Review Mods 23-39 Flashcards
Interest income derived from a temporary investment must be classified as…
Therefore it will not be…
Portfolio income
Not be included in passive activity loss
MACRS for furniture and fixtures
200% declining balance over 7 years
Property taxes that buyer of house pays on May 31st are…
Deductible on a pro rata basis
A cash basis tax payer who writes off uncollectible accounts receivable for their accounting practice. How is this treated on the tax return?
Not deductible, because cash basis tax payer
If a payor makes alimony payments of $40,000 in 2011 and pays nothing in 2012 and 2013, what is the recapture for 2013?
$25,000 ($40,000 - $15,000)
If a payor makes alimony payments of $60,000 in 2011, $25,000 in 2012 and nothin in 2013. What is the recapture for 2012? 2011? 2013?
2012 = $10,000 = $25,000 - $15,000
2011 = $37,500 = $60,000 - (($15,000 + ((25k-10k + 0)/2))
2013 = $47,500 = 2011 recapture + 2012 recapture
How do you calculate basis of new property acquired in a like kind exchange?
Basis of old real estate transferred \+ liability assumed \+ gain recognized - liability given = basis
A partner contributes property with an adjusted basis of $5,000 to and a loan of $7,000 that is assumed by the partnership, what is the partner’s basis?
$0 = $5,000 - $7,000
If a partner with a 50% interest in the partnership received $20,000 in guaranteed payments through December 31, 2013 and the partnership had ordinary income of $40,000 for fiscal year June 30, 2013 and $55,000 for fiscal year June 30, 2014. How much income is included in the partner’s return?
$40,000 =
guaranteed payments for entire year
+ 50% 2013 partnership fiscal year payments
If partnership book income is $90,000 and guaranteed payments are $50,000, what amount should be reported as ordinary income on the partnership’s 2013 return?
$90,000
On the U.S. Return of Partnership Income, where does advertising expense go?
Line 20 other deductions
What type of entity is the partner (on partnership return)?
Individual
Current year increase in capital account, how do you calculate it on partnership schedule K-1?
Add and subtract lines 1 through 13
How do you calculate net earnings from self-employment on line 14A of schedule K?
Net earnings from self employment =
Ordinary business income + guaranteed payments
Gross nonfarm income on schedule K equals…
Gross profit on form 1065
Self employment earnings line 14A on schedule K-1 is calculated by…
Self-employment earnings =
Ordinary business income (schedule K-1) + guaranteed payments
Self employment earnings line 14C on schedule K-1 is calculated by…
Guaranteed payments
+ (gross profit - guaranteed payments) x partnership %
Portfolio income includes all interest income other than interest income…
Derived in ordinary course of trade or business
In determining the NOL for 2013, given that deductions in the tax return exceed gross income, DRD would…2
1 Be allowed
2 does not need to be added or subtracted
In determining the NOL for 2013, given that deductions in the tax return exceed gross income, NOL deduction (carryover from 2012) would…2
1 not be allowed
2 must be subtracted from excess deductions on the tax return
Distributions of property to shareholders reduce earnings and profits by…
The greater of property’s adjusted basis
or FMV at date of distribution
If there is a distribution to shareholders to reduce E&P, a gain must be recognized and is calculated by…
Gain recognized =
FMV distributed property - basis of distributed property
What is the net change in E&P if FMV of property distributed is $13,000, basis of property distributed is $6,000 and a liability on the property is $4,000?
Gain recognized (FMV - basis). $6,000
Distribution FMV property. (13,000)
Distribution of liability. 4,000
Net Decrease in E&P (before tax). $3,000
A series of adjustments must be made in arriving at a corporation’s undistributed personal holding company income (UPHCI), these adjustments include…
Deduction of federal income taxes
A manufacturing company is entitled to a minimum accumulated earnings credit of…
$250,000
When an S-Corp earns $20,000 in net income what 2 items are affected?
1 shareholder’s basis increases by $20,000
2 AAA increases by $20,000
A distribution of an S-corp will reduce both…
Shareholder’s basis and AAA simultaneously
What is the order of how distribution of an S-corp is treated? 4
1 AAA (non taxable)
2 C-corp E&P (dividend)
3 return of basis (nontaxable)
4 capital gain
When built in gain is treated as a LT capital gain, built in gains tax is treated as…
A LT capital loss
On schedule M-1 how are dividends treated?
Dividends received deduction is not included on schedule M-1
How do you calculate net business income per share when a company has net business income of $16,300 , 400 shares outstanding and there are 360 days in the calendar year?
What is net business income of a shareholder that owns 50 shares on schedule K-1 and acquired the shares on January 16th?
Net business income = ($16,300/200 shares)/360 days per share
Net business income x 350 days x 50 shares
A purchase of an S-corporation stock for $3,000. The $3,000 is the shareholder’s…
Beginning basis
What 4 items that don’t not result in an adjustment in computing AMTI or ACE?
1 DRD 70%
2 tax exempt interest
3 real property in service from 1999 on
4 charitable contributions
