Taxes

Question 1

Importance of AGI

Answer 1

• 7.5% Floor on medical Expenses
• 10% Floor on casualty and theft loss
• IRA phaseouts
• Phaseouts on Passive Activity Losses
• ”” Us Savings Bonds
• 2% Tier II misc itemized deductions
• limits on charitable gifts

Question 2

Above the line deductions

Answer 2

Penalty on early withdrawal (CD)
Alimony
IRA deductions
Job Related Moving Expenses (50+ miles)
12 of SE tax
S/E Health Ins Deduction
Qualified Student Loan Int
Discrimination Lawsuit expenses
Jury Duty fees paid to employer

Question 3

Roth and Traditional IRA difference

Answer 3

T-IRA- deductibility vs Eligibility
Have to be under 70.5 to contribute,
Being an active participant
Roth-Eligibility, you can be over 70.5

Question 4

Personal Exemption

Answer 4

$3,800

Question 5

Accounting Methods: Cash Basis

Answer 5

Constructive Receipt: no restriction

Taxed on income received, and deductions actually paid

Question 6

Accounting Methods: Accrual

Answer 6

Inventory: “all events test” you will be taxed when $$ is fixed, and not dependent on another event

Hybrid: used both-Accrual for inventory and cash for everything else

Question 7

Long Term Contract

Answer 7

Percentage of completion method

unique, not completed

Question 8

Inventory valuation

Answer 8

FIFO, Cost of Goods Sold, Lower during inflation, higher profits
COGS Higher, during deflation: low profits
LIFO
Specific ID

Question 9

PSC, Personal Service Corporations

Answer 9

AAA Help

Accounting, Actuarial, and Architecture, Health, Engineering, Law, Performing Arts

Question 10

Cost Recovery: Personalty

Answer 10

MACRS Table (1/2) yr convention in first year
Straight Line Option
Cars Copiers and Computers 5 yrs
All other Personalty 7yrs

Question 11

Cost Recovery: Realty

Answer 11

27.5 for residential,

39 years for commercial