Tax Topics Flashcards
What is the dependent child & Dependent Care Credit?
AGI over $43,000 and above are at 20% x eligible the expenditures for 1 child 3K limit for 2 children 6K limit
The Section 179 Deduction is the lesser of…
-Property Placed in Service (PPS)
-Taxable income (TI)
-Threshold of $1,160,000 phased out for PPS > $2,890,000
What is the relationship between recourse loan and non recourse loan and the impact on basis?
Recourse loan gets added to basis
Non Recourse Loan doesn’t get added to basis
What are appropriate tax withholdings amounts to meet safe harbor rules?
100% LF LAST YEAR’S TAX LIABILITY
90% OF THIS YEAR’S TAX LIABILITY
110% FOR PRIOR YEAR’S TAX IF AGI IS ABOVE 150K
What is the maximum discount that cannot be exceed on sales of personalty or services?
Discount cannot exceed gross profit on personalty or 20% on services
What is the amount of penalty for fraudulent tax return?
75% or 15% per month.
How much student loan interest can you deduct?
$2,500 as an above-the-line deduction
What are some of the requirements for defferal of gains under section 1031?
- Property must be like kind
-Proceeds from original property must be held by an escrow agent - Replacement property must be identified within 45 days, of sales of original property
-Closing on replacement property must be take place by earlier of 180 days from sale of original property or the due date (including extensions of the tax return for the year the original property was sold.
What is phaseout for section 279 deduction?
$2,890,000. Any amount above this must be reduced dollar for dollar.
Which items are not allowed to be added back to negative taxable income?
· Any deduction for personal exemptions.
· Capital losses in excess of capital gains.
· The section 1202 exclusion.
· Nonbusiness deductions in excess of nonbusiness income.
· Net operating loss deduction.
· The domestic production activities deduction.
What is purpose for special election in regards to capital gains?
This allows you to treat long-term capital gains and qualified gains as ordinary income which would allow you to deduct the maximum amount of interest income.
What is the maximum amount of lodging per night per person you can deduct for medical expenses?
50 dollars per person per night.
How are section 1245 recapture property result in immediate recapture of some or all of previous depreciation?
It is recognized through a sale, regardless of cash, notes either or both. Distributions, dispositions or like kind exchanges do not recapture previously deducted depreciation
What are the tax benefits of premiums paid on long term care policy?
Policy must be guaranteed renewable or non-cancelable for premiums to be deductible. Premium paid are deductible based on age. Premiums paid is included for medical expenses for expenditures exceeding 7.5% of AGI.
What is the maximum a corporation can deduct in regards to business startup costs under sec. 195?
A corporation can deduct 5k of business startup costs under sec. 195. The deduction is reduced dollar for dollar (but not below 0) for cumulative amount of starup costs exceeding $50,000. The remaining startup costs can be deducted ratably over a 15 year period, beginning with date corporation has actively begin with the operation.
