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CPA Multiple Units Testing > Units 1-5 10-31-19 review > Flashcards

Units 1-5 10-31-19 review Flashcards

1
Q

In year 4 If a mother sold 50shares of stock to her son for $42K that she purchase 8 years ago for $50K. And the son sold the in year 6 for $60K. What is the son recognize g/l

A

Mom can not recognize loss due to related party. The son may use the mother basis of $50K since higher than is his basis.
$60-50 = 10 gain.

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2
Q

In year 4 If a mother sold 50shares of stock to her sond for $42K that she purchase 8 years ago for $50K. And the son sold the in year 6 for $40K. What is the son recognize g/l

A

Mom can was recognize loss due to related party. The son may use his basis since he sold lower than his basis and the mother basis.
$40-42 = 2 loss.

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3
Q

In year 5, a mom gifted her son stock that she purchase 8 years ago for $8.3K. the value at time of gift was $13.4K. the son sold in year 7 for $15.8K. what is the son g/l recognized.

A

The general rule for gifted stock is the basis is the donor’s basis. $8.3K.
15.8-8.3= 7.5 gain.

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4
Q

An single taxpayer with an AGI of $90K donated land to his church the he purchased 15 years ago for $14K. land has a FMV of $25K. what is the maxiamum he can deduct

A

single taxpayer may deduct up to 30% of AGI for donated property at FMV. 90*30%= $27. therefore he can deduct the full $25K.

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5
Q

Paula has sale under installment basis of Y2 Rev $40- COS 30 = 10. 10/40= 25% gp. Y3 Rev 50-COS 25 = 25. 25/50= 50% gp. In Y2 collected $30K. Collected Y 3. $10 on Yr 2 rev and $30K on Y3 rev. How much deferred gp end of y3

A 
total rev y2 40
collect:
Y2               30
Y3              10
Remain bal   0
total rev y3   50
collected 
Y3                30
Rem bal      20
20*50% gp = 10
10deferred.
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6
Q

Linda is an employee at jRH Corp. which of the following should be include in linda gross income:

Corp paid premiun of $50K life insurance
Linda met sales goals an was award $2K trip
$1k tuition paid
$1,2K annual parking pass

A

Corp paid premiun of $50K life insurance. No fringe
Linda met sales goals an was award $2K trip; yes income
$1k tuition paid : no exp via person development
$1,2K annual parking pass: no fringe.

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7
Q

Bill purchase business equip for $35K and made $1K in improvements. After deducting $5K in depr, Bill gave equip to Reds. At the time of gift , equip had a fmv of $32K. ingnoring tax, what is Reds basis

A

Gifted assets takes the basis the donors:
35+1-5 = $31K.
If red sold asset: the greater of the donor basis, btween donor bais and lower of fmv at the date of gift or less than fmv at date of gift.

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8
Q

If a taxpayer that has netloss from rental business that he does not particapte 9 and a rental income of 7 particapte. how wold the loss be handle

A

when non participate the loss is to the extent of othe rental activities gains. 9 change to 7 - 7 gain = 0

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9
Q

If and indv exchange share of stock for other shares of stock in copr that is reorganizing. what is g/l

A

Zero. due to reorganization.

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10
Q

In a C corp distribution can a capital loss happen

A

No. div income comes from Ordinary income, nontaxaable return of capital and capital gains.

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11
Q

is direct bad debt expense write for tax purposes a temporary difference of permanent difference

A

temporary difference.

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12
Q

What is the AMTI Income limit for MFJ and if you go over the limit, how much is exemption reduced by

A

the AMTI inocme limit is $1,020,000. the exemption is $111,700. Anything over the income limit is reduced by 25% of expemptions. For example couple calc AMTI at $1,520,000. the over by $500,000*25% = 125,000. there exemption is zero.

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13
Q

If decedent dies on March 5, y5 and son inherit stock with a fmv 3400 at time of death. Son does not used the AVD when the FMv was 8000. son sales the stock for $4500. What is son;s g/l on stock

A

Sale 4500- 3400 fmv at decedent death = 1100 gain.

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14
Q

What is the procedure when federal law prohibit states from collect taxes on income

A

when orders are taken within a state. corp is outside of state and orders are shipped out of state.

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15
Q

Are Goodwill, covenants, franchise, trademarks, trade names amortized

A

Yes 15yr period or 180 months

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16
Q

If a person withdraws from a IRA and not 59 1/2 yrs old and used is to pay medical bill is the 10% imposed

A

Yes. 10% not imposed on medical cost for surgeery,

tuition and books for education, and first to home buyers.

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17
Q

If a business has avg gross receipts of $15M for three year period. Pays 9250 in repairs and impr on building it owns wit and adjusted bsis of $700K. Do there cost qualify as routine maint. under safe harbour rules are the mait and repair deductible

A

No. $10M avg three periods qual. as smail business for safe harbour.

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18
Q

What is DNI when long term gains are allocable to corpus

A

it is income+ tax interses + non tax int+ dividends - adm. exp - charitable deduction.

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19
Q

what is the requirement for a foreign person to be considered a not US redsident

A

must be pressetn for at least 31 days and at least 183 days for a three year period.

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20
Q

If I see a problem in an income test for the IRS that say a portion of salary is unreasonalbe. How much is disallowed

A

partial disallowed . key owrds are portion and partial.

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21
Q

Which of the following are credits for deductions

state income taxes
DRD
foriegn income taxes
accelerated depr

A

Credit: foriegn income taxes. The rest reduce taxable income.

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22
Q

`What is the AGI test to have 110% of prior year liab pard

A

AGI in excess of $150K.

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23
Q

Are transferered property and services for corp taxable

A

No on propoerty

Yes on services

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24
Q

When detremining 10% charitable contribuition limit for cC copr, do yo add back DRD

A

yes.

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25
Q

What are some of the expenses that you don’t included Sch C

A

Owners withdrawal from basis, est payroll taxes for owner is adj for AGI; businese meals only half, entertainment( not deductible); Owner health insurance )( deducted from AGI); bad debt exp allow ( only direct write off), State income tax, (sched A)

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26
Q

What are the difference between 1231’s 1245 and 1250

A

1245 personal asset or property used in business

1250 real property

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27
Q

How do you recapture 1250

A

Section 1231 sold real personal property at a gain with accum depr excess of s/l

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28
Q

If a person property that was borrowed $45K and basis of $20K was foreclosed and sold by bank at $35K what was gain of sale for person who was foreclosed

A

It the difference between out balance 45K- 20basis = $25K gain.

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29
Q

A MFJ couple with AGI of $111K . the husband has a retirement plan at work and wants to get an IRA. The wife does not have a retirement and wants an IRA. How much can the contribute

A

The IRA AGI reduction fall between $103K and $123K.
Wife can get the max $6K, Since the husband has plan at work, he must do calc. 123-103 = 20K limit.
MFJ couple AGI $111K ( 111-103 = 8) 8/20 = 40% reduction to 6K . $6K*40% = $2.4K reduction. 6000-2400 = 3600 husband can contribute to IRA. Husband 3600 and wife 6000= 9600

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30
Q

Shareholder redemption for dividend income is

A

the redemption is the proportion of the shareholders investment. sort of like their interest in company.

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31
Q

when does a c corp detail his accounting method for tax purposes

A

Is when they complete tax return and indicate on the form.

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32
Q

for multistate corp approach are nonbusiness allocation and business corp appropriation for business income required

A

Yes

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33
Q

for a nonqualified stock option purch 100 shares at $10 per share.. time received at $5 per share. exercise sept yr 1 $19 and sold 12.1 y2 at $30 per share
what is yr 2 recognize

A

For non qualified at portion tax at the time of option for first tax. $5100 = 500 yr 1 @ ordinary income and 100$10 = 1000. for year 2 the rest taxed at capital gain. $30*100= $3000 - 1500 = 1500 capital gain.

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34
Q

Read all questions thoroughly and read through all answers.

A

Read all questions thoroughly and read through all answers.

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35
Q

what would cease without notice in a principal and agent contract

A

If principale has received a discharge in a bankruptcy under the luidation provision no notice require.

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36
Q

If a retailer and supplier have a contract that would sell retailer 300 flash drives for $2 per flash drive. The retailer tells the supplier that she made a mistake, it shoud have been 200 flash drives. The Supplier tells the retailer that it is fine has not sent out the order. But supplier finds out the order went out. Can the supplier recover his damages.n

A

No. the first contract was under statue of fraud over $500 for good needs to be in writing unless unenforceble. Then contract went to under $500 with modification. However, supplier made unilateral mistake when he said the order did not go out and it did. Retailer did not know. supplier can not recoup and liab.

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37
Q

Can parole of evidence be used in court with previous oral communications

A

NO. no prior of contemporous oral statements can be used.

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38
Q

What is principal obligation to agent

A
  1. maintain pertinent records on payment, account to agent and pay agent.
  2. reimburse and indemnify agent for expenses.
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39
Q

What conditions that are affecting performance may validly be present in contract

A

Conditions precedent, Conditions susequent, and condition concurrent.

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40
Q

What is the difference between novation and substitute contract

A

novation is the agreement is unchanged but one the original parties have been released and a new part is substitute into their place.
substitute contract, the original parties are both released from the original agreement but both bound to a new agreement.

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41
Q

If principal tell broker to go find and buy properties for him, the broker is authorized to enter into contract but instructed not to give his name.

A

The is a actural authority. principle communicated with agent and did not want name discolsed.

In apparent authorized principal can not be undisclosed.

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42
Q

Is consideration needed to support a contract with monetary value and flow to the promisee

A

No. consideration is something of legal vaule and not monetary value. It is to the detriment to the promisee or benefit the promisor. If is suffucient to promise something to the promisor

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43
Q

If a retailer and buyer first make a transaction orally and it is above $500 and then retailer lets buyer know in writing that it can not fill the over $500 or but give buyer $200 order. the buyer needs the $500 order the retailer delivers the $200, Is the retailer able to collect

A

Yes. When buyer sent letter explaning her mistate made the transaction compliant under statue of frauds when the buyer put it in writing.

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44
Q

If one party keeps and offer open for specific time period can it be revoked before that time

A

No. although normally you can revoked before acceptance. However, there are three exceptance: 1. when consideration is paid to keep offer open, 2. a substantial start on a unilateral contract and 3. a merchant’s firm offer under UCC

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45
Q

If a merchant has security interest in an original computer and the customer wants to finance a new computer. how long does the Merchant have to get security interest in the new computer

A

20 days.

If customer move computer to a new state. 4 months.

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46
Q

Is a implied contract for life without something in writing enforceable under statue of fruds

A

No.

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47
Q 
QBI 8794:  What is QBI deductions for:
Single status
TaxabIe Income: $183,200
Net capital Gain: 0
QBI: $80,000
W-2 wages: $20,000
A

QBI deduction:
tax income 183,200
less limited tax income Single -160,700
MFJ: $321400-421,400
Single 160,700-210,700
= 22,500
Divdived $50K phase out /50,000
= phase out 45%

QBI 80,000
*20% qbi 20%
16,000

W2- limit 20,000
*50% *50%
10,000

net qbi 16,000
less net w 2 10,000
complete phase out 6.000
complete phase out 6000
*45% phase out 45%
applicable phase out 2700

net qbi 16000
less applicable phase out 2700
= qbi deduction 13,300

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48
Q

Do you include depreciable or real and personal 1231 losses in 1245 or 1250 or do you add 1231 as ordinary income

A

Do not inclulde 1231 in 1245 or 1250 recapture. Do put 1231 losses as ordinary income.

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49
Q

If Ron contribute basis of $20K on land + liab 30K for 40%, David 15K basis and 10K cash for 40% and Sue conrtributed services $20 for 20%. What is each basis

A

Ron and Dave met the 80% test. non taxable.
Ron $20- 30 liab = 10 gain. basis is zero can go below basis with the 10K net on liab. but can be capital gain fo Ron = 30 ( greater of liab and basis)
Dave = $25K
Sue= $20K

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50
Q

By doctor orders a man had to install a water filter in that cost $7000, it increases his utility bill by 700 and the appraisal cost to find if his house increased cost $350. His house increased by $1000. What is his qualified medical deduction by 10% agi

A

7000 water filter - less 1000 home improve + 700 increase utility bill = $6,700

Do not include $350 appraisal costs.

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51
Q

Is foreign derived intangible income part of the foreign credit limitation

A

No.

Credit limtation includes:
Passive category income
General category income
Foreign branch income

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52
Q

What is built in gains on Scorp election

A

The difference between Adjusted basis and FMV and t of election

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53
Q

What is a exclusion from award income for recipient

A

If recipient did not enter the contest and not action on his part
The award is paid to a non profit or goverment agency.

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54
Q

can a contract for life be considered in statue of fraud

A

No. Life can not be determine

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55
Q

How are corp liquidating assets to shareholders handled

A

FMV - basis = capital gain

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56
Q

What are the requirements of a PHC

A
  1. more than 50% of the stock be owned by 5 or fewer individual.
  2. at least 60% of the adjusted ordinary gross income must consist of certain investment income ( interest, dividends, etc.
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57
Q

If a corp is in incorp in state A and doing business in State b what is the state requirment in state b

A

Maintain and office in statement by as a foreign corp and have certificate to conduct intra state business

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58
Q

If corp declares div on prefrred stock are pf holders considered an unsecured credit

A

Yes. PF do not vote more like creditor than investor.

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59
Q

Under revised model business corp, a dissenting stockholder has the right to get appraisal of stock for mergers and short-form consolidation

A

Yes. short-form consolidation happens when a paretn 90% and wants to consolidae and minority want to review appraisal.

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60
Q

If a corp goes outside of scope of corp( ultra vires) can stockholders sure to recover damages under derivitive law suit

A

Yes.

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61
Q

A stockholder can dissent if corp amend the article of incorp and material effect stockholder
and if there is no vote for a aquisions

A

Yes.

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62
Q

Can a stockholder see corp record on demand

A

No. 5 days wrtten notice is required.

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63
Q

Promoter who are in charge of setting up corp are liab until Corp assume the preincorp cntract by novation ( where new party is substiture for old party in the contract) and all parties must agree

A

yess

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64
Q

How does stock dividends increase shareholders stock

A

stock dividends is a corp’s ratable distribution of addition stock to its stockholders.

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65
Q

Are Property, liquidating and cash dividends call distribution and stcok dividents not.

A

Correct. dividends paid in stock are not dividends.

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66
Q

If a corp borrows money form its stockholders without getting security interest considered piercing the corp viel

A

No

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67
Q

Is business judgement the principle doctrine that protects BOR form personal liab acted in good faith

A

Yes.

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68
Q

Can a corp voluntarily dissolved and terminate only by filing a dissolution document with the state

A

Yes. others do not need to file for dissolution.

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69
Q

Are pre-emptive rights the rights of orignal shares the rights to control over new shareholders

A

Yes.

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70
Q

If a partner sales is interest in 1/3rd for $154K. what is partner’s ordinary income when A/R market value was $420K and cash was $102K. AP $60K and partners capital interest was $14K nbv and fmv $154.

A

Rule: is interest from partner sale is a capital asset getting a captial gain $154-14 = $140. However, unrealized A/R and appreciates inventory and is sold at FMV divided partners % to get ordinary income: A/R sale $522* 1/3 = $174- 14 capital from partner- 20 liab portion = $140

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71
Q

How do you recognize C Corp loss in current , carried back or carryied forward

A

Rule: C Corp loss are carried back 3 years and carried forward 5 years when they expire. losses can not be recognized as ordinary income.

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72
Q

Under Uniform capitalization rules is quality control and selling considered a code 263 amortized exp.

A

Quality control is considered but selling exp is not.

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73
Q

When will a foriegn person not be treated as a US residents

A

If they are not present in the US for a least 31 days during the current year and 183 days over a 3 year period and do not hold a permanent visa.

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74
Q

If a taxpayer is taken as a dependent of another taxpayer can dependent taxpayer deduct student loan interest. and is the MFJ phase out $120K

A

No dependent taxpayer can not take student loan deduction. and phaseout is $15OK

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75
Q

A partner has 50% interest in a partnership. His basis was $5000. Partnership made no distribution during the year. YE earning were $20000. tax exempt 8000, and portfolio income was 4000. what was partners tax basis

A

Rule: increase/decrease on income: 5000+ 50%( 20000+8000+4000) = 21,000 tax basis

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76
Q

If partership adds a new partner with land of $120 fmv and basis of $80. Partnership sales land for $141. what is built in gain

A

Rule: kwhen sold give new partner back orginal land fmv 120 - 80 basis = 40. Then built in appreciatiion of land after sale 141 - 120 partner fmv = 21 *1/3 = 7
built in gain = 40 + 7 = 47

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77
Q

If partners share of loss is $65K. he had beg basis of 60 , received 20 distrib and cap gain of 15 what is partner loss

A

Rule: loss can not go below basis:

60+15-20 = 55 . loss is 55

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78
Q

If taxpayer trade real trade land with cost of 35-dep 18 = 17 basis for land with fmv 17.5 and cash of 2.5. what is real gain recognized gain and tax basis:

A

Rule: lower of boot and realize gain= 2.5

1

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79
Q

Is AMT credit carried indefinetly against regular tax or amt tax

A

regular tax.

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80
Q

What is the priority: a creditor excutied a promissary and had collateral on loan

A

yes. Attachment of the security interest took placed when the loan was made and creditor executed security agreement.

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81
Q

betty adjusted basis in partnership of $45. received a from partnership non liquid of land with basis of 15 and fmv of 30 plus cash of 35. what is new basis

A

Normally when liquidating assets to partner, partner new basis is basis from partner 15. However, when you deducted betty basis 45 - 35 cash = 10. new basis can not be lower than deduction. so it is 10.

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82
Q

Is withdrawal from Ira considered ordinary income

A

Yes.

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83
Q

What is maximum under payment for corp that they are not penalized

A

the tax is less than $500 or 100% of the return for that year.

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84
Q

If a c corp has gross income of 900K before div. and deduction of $1,100 excluding DRD. div are 100K and 2% pf stock. what is net op loss

A

The DRD rule is 0-20% = 50%
21%- 80% = 65%
81% -100% = 100%

Div is separately stated so it is before gross income

DRD is deducted after op deductions and before NOL (I)

Gross income           900
\+Div                            100
total income             1000
-Deduction              (1100)
  net loss  
before drd deduct      (100
less drd 2% = 50%       (50)
NOL                              (150)
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85
Q

M2: if a new partner aquires 50% of partnership with adujusted basis of 7000 and fMV 9000 that is subject to a liab of 3000 what is partners basis

A

Rule: partner basis would be incoming basis + any gain on contributin asset (built in gain) - % portion of debt.

7000- (3000*50%) 1500= 5500 basis.

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86
Q

Are unrealized A/R and appreciated inventory hot assets

A

Yes

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87
Q

If partner sales his interest in partnership. for $30,000 cash and and relief of liab $25,000 Partner basis is $4000 ( 15000 capital and 25000 liab) what is partner gain or loss on sale

A

Partner would recognize g/l on cash and relief of debt - basis. 30+25 = 55-40= 15 capital gain.

If there were hot assets, would recognized the appreciation inv. or inrelaize a/r as ordinary income.

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88
Q

Is the IRS able to make transfer pricing on the following:
US based taxpayer sells tangible property to an affiliate that is not subject to US income tax.
US taxpay enter into loan aggrement with an affilliate that is not subject to income tax
US tax shares cost with an affiliate not subject to US income tax.

A

Yes. to all as long a not subject to income tax, Irs can transfer pricing.

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89
Q

What is the flow of increase and decrease basis for partnershi

A 
Start with beg basis
\+/-net inocme (loss)
\+ interest/divindendincome ( bith regular and tax exempt)
\+/- capital gain/loss
\+ increase debt
-reduction debt
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90
Q

When time does the holding period start for a partner in exhange for contributed of assets began

A

whne the partners holding period began for the captial assets.

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91
Q

If a LLC with two members elect to change to a Corp and one members leaves what is the status of the entity

A

it is a Corp.

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92
Q

Are dividends paid by a foreign corp to a 10% or more US corp eligible for DRD

A

Yes.

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93
Q

If an 100% individual SCorp holder has $25K basis $1K ordinary income and $3K captial gain loss receives a $30 cash disbution what is taxable income

A

Rule: taxpay is taxed on anything over cash distrubution from basis. capital loss for corps can not be recognized to due lack of basis.

25+1 = 26 basis - 30 cash disbutio = 4 taxable

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94
Q

Are captial distribution consider non taxable

A

yes.

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95
Q

If shareholders from Scopr that have 51shares and 49shares, respectively add 200 shres more. They will maintain the preference with

A

Pre-emptive rights

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96
Q

For a CPA liab for service rendered can he guarantee his work

A

no.

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97
Q

Under Circu 230 is email an requirement for written advice

A

no.

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98
Q

Guarantee payment to partner from partnership would it include monthly salarly or other payments that is not calculated with respect to partnership income and 25% of profits

A

Yes with monthly salary to partner. no with 25% interest in partnership profits.

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99
Q

If a parent receives $10K in non tax SSI and $2 div can they be a dependent to child if chid paid more than half support

A

Yes.

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100
Q

Is basis of property acquired in death of decendent always date of dealth and if asset acquired by gift and the FMV on the date of gift is lower than donor dasis, will reciept be able determine value when disposed

A

No. to fmv and date of death could use AVD/

Yes to asset determine at dale asset disposed.

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101
Q

If an epenses owed to a shareholder of over 50% and cash basis. Corp an accrual basis paid half to shareholder. can copr accural all

A

No. If shareholder is 50% or more a cash basis corp can only recognized amount paid.

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102
Q

In like exchange with I giving NBV 17 and receiving 20. what is my basis

A 
Rule: Basis = nbv giving + (differen in lower of gain recognized or boot)
20 getting-
17 giving
3 gain
boot 0

17+0 boot = 17 basis

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103
Q

Wash sale rules
Shares Price
1/1 Pur 500 $25
5/12 Sale 500 $23
5/28 Purch 250 $22
10/15 Sale 100 $18

A

Shares Price
1/1 Pur 500 $25
5/12 Sale 500 $23
5/28 Purch 250 $22
10/15 Sale 100 $18

The 250 that purch and sold on 5/12 are wash sales
25023 sold= 5750
25025 cost /pur 6250
loss (500) @ $2 loss
10/18
sold 100*18 1800
100 cost (5/28 pur 22+2 loss) *24 = 2400
Loss 600

total loss 1100

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104
Q

In S Corp must all shareholders give written consent

A

Yes.

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105
Q

If a private foundation has more than 60% public suppprt will it terminate as a exempt organization

A

Yes.

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106
Q

What if a person elects avd but sales stock before avd fmv determine

A

they would get their g/l by taking date stock sold date stock given fmv - fmv on avd.

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107
Q

when person is giving up basis in land and assuming liab of other party do they use both to determine new basis for them

A

Yes. give 17 = 2 assum liab = 19
Get 22. 3= realize. zero recognized due to no basis.
new basis 19 + lower of realize gain and boot 0 = 19 new basis.

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108
Q

is there income taxe on inheritance

A

no

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109
Q

In a General Partnership, may a partner assign rights to personal property and distributions unless agreed.

A

No on proerty. Yes on Distribution partner can ssign interest or distribution but not authorization.

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110
Q

What is sellers obligation under UCC sales of good

A

Seller is liab for goods untl tendered delivery of conforming goods to a buyers specified destination.

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111
Q

In a partnership, where there is a partner loss portion of 6000; his basis is 4000 both at the preceeding (prior)year In current year has 3500 income and distri of 500 what is partners basis

A

$1000: preeding year had 4000 basis and 600 loss. loss cant not be higher than basis. So loss is 4000 and basis is 0. the 2000 is a suspended loss and can be deduct in the future or next year if there is a positve basis. current year 3500 income - 500 distibution 3000- 2000 suspended = 1000 basis.

112
Q

How is a partners liquidation handled when basis is 32000. He received 2000 in cash and land with a fmv of 25000. the adjusted basis in land for prtship was 15000

A

Partner liquidation basis is $30,000. = interest 32000- less any cash received 2000= 30000. Disregard FMv 25000 and partnership basis 15000. zero out to get out based on interest.

113
Q

Are guarantee of corporate debt an increase in stockholder basis in a S corp. and if ther was a loss of 19000 and current stockholder basis is 43400 and distrib of 38000 what is stockholders loss

A

guarante of corp debt is not increase in basis only loan to s copr will increase debt.
basis 43400- 38000 = 5400 bais . loss 19000.loss can not go below basis. loss is 5400.

114
Q

If married couple both used there gift tax exclusion of 15 on a 60 gift what is there tax gift

A
  1. 60- 15 one spouse +15 other spouse = 30 disregard applicale credit.
115
Q

Is taxed paid by individual to a foreign country would be a federal credit to taxes due in the US

A

Yes. or can itemized NOT SUBJECT TO 2% FLOOR.

116
Q

263 A uniform included warehousing

A

Yes. along with DM, DL IOH . not marketing, distribtution or office maintenance.

117
Q

In a CPA defense on damages file by a user what is the best defense

A

CPA lack the intent to decieve. Not due dilligence.

118
Q

For m1 with book income is 140 an include 50 meal exp and 40 tax. what is sch m1 form 1120 rec book to tax

A

book 140+ add back 25 to meal due to 50% + add bask 40 tax = 205

tax 205

119
Q

if you found money on the street do you include as income

A

Yes.

120
Q

If corp had accum at (45) and current at 15 distributed 18 waht is tax

A

15 tax dividend from earning and 3 return of capital.

121
Q

For corp do you recognize a current year loss in current year`

A

No. carry back 3 years and carryfowd 5 years.

122
Q

If partnership did not elect tax year what is the tax year based on

A

tax year of one or more partners with 50% or more interest in profits and capital

123
Q

when there are conflicting perfecting of collateral, what is the priortity security interest dates

A
  1. finanicing agreement filed 4/1.
  2. Possession of collateral by creditor 4/10
  3. financing agreemetn perfected 4/15
124
Q

Is Sch SE based on sole propriatoreship and general partnership

A

Yes. no scorp

125
Q

Is exemptions taken out of simple trust

A

No

126
Q

What is the 3 year annaul gross test for safe harbour

A

small business with 3 avg gross of $10M. can of unadj. basis up to $1m

127
Q

Can member affiliated groups elect consolidated corp returns

A

Yes.

128
Q

If corp goes from c corp to s corp the following give distr the following year do i considered co income

A

no.

129
Q

Scorp accum bal 40 and current earnings 20 = 60. it paid 100 at 50% each to shareholders. what is taxable to one shares

A

distr 100- 60 AAA = 40 is out of e&P and is taxable to shareholders at 20 each. remember distribution are not taxable.

130
Q

C corp pay taxes on profits and dividends if declareed

A

yes.

131
Q

for distribution of property what is the best entities as far are non taxable

A

general partnership and LLP. Never Scorp there could be tax implications.

132
Q

If a S corp 10% shareholder/employee is convered for family paid coverage is that included in his gross income

A

Yes must be less the 2% shareholder not to be included in gross income.

133
Q

MFJ taxpayer has loss of $157K on 1244 stocks in year 7. how much can taxpayer claim in year 7 against ordinary income

A

MFJ may deduct up to 100K in 1244 + another 3K in capital ooss related to 1244 total = 103K

134
Q

If investor purchase restricted securities uner reg d of sec act 1933 what is his ability to resell

A

He may resell security as part of another exempt from registration.

135
Q

In a situation where given up 17 + 1 cash and received 17.5 +3.5 what is new basis

A

get amout realized :
getting 17.5+3.5 = 21
giving 17+ = 18
realize= 3

New basis:
old basis 17+3 relize-3.5 boot +1 cash give up = 17.5

136
Q

to get 1231 do you deduct all gain and losses

A

yes.

137
Q

How much is child tax credit refundable and what is there is a liab of 1000 how much will it impact child tax per child taken

A

child tax refundable is 1400 per child.
If there is a 1000 liab, add it to child tas credi refundable
for child tax taken.
chlid tax refundable 2 kids *1400= 2800 refundable
2800 refundable +1000 liab = 3800 taken.

138
Q

what is a disadvantage of revocable trust

A

trust is included in the gross estate of the grantor because have not given full control

139
Q

is passive investment income offest oftaxable investment expenses

A

yes.

140
Q

If a corp has the follwing liquidations:
basis fmv g/(l) o c

investment land 500 540 40 c
inventory 130 150 20 o
marketable sec 70 20 (50) c
what is capital gain

A

Segment all capital from nocapt

                       basis             fmv       g/(l) o c

investment land 500 540 40 c
inventory 130 150 20 o
marketable sec 70 20 (50) c

c: 40-50 = (10) capital loss
o= 20 ordinary income : inventory is ordinary income

141
Q

For individuals that investment in corps, if they meet the 80% test are they taxed

A

No. If you are relieved of a liab, you are taxed at boot. and liab. is your basis.

142
Q

Is QBI and adjustment to arrive at AGI and is it separate from standard deduction and itemized

A

QBI is taken from agi and not separate from standard or itemized.

143
Q

Is earned income credit allow as a credit against AMT

A

Yes

144
Q

If a partner is getting out of partnership and interest is liquidated: basis 26K he gets cash of 12K and land with a basis 10K with partnership. What is basis in land

A

non liquidating . zero out to get out; 26 basis - 12 cash =14 basis in land to zero out to get out.

145
Q

If a corp had a loss in prior year and expect to have a profit in the current yr., what methold can they use between Annualized income method and 100% of the preceeding tax year method

A

Since the corp did not pay taxed last year due to loss, can not use 100% but can use annualized.

146
Q

If a stockholder has 100 stock for $10,000 or $100 per share in year 1. Has a 2 for 1 split of 200 @ $50 fo $10000. He sells at 100 shares $65 in year 3. What is l-t capital gain in year 3.

A

65* 100 = 6500
50*100= 5000 (when sale always use orginal basis)
recognize lt cap gain = 1500

147
Q

If partnership makes most election on taxable income to the partnership such as nonrecognition treatment for involuntary conversion gains, election to amortize organization costs, code 179 deduction. can it also make election on deduction of credit for taxes paid to foreign countries

A

No. foreign tax credit is by individual partner on his tax returns.

148
Q

Do PHC make federal income taxes and l-t cap gain less income taxes to determine income prior to dividends paid deductions

A

Yes.

149
Q

In a revokeable trust would a individual use 1040 or 1041 and sch k 1 when living to complete tax returns

A

1040 while living.

150
Q

Rick purch 100 shares on 4/4/y4 for 86 per share = 8600. He sell 50 shares 60 per share for 3000on 2/8/y5 and repurch the 50 shares on 3/1y5 for 64 per shares for 3200. what is the basis of the 3/1/y5 shares due to wash sales

A

since purch sold happen within 30 days period, wash sales loss and not be recognized and is deferred. Hower it is added to the purch .

sold 50shre at 60 3000 - basis 50 *86= 4300 - 1300 loss
repurch 3200 + 1300 = 4500 basis

151
Q

type b organization defined by the irs are

A
  • stock of the target corp is acquired for voting stock of either the acquiring corp its parent
  • acquiring corp must control of the target corp
152
Q

An accrual basis co. has end a/r of 35 and beg a/r 25 plus had rent payment of 50 and advance rent of 5 what is the amount reported for income for tax purposes

A

50 payment + 5 advance+ diff in end 35 - beg 25 receveble 10 ( when ever incr accrual then increaes cash basis) = 65

153
Q

for 1244 stocks can you take the loss on stock if you were orginal owner of stock and if you were not the orginal owner and what is loss threshold

A

for 1244 stock can loss if you were orginal owner and not take loss if you not the original owner.
loss threshold is $100K for mfj + you can tak $3K cap gain loss.

154
Q

if minor has 3000 in interst income and a standard deduction is 950 how much is minor taxed.

A

minor uses the 950 as the first standard dedcution and another 950 standard deducitons at the kiddie tax estate and trust.

3000- 950-950= 1100.

155
Q

Under statue of limitation, does breach of contract hav e to be have to be commence with a certain time when breached.

A

yes.

156
Q

is perole of evidence part of statue of limitation part of statue of limitation

A

no.

157
Q

To meet both the used owned test for MFJ, both must live two of five years and owned two of five years

A

yes.

158
Q

when partner sales his interest in partnership what is his sale of interest

A

Cash received for interest and amoount releived from debt.

159
Q

if a shareholder has an option to receive cash div instead of stock div, would stock have to include stock dividend as div income

A

Yes.

160
Q

Is preferential treatment the benefit a creditor within the 90 day filing of bankrptcy and you do an installment loan on inventory to creditor the one the creditor in bankruptcy proceeding

A

yes.

161
Q

When are accumulated earnings tax impsed

A

they are imposed on stockholders of corp regardless of number and not on excess distributions

162
Q

How are LLC profit / loss distrib

A

by contributions and not orginated %

163
Q

taxpayer gives a prop with nbv 17 and assumed liab of receiver of 1. gets 17.5 prop and relief liab 3.5. what is relized gain, recogn gain. and new basis

A

relize gain getting 17.5 +3.5 = 21
giving 17.+ 1 = 18
realize gain 3
Recognize = lesser of boot and relize gain
boot 3.5 getting 1 giving = 2.5 boot.

recognize 2.5
New basis
orging basis 17 + giving boot 1= 18 +boot 2.5-3.5 getting= 17

164
Q

If a manufacturer sells to wholesalers, retailers and consumers which one is automatically perfected without filing

A

consumer goods

165
Q

If statuary notice of deficency sent to taxpayer (KEY WORD IS TAXPAYER). Taxpayer has 90 days to either pay or else file

A

petition with US Tax court. with district court must pay first and then file petition.

166
Q

If corp accrued 15k in bad debt exp for book purpose and actuall wrote off 5K what is the sched m1 rec

A

increase by 10. remember use accrue exp. and not difference between beg 20 bad debt allw and end 30 bad debt allw = 10.

167
Q

if corp distib 15k cash div. and and bond with basis 25 fmv on date of distr 26 and date declared 26. what is dividend income

A

remember bond is this since is property dividend.

15 cash div and bond on date of distri 26 = 40 dividend income.

168
Q

what is the strongest case for a independent contract

A

that employer or co. does not have control of contractor

169
Q

when is non quailifed stock option ordinary

A

when option is sold on the established market dates.

170
Q

For tax purposes, do you claim interest in the month paid

A

yes

171
Q

which of the following will release a surety from a noncompensated liab:

insanity fo principal
modification of principal and debtor contract

A

modification of principal and debtor contract.

172
Q

What are the drd %

A 
1-20% = 50%
21-80% = 65%
81-100% = 100%
173
Q

how are foriegn taxes paid by coro deducted

A

claimed as a deduction or credit. corps options

174
Q

Are child and dependent credit refundable

A

no. limit to 35% of expense with agi phase out. Only refundable credits are: child tax credit, EIC, withholding taxes, portions of Hope Scholarship, excess SSE tax.

175
Q

If partner LIQUIDATE property with partnership basis of 58. Partner basis of 60. what is outgoing partners basis

A
  1. zero out to get out.
176
Q

If a debt in bankruptcy is to be fraud is it discharged

A

no.

177
Q

Is real estate g/l recognize on real estate exchange

A

no

178
Q

If a partner is adjudicated of bankruptcy does that event dissociate from partner

A

Yes

179
Q

when i see that a interest party in a Copr gets cash from the copr in addition to his basis, would that increase his basis

A

Yes. cash received is treated as a liab assum by corp and it is added to interest party basis

180
Q

What is the difference between capital assets and 1231 assets

A

Capital assets are personl assets such a personal automobile. 1231 real are personal property used in a trade or business.

181
Q

If a 50% partner with basis of 4 and partship liquidated 11 to partner and partnership had ordinary income of 10 how much is net gain realized by partner

A

4 basis + (10*50% = 5) 5= 9

nonliquid 11 = 2 realize

182
Q

what are the 3 ways to secured interest attached

A
  1. security must have value.
  2. parties must agree to create a security interest
  3. debtor must have rights in the collateral.

nvew debt must authorize the filing of a financing statement.

183
Q

is generation skipping transfer tax implses when separate tax in addition t gift and estate tax

A

yes.

184
Q

If building was destroyed with 400 fmv at time of destroyed and basis of 350. insurance proceeds was 400: 300 for building and 100 loss on profits during rebuilding what is tax

A

400 process to thel of fmv and basis
400-350= 50
+ profit recopu 100
=150

185
Q

Under an Scorp. End of yr 7 AAA was 40K. Scorp had ordinary income of 20K. Distribution to two shareholders 100K at 50% each. bill had basis of 18K before distribitution.

A

18K in basis. Distrib to Bill 50K. He get 30K of 60K in AAA. 30K taxed to Bill. 18K non tax. If non distrib, $30K add to basis and non taxed.

186
Q

In the sale of interest in partership, ordinary income is recognized on unrealized a/r and appreciated inventory

A

Yes.

187
Q

When a partner disposed of interest in a partnership and he had accumulate share losses can he dedcuct all losses from gross income

A

yes

188
Q

If a company borrows 5000 with a promissory note from a lender and then tells lender that she want to offer to pay only 4000 the lender accept. Lender still wants additional 1000. If lender sues will he win

A

Yes. The 4000 acceptance is considered a accord and satisfaction. however, the 1000 still needs to be pay off.

189
Q

If co. does % of completion method and has 56K of a 70K contract, can they use in AMT

A

no. AMT uses completed contract. Therefore the 56K is deducted (56K).

190
Q

If couple married a live in house 2 out of 5 years and one spouse live 2 out of 5 married can they get full exclusion

A

Yes. If they got married and new spouse live one year they it s 850 sale - 240 basis = 610 relize gain. 610*1/5=488 exclusion instead of 500.
610 realize gain
488 less exclusion
122 tax.

191
Q

Under UCC sales article can you sue for punative damages

A

No.

192
Q

What is the safe harbor rules

A

3 years prior avg gross of $10M or less. unadjusted basis of less than $1m. May deduct improves that do not exceed. $10K or 2% of undjusted basis.

193
Q

If taxpayer has like exchange of 17 nvb and get new property with fmv of 17.5 and 2.5 cash what is realize gain, recognize gain and new tax basis

A

realize gain: geting 17.5 +2.5 boot cash = 20
giving nvb 17
= 3 realize gain
recognize gain= lower of realize gain 3 and boot 2.5
= 2.5

New basis = nbv + assumd liab +boot - recogniz gain
17 +0 +2.5-2.5 = 17 new basis

194
Q

Partnership: new partner has 25% interested with basis of 100 plus laib on basis of 100. what is new owners basis

A

It would be basis - other partners assumed liab (100%-25%)
100*75%= 75k

100 basis - 75 assumed liab = 25k basis for new owner.

195
Q

Partner with a basis of 10 get distrib of 20+building with adj basis of 30. what is owners basis

A

basis is 10 can not go below 0. so cash of 20 + building of 30 would be 50 distrib and basis is 10. So new basis is 0.

196
Q

If owner of rent property manage property but does not fit the standards of material participation. has loss of 10K can he deduct

A

Yes the full amount if his AGI is below $100K then phase out of 25K.

197
Q

A MFJ have two children in childcare on is 10 and the other is 14. They occured 4K each kid. Husband wages are 60K and wife is 2.5K. How much may they deduct

A

The child age limit is under 13. so one kid is ineligible.
4K. the limit is $3K. then it is the lower of the lowest spouse earned income * 20%.
2.5K *20% = 500

198
Q

which of the following circumstance can a partnership be terminated for tax purposes:

over 55% of the total interest in capital and profits is sold
the partnership business and financial ops are discontinued

A

Correct: the partnership business and financial ops are discontinued

In correct: just because interest is sold does not terminated partnership.

199
Q

What are the 248 upstart expenses for corp

A

fee paid to be state in corp
expense of temp directors and organization charges
accounting services incidental
legal service

never: printing and sale of stock. after incorp

200
Q

what is a irs sub f income

A

taxable income includable by US taxpayer from a controlled foreign corp that has no economic connection to the foriegn country. I.E. services provided by an Irish co. in England entered into by a US parent co.

201
Q

what is not a 1231 asset

A

equipment used for personal activites or asset like personal automobiles these are capital assets

202
Q

If an accountant is being sued by a creditor that relies on audited fs, what is the accountants best defense for lack of privity

A

if a creditor sues for negligence

203
Q

If a partner is selling his interest, what is he getting in return or realizing

A

FMV of capital account and relief of his share of liab.

204
Q

Under USS sale article, during an auction, an auctioneer can withdraw the merchandise when no bid is made in a reasonable time or at any time until the auctioneer announce the completion of sale

A

Only during the without reserve period which is during the time when no bid is made.
other time is a reserve person and can not withdraw.

205
Q

Social security tax is based on

A

employee gross wages and self employed person net profits

206
Q

Can voluntary bankruptcy chap 7 be moved to chap 13 based on means test and is $15,775 unsecured neeeded

A

Yes voluntary chapter 7 can be move to chap 13 by means test. No $15, 775 needed for unsecured.

207
Q

In an agent / prin relationship, agent will have power until principal

A

fired agent and give notice to everyone that agent relationship is over.

208
Q

If a interest party does not materially participate in rental business can he deduct losses and does he get part of losses

A

he can only deduct losses up to passive rent income. Yes he will get a % of loss for tax purposes.

209
Q

Can you deduct illegal expenses from net income

A

NO.

210
Q

If a person actively participate in a rental business and has a % of loss of 30K and his AGI is 125K how much can he deduct

A

He can deduct up to 25K in tax year if agi is 100K or less with 25K phase out if agi over 100K at 50% fully phase if agi is over 150K. so person agi is 125K - 100K = 25K*50% = 12.5k

211
Q

If scorp shareholders two at 50% each have Net income of 200K, and distibution of 80 what is each shareholders basis increase by

A

200 ni- 80 distrib = 120 basis*50% = 60 basis for each stockholder.

212
Q

are socialorganized exclusively for members supported by dues and assessment a tax exemp organization

can an amature sport organization that provide equipment and facilities to athletes be a tax exempt

A

Yes. social club

No to sport organization. if it did not provide equipment and facilities, it would be tax exempt.

213
Q

when doing gifts for tax purposes and it says includes spouses do you add spouses

A

yes.

214
Q

what are capital assets and non capital assets

A

capital assets:
personal automobile
furniture and fixtures for homes
stock and bonds
real and personal property not used in a trade or business
interest in partnership
goodwill of a corp
purchase (as opposed to created) copyrights, literary, musical, or artistic composition
musical composition held by the original artist
other assets held for investments

non cap:
propery normally held inventory or held for sale
depreciable personal or real property used in a business
a/r or notes a/r arising from sales or services in a business
copyrights, literary or artistic composition held by original owner.

215
Q

Are Sole proprietor, partnerships and limited partnership ( with general partner) protected from personal liab

A

NO.

216
Q

Are part of AMT adjustements state and RE taxes

A

yes.

PANIC TS
Passive Activity losses - added back to recalculate
Accelerated depreciation - Depr is calculated more conservative (no DDB SYD)
Net Op loss: must be recomputed
Install method may not be used - by dealer of property sales
Contracts - AMT requires the use of completed contract method, so any differecne is added or subtracted
Taxes- state, sales and property taxes are not allowed.
Standard Deduction - if the taxpayer took standard deduction rather the itemize, the standard deduction is added back to taxable income to calculate AMT

217
Q

What are preferences

A

They are always added back; PPP
Private activity bond-tax exempt interested
Pre-1987 accel depr on real property and leased personal property
Percentage of completion deduction (excess over adjusted basis of property)

218
Q

For 179 deduction, if current purch cost are 1,950M and max allow for 2018 is 2,550m. taxable income is 1,700m and max dedcution is 1,020m what can corp take as deduction

A

purch of 1950 - 2550 are below max deduction so over is zero. can take full 1,020.

How if purch were 2800 - 2550 = 250 overage

1020 max deduct - 250 = 770. can take as long as 770 does not cost take income 1700 to be a loss which it does not.

219
Q

are guaranty payment represent taxable income to partner recieving and separtely stated on k1 and allowable tax deduction for services rendered or use of of capital without regard to income or profit or loss sharing ratio

A

Yes.

220
Q

if there are multiple support to claim parent who claim

A

must total up to more than 50% support and contribitors must have supported more than 10%.

221
Q

In a c corp, the cash distribution to shareholder is tax out of Accum earning (E&P)

A

Yes. so if total distribution is 50 and 35 from accum earning than 15 non tax and 35 is taxed.

222
Q

for related party losses are grandfather and granddaughter and father in law and son in law included

A

yes on grandfather and grandchildren, husband and wife, lineal decendents( father, son, grandfather, mother daugher and granddaughter)
No. for in laws.

223
Q

Can a prin and agent relationship be terminated without cause

A

Yes. however, if contract that agent made are not fulfilled can be held for breach of contract.

224
Q

If a co. purchase computers for retailer on may 8th via promissory note and co. petition bankruptcy on may 9th on may 16th retail files financing statement covering computers do retailer have preferance

A

Yes. this would be considered a pMsi because retailer has secured interest in computer would have preferance over bankruptcy.

225
Q

If a person promised to sing at and event with no consideration and the event is scheduled then personal cancled if event planners sue for damages what would be best case

A

detrimental reliance here nothing was in writing just relaince on word. not to be conflicted with parol of evidance rule where something was in something said conflicts with what was in writing.

226
Q 
MI had the following:
reported book income 2300
included:
muni; 200
regular int
 income: 100
meals 80
fed tax 500
state tax 150
life insure policy for officer 20

further
advance rent collect 50

A

rec to m1

                 2300 \+ fed tx         500  added back \+meal %50    40  added 40 or 50% \+life insur       20  added back not deduct \+ adv rent      50   added not record book but record tax -muni           -200  deduct not tax but record book total            2710

keep state tax 150 error on book.

227
Q

If there is a loss of 73K during the year and a 50% shareholder sale interest in scorp after 90 days in year how is his part of loss

A

prorate the 73K loss per day
73/365days = ($200 per day)
200 loss per da * 90 days = 18000 in 90 days
18000* shareholders inters 50% = 9000

228
Q

If John orally says to Pete that we would give Pete a $10,000 bonus and additional compensation, if he work for him for two year. would the Statue of Fraud be a defense for John if he refuse to pay Pete

A

No. Although the contract need to have been in writing under the statue of frauds, there is an exception if the work was perform during the period so John wold lose.

229
Q

Does reorganization of bankruptcy proceeding commence with involuntary and voluntary and does it have to be confirmed by all the creditors

A

Yes reorganization is commence via invol and vol and does have to be confirm by all or majority of creditor. Just one could confirm.

230
Q

If partner both have basis of 50K with 15K due to assum liab. and partnership had a loss of 25K, distributed 5K in interest and liab was reduced by 20K what is basis for both

A

Separate regular basis from liab and the add and subtract

50 = 35 15
(25) (12.5)
5 2.5
(20) (10)

total 25 10 = 35 basis

231
Q

for income to be taxable in a tax it must be realized and recognized

A

yes. realized of accrual of cash, property or services and then recognized for tax purposes.

232
Q

Are unreimbursable business meal deductable for tax purposes

A

NO

233
Q

If consultant has self employment tax of 3000. the employer portion are

A

one half of the self employed tax is for the employer and are a deduction for AGI

234
Q

what is security attachment 3 principles

A
  1. either parties must tak possesion of collateral or debtor must sign agreement on desrcrobe collateral
  2. value must be given by creditor
  3. debtor must have collateral in his possession.

Proper filing is not required.

235
Q

If an individual pay zero tax liab is he required to pay either 90% or the current tax or 100% of the last tax

A

No. because last year tax was zero.

what is true: if est tax is less than $1000 there is no penalty on tax due.

236
Q

What is the penalty for failure to file an information return prepare by a tax preparer

A

$50 for each return and maximum of $25K. How no penalty if not filed due to reasonable cause and not due to willful neglect.

237
Q

when a corp liquidate property fmv - basis to shareholders does it have a gain or loss

A

yes.

238
Q

are any interest from home equity loans or personal card part of AMT adjustments

A

NO.

239
Q

In a estate distribution to a benificiary what is the income distribution to beneficiary when estate made a distibution of $15K and DNI came to $33K

A

It is the lessor of the two - tax exempt income

240
Q

Are compensatoty and punitative damages taxable

A

Yes.

241
Q

What is the difference between holder and holder in due course

A

Holder is a personal whole rightfully gain possesion of commercial paper ( paper in which drawer orders the drawee to pay the payee.) The holder can enforce the draft.

Holder in due course: is a holder takes possession of the instrument ( commerial paper) for value, in good faith, and without notice of defense or claim to the instrument.

242
Q

Where are real estate taxes from rental property shown and are they a deduction to arrive at agi or from agi

A

They shown on Sch E (rent, trust, estate) and are a deduction to arrive at AGI

243
Q

If a partner sales there interest for 170K, Partner has capital of 20 and assumed debt of 30. Plus hot asset portion of 50. what is the partner gains

A

170 sale price - 20 cap + 30 liab = 120
break = 50 ordinary income for hot assets
70 capital gain.

244
Q

What are the main tax authority literatures

A
  1. tax court cases
  2. IRS Code
  3. Treasury regulations

not IRS publication: it is just a how to book with tax forms

245
Q

A tax payer has an AGI of $50K and has two daugherts one is a fulltime freshman in college and the other is a part time senior in college. both are dependents . freshman tuition fees are 3600 and the part time senior are 4250 and paid by parents. are the American opportunity credit and lifetime learning credit available to them and what is the threshold

A

The American credit is available for freshman up to the 1st 2000 of the 3600 = 1600 and 25% of the 1600 = 400
2400.

Lifetime learning for senior: 20% of the 4250 = 850. Lifetime learning qualifed expense max is $10K and $2K per credit.

246
Q

If DNI want 95 and trust wanted to distrib 70 what is the income distrib and taxable income

A

income distrib is lower of DNI 95 and trust distr 70

70 is the income distrib.

taxable income is what is remain in trust 25000 - 100 exemption for complex trust. = 24900 taxable.

247
Q

when calculating medical expense for sche a itemize deduction make to watch for medical reimburse and deduct form expensesa

A 
med prem 5000
doctor visists  2000
medical reimb  (2000)
total =     5000
248
Q

Are qualified moving expenses a way to arrive at AGI and are roth ira also

A

Yes on qualified moving expenses: as well as student loan, se taxes, e=self emloy health insurance, attorney fees for whistle blower, alimony , ira.( remember ira are not tax deductible but a way to arrive at agi.

Not roth ira

249
Q

if a company factors it A/r is it perfected with possesion with the factor.

A

No only through filing a financing statement.

250
Q

Do passthrough entities get losses or return and which entities do

A

No for passthrough= partnerships, Scorp.

Yes for trust and estates form 1041 line 22, c copr 1120 line 28, 1040 indv line 42.

251
Q

If a c corp qualify for 140K due to 10% but has 135K in qualify charity contrib what is limit

A

135K.

252
Q

In a liquidation of partner what paid out $61 cash, fmv proper was 14 and adj basis 12 and basis was 60, what is gain for partner

A

gain is to the extent of cash paid out to basis.

61 cash - 60 basis = 1 gain.

253
Q

what is the chronlogical formation of tax income return for qbi, adjustment, standard deduct or item

A
  1. adjustment to agi
  2. standard or item adjust form agi
    3 qbi adjust from agi.
254
Q

A taxpayer that paid 95% of tax liab. before extension and paid the balance when filed your. what is penalized on

A

the remaining bal.

255
Q

S corp nonseparated income or loss are to shareholder at year end on a

A

allocated % per share per day. for s Corp

256
Q

a foreign investor with stock in the US will they be taxed on their dividends

A

yes. at 30%

257
Q

Can SEC revoke or suspend CPA license to practice with SEC

A

yes.

258
Q

are state income tax, interest on US bonds, intetrest exp and muni interest expe tax deductible

A

NO.

259
Q

If a couple AGI is $200K and husband is in retirement plan and wife if not can they deduct IRA

A

NO over the phase out.

260
Q

for c copr if you have property basis of 40K and mortgage on it of 10 what is your basis

A

40-10 = 30

261
Q

when john had his clock repaired at Jack clock repair and sale shop. The clock was sold to bill by a clerk by mistake. can john sue bill.

A

no. clock was sold in normal course of business but he can sue jack because he entrusted jack to fix his clock. title that relavant in the matter.

262
Q

what are elements of fraud

A
  • misrepresentation of material facts
  • defendents acts with gross negligence or recklessness
  • intent to induce plaintiff reliance
  • actual and justifiable reliance by plaintiff
  • damages
263
Q

How are corps able to do consolidated

A 
1 corp must have 80% or more control
2 must not be an scopr
3. foriegn corp
4. REITS
5 Some insurance co
6. most exempt organizations
264
Q

How is MACRS for nonresidental calc

A

at 39years over s/l

265
Q

If partnership was liquidated and partner received cash of 1500. His inside basis was 1000 and his outside basis ( which is capital 1000 + 200 liab assum) 1200. how is partner gain recognized

A

on cash received 1500- outsided basis 1200 = 300 gain

266
Q

the date a stock is worthless during an exchange is on the last day of the current taxable year.

A

yes.

267
Q

basis in partner paying for interest from another include

A

cash paid to partner and liab share.

268
Q

is tuition paid to university a relevant question for gift tax

A

yes.

269
Q

can a son who is married and not working is 25 and parent provided more than half his support. he filed a joint return with his wife can he be considered a dependent

A

no, does meet the age limit and is filing a return.

270
Q

in respect to cash basis decendent

A

income earned before taxpayer death but not collected until death.
cash collect must be included not in final return but in estate return.

271
Q

what is one way to determine if someone is nonpassive in busines

A

if person works more than 500 hours during the year.

272
Q

when there is conflict on collateral is get it

A

the one who perfect first by filing. perfect first then attached.

273
Q

can a scorp have passive income of more than 25% of gross rev. for 3 consecutive years and be owned by a bankruptcy estate

A

yes.

274
Q

are Irs tax liens and mortage lien part of homestead exemptions

A

no

275
Q

PHc must have 5%closely held owner with over 60% of their agi consisting of net rent, taxable interest, most roylaities, dividends from an unrelated domestic corp.

A

yes.

276
Q

does at risk limitation may limit partner deduction of his share of losses and net operatig loss carryover

A

yes on partner loss decution.

no. on carryover used is future years when basis in available.

CPA Multiple Units Testing (1 decks)

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