Session 17

Question 1

Regressive Taxes

Answer 1

are levied at the same rate regardless to what tax bracket you are in

Question 2

Progressive Taxes

Answer 2

increase the tax rate as income increases

Question 3

Alimony payments

Answer 3

are awarding at the end of a divorce and the person making the payments can deduct it

Question 4

Personal Use of Vacation House

Answer 4

the greater of 14 days or 10% of total days rented to other at fair value

Question 5

Tax on Dividend Income

Answer 5

Max of 15%

Question 6

Interest Income Taxed?

Answer 6

Always at ordinary income

Question 7

Are dividends double taxed?

Answer 7

No, once distributed and reinvested the holder when he sells the entire position isn’t taxed at the new cost basis

Question 8

Alternative Minimum Tax (AMT) Highlights (5)

Answer 8

1- Accelerated depreciation on property placed in service after 1986
2- Certain cost associated with LP like RD and excess intangible cost
3- Local tax and interest on investments that don’t general income
4- Tax-exempt interest on private purpose mini after August 1986
5-Incentive stock options to the extent that the fair market value of the employer’s stock is in excess of the strike price

Question 9

Effective Tax rate

Answer 9

is the overall rate of tax you pay on your taxable income

Question 10

Marginal Tax rate

Answer 10

is the rate you pay on each additional dollar you received as income

Question 11

Are premium for life insurance tax deductible?

Answer 11

NO

Question 12

Are Policy Loan from life insurance taxable?

Answer 12

NO

Question 13

How is a Policy Surrender taxed?

Answer 13

It will be taxed as ordinary income over of the cost basis

Question 14

How if the sale of the primary residence taxed?

Answer 14

couple first 500,000 of capital gain isn’t touched with taxes and if single 250,000

Question 15

Double Taxation with dividends

Answer 15

first taxed with the C corp before being paid out and then is taxed with it is payable to the shareholder

Question 16

Dividend Exclusion Rule

Answer 16

dividends paid from one corp to another are 70% exempt from taxation and for foreign companies they are 30% exempt

Question 17

When are taxes due for a C corporation?

Answer 17

15th of the fourth month after the fiscal year

Question 18

Different tax forms for each business

Answer 18

1- Sole Proprietor is the Schedule C
2- Members of LLC and Shareholder of S Corps Schedule K-1
3- C Corp is the Form 1120

Question 19

Generation Skipping Trust (GST)

Answer 19

is it given from grandparents to grandchild and it has an exclusion of 5.45 million per grandparent and it starts as of when it is funded…so if it wroth 2 million now and in 30 years it is worth 100 million not taxable on the estate

Question 20

Adjusted Gross Estate (AGE)

Answer 20

certain expenses are deducted from the gross estate like funeral expenses, charitable deductions

Question 21

Alternative Valuation Date

Answer 21

the executor of an estate may choose to calculate the assets in the estate as of date or death or six month later

Question 22

How long do you have to pay the estate tax?

Answer 22

NINE MONTHS after death

Question 23

Taxation of Estate income

Answer 23

will be 39.6% of anything over 12,300