimony
  3. Admin Costs
  4. Ordinary Business
  5. Employee wages
  6. Employee benefit plan
  7. Farmer/Fisherman
  8. Consumer Creditors
  9. Taxes
  10. Death/Personal Injury
  11. All unsecured Creditors
  12. Debtor
101
Q

Does a principal have to ratify a contract in a undisclosed principal situation to be held liable?

A

No

102
Q

Emerging Growth Company (EGC) Qualifications (4)

A
  1. Less than $1 bill Rev
  2. Public less than 5 years
  3. Float of less than $700 mill
  4. Less than $1 bill debt in a 3 year period
103
Q

EGC Advantages (3)

A
  1. Confidential Review of registration statement
  2. Reduced Audit Requirements
  3. More publicity
104
Q

Can a foreign company be an EGC?

A

Yes

105
Q

Do the limited partner and general partner need to be listed on the Limited Partnership certificate?

A

Only the General Partner

106
Q

How is primarily responsible for an employees FICA

A

Employer

107
Q

What standards can a CPA use as a defense against Section 11

A

GAAP and GAAS

108
Q

How can a CPA be absolved of criminal liability under Section 18

A

Acted in Good Faith and had no Knowledge of misstatments

109
Q

What does the Dodd-Frank authorize the PCAOB to do?

A

Regulate the audit of non-public broker dealers

110
Q

Under the Dodd-Frank act, does an employee have to report suspected violations to employer first?

A

No, but it is encouraged

111
Q

What rate can be credited against the Federal Unemployment Tax rate as a deduction?

A

State Unemployment rate

112
Q

ERISA broadly pre-empts what?

A

State Regulation of Pension Funds

113
Q

ERISA applies to what type of plans?

A

Benefit and Welfare

114
Q

Is an LLC operating agreement required and what does it do?

A

Does not have to be filed, settles disputes among members

115
Q

Does the debtor have to be insolvent in the 90 window to create a voidable preference?

A

Yes

116
Q

What must a corporation furnish to it’s shareholders when soliciting a proxy?

A

Last 2 years audited financials

117
Q

Pay to Order of Cash is what type of negotiable instrument

A

Bearer

118
Q

C&F terms title and risk of loss transfer to the buyer when?

A

When delivered to a common carrier

119
Q

Under Common Law what must be proved to held an accountant liable for an audit

A

Negligence, not using due care

120
Q

Is someone a HDC if they do not give value for an instrument and their was a breach of contract on that instrument?

A

No, because of the personal defense of breach of contract

121
Q

What is the purpose of Worker’s Comp Statues

A

Enable employees to recover for injuries regardless of negligence

122
Q

How can a landlord “constructively evict” a tenant with a written lease?

A

Cut off the utilities

123
Q

When can a gain be recognized in a corporate reorganization that involves stock for stock?

A

If boot is also received

124
Q

What is a type B reorganization?

A

Stock for Stock

125
Q

A loss for a S-Corp shareholder can not exceed what?

A

The shareholder’s basis

126
Q

Estate Tax return is due when?

A

9 months after death

127
Q

Are state death taxes an estate tax credit?

A

No

128
Q

What is the result of a “No Change Report” issued by the IRS

A

Can not reopen the tax case unless there was fruad

129
Q

What does a 90 day letter mean?

A

Taxpayer has 90 days to petition tax court

130
Q

Does UCC apply to merchants only?

A

No merchants and non merchants alike

131
Q

Breach of implied warranty statute of limitations starts when?

A

When the goods are tendered to the buyer

132
Q

How do you calculate a Gain on the liquidation of C-Corp in exchange for shareholder stock

A

Property received at FMV, just like the shareholder sold the stock

133
Q

When is a option contract not enforceable?

A

When no consideration is given

134
Q

How soon must an 8-K be filed?

A

4 days

135
Q

Can charitable contributions create a NOL?

A

No

136
Q

Having to perform additional acts, beside paying money, for a negotiable instrument does what to it?

A

Makes in non-negatiable

137
Q

If a seller ship FOB Destination and during shipment they find the buyer to be insolvent and won’t pay cash what can the seller do?

A

Stop delivery of goods

138
Q

What does a merchant firm offer have require to be binding?

A

Only offeror’s signature

139
Q

Is consideration required for a merchant firm offer?

A

NO

140
Q

He deed has to only be signed by who?

A

Seller

141
Q

If a non-accredited investor is involved in a 505 offering what must be provided to them?

A

2 years audited balance sheet

142
Q

What type of interest does a lease create?

A

Possessory Interest

143
Q

Is FUTA a deductible business expense?

A

Yes

144
Q

Under what Regulation D rule is general solicitation allowed?

A

Rule 506

145
Q

Can distributions reduce accumulated profits if Earnings and Profits are negative?

A

NO

146
Q

Distributions from C-Corps never do what?

A

Increase or create a deficit in E&P

147
Q

4 ways to create a Judicial Dissolution of a Corporation

A
  1. Waste of Corporate Assets by BOD
  2. BOD Deadlock
  3. BOD acts are illegal or oppressive
  4. Shareholder deadlock over election of BOD for 2 years
148
Q

When does risk of loss for a merchant seller to the general public transfer to the purchaser (the general public)

A

When the purchaser takes possession

149
Q

Personal holding company tax may be avoided by do what?

A

Dividend Payments

150
Q

An option contract is not enforceable when?

A

No consideration is give

151
Q

8-k events must be filed within how man days?

A

4 days

152
Q

How are organizational expenditures treated for AMT calculation?

A

Added back as ACE adjustment

153
Q

Can Charitable Contributions create on NOL?

A

NO

154
Q

Can an accountants working papers be transferred to another accountant?

A

Not without the client’s permission

155
Q

Does a merchant firm offer need consideration or a signature to be binding?

A

Only the offer’s signature

156
Q

Who has to sign a DEED

A

Only the seller

157
Q

What must happen if a non-accredited investor is involved in a REG D 505 offering?

A

Non-accredited investor must receive 2 years audited balance sheet

158
Q

A lease creates what type of interest for the lessee?

A

Possessory Interest

159
Q

General Solicitation is available for what Reg D exemption?

A

506

160
Q

Do distributions to shareholders reduce Negative Accumulated Earnings and Profits?

A

No, only positive

161
Q

Can distributions create or increase a E&P deficit?

A

No, never

Undeleted (57 decks)

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