gleim final

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gleim final
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  1. What is the AMT formula for individuals
    • taxable income
    • + tax preference
    • + personal exemption
    • + standard deduction if not itemized
    • +- certain other adjustments
    • = Alternative minimum taxable income
    • - exemption amount
    • =alternative minimum base
    • X rate
    • = tentative minimum tax
    • - regular income tax
    • =AMT
  2. what is the fomrula to determine the rate for AMT for individuals
    rate = AMT Base (first 179,500 X 36%) and excess 28%
  3. what is the exemption for personal AMT
    • MFJ -80,800 (phaseoue .25 per 1 over 153,900
    • singler - 51,900 (phaseout .25 per 1 over 115,400
  4. what is the formula for corporate AMT
    • taxable income
    • + tax preference
    • +- adjustments
    • =gross tentative AMTI
    • +- ACE adjustment
    • -AMT NOL deduction
    • = Alternative minimum taxable income
    • - exemption amount
    • =alternative minimum base
    • X rate
    • -foreign tax credit
    • = tentative minimum tax
    • - regular income tax
  5. what are tax preference items for Corp. AMT
    • private activity bond interest - expenses to earning it (add back)
    • percentage depletion - any excee of dedcution calimed over adjusted basis
    • intangible drilling costs - add ane excess amortized over 10 years over 65% of net income from oil, gas, geothermal properties
  6. what are the tax adjustments for Corp. AMT
    • accelerated depreciation - MACRS to 150% declingin for personal property and real property is S/L @ 40 years and mid-month
    • installmenet sales - add any balance of current year gain (on disposition of stock) minus gain recognized under the installment method
    • long-term contracts - convert to percentage of completion method
    • subtract all amounts added to taxable income as a tax preference to the extent they increased the regular tax net operating loss
    • distributions from a trust or estate
  7. how do you compute the adjusted current earnings (ACE) for corp. AMT
    • ACE
    • -tentative AMTI (figure out in another question)
    • = Difference
    • X .75
  8. What adjustmetns are added or subtracted back to calculate tentative AMTI
    • organizational expendures amortized and deducted
    • 70% DRD attributable to <20% owned corps
    • life insurance proceeds on a corporate officer are added
    • installment method on nondealer is disregarded unless interest is paid
    • LIFO recapturefor excess of FIFO valuation over LIFO
    • deprecaiton is combied using the alternative depreciation system
  9. how are ACE adjsutments applied to corp. AMT
    • add ace adjustment if ACE>AMTI
    • subtract ace adjustment if ACE
  10. how is the AMT exemption calculated for a corp. AMT
    40,000 - ((AMTI - 150,000) X .25)
  11. how is the foreign tax credit cacluated for AMT
    • lower if foreign tax credit or
    • 90% of gross tentative AMT computed before ant AMT NOL deduction and foreign tax credit
  12. what is the rate for Corp AMT
    20%
  13. who is exempt from Corp AMT
    • has average gross receipts fo 5M or less for first 3 years
    • has average gross receipts of 7.5M or less for prior 3 years
  14. what are the different methods to calculating the estimated tax payments for a corp
    • 25% of tax liablity
    • annualization method
  15. what is the carryforward for AMT credit liablity
    forward indefinenttly
  16. what does Not essentially equivalent to a dividend mean
    Not essentially equivalent to a dividend means that there is a meaningful reduction in the shareholder’s proportionate interest in the corporation. Reduction in voting power is generally required.
  17. what order is retained earnings affected when a distribution from an s-corp occurs
    • aacumulated adjustment account (AAA)
    • previosuly taxed income (PTI)
    • accumulated earnings and profits (AE&P)
    • other adjsutment account (OAA)
    • stock basis
  18. what are the different committees that a bill must go through to process
    ways and means committee (house) > finance committee (senate) > if revisions then joint committee which goes back to house and senate > president
  19. what is the tax authority hierarchy
    private letter ruling, TAM>Revenue ruling, Revenue procedure >US tax district and federal claims court > treasury regulation, appellate court opinion > IRC, US supreme court > US constitution
  20. what is a revenue ruling
    official interpretation of internal revenue law as applied to a given set of faces and is intended to promote uniform application of tax laws by IRS employees
  21. where are revenue rulings published
    internal revenue bulletins
  22. what are revenue procedures
    interpretation of internal revenue law as applied to a given set of facts (admin and procedural matters)
  23. what is the internal revenue bulletin
    authoritative instrument of the commissioner of internal revenue for announcing official IRS rulings and procedures
  24. what are IRS publications
    explain the law in plain language and their advisors
  25. what is a technical advice memoranda
    requested by IRS area officers after a return has been filed in conjunction with an ongoing examination
  26. what is the difference in the different tax planning techniques: timing, shifting, conversion
    • timing - accelerates or defers recognition of income and/or deductions
    • shifting - moving income from one family member to another or jurisdiction to another
    • conversion - converting income form a less favorable category to a more favorable one
  27. what is a de jure corp.
    corp incorporated in strict compliance with the applicable state statue
  28. what is a de facto corp
    • statue under which the business could have incorporated
    • good faith but unsuccessful attempt to comply with it and
    • objective evidence that indicates an actual or attempted exercise of corporate power
  29. what is the doctrine of respndeat superior
    a principal may be liable for the agents torts but the wrongs must be committed within the scope of the agency
  30. what is the definition of quasi-public
    A quasi-public corporation is privately formed and for-profit. However, it is often heavily regulated because of its substantial effect on the public interest and its special privileges.
  31. what is an agency by estoppel
    person hols himself out as an agent and the alleged principal knows (or should have known) of the represetnation and fails to make an effective denial
  32. what is the difference between general, special, and durable power of attorney
    • general - authorizes agent to do anyhting that may be necessary to transact the principles legal affairs
    • special - authority for only specific transactions
    • durable - effective during a specific period of incapacity of the principal
  33. what are the different types of agents
    • general - perfom all acts relevant to the purpose for which they are engaged
    • universal - conduct principals business for which they can legally delgate
    • special - particular transaction
    • del credere - guarantees obligations of a third party to the principal
  34. what is a primissory estoppel
    promise is given that the promisor should resasonable expect to induce action byt the promisee
  35. what is a quasi-contract
    contract implied by law that makes no promises and reach no agreemetn however one of the parties is substantially benefited at the expense of the ther party
  36. what is a contract of adhesion
    a weaker party only choice is to accept the terms impoaed by the stronger party or forgo the transaction entirely (rental agreement)
  37. what is unconscionability
    relates to inscupulous or unreasonable activity and the contract lacks fundamental fairness
  38. what is exupatory clause
    contractual terms that excuse one pary from liability for injury or damae caused by his acts
  39. what is construtive fraud
    arises from gross negligence and a misrepresentation may bt made with a willful and reckless disregard for its truth or falsity rather than actual intent to deceive
  40. what is fraud in the incudement
    occurs when defrauded party is aware of entering into a contract and intends to do so however they are deceived about a material fact
  41. what is fraud in the execution
    occurs when the signature of a party is obtained by a fraudulent misrepresentaiton that directly relates to the signing of a contract
  42. what are voidabl reasons for a contract
    • fraud in inducement
    • negligent misrepresentation
    • innocenent misrepresentiation
    • mutaul mistake of fact
    • duress - threat
    • undue influence
  43. what are voiid reasons for a cotnract
    • fraud in execution
    • duress - physical force
  44. what is the difference between perfection of possession and control
    • possession - goods, negotialbe documents, tangible chattel paper, instruments money
    • control - investmnet property, electronic chattel paper, deposit accounts, registered security
  45. what is a fee simple, restrive convenant, license, easement
    • fee simple - totality of ownership rights recognized by law because it includes the rights of possession, exploitation, and full ownership for life or in perpetuity
    • restrive convenant - promise included in an agreement that limits the use of real property or the building that may be erected on it. The promise is usually included in a deed.
    • license - revocable personal privilege that permits one party to enter and make some use of land in possession of another without being considered a trespasser. A license is informal. It is personal to the licensee and therefore not assignable.
    • easement - right of one person to legal entry onto, and limited use of, the land of another.
  46. what is a promissory note
    contains a promise that the maker promises unconditionally to pay a fixed amount of money, to the order of the payee or bearer on demand at a definite time
  47. what is a draft
    draft contains an order to an unconditional writtedn order by oner person (the drawer) to another person (drawee) to pay a fixed amount of money to a third person either identified or bearer
  48. what is the difference between a time and sight draft
    • time - payable at definite time in the future
    • sight draft - payable on demand (upon presentiaton to the drawee
  49. what is a trade acceptance
    time draft used by sellers as a means to extend credit to buyers of their goods
  50. what type of draft is a check
    • time draft - when postdated
    • sight draft - checks written other than postated
  51. what is a blank, special, restrictive, conditional, qualified endorsement
    • blank - identifies no particular payee
    • special - specifies person instrument is payable to (pay to, pay to order)
    • restrictive - restricts instrument even furhter (deposit only)
    • conditional - subjects endorsee to happning or nonhappening of a specified event
    • qualified - disclaims or limits contractual liability on instrument (without recourse)
  52. what qualifies as a real defense
    • real defense (FABLE) -
    • forgery
    • alteration
    • bankruptcy
    • , lack of capacity,
    • execution fraud/extreme duress
  53. what qualifies as a personal defense
    • personal defense - (BUILD) -
    • breach of contract,
    • unauthorized completion,
    • inducement in fraud
    • lack of consideration,
    • duress
  54. what is the realized gain on property given to a corp
    Realized gain is:

    • Cash received
    • +Stock equity received
    • +Liability relief
    • -AB of contributed property
    • -Cash contributed
  55. what is the tax basis in shares when property given to a corp
    basis - liability assumed - boot received - gain recognized

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