Tax Planning

Question 1

Deductible Rental Losses

Question 2

Underpayment Penalty

Answer 2

To avoid penalties, pay lessor of:
* 90% of current year liability
* 100% of prior year liability (110% fi AGI >150k)

Question 3

Fraud Penalty

Answer 3

75% of the portion of tax underpayment attributable to fraud

Question 4

Frivolous Return

Answer 4

omits necessary information, shows an incorrect tax, or an attempt to impede tax collection
= $5,000 penalty

Question 5

Negligence

Answer 5

“accuracy-related” penalty
= 20% of underpayment attributed to negligence

Question 6

Deductions from Gross Income

Answer 6

• IRA Contributions
• Student Loan Interest
• Keogh or SEP
• Self-employment tax
• certain alimony paid (before 2018)
• 100% self-employment insurance

Question 7

Child Care Credit

Answer 7

limited to $3,000 for one dependent or $6,000 for two
then multiply by 20%

Question 8

Self Employment Tax

Answer 8

multiply self employment income by .1413

Question 9

S Corp

Answer 9

• one class of stock (common)
• up to 100 shareholders
• losses can be deducted up to basis

Question 10

Deductible Casulty Losses

Answer 10

lesser of basis of FMV
less insurance coverage
less floor ($100)
less 10% of AGI

Question 11

FICA taxes

Answer 11

• (6.2% + 1.45%) up to $160,200
• 1.45% above $160,200

Both employer and employee pay

Question 12

Self employment tax

Answer 12

Includes:
- net schedule C income
- general partnership income (k-1)
- part time earnings 1099
- board of directors fees