Tax Flashcards
Home bought for $100K, sold for $475K by a single person. What recognized and what’s realized
Realized - $375K
Recognized - $125K
You may have realized the gain, but your only going to recognized the smaller gain
(Any additions/renovations done to the home are added to home basis)
Donations to charity can be __% of AGI
__% of AGI to public charities
__% of AGI to private charities
__% of income for business
60%
50%
30%
10%
Boot received =
Boot paid =
Basis ____ from previous property
= recognized gain
= add to basis
carries over
1250 depreciation recapture
Ex.) Land bought for $100K three years ago, depreciation $25K, sold for $140K
25% on depreciation is taxable
and gain from sale is tax at Capital Gains rate
$25K @ 25% = $6,250
$40K gain @ LTCG
How to calculate charity bargain sales?
Bought land for $100K, FMV of $500K, sold to charity for $300K
Basis is adjust down by % of property sold compared to the FMV
(Sale / FMV) x Basis = New Basis of $60K (basis is reduced by 60% because = 300/500)
*so you now have a lower basis, but get a charitable deduction on top of that
Charitable donations are deductible up to __% of AGI?
What __% of AGI for public and private?
60% of AGI for total donations
50% of AGI for public charities
30% of AGI for private charities
Unique items like artwork collectibles and short term capital gains property, that is for income by the charity is limited to ____ for a tax deduction?
Basis
Donations of assets can be __% of AGI for Basis or ___% of AGI for FMV
50% of basis or 30% of FMV (Basis is 5 letters, FMV is 3 letters)
(almost always use FMV calculation (30% of AGI) for Long Term appreciated property)
A donation that is use-related and that is at short-term capital gains is deductible up to FMV or basis?
Basis
(tricky question because normally anything that is for use, is considered to get the 30% FMV deduction, but because it was short term holding period, only gets the basis deduction)
Stocks and real estate that’s donated is always considered ____ and is deductible up for ___ which is ___ %
Use-related
FMV which is deductible up to 30% of AGI
Unused charitable deductions can be carried forward for __ years
5 years (total of 6 year window)
For an AGI of $130K which stock sale has the highest overall tax deduction?
Stock A: Basis - $50K & FMV - $80K
Stock B: Basis - $65K & FMV - $90K
Stock A because will be able to deduct the FMV, but only $39K this year, and then $41K deduction carries forward. Stock B gets a deduction of the full $65K this year, but none of it carries forward.
***be careful for questions asking about tax deductibility for “this year” or “overall” tax deductions
Beneficiaries must report income from Trust/Estate even in not ___ that year
Must report even if not distributed that year
Grantor Trust have beneficial enjoyment for ____ & ____ for grantor or spouse
principal and income
1245 property has a recaptured gain which uses?
1231?
Lesser of adjusted basis or the gain realized
The 1231 transaction subtracts the realized gain from the CRD
An Installment 1245 recapture is calculated the same as a normal 1245 recapture, but the lesser of ____ & ____ is considered?
Lesser of cost recovery deduction (CRD) OR gain. The lesser of these two is then taxed at ordinary income, with remaining amount for the instalment sale.
LLC partners can or can not actively participate in the business?
Can not actively participate in order to maintain their Limited Liability status
Section 1244 stock allows single and MFJ to write off how much? and against what? and how much can be carried forward each year?
Can write off $50K and $100K against ordinary income each year (instead of a $3,000 cost carrying forward with normal stock)
Income from a S-corp increases ____ and avoid what type of tax?
Increases basis and avoid FICA and FUTA tax
Donations of over $250 require?
Donations of under $250 require?
Written acknowledgement of the value of the FMV and Cost Basis of the items gifted to the charity
A date reciept
