Review of C corps Flashcards
When do we make the selection of accounting for tax purposes
Made on the initial tax return
Who uses the accrual basis of accounting
Corp with gross receipts of 30 mil or more in the last 3 years
Tax shelters
Manufacturers
Proceeds of life insurance where the corp is the owner and beneficiary are
Not included in taxable income and expenses for the premiums will not be deductions.
Expenses owed by a corp to a 50% or more stockholder is
Expensed when paid
Organization and startup costs
Each has a deduction of 5k
Once the expense totals more than 50k we start deduction from that 5k initial deduction.
The remaining amount will be amortized over 15 years 180 months.
Charitable contribution is deductible up to
10% of Taxable income
Illegal activities deduct
Cost of merchandise only
Personal holding company deductible dividends paid
Dividends paid + consent dividends
To qualify for DRD
You must own the stock for more than 45 days
Capital losses are
Not deductible past capital gains
We only use capital losses to deduct capital gains.
Special deductions is
Anything that does not have to do with the orgs COGS
Foreign income taxes can be a
Deduction or a credit
Accumulated earnings tax
C-corps 250k accumulated RE
Personal corp 150k accumulated RE
20% tax rate
This does not apply for
Personal holding companies
Tax-exempt corporations
Passive foreign investment corps
Personal holding company qualifications
Owned more than 50% by five or fewer individuals at any time during the last half of the tax year
60% of income is from investments and stocks.
The business interest expense deduction is limited to the sum of:
business interest income;
30 percent of adjusted taxable income (ATI); and
floor plan financing interest expense.
(The limitation does not apply to taxpayers with average annual gross receipts of $30 million or less (2024) for the prior three taxable years.)
