RV (2) Flashcards
limitation on charitable contribution
limited to 10% of taxable income before “special deductions”
ex: 410K income including 20k in dividend received deductions, 430K x 10% = 43K is max charitable contribution
two rules in which an accrual based corporation can deduct an accrued contribution
1) authorized to a qualified charity by board resolution before the end of the taxable year
2) paid by 15th day of the fourth month after the end of the taxable year of accrual
tax on imputed interest on an interest-free loan
imputed interest on interest free loan is subject to gift tax each year loan is outstanding
(ex: parents give interest free loan of 1M to daughter, need to pay tax per each year it is outstanding)
how are married couples treated for accounting for the S corp 100 shareholder limit
for the purpose of the S corp shareholder limit, a married couple counts as 1 single shareholder
how many classes of stock are allowed for an S corp?
only one class of stock! no common & preferred
are decedents estates allowed to be shareholders of an S corp?
yeas
form 1120 treatment for interest to purchase municipal bonds
NOT DEDUCTIBLE, as municipal bond interest income is not taxable
form 1120, business entertainment expeneses
ok to deduct for book but NOT TAX
form 1120, recovery of prior year bad debt
income subject to tax but not recorded on books
form 1120, key person life insurance policies
TAX FREE, income for book but not for tax
can a corporation deduct organizational costs
partially – up to $5K
any amount over $50K reduces the $5K
any excess is amortized over 180 months
can a corporation deduct – life insurance premiums
life insurance premiums are fully deductible
can a corporation deduct – vacation pay for employees
vacation pay for employees is fully deductible given two conditions:
1) vested under a plan
2) paid within 2.5 months after year-end
can a corporation deduct – warranty expense accrued
only if an actual expense exists. if no actual warranty costs as of year end, then cannot deduct for IRS, but ok for gaap
how is goodwill amortized for tax purposes
over 15 years & subtracted from schedule M-1 when getting tax income
dividend received deduction
an allowed deduction of 50% of dividend income for qualified less than 20% owned domestic corporations
what income is separately reported on schedule K
net rental income, interest income, dividend income, capital gains & losses, net section 1231 gain (loss), guaranteed payments
section 179 deduction
allows for a deduction for new or used property (machinery/equipment) that is acquired from an unrelated party during the year
rollover basis
if the basis after cash distribution is > NBV of property received, use the same basis the partnership uses.
ex: if begin basis is 50, receive 20 in cash, basis after cash distribution is 30
and if NBV of prop is only 25, since the after cash basis (30)> NBV (25), use the 25
