BEC 1-2

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Anonymous
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229642
Filename:
BEC 1-2
Updated:
2013-08-10 13:00:41
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BEC
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Description:
part two of individual taxes
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  1. what is allowable adjustment for student loan interest
    • 2500
    • 2-6
  2. what is allowable adjustment for self employment tax
    • 50% of payroll taxes (FICA & Medicare)
    • 1--% of medical insurance premiums
    • 2-6
  3. what is deduction from payroll taxes for FICA and Medicare
    • FICA - 6.2%
    • Medicare - 1.45%
    • 2-6
  4. when would medical premiums not be allowed as an adjustment
    • when another member of the family has coverage through their employer
    • 2-6
  5. what qualifications must be met for moving expenses to be allowed as adjustment
    • work must be at least 50 miles further from old home (each way)
    • only direct costs are allowed
    • meals, house hunting costs or temp living expenses are not allowed
    • must work at least 39 weeks
    • 2-6
  6. what costs are allowed for business expense
    • FAST HOG
    • fifty percent of meals and entertainment
    • all costs to run business
    • similar to small corp.
    • taxes paid by business
    • hobby losses are not
    • one hundred percent of travel
    • gifts up to $25 per customer
    • 2-6
  7. how much is allowed as a deduction for promotional item for business expense
    • $4
    • 2-6
  8. what is definition of passive activity
    • any business venture in which the taxpayer doesn’t materially participate
    • 2-6
  9. what are the most common types of passive activates that a person can participate in
    • limited partnerships interest
    • all rental activity (if not a real state professional)

    2-6
  10. how are losses recorded for passive activity
    • losses only to the extent of passive gains with unused carried forward until activity disposal
    • 2-7
  11. what entities are allowed to claim a passive activity
    • individuals
    • partnerships
    • estates
    • trusts
    • closely held C-Corp
    • personal service Corp
    • 2-7
  12. when can tax credits from passive activities offset taxes
    • when it arises from passive activities
    • 2-7
  13. how are losses recorded for someone who materially participates in rental activity
    • real estate person - losses treated as ordinary loss
    • active participation - $25 K of losses as ordinary loss
  14. what is phase out for active participation for real estate
    • 50% reduction of excess of taxpayers modified AGI over 100K
    • 2-7
  15. when is rental income allowed to be excluded from gross income
    • dwelling is rented for less than 15 days
    • 2-7
  16. how is rental income treated for a property that is also used for personal use
    • rented more than 14 days or 10% of number of days rented - deductions are limited to gross rental income
    • rented is not more than 14 days or 10% - all expenses allocate to the rental portion
    • 2-7
  17. what qualifications must be met to be considered alimony
    • CANNOT
    • cash only (not property)
    • apart when payments are made
    • not child support
    • not designated as property settlement
    • own return for payer and payee
    • terminates on death of recipient
    • 2-8
  18. would payments for college qualify as alimony
    • yes
    • 2-8
  19. what qualifies as earned income for retirement plan
    • salaries and wages
    • net self-employment
    • alimony
    • 2-8
  20. how much is a person able to contribute to an IRA
    • 5000 or 6000 if 50+
    • 2-8
  21. what is the income cap for Roth IRA
    • 122K or 183K if married
    • 2-8
  22. what conditions cause a traditional IRA to not be deductable
    • individual participates in another pension or profit sharing plan AND
    • AGI excess 68K or 112 married
    • 2-8
  23. what happens to IRA contributions if a spouse is a participant in another plan
    contributions for no-participating spouse cannot be deducted if joint AGI excess 183K

    2-9
  24. when would early deduction from a IRA not cause a 10% penalty
    • reached age 59.5
    • medical expenses exceeding 7.5% AGI
    • death or disability of participant
    • first time purchase of home (10&
    • 2-9
  25. what is a Coverdell education savings account
    • allows 2000 contribution made to beneficiary who is under the age of 18
    • 2-9
  26. how are Coverdell education savings monies withdrawn tax free
    • pay elementary, middle, high school and college expenses
    • 2-9
  27. when does unspent money for Coverdell savings get taxed
    • at age 30 of beneficiary unless transfer money to another family member of same generation
    • 2-9
  28. when would jury duty be entered into AGI
    • when submitted to employer if employer reimbursed for it
    • 2-10
  29. what counts as qualified higher education and what is allowable deduction
    • courses required by employer, by law, govt. regulation, or improve/maintain skills required in performing job
    • $4,000
    • 2-10
  30. what form is used for health savings account deduction
    • 8889
    • 2-10
  31. what is the crop method of accounting
    • cost of producing crop is deducted in year the crop income is realized
    • 2-11
  32. what income items go on schedule f
    • raised livestock, produce & grains
    • livestock and other items bought for resale
    • 2-11
  33. what expenses are allowed for farmers
    • car/truck
    • chemicals & pesticides
    • depression and 179 depreciation
    • feed purchased
    • fertilizers
    • seeds & plants
    • reasonable wages paid to children, meals to feed workers
    • 2-11
  34. when do depreciation review farm income
    11-Feb
  35. what is the standard deduction if being claimed on another persons tax return
    • greater of 950 or earned income +300 never to exceed regular standard deduction
    • 2-11
  36. when would a standard deduction be increased from normal
    • if over 65 or blind
    • $1,450
    • 2-11
  37. when is a charitable deduction allowed to be deducted on taxes
    • if given cash or property and when charity receives the funds
    • 2-12
  38. what valuation is given to property for charitable contributions
    • lower of tax basis or fair market value on date of contribution
    • 2-12
  39. what valuation is given to property for charitable contributions that is held for at least one year
    • fair market value of long-term capital gains recovery
    • 2-12
  40. how much of a deduction is allowed for charitable contributions
    • 50% of AGI or 30% for long-term assets
    • 2-12
  41. what is carry foward for charitable contribution
    • 5 years
    • 2-12
  42. how much of a deduction is allowed for charitable contributions for corporations
    • 10% of ATI
    • 2-12
  43. what qualifies as an other miscellaneous expense
    • gambling losses to extent to winnings
    • estate taxes on income in respect to descendent
    • 2-12
  44. what qualifies as a miscellaneous expense
    • BIT
    • business expense as employee
    • investment costs
    • tax preparation/legal advice related to taxable income
    • 2-12
  45. what form is used for business expenses of an employee
    • form 2106 in schedule A
    • 2-12
  46. what qualifies as a business expense
    • A JAB CLUB
    • AICPA and union dues
    • job travel
    • appraisal fees for charitable donations or casualty loss
    • business mileage
    • CPE/job education
    • laptop
    • uniforms
    • business use of home
    • 2-12
  47. what is included as investment expense
    • safety deposit box
    • investment advisory fees
    • newsletters
    • and IRA custodial fees
    • 2-13
  48. what qualifies as medical expense for deductable expense
    review HW problems for items
  49. who can qualify for medical expense deduction
    • taxpayer
    • spouse
    • dependents
    • anyone who provides taxpayer over 50% of support
    • 2-13
  50. what interest is deductable
    • investment interest
    • mortgage loan interest
    • 2-13
  51. how much of mortgage loan interest is allowed of deduction
    • acquisition indebtedness to 1,000,000
    • home equity loans 100,000
    • 2-13
  52. how much is allowed for deduction of interest
    • extent of reported net investment income on tax return
    • carried forward indefinitely
    • 2-14
  53. what is definition of acquisition indebtedness
    • loans used to acquire or construct the home as well as loans that replace previous acquisition indebtedness
    • 2-14
  54. what qualifies as taxes paid for deduction
    • personal property and real estate taxes
    • state and local sales tax
    • state, local, or foreign taxes
    • 2-14
  55. what does not qualify for taxes for deduction
    • fees
    • fines
    • federal
    • FICA
    • gas
    • excise
    • 2-15
  56. what is phase-out for itemized deductions
    • misc - 2%
    • theft & casualty - 10%
    • medical - 7%
    • 2-15
  57. how is loss measured for theft & casualty
    • drop in fair market caused by event but is limited to the tax basis of asset
    • 2-15
  58. what is calculation for theft and casualty losses
    • loss
    • -insurance reimbursement
    • -$100 per event
    • -10% AGI
    • 2-15
  59. when can a child claim an exemption
    • when dependent child is not claimed as personal exemption
    • 2-15
  60. what is requirement for dependent
    • C-IRS Jack you
    • Citizen
    • income
    • relationship or unrelated household member
    • support
    • no Joint return
    • 2-16
  61. What are citizen requirements for dependence
    • US citizen
    • resident of Mexico or Canada
    • 2-15
  62. what is not considered relative for dependence
    • cousin
    • 2-16
  63. what are different credits allowed for individual tax return
    • FACE FED
    • foreign tax credit
    • adoption credits
    • child tax credit
    • education credits
    • first-time homebuyer tax credit
    • earned income credit
    • dependent and child care credit
    • 2-19
  64. what is the amount of child tax credit
    • 1,000 for children under 17
    • 2-17
  65. what is the dependent care credit based on
    • smallest of
    • actual dependent care expenses
    • earned income
    • 3,000 for one dependent or 6,000 for multiple dependents
    • 2-17
  66. what income is used for calculation of dependent care credit
    • earned income is based on lower-paid spouse
    • unless spouse in school and income based on the spouse who is gainfully employed
    • 2-17
  67. what is the amount allowed for the adoption credit
    • first 13,360 of costs and carry forward for 5 years
    • 2-18
  68. what are two different types of education credits
    • American opportunity tax credit
    • lifetime learning credit
    • 2-18
  69. what is the amount of the tax credit for the American opportunities tax credit
    • applies to first four years of post secondary school
    • 100% of first 2,000
    • 25% of next 2,000
    • per student
    • 2-18
  70. what is the amount of the tax credit for lifetime learning credit
    • applies to all other years of education
    • 20% of first 10,000
    • per family
    • 2-19
  71. what are limitations for lifetime learning and American opportunities credit
    • applies to only tuition and fees
    • credit is not available to taxpayers over a certain AGI
    • credit cannot be claimed on the tax return of the dependent
    • cannot claim both credits at the same time
    • 2-18
  72. what is the maximum investment income a person can have to still qualify for earned income credit
    • under 3,100
    • 2-18
  73. what amount is allowed for the first-time homebuyer tax credit
    • lesser of 8,000 or 10% purchase price
    • 2-19
  74. what form are estimated tax payments made
    • 1040ES
    • 2-19
  75. when are estimated tax payments due for individual taxpayers
    • months 4,6,9
    • and Jan 15
    • 2-19
  76. when would an individual be subject to underpayment tax penalty
    • balance due on the tax return is greater than 1,000 by April 15
    • 2-19
  77. how can an individual avoid the underpayment penalty for employment tax
    • withholding & estimated taxes excess 100% of prior year or 100% if taxable income is over 150,000 in PY
    • 90% of current year tax liability is paid
    • 2-19
  78. what is the penalty for underpayment for estimated tax payments
    • filing - 5% per month limited to 25%
    • payment - .5% per month
    • 2-19
  79. what is an accuracy related penalty
    • penalty of 20% if underpayment of employment taxes is attributable to negligence or disregard of rules
    • 2-20
  80. what is the calculation for alternative minimum tax for individuals
    • AMT
    • regular taxable income
    • +- adjustments and preferences
    • =AMTI before exemption
    • - exemption
    • =AMTI
    • X tax rate
    • =tentative minimum tax
    • - regular tax
    • =amt
    • 2-21
  81. what are different adjustments for AMT
    • SIMPLE PIE
    • standard deduction
    • interest on home equity loans
    • medical expenses under 10%AGI
    • personal and dependent exemptions
    • local and state income taxes, all property taxes and sales tax
    • employee business expense, tax prep and investment expense subject to 2%
    • 2-22
  82. what are preferences for AMT
    • PIE
    • private activity bond interest
    • incentive stock options
    • excess depreciation on personal property
    • 2-22

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