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28 Cards in this Set
- Front
- Back
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What is the maximum dollar amount for 2009 that may be expensed as a Section 179 deduction?
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$250,000
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What is the total cost of Section 179 property that may be placed into service before the deduction is limited?
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$800,000
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What is the business income limitation for Section 179?
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The total 179 deduction can’t be greater than the total of business income + wages (& tips) both spouses
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What happens to the Section 179 expense that is disallowed due to the business income limitation?
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It is carried forward
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What is the basis of converted property?
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The lesser of FMV on the date of conversion or Adjusted Basis
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What triggers the mid-quarter convention?
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When more than 40% of the assets placed in service during the year are purchased and placed in service during the last quarter
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When considering the depreciable basis of property for the purposes of determining if the mid-quarter convention applies, what is not to be included?
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Assets for which the Section 179 deduction was taken; residential rental and nonresidential real property
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What is a disposition of property?
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When property is withdrawn from service in a trade or business
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What are some of the ways a property disposition could occur?
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If the property is sold, abandoned, exchanged, retired, destroyed, or converted to personal use
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If a disposition occurs before an asset is fully depreciated, may a taxpayer claim any depreciation in the year of disposition?
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Yes, a partial deduction for depreciation may be allowed
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If the business asset is sold, on what form will the sale be reported?
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Form 4797
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What special treatment is available to self-employed taxpayers with regard to health insurance premiums they pay?
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They may deduct their premiums as an adjustment to income, if they qualify
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How is the deduction limited?
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It may not exceed the net earnings from self-employment; that is, the total from Schedule C minus the deductions for one-half of the self-employment tax and contributions to a qualified retirement plan attributable to Schedule C
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What happens to any portion of the premiums that cannot be deducted as an adjustment to income?
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It can be claimed as a medical expense deduction on Schedule A
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A married taxpayer has income from self-employment, and his spouse is employed. His spouse’s employer offers health insurance, but the couple chooses not to participate in the plan offered by the company. Instead, they purchase their own health insurance. May they take the deduction for self-employed health insurance?
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No. The deduction is not available to any taxpayer for any calendar month in which the taxpayer is eligible for coverage through a subsidized health insurance plan maintained by his (or his spouse’s) employer.
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What is a SEP?
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A simplified employee pension (SEP) is an employer-funded plan under which the employer contributes to each employee’s IRA. It can also be a self-employed retirement plan.
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May an employee contribute to his SEP-IRA or separate IRA in addition to his employer contributions?
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Yes, the employee may contribute the allowed amount either to the SEP-IRA or a separate IRA, based on the rules for active participants.
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Are the employer’s contributions to an employee’s SEP-IRA reported on the tax return?
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No.
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What is the three-years-of-profit test?
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If an activity is profitable in three of the last five years, the IRS will presume that the activity is engaged in for profit by the taxpayer. However, this is only a presumption and not the law
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Carol has a home office. When she is not using it, she lets her children play video games on an old television she keeps in there. Can she deduct a home office expense?
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No. She fails the exclusive use test
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An employee has an office where he works, but his work load demands that he bring home work in the evenings and on weekends. He uses a room in his home regularly and exclusively for business. May he deduct a home office expense?
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No. It is for his convenience, not the employer’s
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An insurance salesman uses a room in his home regularly and exclusively to meet customers, make presentations and host business meetings. May he deduct a home office expense?
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Yes, provided he has no other fixed location to conduct these activities.
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What limitations apply to the deduction for business use of home?
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The deduction for rent, utilities, maintenance, and repairs may not exceed the gross income from the business reduced by all other expenses (other than home office) and also by the business portion of real estate taxes and home mortgage interest
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What is the rule regarding vehicles weighing over 6,000 lbs?
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Vehicles weighing over 6,000 lbs are not subject to depreciation limits, but are subject to other listed property rules such as if used 50% or less for business, no section 179 deduction may be taken and straight-line depreciation must be used
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If no special depreciation is taken, what is the maximum depreciation deduction allowed for a passenger automobile weighing under 6,000 lbs, for the year placed in service?
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$2,960
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Is there a difference in the depreciation limits for trucks and vans?
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If placed in service after 2002, the limits are higher than those for passenger autos.
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The ARRA increased the amount of expensing for Section 179 property placed in service in 2009 but Oregon did not follow federal. What were the limits Oregon placed?
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Maximum Section 179 of $133,000
Maximum assets of $530,000 |
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Are any adjustments required to the Oregon return for self-employed adjustments used on the federal return?
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Not for full-year residents
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