WAB Income tax

Question 1

Taxable Amount of Annuity payments

Answer 1

( Basis / payout calculated ) x pmt = excluded amount from tax

After life expectancy years - 100% is taxable since you’ve recovered the full basis

Question 2

SECTION 179

Answer 2

Expenses for purchase of business personal property (1245)

Question 3

Entertainment expenses are

Answer 3

Not deductible

Question 4

Corporate AMT

Answer 4

Eliminated

Question 5

Non-qualified deferred compensation is

Answer 5

Very expensive

Question 6

Surrenders of a MEC are

Answer 6

Ordinary income taxed ( + 10% penalty if younger than 59 1/2)

Question 7

Businesses under ____ in annual value can use cash accounting

Answer 7

$25MM

Question 8

Salary paid by an S Corp is subject to

Answer 8

FICA but not SE taxes

Question 9

If it generates profit in _____ it’s a business not a hobby

Answer 9

• 3/5 years
• 2/7 years for horses

Question 10

Tax Penalty is on the

Answer 10

Amount of tax underpayment (NOT interest)

Question 11

No penalty if you pay _____ of this years tax liability or _____ of last years

Answer 11

1) 90%
2) 100% (110% if you make $150k+)

Question 12

SCHEDULE A
SCHEDULE B
SCHEDULE C
SCHEDULE D
SCHEDULE E
SCHEDULE F

Answer 12

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

Question 13

Health insurance premiums for SE, partners and 2%+ owners of an S Corp is

Answer 13

Taxable income and 100% deductible

(Applies for medical, dental, LTC but not disability)

Question 14

SE tax is

Answer 14

Income x .1413

Question 15

1040 AGI SE tax adjustment is

Answer 15

1/2 of .1413

Question 16

Schedule 1

Answer 16

Above the line deductions (schedule A)

Question 17

Installment sale calculation

Answer 17

(Profit / sale value) x monthly payment or annual payment = amount that is a gain and taxable

Question 18

QBI -199A

Answer 18

Business pass through deduction

Question 19

Corporation Tax forms (files, employee, & distributions)

Answer 19

Files 1120
Employee W -2
Distributions 1099 (dividends)

Question 20

Self employed Tax forms (files & employee forms)

Answer 20

Files Schedule C
Employee Schedule C

Question 21

Partnership Tax forms (files, employee, & distributions)

Answer 21

Files 1065
Employee W-2
Distributions K-1

Question 22

S corporation Tax forms (files, employee, & distributions)

Answer 22

Files 1120S
Employee W-2
Distributions K-1 (unearned)

Question 23

Trusts are tainted for estate tax if

Answer 23

There is a right to beneficial enjoyment or a reversionary interest of greater than 5% at the time of death

Question 24

Charitable bargain sale adjusted basis=

Answer 24

(Proceeds/FMV) x OG basis

Question 25

If a child has LTCGs then

Answer 25

The second $1250 is taxed at 0%

Question 26

If a child is SE they must still

Answer 26

Pay SE tax

Question 27

1/2 of .1413 and SE health insurance premiums comes

Answer 27

AFTER SE tax is paid

Question 28

FICA covers

Answer 28

SS AND MEDICARE

Question 29

FICA tax percentages

Answer 29

6.2% up to $160,200k
AND
1.45% on full income

Question 30

Child tax credit has

Answer 30

A phase out but dependent care does not

Question 31

Earned income credit and child tax credit are

Answer 31

Refundable (child tax credit only up to $1600/child)

Question 32

Sole proprietor loan interest is deductible up to

Answer 32

NO LIMIT

Question 33

NOLs are no longer allowed but they used to be allowed for

Answer 33

Sole proprietors, Estates and corporations but not partnerships or Scorps

Question 34

Losses on the sale of a personal residence

Answer 34

CANT BE TAKEN

Question 35

Real estate losses can only be taken if AGI is below

Answer 35

$150k

Question 36

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?

Answer 36

$0 it would be a passive loss

Question 37

Do separate maintenance agreements (pre2019) qualify as tax deduction for payor spouse?

Answer 37

Yes

Question 38

Foreign Taxes can be claimed as

Answer 38

An itemized deduction or tax credit

Question 39

If no alimony is paid in the 3rd year, then you ______ to know how much is subject to recapture

Answer 39

Subtract $37,500 from total alimony paid in years 1 and 2

Question 40

Schedule E income from active participation in rental activities can be used to

Answer 40

Offset other passive losses

Question 41

Qualifying taxpayers (AGI under $100k) May deduct up to ______ in losses from active participation in real estate

Answer 41

$25,000

Question 42

Corporate charitable deduction percentage

Answer 42

10% of taxable income is deductible

Question 43

EE Education bonds are federal tax free when

Answer 43

Used for qualified education costs AND owned by the child’s primary care taker (usually parents not gparents)

Question 44

MACRS AND STRAIGHT LINE
(Years 1 and 2 table)

Answer 44

Question 45

Calculating SE AGI

Answer 45

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