Review

Question 1

Elements of Fraud

Answer 1

Scienter, intent to deceive, actual or justifiable reliabce, damages (also includes negligently performing audit procedures).

Question 2

How much of EE life insurance proceeds taxable to the EE?

Answer 2

First $50,000 are tax free, excess over $50,000 are taxable to the EE.

Question 3

What type of court-damages awards are taxable?

Answer 3

Punitive damages and personal reputation awards.

Question 4

2014 max section 179 expense deduction.

Answer 4

$25,000

Question 5

Oral contracts are enforceable w/ out writing if…(SWAP)

Answer 5

Specially manufactured good (specific/particular purpose), written confirmation of contract, admitted in court, performed substantially.

Question 6

1934 securities act is enforceable on what conditions?

Answer 6

Securities are publicly traded, 500+ shareholders, over $10 million in total assets

Question 7

AOC and LLC - American opportunity and Lifetime learning details

Answer 7

AOC - 100% of first $2,000, 25% of second $2,000

LLC - 20% of expenses UP TO $10,000 deductible

Question 8

By what date must S-corp election be made?

Answer 8

15th day of third month, otherwise, election is deferred to the following year.

Question 9

Organizational/ start up expenses

Answer 9

Deductible up to $5,000; remainder is amortized over 180 months. Org expenses related to stock issuance/advertising/printing and sale are not amortizable.

Question 10

Regulation D of 1933 Securities Act, sections 505 and 506 pertain to what?

Answer 10

General advertising of stock sales is prohibited.

Question 11

Built-in gains to contributing partner rules:

Answer 11

NBV<FMV, built in gain is allocated to partner upon the re-sale of the property. Gain is FMV (at date contributed) less adjusted basis.

Question 12

Liquidating partnership interest details.

Answer 12

Zero out to get out - no gain or loss recorded (by the partnership) upon liquidation of interest.

Question 13

Schedule E items and Schedule C items are deducted where on 1040? What are their characteristics?

Answer 13

Schedule E - passive income (rent & royalty, income & related expenses), deductible as expenses FOR AGI.

Question 14

Personal AMT disallowed deductions:

Answer 14

Taxes and miscellaneous itemized deductions; $40,000 exemption is reduced by 25% of AGI in excess of $150K, phaseout @ $310K

Question 15

How is a security interest attached and perfected?

Answer 15

Attached: agreement w/ the parties, value is given by the creditor, debtor has rights in the collateral.
Perfection is achieved by filing a financing statement w/ courts.

Question 16

What types of interest & other personal items are not deductible?

Answer 16

Investment interest in excess of investment income; homeowners insurance; loss on personal residence; FMV of services for charity.

Question 17

Individual estimated tax thresholds:

Answer 17

If AGI is in excess of $150K, 90% of current-year tax in 4 equal installments; OR 110% of prior year in 4 equal installments. Less than $150K, it is 90%/100%

Question 18

Section 444

Answer 18

Alternative tax election year

Question 19

Passive activity net losses disallowed:

Answer 19

When rental was used for more than 14 days. (losses are considered personal thereafter)

Question 20

How are moving expenses deducted?

Answer 20

FOR AGI, temporary living expenses are not deductible.

Question 21

Gain/loss/basis recognition and realization on sale of personal property.

Answer 21

Realized gain = FV of new + boot received - boot paid (liabilities assumed) - basis of old.
Recognized gain = lesser of realized gain or boot received.
New basis = Basis of old + gain realized - boot received + boot paid

Question 22

Foreign tax treatment

Answer 22

Treated as a credit to federal tax due.

Question 23

AMT phase-out

Answer 23

$40,000 exemption is reduced by 25% of the amount in excess of $150K in AGI.

Question 24

Individual capital loss threshold deduction

Answer 24

$3,000, excess of $3,000 is carried forward indefinitely.

Question 25

Alternative valuation date

Answer 25

6 months past date of death.

Question 26

Income and expenses allocated to corpus are…

Answer 26

NOT included in the trust’s income.