Tax Flashcards
if a subchapter S corp has earnings but does not distribute them, the earnings are…
taxed to the SHs in the current year and each SHs basis in corp shares is increased by his or her proportionate undistributed share
damages for emotional distress are not ______ when awarded for nonphysical injuries such as defamation or libel
excluded; there is no 10% floor or $50k ceiling and it does not matter whether the damages are paid by an employer
how are punitive damages treated under the IRC
they are fully excludable as ordinary income to the recipient
if any portion of an alimony payment is fixed by the decree or agreement as being for the support of the payor’s children, that portion is…
not deductible by the payor, nor is it includible by the recipient
- in general though, alimony is income to the recipient and deductible by the payor
property acquired by bequest or inheritance may take as its basis the FMV on which dates
- date of decedent’s death
- 6 months from date of decedent’s death
- at the time of disposition, if disposed of within 6 months after decedent’s death
if a taxpayer receives a PI settlement that includes compensation for medical expenses, pain and suffering, lost wages and punitive damages which damages may be excluded from GI
damages for medical expenses, pain and suffering, lost wages
wagering losses are allowed only the the extent of the…
taxable year’s reported gains from wagering transactions
how are child support payments treated under the IRC
as an exclusion from income for the recipient and not deductible by the payor
if a cash basis taxpayer receives a check for services rendered, in what year must the taxpayer recognize the income
the year the taxpayer receives the check
minimum holding period to qualify as LTCG treatment
more than 12 months
if a professional agrees to be compensated for his services with property instead of cash, does the professional need to report the value of property on his tax return
yes - because the property served as compensation for services rendered, and therefore is income
to what extent are an individual’s medical expenses deductible if the expenses were not compensated for by insurance or otherwise
to the extent they exceed 10% of the taxpayer’s adjusted GI, and insurance premiums can be counted as part of the expense
for capital gains, what is a taxpayer’s basis for property given to the taxpayer as a gift during the donor’s life
the basis the property had in the hands of the donor
a corp is taxed on its earnings, and the earnings are taxed again as…
income of the SHs if distributed to them
how is a transfer of property between former spouses treated upon divorce
as a nontaxable exchange; the transferor recognizes no gain or loss and the transferee takes the transferred basis
