Section 4 Reg Flashcards
What is the most categorical change to the tax code in the last 30 years?
When did it take effect?
TCJA
Tax Cut & Jobs Act
1/1/2018
Under the new tax law what are the deduction amounts? MFJ HH Single - Personal Exemption
MFJ - 24K
HH - 18K
Single - 12K
Personal Exemption - 0
Kiddie tax
Taxable ____ of a child is taxed at the rate for ___ individuals & net ___ income is taxed at the ___ and ___ rates
Taxable earned income of a child is taxed at the rate for single individuals & net unearned income is taxed at the trust and estate tax rates.
When is the kiddie tax triggerd? (after what amount)
What rate does trust and estate rates start at?
After $2,100
37%
LOSS LIMITATION RULE
Excess business losses of a taxpayer other than a corporation are ____. Those losses are ___- and treated as the tax payers ____.
What is this netted against?
not allowed , carried forward, NOL Carry-forward
Netted against gains
LOSS LIMITATION RULE
NOL are the ___ of the carryover amt or ____ determined wihtout regard to the deduction of NOL
the lesser, or 80% of taxable income.
LOSS LIMITATION RULE
NOL carrybacks after 2017 tax years are ____
eliminated
CHILD TAX CREDIT Child tax credit is increased to \_\_\_\_ What is the cutoff age? Can a child get a credit w/o SSN? What is the refundable portion? What is the earned income threshold? What is the credit amount for qualifying dependents (not qualified children)
$2000, cut off age: 17, Cant get w/o ssn, refundable portion is $1,400 per child, Earned income threshold is $2,500,
Credit amount that is not a qualifeid child, is $500
EDUCATION PROVISION
Higher education expenses for section 529 includes ___ for elementary, secondary public, ___, or ___ schools up to $___ per year
includes tuition
Private & religious schools
$10k per year
EDUCATION PROVISION
Certain student loans are discharged on account of ___ or ___ and is excluded from Gross Income
Death or total disability
What is the deduction amount for new mortgages?
Home Equity Debt and lines of credit must be used to what?
$750k MFJ, or $375k Single
Must be used to buy, build, or improve the home that secures the loan
When are state and local taxes dedutible? (not the itemized one). Could you deduct foreign real property taxes?
What is the deductible amount for State and local taxes when itemizing? What is NOT deductible?
When paid/accrued in a trade or business. Yes, can deduct foreign real property taxes.
$10k – Foreign real property taxes are NOT deductible
What is the amount for personal casualty losses?
There are none – its suspended
Deductions for personal casualty losses incurred in a ___ is not affected. If an individual hass a net disaster loss, the standard deduction is increased by ___
federal declared disaster
increased by the net disaster loss.
All deductions for expense incurred in wagering & gambling are limited to ___
the winnings
What is the deduction % of cash contributed to charities?
60% (example - you donate $100 - $60 is deductible)
If the donation exceeds 60% of the donor’s AGI, what does that mean?
a 5 year carryover period will come into play
When is a charitable deduction not allowed?
If it was in exchange for tickets/seating at an event
All misc. itemized deductions that are subject to the 2% floor are ___
suspended
Moving expenses are ___ except for ___
Suspended, except for active duty armed forces
The AMT (Alternative minimum tax) is increased to ___
$109,400
What is the medical expense deduction %?
10%
A roth IRA conversion made after ___ cant be re-characterized as a____ to a ___
made after 1/1/2018 , as a contribution to a traditional roth IRA
For divorce or separation, alimony and separate maintenance are ____ by the payor and not included in the ___ of the payee.
What is this rule to follow?
not deductible by the payor, not included in the gross income of the payee.
Wants to follow Gould v Gould- reason is that payments are not income to the recipient
Like-kind changes are ___
suspended
What is the amount of the Affordable Care Act individual shared responsibility payment?
0
how much is the estate/gift tax exemption?
How much can MFJ exempt?
$10M
$22.36M
GROSS INCOME
What does constructive receipt mean?
Means that it is made available to the taxpayer w/o restrictions
GROSS INCOME
Can scholarship money – room and board be considered as income?
Can debt forgiveness be considered as income?
Yes to both
What are the following investment incomes maximum tax rates?
Qualified Dividends
Capital Gain Dividend
Capital Transactions
Either 0%, 15%, 20% for all
When would state and local tax refunds be included in gross income?
What is the amount limited to?
When would you not include the refund amount in gross income?
Include when: state & local taxes were deducted in the PY schedule A
Amount is limited to the amount of the tax benefit
Dont include when: standard deduction was taken in the PY tax return
GROSS INCOME
All income is taxable unless it is ___ or ___
fully or partially
STATUTORY OPTIONS - INCENTIVE STOCK OPTION (ISO)
Do employees recongize this as income?
Employees qualify for LTCG, ONLY IF: (2)
How much is the employer deduction for ISO?
When would employee include has ordinary income for ISO?
No - they dont recognize as income
LTCG: (1) Stock held >1yr & (2) stock isnlt sold within 2 years the stock was given
Ordinary income if the sale price exceeds the option price
Employer doesn’t get a deduction
Deferral Election - Stock
What can employees defer?
When can the election be made?
Does an employer get a deduction? If so, when?
Employees can defer the income
Election must be made within 30 days after given the stock (vested) or when the stock becomes transferable
Employer does get a deduction, it is deductible when the employee includes the stock in their income
NONSTATUTORY STOCK OPTIONS
Employees Tax Treatment of NSOs depnd on whether the ____
This is known as ___ stock option
FMV is readily ascertainable
Known as nonqualifeid stock option
If the NSO (nonstatutory stock option) is readily ascertainable, then:
Include as ____ the FMV less any amount ___ when the option is ___
Include ___ in income when option is exercised
Treat as a ___ when stock is sold – when does the holding period begin?
Include as ordinary income, less any amount paid when the option is received
Include $0 in income when exercised
Treat as a capital asset when sold. Holding period begins when the option is acquired.
For NSO, how much is the employer deduction?
Same amount as employee deduction
If an NSO is NOT readily ascertainable, then:
Include $___ in income when received
Include as ___ the ___ less any amount ___ when option is exercised
Treat as a ___ when stock sold
Include $0 in income when received
Include as ordinary income the FMV less any amt. paid when exercised
Treat as a capital asset
Which of the following is NOT included in gross income?
Punitive damages, bribes, found property
All included in gross income
Fringe benefits excluded from employee’s income:
___ & ___ premiums
_SA
____ assistance, which is subject to MAGI (Modified Adjusted Gross Income )
___ care assistance
____ assistance that’s covered up to $5,250/yr
Accident & Health premiums FSA Adoption Assistance, MAGI Dependent Care assistance Education assistance up to $5,250
FRINGE BENEFITS
Group-term ___ premiums are excludible on the first $____ of coverage
Life insurance proceeds paid by reason of death is excludible by the beneficiary unless ____
life insurance - first $50K
unless the beneficiary owns the policy
FRINGE BENEFITS
When are meals & lodging excludible? (4)
Furnished by employer
On employer’s premise
In-kind meals
Loding - MUST be a condition of employment
Cafeteria plans allow an employee to choose between ___ and ___
Cash & qualified benefits
FRINGE BENEFIT - CAFE PLAN
If employee chooses cash, the amt is treated as ___
If employee choose benefit, it is not ___
treated as wages
not taxable
