Becker1-6

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  1. ´╗┐what is the general rule of when a person has to file a 1040
    • equal to or greater than:
    • personal exemption, plus
    • regular standard deduction
    • B1-7
  2. when would a person have to file a 1040 if they are under the general rule for filing
    • self employment income of $400, or
    • individuals who can be claimed as a dependent, have unearned income, and gross income of $1K
    • individuals who received advanced payments of earned income credit
    • B1-7
  3. what is a dependent in regards to filing status of qualifying widow with dependent child and how long do you have to have the dependent
    • son, stepson, daughter, or stepdaughter
    • must live with for whole year
    • B1-8
  4. who does not qualify as a dependent for filing status head of household and how long must a dependent live with you for the filing status
    • cousins cannot be a dependent
    • must live with for more than half the year
    • B1-9
  5. how can a married couple claim an exemption if married filing separately
    • taxpayers spouse has no income, and
    • cannot be claimed as a dependent of another taxpayer
    • B1-10
  6. what is the phase-out for personal exemption
    • 2% for every $2.5K of which gross income exceeds:
    • 300K for married
    • 250K for single
    • B1-11
  7. what are the requirements to get an exemption from a qualifying child
    • CARES
    • close relative
    • age limit (19 or 24 if full time)
    • residency and filing requirements
    • eliminate gross income test
    • support test changes
  8. what are the requirements to get an exemption from a qualifying relative
    • SUPORT
    • support of over 50% or 10% if multiply support agreement
    • under a specific amount of taxable gross income (3,900)
    • precludes dependent filing a joint return test
    • only citizen test (US/Canada/Mexico)
    • relative test or Taxpayer lives with individual for whole year
    • B1-11
  9. what is considered nontaxable income for exemption from a qualifying relative
    • social security
    • tax exempt interest income
    • tax exempt scholarships
    • B1-13
  10. what is the difference between realization and recognition
    • realization - accrual or receipts of cash, property, or services
    • recognition - realized gain is included on tax return
    • R1-15
  11. when given property for income what value is given to property
    • FMV
    • R1-17
  12. what two fringe benefits are not taxable
    • general health
    • retirement
    • R1-18
  13. how much can be excluded from gross income for payments made by employer on behalf of employees educational expenses
    • 5,250
    • R1-19
  14. when would employer discounts on merchandise be included in gross income
    • employers gross profit percentage (paid less COGS and if negative is taxable)
    • R1-19
  15. what interest is tax exempt
    • state and local government bonds (muni)
    • bonds of a US possession
    • Series EE (education bonds)
    • R1-22
  16. how long does a stock have to be held for to have dividends qualify for lower tax rate
    • held for more than 60 days
    • R1-23
  17. what are tax rates for dividends
    • 0% - if tax bracket is 10% - 15%
    • 15% - most tax payers
    • 20% - if tax bracket is 39.6%
    • R1-24
  18. what are the different types of tax free distributions
    • return of capital
    • stock split
    • stock dividend
    • life insurance dividend
    • R1-24
  19. unearned income is taxed at the Medicare rate of what percent
    • 3.8%
    • R1-24
  20. when would state and local tax refunds be taxable
    • it the tax refund was itemized in the prior year
    • R1-25
  21. what expenses are not deductible on schedule C
    • salaries paid to the sole proprietor
    • federal income tax
    • personal expenses
    • bad debt for cash basis
    • charitable contributions
    • R1-28
  22. what is the carry forward for net income loss
    • 2 year carryback
    • 20 year carry forward
    • R1-29
  23. what is the FICA tax rate
    • Medicare - 1.45%
    • SS - 7.65% up to 113,700
    • R1-29
  24. what types of property do the uniform capitalization rules apply to:
    • production for use (fixed assets)
    • produced for sale (inventory of manufacturing firm)
    • acquired for resale(inventory of merchant)
    • R1-30
  25. When would property acquired for resale not be included in the uniform capitalization rules
    • taxpayers average gross receipts for the 3 preceding tax years do not exceed $10M
    • R1-30
  26. what costs cannot be capitalized
    • RAMS
    • research
    • advertising
    • marketing
    • selling
    • R1-30
  27. what construction contracts do not have to convert to long-term construction contracts
    • small contractors & home construction contractors
    • R1-31
  28. what are exceptions to the penalty tax for IRA early withdraw
    • HIM DEAD
    • home buyer (up to 10K)
    • insurance (medical)
    • medical expenses in excess of 10% AGI
    • disability (permanent or indefinite, but not temporary)
    • education (tuition, books, etc.)
    • and
    • death
    • R1-39
  29. how much rental income can be deducted for active rentals
    • $25K with phase-out from 100-150K
    • R1-43
  30. what value is given to prized and awards for taxable income
    • FMV
    • R1-45
  31. when is an nonqualified employee stock option taxed
    • nonqualified is taxed when granted if the option has a ascertainable value otherwise taxed when exercised.
    • R1-47
  32. what are the adjustments to gross income allowed on a 1040
    • A IDIOT SHAMES
    • alimony paid
    • IRA
    • domestic production activity
    • interest withdraw penalty
    • one half self employment FICA
    • tuition and fee deduction
    • student loan interest
    • health savings account
    • attorney fees pain in discrimination & whistle blower
    • moving expenses
    • educator expenses
    • self employment health insurance & retirement
    • R2-1
  33. how much can be deducted for educator expenses
    • 250
    • R2-4
  34. how much can a person deduct from IRA and what is the phase-out for the IRA
    • up to $5.5K
    • when AGI is between 59-69K (single) or (95-115K (joint), and
    • a taxpayer or spouse participates in another qualified plan (if spouse between 178-188K phase-out)
    • R2-5
  35. what is considered compensation for IRA
    • salary
    • wages
    • commissions
    • bonuses, and
    • alimony
    • R2-6
  36. if over 50 years old how much can a person give to IRA
    • $6.5K
    • R2-7
  37. what are phase-out limits for Roth IRA
    • 112-127 MAGI (single)
    • 178-188 MAGI (joint)
    • 0-10 MAGI (Married filing separately)
    • R2-7
  38. when can a Roth IRA be withdrawn tax free
    • HAD Death
    • Homebuyer is first time (not owned home in 2 years)
    • age 59.5
    • disability
    • death of taxpayer
    • R2-8
  39. what is the allowed deduction for Coverdell education savings
    • $2K annually
    • R2-9
  40. what is the time limitation for the Coverdell education savings
    • beneficiary reaches 30 years of age, or
    • can be transferred to another family member(including niece and nephew), if not
    • becomes taxable to beneficiary and assess a 10% penalty
    • R2-9
  41. what is the amount to deduct for student loan interest
    • $2.5K
    • but may not be claimed as dependent
    • R2-10
  42. what is the amount of deductions for tuition and fees
    • $4K
    • but cannot apply if already used the American opportunities, lifetime learning, or non-taxable education savings
    • R2-11
  43. what are the requirements for moving expenses
    • fifty miles farther from old residence his former principal place of work
    • stay for 39 weeks or 78 if self-employed
  44. what expenses are reimbursable from moving expenses
    • 24 cents per mile
    • travel and lodging
    • transporting goods to new location
    • R02-12
  45. how much can a person deduct for Keogh plan
    • lessor of: $51K or 25% net (Keogh/self employed) earnings
    • R02-13
  46. who much can a person add for Keogh plan
    • lessor of: $51K or 100% of net earnings if compensation is less than $51K
    • R02-13
  47. how do you determine the net earnings for a Keogh plan
    • Schedule C
    • Less: 1/2 self employment tax
    • less: Keogh deductions
    • = Keogh net earnings
    • R2-14
  48. what is the standard deduction amount
    • $6.1K single
    • 9K for HOH
    • R2-15
  49. what is the standard deduction amount for a dependent
    • greater of $1K or earned income plus 350
    • R2-17
  50. how much of medical expenses are allowed
    • 10% AGI
    • or 7.5% if 65 and over
    • R2-19
  51. when are points from acquisition deductible and amortized
    • acquisition indebtedness are deductible
    • refinancing are amortized
    • R2-21
  52. how long can interest expense be carried forward
    • indefinitely
    • R2-23
  53. what is the maximum allowable charitable deduction
    • 50% of AGI for cash
    • 30% of AGI for gifts of long term capital gain
    • R2-24
  54. what is the value for property given as a charitable deduction
    • FMV if held for more than 1 year, or
    • basis if not held for one year
    • R2-24
  55. what is time worked for charitable deduction allowed to be deductible
    • they are not
    • R2-25
  56. what is the carryover for excess charitable deduction
    • five years
    • R2-25
  57. what are the deductible miscellaneous itemized expenses
    • BUSHED BEET U
    • Business gifts ($25)
    • uniforms
    • subscription to professional journals
    • hobby (are not)
    • educational expenses (maintain improve skill or meet job requirements)
    • debit card fees to pay income tax
    • business use of home
    • expenses of investors (safe deposit and investment advice)
    • employment agency fees
    • tax prep fees
    • unreimbursed business expense(
    • travel, meal lodging
    • transportation expense
    • meals/entertainment)
    • R2-28
  58. what other miscellaneous expenses are not subject to 2%
    • gambling losses
    • federal estate tax pain on income in respect to descendent
    • R2-30
  59. what are the refundable personal tax credits
    • child tax credit
    • earned income tax
    • withholding tax
    • excess SS
    • American opportunity credit
    • R2-33
  60. how old does a child have to be to be qualified for child and dependent care credit,
    what are eligible expenses,
    what is the maximum %
    how many kids can be qualified
    • under 13
    • babysitter, nursery school, day care
    • 35%
    • up to 2
    • R2-33
  61. what is the amount for that is deductible for the American opportunities
    • 100% of first 2000 and 25% of next 2,000
    • and is per student basis
    • R2-36
  62. what are the credits for lifetime learning
    • 20% of first $10K and does not vary by family
    • R2-37
  63. what is the allowable tax credit for foreign tax
    • lesser of:
    • foreign tax, or
    • taxable income from foreign operations/(taxable income + exemptions) X US tax
    • R2-40
  64. what are the credits for 1040
    • COMMITT
    • charitable contributions
    • other misc.
    • misc.(2%)
    • medical(10% or 7&
    • interest
    • taxes
    • theft and lossR2-17
  65. how much is the child tax credit
    • $1K per child under the age of 17
    • R2-42
  66. what are the eligibility requirements for the earned income credit
    • live in the US for more than half the year
    • meet earned income thresholds
    • over 25 and less than 65
    • R2-42
  67. what automatically disqualifies a person from earned income credit
    • interest
    • dividends
    • net rental/royalty income
    • net capital gains,
    • net passive income
    • that are more than $3.3K
    • R2-43
  68. what is the formula for personal AMT
    • taxable income
    • +_ adjustments
    • + preferences
    • =AMTI
    • - exemption
    • =AMT Base
    • X Tax computation
    • =tentative AMT
    • -tax credits
    • =tentative minimum tax
    • R2-45
  69. what are the adjustments for personal AMT
    • PANIC TIMME
    • Passive activity losses
    • accelerate depreciation
    • net operating loss
    • installment income of a dealer
    • contracts - % of completion
    • interest deductions
    • medical deductions
    • misc. deductions not allowed
    • exemptions (personal) and standard
    • R2-50
  70. when are personal tax estimations not penalized
    • 90% of current years ta, or
    • 100% of PY or 110% if over 150K
    • R2-54
  71. what belief should a tax payer recommend for a tax return position
    • realistic possibility of success
    • R2-57
  72. what is the basis of property that is received by a corp.
    • greater or adjusted basis plus gain recognized, or
    • debt assumed by corp.
    • R3-3
  73. when would property contributed to a corp. not result in gain/loss
    • if 80% of control after transaction, and
    • no boot involved (cash withdrawn or receipt of debt securities)
    • R3-3
  74. what is an individuals basis for common stock from a corp.
    • amount contributed - cash
    • adjusted bases reduced by debt for property
    • R3-4
  75. how much domestic production deduction is allowed
    • 9% of lesser of:
    • qualified production activities income, or
    • taxable income
    • and cannot exceed 50% of the W-2 wages paid by the corp.
    • R3-15
  76. what is max charitable contribution a corp. can recognize
    • 10% of taxable income before:
    • DRD
    • net operating loss carryback
    • capital loss carryback
    • US Production activities deduction
    • R3-16
  77. what is the value given to business losses or casualty loss related to business
    • if partially destroyed is lower of decline in value or adjusted basis before casualty
    • if fully destroyed is adjusted basis of property
    • R3-17
  78. how much of expenses can a start up corp. expense in its first year
    • $5K and reduced any amount exceeding $50K
    • remainder is amortized over 180 months
    • R3-17
  79. what costs can be expenses/amortized as organizational expenses
    • DAB OF
    • drafting corporate charter
    • accounting fees
    • bylaws
    • organizational minutes
    • fees paid to the state of incorporation
    • R3-17
  80. how do tax and book handle organizational costs
    • tax amortizes
    • Book tests for impairment
    • R3-18
  81. what lobbying costs are allowed
    • local but not state and national
    • R3-19
  82. what is the carry forward to capital losses for a corp.
    • back 3 years and forward 5 years
    • R3-19
  83. what is the corp. tax rate for capital gains
    • ordinary tax rate
    • R3-19
  84. what is the formula for the general business credit
    • 25% of regular tax liability above $25K, or
    • tentative minimum tax for the year
    • R3-21
  85. how long does stock have to be held to received DRD
    • 46 days
    • R3-23
  86. what percentage is the DRD allowed to be received.
    • 0-19.99% = 70%
    • 20-79.99% = 80%
    • 80% -100% = 100%
    • R3-23
  87. what entities are dividends not allowed to be received from
    • personal service Corp
    • personal holding company
    • S-Corp
    • R3-25
  88. how can a corp. avoid paying estimated tax penalty
    • 100 percent of tax show on return for CY or PY (if there was tax liability in PY)
    • or if over 1M must pay 100% of CY only
    • R3-27
  89. what is a brother/sister corp.
    • individual owns two or more corps
    • R3-29
  90. what is the biggest disadvantage of filing a consolidated return
    • mandatory compliance with complex regulations
    • 1R3-29
  91. What is the formula for corp. AMT
    • taxable income
    • +_ adjustments
    • + preferences
    • =unadjusted AMTI
    • +- ACE
    • - AMT NOL Deduction
    • =AMTI
    • - exemption
    • =AMT Base
    • X 20%
    • =gross AMT
    • -foreign tax credit
    • =tentative minimum tax
    • R2-45
  92. how is the AMT Exemption for a corp. calculated
    • 40K less 25% of MTI over $150K
    • R3-31
  93. what are tax preference for corp. AMT
    • Percentage depletion
    • private activity bond interest
    • ACRS depreciation
    • R3-33
  94. what is the calculation for ACE for corp. AMT
    • unadjusted alternative minimum tax
    • + muni bond interest
    • + deductions related to org. expense amortization
    • + life insurance proceeds on key employees
    • + 70% DRD
    • -AMTI
    • X 75%
    • R3-34
  95. what is the accumulated earnings tax
    when is it applied
    what is the rate
    • tax for corporations that have accumulated earnings over $250K of $150K if personal service corp.
    • flat tax of 20%
    • R3-38
  96. what entities will not have an accumulated earnings tax assessed
    • personal holding companies
    • tax-exempt corps
    • passive foreign investment corp.
    • R3-38
  97. what is a personal holding corp. and what is the tax rate
    • corp./ that has more than 50% owned by 5 or fewer individuals and having 60% adjusted ordinary gross income consisting of:
    • net rent
    • interest
    • royalties (except mineral, oil, or copyright)
    • dividends from unrelated domestic corp.
    • taxed at 20% additional not distributed
    • R3-39
  98. what is a constructive dividend and what are examples
    • transactions that is in excess of fair value of service
    • excess salaries paid to shareholder employees
    • excessive rent/royalty
    • loans to shareholders with no intent to repay
    • sale of asset below FMV
    • R3-43
  99. what is a disproportionate stock redemption
    • percentage ownership after redemption is less than 50% and less than 80% of the percentage of ownership before redemption
    • R3-45
  100. what stock redemptions are traded as taxable/return exchange of stock
    • taxable - proportional, disproportional
    • exchange - partial liquidation, complete buy-out, redemption not essentially equivalent, redemption to pay estate taxes
    • R3-45
  101. what are the different types or reorganization
    • A - mergers or consolidations
    • B - stock for stock
    • C - stock for assets
    • D - dividing corp. into separate entity
    • E - recapitalization
    • F - change in ID, form, or place
    • E3-46
  102. how much of 1244 worthless stock can be expenses
    • 100K for MFJ
    • 50K for all others
    • R3-47
  103. what entities are not allowed to be a shareholder for an S-Corp
    • corporations and partnerships
    • R3-48
  104. how many shareholders is an s-corp. allowed to have
    • 100 shareholders
    • R3-48
  105. what are the principal taxes imposed on S-corps when changing from an C-corp.
    • LIFO recapture (FIFO over LIFO)
    • built in gains (sale of assets unless held for 10 years)
    • tax on passive income
    • R3-49
  106. what S-corp. expenses flow through to shareholder
    • COPS FRET PUG
    • charitable contribution
    • ordinary income
    • percentage depletion
    • Section 1231 gains and losses
    • foreign income tax
    • rental income/loss
    • expense deduction (section 179)
    • tax exempt income
    • portfolio income
    • un-recaptured section 1250 income
    • gain/loss from sale of collectables
    • R3-51
  107. when are fringe benefits deductible for S-corp.
    • non-shareholder employees and those employees shareholders owning 2% or less
    • R3-51
  108. how is the shareholder basis calculated
    • initial basis
    • + income items
    • + additional shareholder investment
    • - distribution to shareholder
    • -loss or expense items
    • =ending basis
    • R3-55
  109. what is the order of distributions from an S-Corp.
    • AAA
    • E&P
    • basis of stock
    • excess of basis of stock
    • R3-56
  110. what is real and personal property
    • real property - land & building
    • personal property - machinery, equipment, & auto
    • both not used for business
    • R4-3
  111. what is a capital asset
    • real and personal property
    • goodwill of corp.
    • copyrights purchased
    • R4-3
  112. what is not a capital asset
    • section 1231, 1245, 1250 property
    • inventory
    • copyrights held by original artist
    • treasury stock
    • R4-3
  113. How does an individual realize a gain when selling property
    • cash received
    • assumption of debt by buyer
    • property received at FMV
    • services received at FMV
    • less: selling expenses
    • R4-8
  114. what is the basis of property when bought by an individual
    • cost of property
    • R4-8
  115. what is the basis of property when received as a gift
    • donors cost basis increased by gift tax paid
    • except if FMV is lower than cost (then if sold higher than both use basis, if sold lower than both use FMV, if sold between no recognition)
    • R4-10
  116. what is the holding period for property that is gifted
    • donors holding period unless there is a loss then use date of gift
    • R4-10
  117. what is the value of property that is inherited
    • FMV at date of death or alternative date
    • R4-11
  118. what is the holding period for inherited property
    • long-term
    • R4-11
  119. what is the homeowner exclusion
    • 500K for married
    • 250K for single, HOH, MFS
    • R4-13
  120. how long does a person have to live in home for homeowner exclusion
    • two years during 5 year period.
    • R4-13
  121. when would a person recognize a gain on involuntary conversion
    • un-reinvested amount is considered gain (2 years for personal property, 3 for business)
    • R4-15
  122. what is basis of new property if purchased from involuntary conversion if insurance company gave you more money than adjusted basis
    • Cost of new building
    • Less: gain not recognized
    • E4-16
  123. when would a person recognize a loss on involuntary conversion
    • if insurance money is less than adjusted basis
    • R4-16
  124. what is the realized and recognized gain for like-kind exchange
    • realized is FMV - adjusted basis
    • recognized is lesser of boot or realized
    • R4-17
  125. what is the formula to calculate basis in like-kind property
    • FMV of like kind received
    • Less deferred gain (realized minus recognized)
    • plus deferred loss
    • R4-18
  126. when is a loss recognized for like-kind exchange
    • never
    • R4-19
  127. what is the basis of repurchased stock for a wash sale (purchased within 30 days)
    • price of new stock and plus disallowed loss
    • R4-25
  128. who are the related parties in related party transaction
    • brother/sister
    • husband/wife
    • lineal descendants
    • entities that are more than 50% shareholders
    • R4-26
  129. when would capital gains not be recognized
    • if husband and wife, or
    • individual and a 50% controlled corp. or partnership
    • R4-26
  130. what is the basis of property for related party transactions
    • similar to gift tax
    • R4-26
  131. what is the carry forward for net capital loss (personal)
    • forward indefinitely
    • R4-28
  132. what convention is used for MACRS property other than real estate
    • half year convention
    • mid quarter if 40% of property purchased in last quarter
    • R4-30
  133. how is residential rental and nonresidential real property depreciated with MACRS
    • both mid-month convention, salvage value ignored
    • residential - 27.5 years
    • nonresidential - 39 years
    • R4-30
  134. what is the amortization for intangibles
    • 15 years from acquisition
    • R4-33
  135. what is the amortization for research
    • 60 months
    • R4-33
  136. what happens if Section 1245 property is sold
    • loss - treated as ordinary loss
    • ordinary income - extent of accumulated depreciation
    • section 1231 (capital) - gain on sale in excess original cost
    • R4-35
  137. what happens if Section 1250 property is sold
    • depreciation in excess of S/L is ordinary income
    • and remaining is taxed at 25%
    • R4-35
  138. when would a gain/loss be recognized on a contribution of property to a partnership
    • property is subject to liability greater than book value
    • R4-40
  139. what is the holding period if a partnership receives property from a partner
    • if section 1231 then holding period of partner
    • if ordinary income asset (inventory) the date the property is contributed to partnership
    • R4-42
  140. what is the partnerships basis for contributed partnership
    • greater of net book value or debt assumed
    • R4-42
  141. what is the calculation to determine the partners basis formula
    • beginning capital account
    • + % all income (ordinary, capital, tax free)
    • - % all losses (up to basis)
    • - withdraws (if property reduced at NBV)
    • =ending capital
    • + % recourse liability
    • =year end basis
    • R4-43
  142. when does a partnership terminate
    • operations cease
    • 50% or more of capital and profits sold in 12 month period
    • less than 2 partners
    • R4-44
  143. what value is given to property if given in a non-liquidating distribution
    • net book value, or
    • partner basis if lower than NBV
    • R4-55
  144. when would a partnership liquidation result in a gain
    • if $ received was greater than basis
    • R4-57
  145. when would the sale of a partnership result as ordinary income instead of capital gain
    • unrealized (cash basis) receivables
    • appreciated inventory
    • recapture income regarding depreciable assets
    • R4-58
  146. is a LLC taxed more like a partnership or corp.
    • partnership
    • R4-59
  147. how is the calculation for distributable net income
    • estate (trust) gross income
    • less: estate (trust) deductions
    • =adjusted total income
    • + adjusted tax-exempt interest
    • - capital gains
    • =DNI
    • R4-62
  148. when are charitable contributions allowed as a deductions in estate
    • is contributions are provided for in will
    • R4-62
  149. what is the amount of the income distribution deductions for estates
    • lesser of:
    • actual distribution, or
    • DNI (less adjusted tax-exempt interest
    • R4-64
  150. when is an annual estate income tax required
    • when annual income exceeds 600
    • R4-64
  151. when are estimated payments required for an estate
    • after first two tax years
    • R4-64
  152. what tax years can a estate and trust use
    • estate - calendar year of FY
    • trust - calendar only
    • R4-65
  153. what are key items to know about simple trust
    • cannot distribute income from corpus
    • distribute all its income currently
    • cannot take a deduction for charitable contribution
    • $300 exemption
    • R4-65
  154. how is property included in a gross estate
    • FMV and split 50/50 with spouse, or
    • if other joint then 100% less other owners contribution
    • R4-69
  155. what items can either be expenses on income tax return or deducted as liability on estate tax return
    • medical
    • admin
    • R4-71
  156. what charitable contributions fall under unlimited exclusion
    • directly to educational institution
    • directly to health care provider
    • charitable gifts
    • marital deductions
    • R4-74
  157. what is a complete and incomplete gift
    • complete - fully given to person receiving
    • incomplete - conditional or revocable and will be part of estate tax
  158. what is the generation skipping tax
    • if give estate to grandkids taxed twice
    • R4-77
  159. what is the term for greater than 50% likelihood of tax position
    • more likely than not
    • R5-3
  160. what is the term for 33-50% likelihood of tax position
    • substantial authority
    • R5-4
  161. what is the term for 20-33% likelihood of tax position
    • reasonable basis
    • R5-4
  162. what is the difference between a tax preparer and tax practitioner
    • preparer - prepares for compensation taxes
    • practitioner - practice before IRS
    • R5-5
  163. when is a tax position considered unreasonable
    • normal substantial authority
    • position disclosed can have reasonable basis
    • tax shelter can have more likely than not
    • R5-5
  164. what are the payment penalties understatement
    • preparer may be hit for understatement
    • preparer will be hit for willful or reckless conduct
    • R5-6
  165. how long does a tax preparer have to keep their records
    what information do they need to keep
    • 3 years following the last day of the return period
    • keep either a copy of the return or listing of the name and ID of each taxpayer
    • R5-7
  166. when can a contingent fee be charged
    • IRS examination or audit
    • claim for refund or interest
    • judicial proceeding
    • R5-10
  167. what is the only power that can suspend or revoke a CPA license
    • state board
    • R5-18
  168. who prosecutes for SEC
    • department of justice
    • R5-21
  169. how long do audit work papers need to be kept for
    • 7 years
    • R5-21
  170. what is the appeals process for IRS audit
    • get a preliminary notice (30 day letter or right to appeal)
    • appeal officer or 90 day letter
    • court
    • R5-32
  171. what is the penalty for negligence penalty for understatement penalty
    • 20% of understatement
    • R5-35
  172. who has right to sue in common law
    • only parties in privity
    • R5-38
  173. when can a person sue for negligence
    • LIB
    • loss occurred
    • injury suffered
    • breach of duty (failure to act without reasonable care)
    • R5-40
  174. when can a person sue for fraud
    • misrepresentation of material fact
    • intent to deceive
    • reliance on misrepresentation
    • R5-40
  175. what is the difference between actual and constructive fraud
    • fraud - intent to deceive
    • constructive fraud - act recklessly or gross negligence
    • R5-40
  176. when can a person sue under 1933 act
    • acquired stock
    • suffered a loss
    • material misstatement
    • R5-41
  177. when can a person sue under 1934 act
    • acquired stock
    • suffered a loss
    • material misstatement
    • scienter (intent to deceive or reckless disregard for truth)
    • R5-41
  178. what additional items did the private securities litigation reform act add to 1934 act
    • RIG
    • related party transaction
    • illegal acts
    • going concern
    • R5-42
  179. what entities (people) are required to register under 1933 act
    • issuers
    • underwriters
    • dealer
    • R5-44
  180. what information is given for a registration statement
    • NAPA
    • names and addresses of director, officers, underwriter, and 10% shareholder
    • amount of stock
    • purpose of stock
    • anything that might affect the value
    • R5-45
  181. what is a shelf registration
    • issuing stock for second time and not having to go through 33 act
    • R5-45
  182. what are blue sky laws
    • state governing stocks
    • R5-45
  183. what option does a corp. have after registration but before 20 day waiting period is over
    • TOPS
    • tombstone ad
    • oral offer
    • preliminary prospectus (red herring)
    • summary prospectus
    • R5-46
  184. what securities are exempt from filing under 1933 act
    • ACID BRAINS
    • regulation A
    • commercial paper/casual sale
    • intrastate
    • regulation D
    • brokerage transactions
    • regulated industries
    • agencies of the Gov..
    • insurance contracts/policies
    • not for profit
    • stock dividends and splits
    • R5-47
  185. what are the dollar limits for 504, 505, 506 regulations
    • 504-$1M
    • 505-$5M
    • 506-unlimited
    • R5-49
  186. what is the best defense for 1933 act
    • due diligence
    • R5-51
  187. what two entities must register their securities
    • traded on national exchange, or
    • $10M in assets and 500 non-accredited
    • R5-51
  188. what are the different methods of formation for a contract
    • express - oral or written
    • implied - conduct
    • implied in law/quasi contract - prevent unjust enrichment
    • R6-3
  189. what is the difference between unilateral and bilateral contract
    • unilateral - promise for performance
    • bilateral - promise for a promise
    • R6-3
  190. what is the difference between executory and executed contract
    • executory - duties remain to be performed
    • executed - all duties have been performed
    • R6-4
  191. what are the three requirements for a legally enforceable contract
    • agreement (offer and acceptance)
    • exchange of consideration
    • lack of defense
    • R6-4
  192. what terms must be definite and certain in a contract
    • identity of offeree
    • price to be paid
    • time of performance
    • quantity to be involved
    • nature of work
    • R6-5
  193. when is a termination offer that was revoked effective
    • when received by offeree
    • R6-7
  194. consideration for a contract must be________
    • legally sufficient
    • R6-10
  195. who can withdraw from a voidable contract
    • the party who is hurt or victim of breach
    • R6-13
  196. what are voidable reasons for a contract
    • MID FUN
    • mutual mistake of fact
    • innocent misrepresentation
    • duress - threat
    • fraud in inducement - terms are materially misstated
    • undue influence
    • negligent misrepresentation
    • R6-13
  197. what are void reasons for a contract
    • fraud in execution - deceived into signing something that he does not know is a contract
    • duress - physical force
    • mental incapacity
    • R6-13
  198. what contracts require writing
    • MY LEGS
    • marriage
    • year - cannot be performed
    • land
    • executors to pay estate debts
    • goods for $500 or more
    • surety
    • R6-16
  199. when does the time start for the year stipulation for statue of frauds
    • date of contract
    • R6-17
  200. what is accord and satisfaction
    • substitute one contract for another
    • R6-20
  201. what is novation
    • substitutes new party for an old party
    • R6-20
  202. what is parole evidence
    • oral or written evidence mare prior to contract made contemporaneously
    • R6-21
  203. what is anticipatory repudiation
    • one person breaches contract before contract is done
    • R6-22
  204. what are compensatory damages
    • put back to where you were so not any better off
    • R6-23
  205. what is a donee and creditor beneficiary
    • donee - receive interest as gift
    • creditor = party owes them something
    • R6-25
  206. what are the required elements for a sales contract
    • seller must be a merchant
    • offer in writing and signed by merchant
    • assurance it will be kept open
    • R6-28
  207. what happens if non-conforming gods are shipped in sales contract
    • both an acceptance and breach of contract. If receiver accepts goods then it is a contract if not it is breach
    • R6-29
  208. under a sales contract when does risk passes to buyer
    • if non-merchant seller - tender of delivery
    • merchant seller - actual delivery
    • R6-32
  209. what are the difference between
    express warranty
    implied warranty of title
    implied warranty of merchantability
    implied warranty of fitness
    • express - oral or written
    • title - good title, no encumbrances
    • merchantability - goods fir for ordinary purpose
    • fitness - seller selects goods for particular purpose
    • R6-37
  210. what is strict product liability
    • defective product
    • caused injury
    • defect made unreasonably dangerous
    • seller was in business of selling goods
    • R6-38
  211. what items are copyrightable
    • literary works
    • music
    • film
    • computer programs
    • R6-43
  212. how long does a copyright last for
    • age of author plus 70 years
    • 95 years if owned by a company from published date or 120 years from creation
    • R6-43
  213. how longs does a patent last
    • 20 years of 14 if design patent
    • R6-45

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