Tax - Miscellaneous Flashcards
Estimated taxes
Individuals, estates and trust:
– Must pay estimated taxes if expect to owe more than $1000 in tax
Exempt organization: unrelated business income
Not taxed on unrelated business income of less than $1000.
Imposition of tax does not affect exempt status
Includes:
– Rent from debt-financed building
Timing of charges for deduction calculation
Credit card charges considered paid when chart.
So if expense occurred in prior-year in charge this year by card, and counts as this year
Goodwill from purchase of business
= dollars paid – total FMV of assets
Netting capital gains and losses
– First net STCG and STCL
– Then net LTCG and LTCL
– Then net ST and LT
- If no G to offset L, carry L back 3 years, forward 5 years
– If G offsets some L, then L can only offset up to G’s amount
STCL cannot offset ordinary income!!!
Only $3000 of LTCL can offset.
No CL can offset for corporations.
Cash basis taxpayer: prepayment
Pre-payment of expenses for over one year is not cash basis.
– Deduct first year in current and amortize balance over appropriate years
Amortize organizational costs
If under $50,000:
$5000 deductible
Remainder amortize over 180 months
If over $50,000:
$5000 reduced by excess
Remainder amortize over 180 months
IRC Section 267
Rule for related party sales unpaid at end of year for cash basis seller to accrual basis buyer:
– Fire can’t deduct expenses until seller reports income
Sales of shares in stock of corporation
Shares of stock of corporation or capital assets
Shareholders selling stock gets capital gains and losses
Gain/loss = sales proceeds - tax basis
100% redemption of shareholder stock qualifies as sale or exchange instead of distribution of E&P taxed as dividend
Sales of shares in stock of corporation
Shares of stock of corporation or capital assets
Shareholders selling stock gets capital gains and losses
Gain/loss = sales proceeds - tax basis
100% redemption of shareholder stock qualifies as sale or exchange instead of distribution of E&P taxed as dividend
Worthless asset
Eg: stock where a company declare bankruptcy and with the cleared insolvent
Asset is deemed worthless all last day of the year, not date of incident.
this means holding period may be more than one year, making the asset have long-term loss, not short-term.