Tax

Question 1

The adoption expense credit limit for 2020 is

Answer 1

$14,300.

Question 2

An art donation to a local charity, Only materials and expenses are deductible, not __ or ___

Answer 2

artistic contribution or time.

No deduction is allowed for use of property; therefore, the pro-rata overhead would likely not be allowed.

Question 3

The best source for gathering information about the intent of recent changes in the tax law might be:

Answer 3

Congressional committee Reports

Question 4

what is the maximum Child Tax Credit Credit for 2020 per child?

Answer 4

$2,000

Question 5

The classifications of income are __,__,__

Answer 5

active, passive, portfolio. Earned income is a subset of active income. Unearned income may be either a passive or portfolio income

Question 6

What are the two times the recapture rules for Section 179 apply?

Answer 6

1. Business use of an asset drops below 50% for a given year.
2. Asset is disposed of before it would have been fully depreciated.

Question 7

Disability income is taxable to the taxpayer when

Answer 7

someone other than the taxpayer pays the premiums or provides the benefit as in the care of a company who self insures employees for disability losses

Question 8

The five dependency tests are:

Answer 8

JCSMuG

Joint Filing Test.
Citizenship Test (U.S., Canada or Mexico), and
Support Test,
Member of Household or Family Member Test,
Gross Income Test,

Question 9

Under current rules, the Section 179 deduction for expensing qualifying business property in 2020 is:

Answer 9

Section 179 deduction is $1,040,000 for 2020.

However, the amount is reduced dollar for dollar for acquisition amounts above $2,590,000 placed into service during 2020.

Question 10

Child support is deductible TF

Answer 10

False. Child support is not deductible under any circumstances when identified as child support. It is also not taxable to the recipient.

Question 11

Below the line deductions include all itemized deductions TF

Answer 11

True

Question 12

TCJA

Answer 12

tax cuts and jobs act

Question 13

Can you deduct unreimbursed employee business expenses?

Answer 13

No. Post 12/31/17, TCJA eliminated the deduction for unreimbursed employee business expenses.

Question 14

what is section 1202

Answer 14

Small Business Stock Gains Exclusion.

Allows capital gains from select small business stock to be excluded from federal tax.

Only applies to qualified small business stock acquired after Sept. 27, 2010, that is held for more than five years.

Question 15

A mid quarter convention generally applies if the total cost basis of business equipment placed in service during the last three months of the tax year exceed ___ of the total basis of all the property placed in service during the year.

Answer 15

40%

Question 16

Investment interest expense incurred to purchase the mutual fund is deductible if

Answer 16

the investor itemizes

Question 17

A self-employed person would report their income and deductions relating to his sole proprietorship on ___ of his income tax return

Answer 17

Schedule C

Question 18

LT cap gains and qualified dividends are not considered investment income unless

Answer 18

the taxpayer makes an election to have these income items taxed at ordinary rates.

Question 19

Advantages to family limited partnership

Answer 19

• retain interest
• maintain control over assets
• gift 99% to children
• gifts could be made over time to take advantage of valuation discounts and minimize gift tax impact.

Question 20

When appreciated stock is donated to charity, even if through a CRUT, the charitable deduction in the year of the donation is limited to ___ of the taxpayers AGI

Answer 20

30%

Question 21

TCJA eliminated the ability to deduct 2% miscellaneous itemized deductions, including ___

Answer 21

attorney’s fees

Question 22

TCJA eliminated the ability to deduct unreimbursed personal casualty losses, unless

Answer 22

loss is incurred in a federally declared disaster area

Question 23

When a wash sale occurs, the basis in the remaining shares is the cost basis of those shares plus ___ due to the wash sale rules

Answer 23

any loss that is disallowed

Question 24

Assets are transferred from a 401k without tax consequence to a divorced spouse if a ___ is obtained

Answer 24

QDRO

Question 25

When a taxpayer donates use-unrelated tangible personal property to a charity their deduction is limited to

Answer 25

the lesser of the cost basis or FMV of property at time of donation

Question 26

Depreciation recapture is generally taxed as ordinary income up to a maximum rate of

Answer 26

25%

Question 27

1250 gain

Answer 27

gain related to depreciation on residential property

Question 28

___ income is earnings derived from a rental property, limited partnership, or other enterprise in which a person is not actively involved.

Answer 28

passive

Question 29

compensatory damages relating to physical injury are

Answer 29

tax free

Question 30

The annual contribution limit in 2020 for the TSP will be ___. This limit also applies to 401(k), 403(b), and most 457 plans.

Answer 30

$19,500

Question 31

When you sell passive property you can deduct current year loss and passive loss carryforward TorF

Answer 31

T. The AGI limit also does not apply

Question 32

For tax liability estimated payments, If AGI>$150,000 , they need to pay ___

Answer 32

110% of the tax from previous year. If AGI under 150k, can pay 90% of current year tax liability, or 100% of past year tax liability. 25% is due each quarter

Question 33

If itemizing, the lesser of investment income or _____ can be deducted

Answer 33

investment expense

Question 34

If the client’s AMT is less than the exemption amount, they

Answer 34

do not need to pay AMT.