Week 2

Question 1

what is the difference between capital assets and 1231, 1245, and 1250 assets?

Answer 1

Capital assets are investment property and personal use property
(Business Use)
Section 1231 - depreciable property and real property( buildings and equipment)
Section 1245 - tangible and intangible asset
Section 1250 - when company depreciate its real estate

Question 2

Where do appeals from the US tax court and US District Court ( pay to play) goes to?

Answer 2

US Circuit of Appeals

Question 3

Where does the US Federal Court of claims appeal to ( Pay to play, dead baby)

Answer 3

US Court of Federal Claims

Question 4

What defines as abuse as stated in the 2005 Bankruptcy Reform Act?

Answer 4

1. The debtors median family income
2. 6 months average income of the debtor’s family multiplied by 12
3. If a calculation results in income exceeding state median income by at least 6000, abuse is presumed

Question 5

How much of a nonrefundable tax credit can individuals take for qualified tuition for a dependent?

Answer 5

20%

Question 6

which of the following can be considered to be PHC?
Rent
gas royalities
capital gains
dividends
annuities
oil

Answer 6

everything except dividends

Question 7

Transfer of property to a coporation in exchange for stock?

Answer 7

The general rule is that transfers of property to a corporation in exchange for stock will be tax-free as long as the transferors are in control of the corporation immediately after the exchange. Control is defined as 80% of both the voting power and number of shares of the stock.

Question 8

The corporate dividends-received deduction:

Answer 8

is affected by a requirement that the investor corporation must own the investee’s stock for a specified minimum holding period.

The general rule is the dividends-received deduction is allowed if the underlying stock was held for at least 46 days during the 91-day period beginning on the date 45 days prior to the ex-dividend date.

The corporate dividends-received deduction is not based on any percentage of the recipient shareholder’s taxable income. Instead, it is based on the percentage of ownership in the corporation.

Question 9

How much can a partner in a partnership deduct?

Answer 9

ordinary loss up to ordinary basis

Question 10

what is included on schedule 1120?

Answer 10

gain or loss from the sale of collectibles

Question 11

Capital carryback are?

Answer 11

short term capital loss

Question 12

Give me some facts about uniform capitalization method

Answer 12

1) real or tangible personal property produced by the taxpayer for use in a trade or business or in an activity engaged in for profit,
2) real or tangible personal property produced by the taxpayer for sale to customer, or
3) real or personal property (both tangible and intangible) acquired by the taxpayer for resale.

does not exceed 10 million

Question 13

C to S corp election advantage?

Answer 13

The corporation’s capital losses can be claimed on the tax return of the shareholders

Question 14

what is the minimum proof that a defendant must prove after suffering loss when a CPA fail to discover irregularities in financial statements?

Answer 14

failed to exercise due case

Question 15

Which are seperately stated items that will not affect income?

Answer 15

net income from rental property
interest income
guaranteed payments
capital gains and losses 
charitable losses
179 expense
amt adjustments
tax exempt income

Question 16

what are 179 deduction

Answer 16

depreciation deductions used for property used in business

Question 17

Who has control over the accountant’s workpapers?

Answer 17

the accountant, but may not disclose them without the clients consent or without a court order

Question 18

how would you calculate gain during a property exchange

Answer 18

take the lesser of

1) Gain ( FMV vs FMV)
2) or boot received (mortgage recieved)

Question 19

How much can the IRS seize you income for past due taxes?

Answer 19

the individual’s standard deduction and allowable personal exemptions divided by 52.

Question 20

A bond premium amortization should be

Answer 20

1) computed under the constant yield to maturity method.

2) treated as an offset to the interest income on the bond.

Question 21

Which of entity may not deduct fringe benefits for its owners?

Answer 21

Sole propertorship

Question 22

What is the status of apparent authority of partners in a partnership?

Answer 22

Each partner is an agent of the partnership and for all of the other partners, and while acting within actual or apparent authority of the partnership business he binds the other partners. Partners in a trading partnership have implied authority to buy and sell property in which the partnership business is engaged.

Question 23

To create an offer, a contract must be drawn

Answer 23

lol

Question 24

what is FASB made to do?

Answer 24

improve financial standards for non governmental agencies

Question 25

What is a remainder interest?

Answer 25

not a complete gift since the grantor has the power to revoke it at anytime

Question 26

What is deductible as a charity contribution?

tavel expense or value of services rendered

Answer 26

travel expense

Question 27

During a property contribution to a partnership, what is recognized as income?

Answer 27

value of services rendered