unit 21 Flashcards

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1
Q

tax on income

A

progressive

rate increases and income increases

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2
Q

whats the best status to be used for someone who is single but has children

A

head of household

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3
Q

once you hit age 65

A

you get a higher standard deduction

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4
Q

earned income

A
from your job
salary
wages
tips
bonuses 

ordinary income rates

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5
Q

passive income

A

ordinary income rates
rents

can offset passive losses(DPPS)

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6
Q

portfolio income

A

investment income

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7
Q

qualifying dividends

A

they are taxed at a rate lower than ordinary income

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8
Q

non qualifying dividends taxed at

A

ordinary income

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9
Q

bond interest taxed at

A

ordinary income

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10
Q

muni bonds taxed

A

interest tax free for federal

sometimes can be for state

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11
Q

are stock dividends taxed

A

no

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12
Q

the benefit of reinvesting dividends and capital gains

A

compounding effect

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13
Q

DRIPS

A

offered from issuers to shareholders

ether will be at a discount or free or commissions or both

can usually invest additional funds

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14
Q

Drip or mutual fund reinvestment tax based

A

tax based on year of receipt. You don’t avoid. not deferred

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15
Q

net capital loses(more losses than gains). how much can be offset

A

3000 max can be deducted on annual basis

can carry forward rest each year with 3k max

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16
Q

wash sale rule time

and what you can’t buy

A

30 days after or before. 61 to be safe day period

can’t take loss if you buy stock, call, convertible bond, rights, warrents

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17
Q

IRS default

A

FIFO

18
Q

mutual funds default

A

the average cost per share

19
Q

exemption on sale of a primary residence

A

lived there in at least 2 of past 5 years

500k for married is free of any tax
250k for a single is free of any tax

20
Q

items that are considered preference items for AMT

A

accelerated depreciation
excess intangible drilling costs
tax-exempt interest on private purpose muni bonds(sports stadiums, hospitals, housing projects)
incentive stock options(in the money. that excess)
state and local taxes

21
Q

what is not AMT eligible

A

income from foreign stock

22
Q

Life insurance taxation

A

death benefit proceeds not subject to income tax

proceeds included in estate unless owned by someone other than the insured

23
Q

social security income and taxes

*

A

25k-34k you begin to phase out tax free if single

32k-44 for couple

24
Q

cost basis of gifted securites

A

donors cost basis passes onto donee

25
Q

inherited securities cost basis

A

stepped up basis

always considered long term

26
Q

trust taxation

A

if trust retains income, brackets are compressed

over 12,500 at 37%

27
Q

gross estate includes

A

cash securities realestate
insurance(if policy owned by insured)
property in revocable trusts, iras, annuities, business interest
all other assets deceased has ownership

28
Q

how are estate assets valued

A

as of date of death or valuation date six months later

29
Q

things subtracted from gross estate

A

mortages and other debts
estate administrative expenses
property passing to qualified charities
property passing to surviving spouse(if us citizen, spousal deduction unlimited)

30
Q

taxable estate percentages

A

progressive rate(start at 18% and go to 40%)

31
Q

estate tax due(time and what form)

A

9 months after the death form 706

32
Q

gift tax exclusion

A

15k annual amount without tax

30k with for married couple

33
Q

non citizen gift tax?

A

there is a gift tax

us citizen spouse has no gift tax

34
Q

gift tax due on what form

A

709

35
Q

taxes for sole

A

sole-individual taxed on schedule c of form 1040

36
Q

taxes for partnership

A

partnership- form 1065 informatin return(due march 15) parners receives schedule k-1)

37
Q

taxes for LLC

A

single member like sole propretorship

mutiple members file like partnership

38
Q

tax for S corp

A

filed on form 1120s
due on 15th of 3rd month after year end
schedule K-1 to shareholders

39
Q

tax for c corp

A

form 1120
due 15th day of 4th month after year-end

no forms to shareholders

40
Q

the corporate dividend exclusion rule

A

if c corp receives dividends from another corp- it can exclude 50% from taxable income

41
Q

alternative minimum tax added? Subtracted? whats the deal

A

excess of alternative tax over regular tax is added to the regular tax amount