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TCP1 Flashcards

1
Q

When is ordinary income recognized according to NPO stock?

A

When it has ascertainable value which is when it is selling on an establish exchange, which increases the value of the stock.

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2
Q

When does employee recognize capital g/l on stock? How is the gain calculated?

A

When sold. Gain is the sell price less the basis which is the FMV of stock on vesting date.

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3
Q

What type of stock is receiving right to purchase and not actual stock?

A

ISO or ESPP

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4
Q

Kiddie tax subject to parents rate is unearned income over what amount?

A

$2,500

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5
Q

Income types - what are the 3?

A

Active, passive, portfolio

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6
Q

PALs offset what type of income and when can you use them?

A

Offset passive income not portfolio or active. Are suspended and carry forward until passive income in future years from that activity.

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7
Q

What’s the phase out for real estate professional??

A

Can take a loss up to $25k but phase out starts at $100k AGI to $150k at 50cents per $1. Loss will get limited.

Ex: $120k AGI before $40k loss is $20k over or $10k limited from the $25k loss allowed. $15k loss allowed only.

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8
Q

What are future gifts of interest?

A

Interest in a trust where one can’t take distributions annually or until a certain age. The gift exemption is not used against this.

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9
Q

What types of gifts are excluded from gift tax?

A

Medical directly, tuition directly, spouse always.

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10
Q

What is considered present interest gift?

A

Gifts to life estate and these quality for annual gift exclusion.

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11
Q

A donated car deduction is considered by taking the value of what?

A

The selling price of the car by the org.

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12
Q

Can you use spouse use earned income for your IRA contribution?

A

Yes, but up to the limit of annual contributions.

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13
Q

What loan is based on financial need?

A

Subsided stafford loan - this is where the gov pays interest while in school

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14
Q

ROI is calculated how

A

(Investment less cost of inv)/ cost of inv

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15
Q

ATRR is calculated how

A

ROI x (1- tax rate)

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16
Q

C Corp loss gets carried back how many years and how many years forward ?

A

3 years back
Forever forward

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17
Q

NOL can be used after 12/31/2017

A

Yes but only up to 80% of taxable income current year

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18
Q

The basis of the property to corporation is ….

A

The greater of 1) adjusted NBV of s/h plus any gain recognized by the s/h or 2) debt assumed by the Corp

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19
Q

Is there a gain or loss to corporation issuing stock in exchange for property?

A

No

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20
Q

Basis of the property to the corporation is the greater of …

A

1) adjusted NBV of shareholder plus any gain recognized by the s/h or
2) debt assumed by the Corp

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21
Q

Distribution from C Corp to the extent of what is considered dividends?

A

Extent of current or accumulated earnings and profits

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22
Q

Distributions in excess of current and accumulated earnings and profits is considered what?

A

Nontaxable return of capital to the extent of s/h basis

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23
Q

Distribution from C Corp that is in excess of basis and current or accumulated earnings and profits is considered what?

A

Capital gain

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24
Q

Members of what group may file consolidated tax returns?

A

Affiliated group

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25
Q

What is an advantage of a consolidated tax return?

A

Offsetting gain/loss amount with group members as id they were one single taxpayer

26
Q

What are the rules to file as consolidated group?

A

1) must have consent
2) must have been member of an affiliated group at some time
3) common parent owns 80% or more of voting power of outstanding stock and 80% or more of the value of all outstanding stock of each Corp

27
Q

Are interco dividends eliminated?

A

Yes 100% of intercompany dividends paid from the sub/parent to sub/parent are eliminated

28
Q

What’s a disadvantage of consolidated returns?

A

Mandatory compliance with complex regulations

29
Q

Can consolidated returns be elected annually?

A

Yes election is made annually.

30
Q

Subpart F income is taxed immediately if it’s what type of income?

A

Passive or related party active income

31
Q

What increases corporate foreign derived intangible income?

A

Sales to non-US persons of property for use outside of the US

32
Q

What is a permanent establishment?

A

When a US Corp has a place of business in a foreign country generating revenues

33
Q

Foreign branch vs foreign subsidiary. Which is a separate entity?

A

Foreign sub is separate entity

34
Q

What is GILTI inclusion ?

A

US s/h share of CFC’s net income less excess of either 1) 10% of the CFC aggregate adjusted basis in the depreciated tangible property used in its T or B, over 2) the CFC net interest expense.

35
Q

BEAT rules apply to what type of corporations?

A

Large ones with $500M gross receipts and large deductions related to foreign affiliates.

36
Q

Corporate capital losses are carried back and forward how much?

A

Back 3 years, forward indefinitely

37
Q

Pre 2018 NOL can be used how much vs post 2017 NOL ?

A

Pre 2018 can be used 100%
Post 2017 can be used only 80%
Of taxable income

38
Q

How to calculate tax estimates for CY if Corp had no tax liability in PY?

A

Cannot rely on PY if $0. Need to use CY tax

39
Q

Do owners of LLC, GP, LP have personal liability for the obligations of the business beyond their investment?

A

No for LLC
For LP, atleast one GP has limited personal liability. For GP all members have unlimited personal liability.

40
Q

Which entity has the most flexibility in choosing accounting period?

A

C Corp

41
Q

Does the C Corp one owner have to be a US citizen?

A

No

42
Q

What entity can be formed verbally?

A

GP

43
Q

What entity shareholders can transfer their ownership without consent?

A

C Corp

44
Q

What entity is most advantageous for tax purposes?

A

S Corp

45
Q

What types of entities recognize gain on distribution of appreciated property?

A

C or S corp

46
Q

What is used for the shareholder basis in the property distributed by an S Corp?

A

FMV

47
Q

S corp basis in the property is calculated how?

A

The same as the contributing shareholder’s basis

48
Q

Excess of basis of property over liability is considered what?

A

Recognized gain

49
Q

How is loss limitation on Sec 382 stock triggered during ownership change?

A

When one or more 5% shareholders increase their ownership by more than 50%

50
Q

How are dividends treated according to E&P?

A

Dividend payout is first with current E&P then accumulated if any.

51
Q

What is considered non effective tax planning in regards to accelerating or decelerating deductions or income ?

A

A company accelerates deductions when tax rates are increasing from one year to the next. A higher tax rate in the future May outweigh the discount factor.

52
Q

Are Sec 1244 losses ordinary or capital?

A

Ordinary, limited to $50k per taxpayer

53
Q

When contributing to a Corp, the corp’s basis in the property is calculated how?

A

The basis of the shareholder who contributed the property. Computed separately from any debt that it assumes related to the building.

54
Q

How to calculate non taxable distribution out of an S Corp?

A

Non taxable to the extent of AAA then multiply by ownership, limited to basis is non taxable portion.

55
Q

If a domestic Corp owns 100% of a foreign Corp that operates outside of the US, the foreign co sub part F income will be treated how?

A

Treated as deemed dividend subject to immediate recognition by the domestic co

56
Q

A foreign co is considered a CFC when?

A

If more than 50% if its stock is owned by a US shareholder on any day of the year

57
Q

Perks for a foreign subsidiary?

A

Income earned is generally not included in income and eligible for dividends received deduction until the earnings are paid as a dividend to the US shareholder

58
Q

A partner’s tax basis in property received in a liquidating distribution from a partnership is equal to what?

A

The partner’s remaining basis in the partnership interest after cash distributions.

59
Q

A shareholder’s tax basis in property received in a liquidating distribution from an S Corp is equal to what?

A

The FMV at the date of distribution.

60
Q

Loss on worthless sec 1244 stock can be used by who?

A

Only original owners

TCP (3 decks)

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