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  1. ´╗┐what are separelty stated items for a partnership
    • rental income/loss
    • interesst
    • dividend income
    • capital gain/losss
    • charitbale contribution
    • section 179
    • investment interest expense
    • R4-53
  2. when would a partner who has sold his shares recognize oridinary income
    based on any unrealized receivables and appreciated inventory
  3. how is stock that sold to a family member at a loss then subsequently sold gain/loss to third party
    • gain - take original family member basis to recognize gaine
    • loss - no loss can be take unless below oringial family member FMV
  4. what is does a private foundation not include
    • Max 50% charitable deduction donees
    • Broadly publicly-supported organizations
    • Supporting organizations
    • Public safety organizations
  5. what entity has their basis affected by bank loans
    partnership but not an s-corp
  6. when would a shareholder of a corp have to recognize gain on contributed property
    if there is boot and the value is lesser of boot or gain realized
  7. how is accumulated E&P and current E&P handled if two distributions occur during the same year
    • current - first distribution/total distributionXcurrent E&P for year
    • accumulated - used on first come first serve after current
  8. what propeprty dividend from a corp is taxed as dividend
    A dividend paid in property other than money is taxable to an individual taxpayer to the extent of the property's fair market value, but not in excess of the current and accumulated earnings and profits of the distributing corporation. In this case the fair market value of the dividend is $200,000. It is taxable to the extent that Kent had current earnings ($60,000) plus accumulated earnings and profits ($125,000) plus any gain generated on the distribution itself ($50,000); thus the dividend is taxable to the extent of $200,000.
  9. what amount of gain should a shareholder recognize from a corporations liquidation
    extent that FMV of asset exceeds shareholders basis in corp
  10. what are the differences between:
    incentive stock option
    employee stock option
    nonqualified plan
    • ISO - nore more than 10% shareholder, option price is less than FMV of stock at grant date, stock held for 2 years from date of grant and on year from exercise
    • ESPP - not more than 5% shareholder, option price is not less than 15% of stock price, held for 2 years from date of grant and one year from exercise
  11. what is the phase out of active participation of rental
    100-150K
  12. 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
  13. 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
  14. 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
  15. 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
  16. 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
  17. 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
  18. 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
  19. 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
  20. what is considered nontaxable income for exemption from a qualifying relative
    • social security
    • tax exempt interest income
    • tax exempt scholarships
    • B1-13
  21. 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
  22. when given property for income what value is given to property
    • FMV
    • R1-17
  23. what two fringe benefits are not taxable
    • general health
    • retirement
    • R1-18
  24. how much can be excluded from gross income for payments made by employer on behalf of employees educational expenses
    • 5,250
    • R1-19
  25. 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
  26. what interest is tax exempt
    • state and local government bonds (muni)
    • bonds of a US possession
    • Series EE (education bonds)
    • R1-22
  27. 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
  28. 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
  29. what are the different types of tax free distributions
    • return of capital
    • stock split
    • stock dividend
    • life insurance dividend
    • R1-24
  30. unearned income is taxed at the Medicare rate of what percent
    • 3.8%
    • R1-24
  31. when would state and local tax refunds be taxable
    • it the tax refund was itemized in the prior year
    • R1-25
  32. 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
  33. what is the carry forward for net income loss
    • 2 year carryback
    • 20 year carry forward
    • R1-29
  34. what is the FICA tax rate
    • Medicare - 1.45%
    • SS - 7.65% up to 113,700
    • R1-29
  35. 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
  36. 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
  37. what costs cannot be capitalized
    • RAMS
    • research
    • advertising
    • marketing
    • selling
    • R1-30
  38. what construction contracts do not have to convert to long-term construction contracts
    • small contractors & home construction contractors
    • R1-31
  39. 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
  40. how much rental income can be deducted for active rentals
    • $25K with phase-out from 100-150K
    • R1-43
  41. what value is given to prized and awards for taxable income
    • FMV
    • R1-45
  42. 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
  43. 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
  44. how much can be deducted for educator expenses
    • 250
    • R2-4
  45. 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) (95-115 if you participate)
    • R2-5
  46. what is considered compensation for IRA
    • salary
    • wages
    • commissions
    • bonuses, and
    • alimony
    • R2-6
  47. if over 50 years old how much can a person give to IRA
    • $6.5K
    • R2-7
  48. what are phase-out limits for Roth IRA
    • 112-127 MAGI (single)
    • 178-188 MAGI (joint)
    • 0-10 MAGI (Married filing separately)
    • R2-7
  49. 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
  50. what is the allowed deduction for Coverdell education savings
    • $2K annually
    • R2-9
  51. 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
  52. what is the amount to deduct for student loan interest
    • $2.5K
    • but may not be claimed as dependent
    • R2-10
  53. 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
  54. 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
  55. what expenses are reimbursable from moving expenses
    • 24 cents per mile
    • travel and lodging
    • transporting goods to new location
    • R02-12
  56. how much can a person deduct for Keogh plan
    • lessor of: $51K or 25% net (Keogh/self employed) earnings
    • R02-13
  57. 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
  58. 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
  59. what is the standard deduction amount
    • $6.1K single
    • 9K for HOH
    • R2-15
  60. what is the standard deduction amount for a dependent
    • greater of $1K or earned income plus 350
    • R2-17
  61. how much of medical expenses are allowed
    • 10% AGI
    • or 7.5% if 65 and over
    • R2-19
  62. when are points from acquisition deductible and amortized
    • acquisition indebtedness are deductible
    • refinancing are amortized
    • R2-21
  63. how long can interest expense be carried forward
    • indefinitely
    • R2-23
  64. what is the maximum allowable charitable deduction
    • 50% of AGI for cash
    • 30% of AGI for gifts of long term capital gain
    • R2-24
  65. 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
  66. what is time worked for charitable deduction allowed to be deductible
    • they are not
    • R2-25
  67. what is the carryover for excess charitable deduction
    • five years
    • R2-25
  68. 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
  69. what other miscellaneous expenses are not subject to 2%
    • gambling losses
    • federal estate tax pain on income in respect to descendent
    • R2-30
  70. what are the refundable personal tax credits
    • child tax credit
    • earned income tax
    • withholding tax
    • excess SS
    • American opportunity credit
    • R2-33
  71. 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
  72. 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
  73. what are the credits for lifetime learning
    • 20% of first $10K and does not vary by family
    • R2-37
  74. 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
  75. what are the credits for 1040
    • COMMITT
    • charitable contributions
    • other misc.
    • misc.(2%)
    • medical(10% or 7&
    • interest
    • taxes
    • theft and lossR2-17
  76. how much is the child tax credit
    • $1K per child under the age of 17
    • R2-42
  77. 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
  78. 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
  79. 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
  80. 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
  81. when are personal tax estimations not penalized
    • 90% of current years ta, or
    • 100% of PY or 110% if over 150K
    • R2-54
  82. what belief should a tax payer recommend for a tax return position
    • realistic possibility of success
    • R2-57
  83. 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
  84. 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
  85. what is an individuals basis for common stock from a corp.
    • amount contributed - cash
    • adjusted bases reduced by debt for property
    • R3-4
  86. 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
  87. 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
  88. 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
  89. 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
  90. 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
  91. how do tax and book handle organizational costs
    • tax amortizes
    • Book tests for impairment
    • R3-18
  92. what lobbying costs are allowed
    • local but not state and national
    • R3-19
  93. what is the carry forward to capital losses for a corp.
    • back 3 years and forward 5 years
    • R3-19
  94. what is the corp. tax rate for capital gains
    • ordinary tax rate
    • R3-19
  95. 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
  96. how long does stock have to be held to received DRD
    • 46 days
    • R3-23
  97. what percentage is the DRD allowed to be received.
    • 0-19.99% = 70%
    • 20-79.99% = 80%
    • 80% -100% = 100%
    • R3-23
  98. what entities are dividends not allowed to be received from
    • personal service Corp
    • personal holding company
    • S-Corp
    • R3-25
  99. 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
  100. what is a brother/sister corp.
    • individual owns two or more corps
    • R3-29
  101. what is the biggest disadvantage of filing a consolidated return
    • mandatory compliance with complex regulations
    • 1R3-29
  102. 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
  103. how is the AMT Exemption for a corp. calculated
    • 40K less 25% of MTI over $150K
    • R3-31
  104. what are tax preference for corp. AMT
    • Percentage depletion
    • private activity bond interest
    • ACRS depreciation
    • R3-33
  105. 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
  106. 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
  107. what entities will not have an accumulated earnings tax assessed
    • personal holding companies
    • tax-exempt corps
    • passive foreign investment corp.
    • R3-38
  108. 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
  109. 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
  110. 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
  111. 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
  112. 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
  113. how much of 1244 worthless stock can be expenses
    • 100K for MFJ
    • 50K for all others
    • and must be owned be original person
    • R3-47
  114. what entities are not allowed to be a shareholder for an S-Corp
    • corporations and partnerships
    • R3-48
  115. how many shareholders is an s-corp. allowed to have
    • 100 shareholders
    • R3-48
  116. 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
  117. 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
  118. when are fringe benefits deductible for S-corp.
    • non-shareholder employees and those employees shareholders owning 2% or less
    • R3-51
  119. how is the shareholder basis calculated
    • initial basis
    • + income items
    • + additional shareholder investment
    • - distribution to shareholder
    • -loss or expense items
    • =ending basis
    • R3-55
  120. what is the order of distributions from an S-Corp.
    • AAA
    • E&P
    • basis of stock
    • excess of basis of stock
    • R3-56
  121. what is real and personal property
    • real property - land & building
    • personal property - machinery, equipment, & auto
    • both not used for business
    • R4-3
  122. what is a capital asset
    • real and personal property
    • goodwill of corp.
    • copyrights purchased
    • R4-3
  123. what is not a capital asset
    • section 1231, 1245, 1250 property
    • inventory
    • copyrights held by original artist
    • treasury stock
    • R4-3
  124. 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
  125. what is the basis of property when bought by an individual
    • cost of property
    • R4-8
  126. 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
  127. 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
  128. what is the value of property that is inherited
    • FMV at date of death or alternative date
    • R4-11
  129. what is the holding period for inherited property
    • long-term
    • R4-11
  130. what is the homeowner exclusion
    • 500K for married
    • 250K for single, HOH, MFS
    • R4-13
  131. how long does a person have to live in home for homeowner exclusion
    • two years during 5 year period.
    • R4-13
  132. 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
  133. 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
  134. when would a person recognize a loss on involuntary conversion
    • if insurance money is less than adjusted basis
    • R4-16
  135. what is the realized and recognized gain for like-kind exchange
    • realized is FMV of auto received - boot paid-liability you assumed +liability they assumed- adjusted basis of auto given up
    • recognized is lesser of boot received or realized gain from above
    • R4-17
  136. what is the formula to calculate basis in like-kind property
    • adjusted basis of property given up
    • + gain recognzied
    • - loss recognized
    • + boot paid
    • - boot received
    • R4-18
  137. what happens if a loss is realized in like-kind exchange but boot was given
    no gain and no loss
  138. when is a loss recognized for like-kind exchange
    • never
    • R4-19
  139. 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
  140. who are the related parties in related party transaction
    • brother/sister
    • husband/wife
    • lineal descendants
    • entities that are more than 50% shareholders
    • R4-26
  141. when would capital gains not be recognized
    • if husband and wife, or
    • individual and a 50% controlled corp. or partnership
    • R4-26
  142. what is the basis of property for related party transactions
    • similar to gift tax
    • R4-26
  143. what is the carry forward for net capital loss (personal)
    • forward indefinitely
    • R4-28
  144. 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
  145. 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
  146. what is the amortization for intangibles
    • 15 years from acquisition
    • R4-33
  147. what is the amortization for research
    • 60 months
    • R4-33
  148. 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
  149. 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
  150. 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
  151. 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
  152. what is the partnerships basis for contributed partnership
    • greater of net book value or debt assumed
    • R4-42
  153. 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
  154. 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
  155. what value is given to property if given in a non-liquidating distribution for partnership
    • net book value, or
    • partner basis if lower than NBV
    • R4-55
  156. when would a partnership liquidation result in a gain
    • if $ received was greater than basis
    • R4-57
  157. 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
  158. is a LLC taxed more like a partnership or corp.
    • partnership
    • R4-59
  159. 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
  160. when are charitable contributions allowed as a deductions in estate
    • is contributions are provided for in will
    • R4-62
  161. what is the amount of the income distribution deductions for estates
    • lesser of:
    • actual distribution, or
    • DNI (less adjusted tax-exempt interest
    • R4-64
  162. when is an annual estate income tax required
    • when annual income exceeds 600
    • R4-64
  163. when are estimated payments required for an estate
    • after first two tax years
    • R4-64
  164. what tax years can a estate and trust use
    • estate - calendar year of FY
    • trust - calendar only
    • R4-65
  165. 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
  166. 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
  167. what items can either be expenses on income tax return or deducted as liability on estate tax return
    • medical
    • admin
    • R4-71
  168. what charitable contributions fall under unlimited exclusion
    • directly to educational institution
    • directly to health care provider
    • charitable gifts
    • marital deductions
    • R4-74
  169. what is a complete and incomplete gift
    • complete - fully given to person receiving
    • incomplete - conditional or revocable and will be part of estate tax
  170. what is the generation skipping tax
    • if give estate to grandkids taxed twice
    • R4-77
  171. what is the term for greater than 50% likelihood of tax position
    • more likely than not
    • R5-3
  172. what is the term for 33-50% likelihood of tax position
    • substantial authority
    • R5-4
  173. what is the term for 20-33% likelihood of tax position
    • reasonable basis
    • R5-4
  174. what is the difference between a tax preparer and tax practitioner
    • preparer - prepares for compensation taxes
    • practitioner - practice before IRS
    • R5-5
  175. 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
  176. what are the payment penalties understatement
    • preparer may be hit for understatement
    • preparer will be hit for willful or reckless conduct
    • R5-6
  177. 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
  178. when can a contingent fee be charged
    • IRS examination or audit
    • claim for refund or interest
    • judicial proceeding
    • R5-10
  179. what is the only power that can suspend or revoke a CPA license
    • state board
    • R5-18
  180. who prosecutes for SEC
    • department of justice
    • R5-21
  181. how long do audit work papers need to be kept for
    • 7 years
    • R5-21
  182. 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
  183. what is the penalty for negligence penalty for understatement penalty
    • 20% of understatement
    • R5-35
  184. who has right to sue in common law
    • only parties in privity
    • R5-38
  185. when can a person sue for negligence
    • LIB
    • loss occurred
    • injury suffered
    • breach of duty (failure to act without reasonable care)
    • R5-40
  186. when can a person sue for fraud
    • misrepresentation of material fact
    • intent to deceive
    • reliance on misrepresentation
    • R5-40
  187. what is the difference between actual and constructive fraud
    • fraud - intent to deceive
    • constructive fraud - act recklessly or gross negligence
    • R5-40
  188. when can a person sue under 1933 act
    • acquired stock
    • suffered a loss
    • material misstatement
    • R5-41
  189. 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
  190. what additional items did the private securities litigation reform act add to 1934 act
    • RIG
    • related party transaction
    • illegal acts
    • going concern
    • R5-42
  191. what entities (people) are required to register under 1933 act
    • issuers
    • underwriters
    • dealer
    • R5-44
  192. 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
  193. what is a shelf registration
    • issuing stock for second time and not having to go through 33 act
    • R5-45
  194. what are blue sky laws
    • state governing stocks
    • R5-45
  195. 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
  196. 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
  197. what are the dollar limits for 504, 505, 506 regulations
    • 504-$1M
    • 505-$5M
    • 506-unlimited
    • R5-49
  198. what is the best defense for 1933 act
    • due diligence
    • R5-51
  199. what two entities must register their securities
    • traded on national exchange, or
    • $10M in assets and 500 non-accredited
    • R5-51
  200. 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
  201. what is the difference between unilateral and bilateral contract
    • unilateral - promise for performance
    • bilateral - promise for a promise
    • R6-3
  202. what is the difference between executory and executed contract
    • executory - duties remain to be performed
    • executed - all duties have been performed
    • R6-4
  203. what are the three requirements for a legally enforceable contract
    • agreement (offer and acceptance)
    • exchange of consideration
    • lack of defense
    • R6-4
  204. 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
  205. when is a termination offer that was revoked effective
    • when received by offeree
    • R6-7
  206. consideration for a contract must be________
    • legally sufficient
    • R6-10
  207. who can withdraw from a voidable contract
    • the party who is hurt or victim of breach
    • R6-13
  208. 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
  209. 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
  210. 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
  211. when does the time start for the year stipulation for statue of frauds
    • date of contract
    • R6-17
  212. what is accord and satisfaction
    • substitute one contract for another
    • R6-20
  213. what is novation
    • substitutes new party for an old party
    • R6-20
  214. what is parole evidence
    • oral or written evidence mare prior to contract made contemporaneously
    • R6-21
  215. what is anticipatory repudiation
    • one person breaches contract before contract is done
    • R6-22
  216. what are compensatory damages
    • put back to where you were so not any better off
    • R6-23
  217. what is a donee and creditor beneficiary
    • donee - receive interest as gift
    • creditor = party owes them something
    • R6-25
  218. 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
  219. 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
  220. under a sales contract when does risk passes to buyer
    • if non-merchant seller - tender of delivery
    • merchant seller - actual delivery
    • R6-32
  221. 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
  222. what is strict product liability
    • defective product
    • caused injury
    • defect made unreasonably dangerous
    • seller was in business of selling goods
    • R6-38
  223. what items are copyrightable
    • literary works
    • music
    • film
    • computer programs
    • R6-43
  224. 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
  225. how longs does a patent last
    • 20 years of 14 if design patent
    • R6-45
  226. define the following types of endoresment:
    special
    blank
    restrictive
    qualified
    • special - names a particula person
    • blank - bearer paper
    • restrictive - "for deposit", "for collection"
    • qualified - without recourse
    • R7-15
  227. what are real defenses against holder in due course
    • FAIDS
    • fraud in execution
    • forgery
    • adjudicated insanity
    • aleration materially of instrument
    • infacny
    • illegality
    • duress, extreme
    • discharge in bankruptcy that are known to HDC
    • suretyship defenses
    • statue of limitations
    • R7-19
  228. who are primarily and secondarily liable in note and draft
    • primary - maker, drawee
    • secondary - drawer
    • R7-20
  229. what bankruptcy require a trustee
    • chapter 7
    • R7-46
  230. what is the involuntary gap period
    • involuntaryily petitioned into bankruptcy and have 20 days to object
    • R7-47
  231. what property is included in a bankruptcy after filing
    • divorce
    • inheritance
    • insurance iwthiont 180 days
    • R7-48
  232. what is the statue of limitations for a frauluent transfers for bankruptcy
    • 2 years
    • R7-49
  233. what debts will not be discharged in bankruptcy
    • WAFTED
    • willful and malicious injury
    • alimony
    • fraud
    • taxes
    • educational loans
    • debts undisclosed
    • R7-55
  234. what is the priority of payments in bankruptcy
    • SAG WEG ctI
    • support obligations for spouse and child
    • admin expenses
    • gap creditors
    • wages up to 12,475
    • employee benefit plan
    • grain farmers
    • consumer deposits for goods paid but not delivered
    • taxes
    • injury claims cuased by intoxication
    • R7-58
  235. define:
    exoneration
    subrogation
    reimbursement
    • exoneration - bring suit to compel payment
    • subrogation - enforcement of creditors rights to against principal
    • reimbursement - suit against principal after payment
    • R8-4
  236. what are the defenses for a surety
    • CPR'S
    • creditor acted in bad faith (fraud, duress, illegality)
    • payment has been tendered
    • release of debtor
    • surety lacks capacity
    • R8-6
  237. what is a compostion of creditors
    agreement between debtor and two cerditors where creditors take less than full payment to discharge debts

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