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Yaeger REG > Review Mods 23-37 > Flashcards

Review Mods 23-37 Flashcards

1
Q

A blank endorsement converts…

A

Order paper to bearer paper

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2
Q

Use of special endorsement converts…

A

Bearer paper into order paper

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3
Q

A qualified endorsement that does not specify any payee converts…

A

Order paper into bearer paper

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4
Q

To qualify as a holder in due course, an individual most be…3

A

1 holder of properly negotiated negotiable instrument

2 give value for instrument

3 take instrument in good faith without problems

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5
Q

How do you calculate the gain realized, in a like kind exchange? 5 steps

A 
FMV prop received
\+ boot received
= amount realized
- basis of property exchanged
= gain realized
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6
Q

Recognized gain in a like-kind is the lesser of…2

A

Boot received or amount realized

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7
Q

A corporation’s net capital loss…

A

Cannot be offset against ordinary income

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8
Q

Net capital loss is generally carried back…

2) And carried forward…

A

3 years

2) 5 years

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9
Q

Tax basis on involuntary conversion where $10,000 is destroyed and $13,000 is received with $11,000 reinvested?

A

$10,000 ($11,000 cost - $1,000 deferred gain)

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10
Q

With an involuntary conversion, if $10,000 of property is destroyed and $14,000 is received by the county. And $16,000 is reinvested what is the realized gain? How much is recognized?

A

Realized gain = $4,000

Recognized gain = $0

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11
Q

Fees received for jury duty represent compensation for services and must…

A

Be included in gross income

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12
Q

Jury duty fees are taxable as…

A

Other income on page 1 of Form 1040

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13
Q

Accounts receivable resulting from services rendered by a cash basis tax payer have…

A

Zero tax basis

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14
Q

A loss sustained from a Nonbusiness bad debt is always…

A

Classified as a short term capital loss

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15
Q

Non business bad debt is deductible on…

A

Schedule D

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16
Q

Rental property including parking lots is reported on…

A

Schedule E

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17
Q

Schedule E- Supplemental Income and Loss is used to report on income and loss from…5

A 
1 royalties
2 partnerships
3 S-corporations
4 estates
5 trusts
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18
Q

Loss resulting from sale of personal residence is…

Why?

A

Not deductible

Because property held for personal use

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19
Q

When alimony payments of $2,000 are reduced by $300/month due to divorce decree, when a child reaches age 21. What is the tax treatment of these payments?

A

$300 of the $2,000 per month will be treated as child support

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20
Q

What is the installment method formula for the amount reported each year?

A

Gain from sale =

(Gross profit/total contract price) x Amount received in year

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21
Q

How do you calculate contract price for the installment method formula?

A

Contract price = selling price - mortgage assumed

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22
Q

How do you calculate gross profit for the installment method formula?

A

Gross profit = selling price - basis

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23
Q

For farm income, soil and water conservation expenditures are $20,000 for the year and gross income from 2 farms is $40,000, the deduction is limited to…

A

$10,000 = ($40,000 x 25%)

Gross income x 25%

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24
Q

Feed and planting seed expenses can be deducted up to…

A

50% x other expenses

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25
Q

A retiree’s pension contribution is…

A

Excluded from income on a pro rata basis

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26
Q

For a two-family rental apartment, where one is lived in and one is rented out, depreciation would be…

A

Subtracted by 50% against rental income

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27
Q

Passive activity loss calculation

A

Passive activity loss = (Ownership %) x operating loss

28
Q

When the midquarter convention is used in the last quarter, you should…

A

Multiply by 1/8

29
Q

Emergency room fee cannot be deducted for a family member that…

A

Provides more than half their support

30
Q

2 expenses that are not deductible relating to adoption of a child?

A

1 legal expenses

2 agency fee

31
Q

Delinquency taxes not paid by the seller and paid by the buyer are…

A

Not deductible

32
Q

2013 property taxes, for property bought on July 1st, 2013 and paid in full by the buyer are…

A

Deductible on a pro rata basis

33
Q

For a deduction for a qualified residence, what are 2 examples of Nondeductible personal expenses?

A

1 utilities expense

2 insurance expense

34
Q

All unreimbursed business expenses of an outside salesman are deducted as…

A

Miscellaneous itemized deductions subject to a 2% floor

35
Q

In determining net self-employment income, estimated income taxes on self-employment income are…

A

Excluded from its computation

36
Q

Guaranteed payments go on…

A

Line 4 of schedule K

37
Q

Net earnings from self employment on schedule K is calculated by…

A

Net earnings = ordinary business income + guaranteed payments

38
Q

Where is gross income reported on schedule K?

A

Line 14C gross nonfarm income

39
Q

How is ordinary business income on schedule K-1 calculated?

A

(Ordinary business income from line 1 schedule K) x partnership %

40
Q

How is self-employment earnings on line 14A of schedule K-1 calculated?

A

Self-employment earnings =

(ordinary business income on K-1) + guaranteed payment

41
Q

How is self-employment earnings on line 14C of schedule K-1 calculated?

A

Self employment income C =
Guaranteed payment
+ (gross income - guaranteed payment) x partnership %

42
Q

What is the IRS center where the partnership filed the return?

A

Ogden, Utah

43
Q

For the partnership return SIM, was any capital contributed during the year?

A

No

44
Q

How do you calculate the current year increase in partner’s capital account? 2 steps using items from schedule K-1

A

1 Add all income items (except guaranteed payments)

2 subtract all deductions and losses

45
Q

Tax exempt interest is included when calculating…

A

Current year increase in partner’s capital account

46
Q

Guaranteed payments are deducted in computing…2

A

1 partnership book income

2 partnership ordinary income

47
Q

If an item is deductible in computing both partnership book income and partnership ordinary income, when computing partnership ordinary income from book income…

A

The item is not added back

48
Q

Charitable contributions are deducted in…

A

Arriving at partnership book income

49
Q

Charitable contributions must be separately passed through to partners on schedule K-1 and cannot…

A

Cannot be deducted in computing partnership ordinary income

50
Q

A deduction that is included in book income, but not ordinary income for a partnership is…

A

Added to book income

51
Q

When there is a guaranteed monthly payment and ordinary income for the fiscal year is given, in regards to ordinary income assume that…

A

Guaranteed payments have already been subtracted

52
Q

Although, the sale of a partnership interest generally results in a capital gain or loss, ordinary income must be recognized to the extent of selling partner’s share of…2

A

1 unrealized receivables

2 appreciated inventory

53
Q

If there are $800,000 in unrealized receivables and the partner sells their 1/4 interest in the partnership, what is recognized?

A

$200,000 ordinary gain (800k/4)

54
Q

A current distribution is also known as…

A

A nonliquidating distribution

55
Q

No loss can be recognized as a result of a…

A

Current (nonliquidating) distribution

56
Q

In a nonliquidating distribution, a gain will be recognized only if…

A

Cash received exceeds the basis for the partner’s partnership
Interest

57
Q

If both cash and noncash property are received in a single distribution, the basis for the partner’s interest is…

A

first reduced by the cash, before noncash property

58
Q

Since $30,000 cash does not exceed the $31,000 basis of Andrew’s partnership interest…

A

No gain is recognized

59
Q

When there is a cash and noncash (land) nonliquidating distribution, where cash reduces the partner’s interest basis to $20,000. Land distributed with a basis of $35,000 will…

A

Have its basis limited to $20,000 (partner’s basis after reduction
Of cash)

60
Q

In a complete liquidation of a partner’s interest in a partnership, the property distributed will have a basis equal to…

A

Adjusted basis of partner’s partnership interest - money received

61
Q

Generally, in a liquidating distribution, the basis for a partnership interest is first reduced by…

A

Amount of money received

62
Q

In a liquidating distribution, the basis for partnership interest is first reduced by amount of money received, it is then reduced by unrealized receivables and inventory…

A

Received

63
Q

A distributed partner can recognize loss only upon…

A

Complete liquidation of the partner’s interest

64
Q

A distributed partner can recognize loss only upon complete liquidation of the partner’s interest through receipt of…3

A

1 money

2 unrealized receivables

3 inventory

65
Q

If there is a basis of $20,000 and the partner received a liquidating distribution of $2,000 cash and inventory with a basis of $4,000 and FMV of $10,000, what is the gain or loss recognized? (Show calculation)

A

$14,000 loss ($20,000 - cash - basis of inventory)

Yaeger REG (77 decks)

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