WAB Income tax Flashcards
Taxable Amount of Annuity payments
( Basis / payout calculated ) x pmt = excluded amount from tax
After life expectancy years - 100% is taxable since you’ve recovered the full basis
SECTION 179
Expenses for purchase of business personal property (1245)
Entertainment expenses are
Not deductible
Corporate AMT
Eliminated
Non-qualified deferred compensation is
Very expensive
Surrenders of a MEC are
Ordinary income taxed ( + 10% penalty if younger than 59 1/2)
Businesses under ____ in annual value can use cash accounting
$25MM
Salary paid by an S Corp is subject to
FICA but not SE taxes
If it generates profit in _____ it’s a business not a hobby
- 3/5 years
- 2/7 years for horses
Tax Penalty is on the
Amount of tax underpayment (NOT interest)
No penalty if you pay _____ of this years tax liability or _____ of last years
1) 90%
2) 100% (110% if you make $150k+)
SCHEDULE A
SCHEDULE B
SCHEDULE C
SCHEDULE D
SCHEDULE E
SCHEDULE F
A - itemized deductions
B - interest/ordinary income
C - profit/loss from business (solep)
D - capital gains/loss
E - rental/S corp/estate/trusts/partnership income
F - farm profit/losses
Health insurance premiums for SE, partners and 2%+ owners of an S Corp is
Taxable income and 100% deductible
(Applies for medical, dental, LTC but not disability)
SE tax is
Income x .1413
1040 AGI SE tax adjustment is
1/2 of .1413
Schedule 1
Above the line deductions (schedule A)
Installment sale calculation
(Profit / sale value) x monthly payment or annual payment = amount that is a gain and taxable
QBI -199A
Business pass through deduction
Corporation Tax forms (files, employee, & distributions)
Files 1120
Employee W -2
Distributions 1099 (dividends)
Self employed Tax forms (files & employee forms)
Files Schedule C
Employee Schedule C
Partnership Tax forms (files, employee, & distributions)
Files 1065
Employee W-2
Distributions K-1
S corporation Tax forms (files, employee, & distributions)
Files 1120S
Employee W-2
Distributions K-1 (unearned)
Trusts are tainted for estate tax if
There is a right to beneficial enjoyment or a reversionary interest of greater than 5% at the time of death
Charitable bargain sale adjusted basis=
(Proceeds/FMV) x OG basis
If a child has LTCGs then
The second $1250 is taxed at 0%
If a child is SE they must still
Pay SE tax
1/2 of .1413 and SE health insurance premiums comes
AFTER SE tax is paid
FICA covers
SS AND MEDICARE
FICA tax percentages
6.2% up to $160,200k
AND
1.45% on full income
Child tax credit has
A phase out but dependent care does not
Earned income credit and child tax credit are
Refundable (child tax credit only up to $1600/child)
Sole proprietor loan interest is deductible up to
NO LIMIT
NOLs are no longer allowed but they used to be allowed for
Sole proprietors, Estates and corporations but not partnerships or Scorps
Losses on the sale of a personal residence
CANT BE TAKEN
Real estate losses can only be taken if AGI is below
$150k
Paul Williams is a limited partner in an oil and gas co. that produced a $30k loss. How much of the loss can he take?
$0 it would be a passive loss
Do separate maintenance agreements (pre2019) qualify as tax deduction for payor spouse?
Yes
Foreign Taxes can be claimed as
An itemized deduction or tax credit
If no alimony is paid in the 3rd year, then you ______ to know how much is subject to recapture
Subtract $37,500 from total alimony paid in years 1 and 2
Schedule E income from active participation in rental activities can be used to
Offset other passive losses
Qualifying taxpayers (AGI under $100k) May deduct up to ______ in losses from active participation in real estate
$25,000
Corporate charitable deduction percentage
10% of taxable income is deductible
EE Education bonds are federal tax free when
Used for qualified education costs AND owned by the child’s primary care taker (usually parents not gparents)
MACRS AND STRAIGHT LINE
(Years 1 and 2 table)
Calculating SE AGI
gross income minus bus expenses to get NET income
NET income x .07065 to get 1/2 of SE tax
NET income plus other income minus health insurance premiums minus retirement plan contributions minus 1/2 of SE tax calculated etc
