shootin' for the stars Flashcards
what’s the difference between a simple trust and a complex trust?
simple trusts must distribute all income earned
complex trusts can distribute less or more (principal) of income earned
how is holding period determined for:
- related party transactions
- gifts
- inheritances
individual basis
basis
always long term
which type of trust can give charitable contributions?
complex trusts
when can a security deposit be excluded from income?
when held in a separate account; as a liability
a cash basis taxpayer owns 55% of an accrual basis corporation. the corp owes the taxpayer $4,500 for rent in Year 1. in Year 2, half of the expense was paid. how much can the corp deduct for rent expense?
amount paid, so $2,250
when a partner sells their partnership interest which includes hot assets, how are the gains from it classified?
ordinary income
how should a tax preparer report tax shelters?
disclose + “more likely than not” tax position
how should a tax preparer report non-tax shelters?
if disclosed, then tax position is reasonable basis
if not disclosed, then tax position is substantial authority
list the chances of winning the following tax positions:
reasonable basis
substantial authority
more likely than not
> 20%
33% - 50%
50%
what is the key word for the mom and pop exception for rental real estate losses?
actively participates
under the mom and pop exception, if AGI is $120,000 and the net rental real estate loss is $30,000, how much can the taxpayer deduct?
$15,000
$20,000 over $100,000
$20,000 * 50% = $10,000 phase out $25,000 limit
how do distributions impact
S corp
C corp
reduces basis
dividend income
how does taxable income impact
S corp
C corp
flow through
C corp is taxed
if a buyer receives nonconforming goods, what are the possible remedies?
reject
cover
accept
