This is quite taxing Flashcards
what happens with the Alternative minimum tax
must pay the greater of the regular tax or the tentative minimum tax
what is the AMT credit
is limited to the amount of AMT generated from timing differences, and this credit is available in a year in which tentative tax is less than regular tax.
How long can the AMT credit be carried forward
indefinitely
how do you compute AMT
excess of the alternative minimum tax over the regular tax
American Opportunity
enrolled in first 4 years of college. $2k credit for tuition and fees and books. 2nd $2k you get a 25% credit
Lifetime learning
Available after the American Opp credit. $2k per taxpayer (not per student)
what kind of credits can result in a refund even if the TP didnt have any income tax liability
Earned income credit
what is the credit percentage of AGI for the child care credit?
35% if the AGI is under $15k and is reducted by 1% for each $2k increment that AGI is above $15k. Once AGI hits $43k the % is reducted to 20%
at what AGI does the american opp credit start to phase out?
$160k
how much is the credit for the child credit
1000 per child. reduced by $50 for every $1k over $110k salary
what are the requirements to be a qualifying child for the child credit?
under 17 and dependent
what are the requirements for the dependent care credit
under 13
what amount of qualifying expenses are allowed for the dependent care credit
$3k for one qualifying individual and $6k for more than one (limited to amount paid and wages of lowest paid spouse)
what is the work opportunity credit calc on?
on the amount of wages paid per eligible EE during the first year of employment. Max credit is $2,400 per EE
definition of a private foundation
tax exempt org that receives less than 1/3 of its annual support from its members and the general public
if boot is received, what is the gain recognized to the SH?
the lower of: realized gain or FMV of the boot received
what is the calc of gain recognized if liabilites are assumed?
Gain recognized = liabilities assumed - adj basis of property transferred
how can you be eligible to defer a gain on the contribution of appreciated property to a corp?
the SH must receive stock in exchange for the property.
immediately after incorporation, what percent of stock must the incorporator own to be a tax-free incorporation
80%
what basis does a corp have when property is donated by a SH?
the same basis that the SH had in the items + gain received by SH
is there gain or loss recognized if property is transferred soley for the exchange of stock of the corp
if immediately after the transfer the transferring TP have control over the corp (80%). if combined, the SH own more than 80%, its tax free
No gain or loss is recognized to the SH or corp upon the formation of a corp if:
- the SH contributing property own collectively at least 80% of the voting stock
- the SH contributes property not services to the corp
- the SH receives only stock in exchange
How do you compute the SH’s basis in the stock in a corp formation?
Basis of all property transferred to the corp \+Gain realized by the SH - boot received by SH -Liabilities assumed by the corp =SH basis in stock received
how long is the Holding period
the length of time the SH held the item before transferring to corp
how long can a net capital loss be carried forward or back
back 3 years and forward 5 years
if a C corp owns less than 20% of a domestic corp, what % of dividends received or accrued may be deducted?
70%.
A C corporation owning 20 percent or more but less than 80 percent of a domestic corporation may deduct 80 percent of the dividends received or accrued from the corporation. Similarly, C corporation owning 80 percent or more of a domestic corporation may deduct 100 percent of the dividends received or accrued from the corporation
How long can you carry back or forward a NOL?
back 2, forward 20
for corporations, what is the limit on the deduction for charitable contributions?
limited to 10% of taxable income
for corp, excess chartiable contributions is carried back forward..
carried forward for 5 years
the domestic production deduction may not exceed what percent of the wages allocable to domestic production income
50%
if a corp owns less than 20% (stock) of the domestic corp that paid the dividends, what percent dividend received deduction may they take
70%
What cannot be amortized for tax purposes?
stock issuance costs
how do you compute alternative minimum taxable income for corp
corp may take an exemption of $40k minus 25% of AMTI exceeding $150k
for purposes of the personal holding company tax,
taxable income is reduced by excess charitable contributions to calc personal holding company income
who is exempt from the personal holding company tax
banks, insurance companies, finance companies
who is subject to the personal holding company tax
personal holding companies
in order to be a personal holding company, a companys passive income must be __ of AGI
60% or more
what is a consent dividend used for
reduce both the accumulated earnings tax and the personal holding company tax
for purposes of the PHC tax, how do dividend distributions from earnings and profit paid within 2.5 months of year end affect PHCI
reduce PHCI
what does PHC income consist of
dividends; interest; annuities; rents; mineral, oil and gas royalties; copyright and patent royalties; produced film rents; compensation for more than 25 percent use of corporate property by shareholders; amounts received under personal services contracts; and amounts received from estates and trusts
what is the accumulated earnings tax
a penalty tax imposed on corporations that accumulates earnings and profits for the purpose of avoiding income tax for its shareholders. The accumulated earnings tax is equivalent to 20 percent of the corporation’s accumulated taxable income.
Accumulated taxable income is composed of
taxable income adjusted downward for federal income and excess profits taxes, charitable deduction in excess of the ceiling, net capital gains and losses, and taxes of foreign countries and U.S. possessions and upward for certain corporate deductions, net operating loss deduction and capital loss carryback or carryover.
The stock ownership test is satisfied if, at some time during the corporation’s tax year,
50 percent or more of the corporation’s stock was directly or indirectly owned by five or fewer individuals.
In order to have a brother-sister controlled group of corporations
five or fewer common shareholders must own in aggregate 80% or more of the stock of each corporation within the group.
A parent-subsidiary affiliated group can only exist when
one corporation owns 80% or more of the stock of at least one corporation.
The primary advantages of filing a consolidated return are that
1) losses of one affiliated member offset gains of another member;
2) intercompany dividends are excludable from taxable income; and
3) intercompany profits are deferred until realized.
“Buy-sell” agreements are excludable from a decedent’s estate provided the agreement
1) is a bona fide business agreement;
2) is not a device to transfer property to the decedents family for less than full and adequate consideration; and
3) has terms similar to those entered into by persons in arm’s length transactions.
when is the due date of the estate return
9 months after death
Certain credits may be offset against the gross estate tax to determine the net estate tax of a U.S. citizen.
These credits are the unified credit, foreign death taxes, prior transfers and gift taxes paid on pre-1977 gifts.
