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CFP > Tax > Flashcards

Tax Flashcards

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1
Q

Section 1231 Assets

A
  • machinery and equipment
  • buildings
  • vehicles
  • computers
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2
Q

Section 1250 Assets

A
  • commercial buildings
  • warehouses
  • barns
  • rental properties and their structural components
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2
Q

Section 1245 Assets

A
  • furniture
  • fixtures & equipment
  • carpet
  • decorative light fixtures
  • electrical costs that serve telephones
  • data outlets
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3
Q

Accelerated Cost Recovery System (ACRS)

A
  • assets placed in service after 1980
  • subject to wear & tear, obsolescence, etc
  • determinable useful life
  • tangible personalty or realty
  • MACRS most common
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4
Q

General Depreciation System (GDS)

A
  • nine property classifications
  • 3yr, 5yr, 7yr, 27.5yr, 39yr
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5
Q

MACRS Depr. Method: 200% Declining Balance

A
  • used over GDS recovery period
  • extra depreciation in early years
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6
Q

MACRS Depr. Method: 150% Declining Balance

A
  • used over GDS recovery period
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7
Q

MACRS Depr. Method: Straight Line Method (GDS)

A
  • used over GDS recovery period
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8
Q

MACRS Depr. Method: Straight Line Method (ADS)

A
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9
Q

Sole Proprietorship
- Tax form
- What concept is taxed
- Tax form for owner’s compensation report
- Nature of owner’s income from organization

A
  • Unlimited liability
  • Form 1040, Schedule C
  • Individual Level
  • Form 1040, Schedule C
  • Self-employment income
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10
Q

General Partnership
- Tax form
- What concept is taxed
- Tax form for owner’s compensation report
- Nature of owner’s income from organization

A
  • Unlimited liability
  • Form 1065
  • Flow-through
  • Schedule K-1, 1040
  • Self-employment income
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11
Q

LLP
- Tax form
- What concept is taxed
- Tax form for owner’s compensation report
- Nature of owner’s income from organization

A
  • Limited liability
  • Form 1065
  • Flow-through
  • Schedule K-1, 1040
  • Self-employment income
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12
Q

LLC
- Tax form
- What concept is taxed
- Tax form for owner’s compensation report
- Nature of owner’s income from organization

A
  • limited liability
  • (Sole) Form 1040, Schedule C
  • (Partnership) Form 1065
  • (C corp) Form 1120
  • (S corp) Form 1120S
  • Can be taxed as sole, partnership, c corp, or s corp
  • Form 1040, Schedule C / K-1 / W-2, K-1 / W-2
  • Self-employment tax / W-2 / ordinary income, W-2
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13
Q

Limited Partnership
- Tax form
- What concept is taxed
- Tax form for owner’s compensation report
- Nature of owner’s income from organization

A
  • Limited liability
  • Form 1065
  • Flow-through
  • Schedule K-1, 1040
  • Ordinary income
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14
Q

S Corp
- Tax form
- What concept is taxed
- Tax form for owner’s compensation report
- Nature of owner’s income from organization

A
  • Limited liability
  • Form 1120S
  • Flow-through
  • Form W-2, K-1
  • W-2, Ordinary income
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15
Q

C Corp
- Tax form
- What concept is taxed
- Tax form for owner’s compensation report
- Nature of owner’s income from organization

A
  • Limited liability
  • Form 1120
  • Entity Level
  • W-2, dividends Form 1099-DIV
  • W-2, Dividend income
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16
Q

If your 2024 return is over 60 days late when due in 2025, the minimum failure to file penalty will rise to the smaller of:

A

$510 or 100% of the tax required

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17
Q

If your 2023 return is over 60 days late when due in 2024, the minimum failure to file penalty will be the smaller of:

A

$485 or 100% of the tax required.

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18
Q

Public Charity Donation: LTCG Property (intangible, real, tangible - related use)

A

Either FMV or Adj Basis
- 30% if FMV
- 50% if Basis

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19
Q

Public Charity Donation: Cash

A
  • 60%
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20
Q

Public Charity Donation: Ordinary income property, STCG, All Loss property

A

Lesser of Adj Basis or FMV
- 50%

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21
Q

Public Charity Donation: LTCG Property (tangible personalty - unrelated use)

A

Lesser of Adj Basis or FMV
- 50%

22
Q

Private Charity Donation: LTCG Property (intangible, real, tangible - related use)

A
  • 20% must use basis
23
Q

Private Charity Donation: LTCG Property (tangible personalty - unrelated use)

A

Lesser of Adj Basis or FMV
- 20%

23
Q

Private Charity Donation: Ordinary income property, STCG, All Loss property

A

Lesser of Adj Basis or FMV
- 30%

23
Q

Private Charity Donation: Cash

A
  • 60%
24
Q

Examples of real property

A
  • land
  • real estate
  • sewers, buildings, etc
25
Q

Examples of Tangible Personalty (related use) property

A
  • related use =related to charity’s purpose
  • office equipment, jewelry, toys, light trucks, buses, etc
26
Q

Examples of Ordinary Income property

A
  • inventory
  • works of art created by donor
  • capital assets held <1yr
27
Q

Examples of Tangible Personalty (unrelated use) property

A
  • unrelated use = not related to charity’s purpose
  • office equipment, jewelry, toys, light trucks, buses, etc
28
Q

Kiddie Tax: Unearned Income Process

A
  • first $1,300 not taxed (standard deduction)
  • next $1,300 taxed to child (single filer’s rate)
  • above $2,600 taxed at parental rate
29
Q

Kiddie Tax: Earned Income Process

A

Standard Deduction greater of:
- $1,300
OR
- Earned income + $450

30
Q

Kiddie Tax: How to approach question

A
  1. Figure out standard deduction if earned income included ($1,300 or earned + $450)
  2. Apply $1,300 std deduc. to unearned income
  3. Apply remaining std deduc. to earned income
31
Q

Like-Kind Exchanges: Receiving Boot (cash, mortgage relief, etc)

A
  • recognize gain to extent of boot received
  • if boot > gain, reduce basis
32
Q

Like-Kind Exchanges: Losses realized

A
  • not recognized until replacement property is sold
33
Q

Like-Kind Exchanges: Paying Boot (cash, mortgage relief, etc)

A
  • no gain
  • increase basis by boot paid
34
Q

Like-Kind Exchanges: When must new property be identified?

A
  • within 45 days of when old property was transferred
35
Q

Like-Kind Exchanges: When must new property be received?

A

Early of the following:
- within 180 days when old property transferred
- due date (including extensions) for tax return covering year

36
Q

Like-Kind Exchanges: If boot exceeds gain

A
  • reduces basis
37
Q

Three types of income

A
  • active
  • passive
  • portfolio
38
Q

Deduction for medical care: Lodging

A

$50/night per person

39
Q

Deduction for medical care: Mileage

A

Allowed

40
Q

Golden Parachute payments made to ‘disqualified’ person

A
  • includible in W-2 income (OI)
  • amounts under SS cap subject to OASDI
  • all amount subject to medicare tax
  • additional 20% excise tax
41
Q

Medicare tax

A
  • 2.9% total
  • 1.45% split
42
Q

OASDI tax

A
  • 12.4% total
  • 6.2% split
43
Q

What classifications of property are subject to cost recovery?

Personalty
Personal use property
Natural resources
Intangible property
Real estate including land
A
  • Personalty - used in business (depreciation)
  • Natural resources (depletion)
  • Intangible property (amortization)
44
Q

Approximate client’s minimum income tax liability: AGI < $150,000

A

three choices:
- 90% current year tax
- 100% prior year tax
- 110% prior year tax

45
Q

Approximate client’s income tax liability: AGI > $150,000

A

two choices:
- 90% current year tax
- 110% prior year tax

46
Q

What does SALT stand for?

A
  • State and Local Taxes deduction
  • limited to $10,000 FROM AGI (itemize deductions)
47
Q

Unpaid medical expenses can be deducted on form ____ or form _____.

A
  • 1040 (decedent’s Fed tax filing)
  • 706 (estate tax to figure out estate tax due)
48
Q

Any executor fees may be deducted on form ____ or the form _____.

A
  • 1041 (estate tax return)
  • 706 (estate tax to figure out estate tax due)
49
Q

Definition of Section 179

A
  • immediate expense deduction that business owners can take for purchases of depreciable business equipment instead of capitalizing and depreciating the asset over a period of time.
50
Q

When do recapture rules of Section 179 apply?

A
  • When asset sold before fully appreciated
  • When business use drops below 50% for given year

CFP (9 decks)

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