unit 21

Question 1

tax on income

Answer 1

progressive

rate increases and income increases

Question 2

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

Answer 2

head of household

Question 3

once you hit age 65

Answer 3

you get a higher standard deduction

Question 4

earned income

Answer 4

from your job
salary
wages
tips
bonuses 

ordinary income rates

Question 5

passive income

Answer 5

ordinary income rates
rents

can offset passive losses(DPPS)

Question 6

portfolio income

Answer 6

investment income

Question 7

qualifying dividends

Answer 7

they are taxed at a rate lower than ordinary income

Question 8

non qualifying dividends taxed at

Answer 8

ordinary income

Question 9

bond interest taxed at

Answer 9

ordinary income

Question 10

muni bonds taxed

Answer 10

interest tax free for federal

sometimes can be for state

Question 11

are stock dividends taxed

Answer 11

no

Question 12

the benefit of reinvesting dividends and capital gains

Answer 12

compounding effect

Question 13

DRIPS

Answer 13

offered from issuers to shareholders

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

can usually invest additional funds

Question 14

Drip or mutual fund reinvestment tax based

Answer 14

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

Question 15

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

Answer 15

3000 max can be deducted on annual basis

can carry forward rest each year with 3k max

Question 16

wash sale rule time

and what you can’t buy

Answer 16

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

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

Question 17

IRS default

Answer 17

FIFO

Question 18

mutual funds default

Answer 18

the average cost per share

Question 19

exemption on sale of a primary residence

Answer 19

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

Question 20

items that are considered preference items for AMT

Answer 20

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

Question 21

what is not AMT eligible

Answer 21

income from foreign stock

Question 22

Life insurance taxation

Answer 22

death benefit proceeds not subject to income tax

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

Question 23

social security income and taxes

*

Answer 23

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

32k-44 for couple

Question 24

cost basis of gifted securites

Answer 24

donors cost basis passes onto donee

Question 25

inherited securities cost basis

Answer 25

stepped up basis | always considered long term

Question 26

trust taxation

Answer 26

if trust retains income, brackets are compressed | over 12,500 at 37%

Question 27

gross estate includes

Answer 27

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

Question 28

how are estate assets valued

Answer 28

as of date of death or valuation date six months later

Question 29

things subtracted from gross estate

Answer 29

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

Question 30

taxable estate percentages

Answer 30

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

Question 31

estate tax due(time and what form)

Answer 31

9 months after the death form 706

Question 32

gift tax exclusion

Answer 32

15k annual amount without tax | 30k with for married couple

Question 33

non citizen gift tax?

Answer 33

there is a gift tax us citizen spouse has no gift tax

Question 34

gift tax due on what form

Answer 34

709

Question 35

taxes for sole

Answer 35

sole-individual taxed on schedule c of form 1040

Question 36

taxes for partnership

Answer 36

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

Question 37

taxes for LLC

Answer 37

single member like sole propretorship | mutiple members file like partnership

Question 38

tax for S corp

Answer 38

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

Question 39

tax for c corp

Answer 39

form 1120 due 15th day of 4th month after year-end no forms to shareholders

Question 40

the corporate dividend exclusion rule

Answer 40

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

Question 41

alternative minimum tax added? Subtracted? whats the deal

Answer 41

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