Reg - Fed Taxation, Entities

Front 1

It is important to remember the difference between Capital Account and Partnership Basis.
Basis =

Back 1

Capital Account + Partner's Share of Liabilities
B -> Beginning Cap. Account (Cash, FMV services, NBV assets, <liability>)
A -> + % All income ( ordinary, capital, tax free)
S -> <% All Losses> or <Withdraws>
________________________________________________
E -> Ending Capital Account
+ % Recource Liabilities
_________________________________________________
YEAR-END BASIS

Front 2

ORGANIZATIONAL EXPENDITURES AND START-UP COSTS
1 Tax Rule -
2. GAAP Rule -

Back 2

1. $5,000 expense max/ 180 months amortization of remainder
2. EXPENSE

Front 3

Must understand the difference
1. Nonliquidating Withdrawal =
2 . Liquidating Withdrawal =

Back 3

1. Basis used - NBV Asset Taken
Stopping point - Stop at Zero

2 Basis used - Partnership interest
Stopping point - Must "Zero-out " Account

Front 4

In order to apply the annual Exclusiton to a GIFT , it must be
1,2, 3

Back 4

1 A present interest - can use right now
2 Complete
3 under $12,000 per donee; unless paid directly to medical expenses of education expenses

Front 5

GENERALLY - NO GAIN or LOSS recognized by a partner upon the liquidation of a partnership interest, but EXCEPTIONS ARE:
1. GAIN is recognized if cash distributed is in excess of _________
2. LOSS is recognized if no property other than cash is distributed and the cash is _________

Back 5

1. THE PARTNER'S BASIS IN THE PARTNERSHIP INTEREST
2. IS LESS THAN THE PARTNER'S BASIS IN THE PARTNERSHIP INTEREST

Front 6

__________ are payments to a partner for services or capital without regard to partnership income.

Back 6

GUARANTEED PAYMENTS
must be fixed payments

Front 7

The Accounting fees to prepare the representatins in offering materials are called syndication expenses which are ________

Back 7

NOT amortizable and must be CAPITALIZED

Front 8

REVERSIONARY TRUST income is taxed to the ________ , even thought the income is distributed to the beneficiaries.

Back 8

GRANTOR

Front 9

To be a ________ gift, the grantor must relinquish all dominion and control over the transferred property.

Back 9

COMPLETED

Front 10

What type of trust
1. Distributes all current income
2. Does not distribute from trust corpus
Does not deduct charitable contributions

Back 10

SIMPLE TRUST

Front 11

A trust in which the beneficiaries are given a future right to trust income or corpus and the $12,000 gift tax exclusion is retained is called

Back 11

CRUMMY TRUST

Front 12

The difference in the treatment of purchased Good will :
1. Tax Rule -
2. GAAP Rule -

Back 12

1. Amortized on a straight-line basis over 15 years 180 months
2. Not amortized ; test for impairment.

Front 13

DEFERRED TAXES are only established for _________ differences.

Back 13

TEMPORARY

Front 14

Capital loss rules vs Net operating loss
1. Net operating loss - Offset other income, Carry back, Carry forward?
2. Corporate NET Cap. loss - Offset other income, Carry back, Carry forward?
3. Individual Net Cap. loss - Offset other income, Carry back, Carry forward?

Back 14

1. N/A, 2, 20
2. 0, 3, 5
3. $3,000 max, 0, Unlimited

Front 15

Corp. charitable contributions are limited to _________
which is calculated before deduction of
Any charitable contributions
Dividend receivable deduction
Any net oper. loss carryback
Any Capital loss carryback
US production activities deduction

Back 15

10% of Adjusted Taxable Income Limitation
Corp. charitable contributions must be paid within 2-1/2 months following the close of the year.

Front 16

To calculate M-1 of corp. tax return. Given:
1. Net income per books after tax
2. Tax- exempt interest
3. Excess book depreciation
4. Capital losses
5. Fed. income tax
6. Excess contribution
7.Premiums on officer life insurance (payable to corp)
8.Meals in excess of %50 limitation

Back 16

1. Net income per books after tax
ADD BACK:

3. Excess book depreciation
4. Capital losses
5. Fed. income tax
6. Excess contribution
7.Premiums on officer life insurance (payable to corp)
8.Meals in excess of %50 limitation

Front 17

The amount "RECAPTURED" as ordinary income is the LESSER of the

Back 17

TOTAL GAIN or
ACCUMULATED DEPRECIATION ALLOWED OR ALLOWABLE

Front 18

The minimum total voting power that a parent corp must have in a subsidiary's stock in order to be eligible for the filing of a consolidated return is _________

Back 18

80%

Front 19

DIVIDENDS RECEIVED DEDUCTION
Percentage of Ownership
1. 0% to < 20% or UNRELATED
2. 20% to < 80%
3. 80% or more

Back 19

Dividends Received Deduction
1. 70%
2. 80%
3. 100%
Deduction is calculated on the LESSER of Dividends OR Net Income

Front 20

Any time a Corp. has earnings and profits AND makes a PROPERTY nonliquidating distribution to its shareholders, the Corp. must recognize a taxable GAIN =

Back 20

FMV of property less NBV ( basis)
Gain is passed to Shareholder

Front 21

What type of Corp. this is ?
1. Eligible shareholder must be an individual, estate or certain types of trust.
2. An individual shareholder must be US citizen.
3. Corp. and Partnerships are not eligible shareholders.
4. There may not be more than 100 shareholders.
5. One class of stock with different voting rights and no preferred stock.
6. GR - Dec 31 is year end and Tax return is due March 15
7. No TAX at Corporate level

Back 21

SMALL BUSINESS CORPORATION
S CORP.

Front 22

Compute shareholder basis in S corp. stock?

Back 22

B -> initial Basis
A -> + Income Items;
+ Additional investment in stock
S -> less Distribution to shareholder
less Loss or expense items
__________________________________________________
E -> Ending Bases
Note : Loss limitation = Basis+ Direct shareholder loans - Distributions

Front 23

S corp. shareholders are taxed on "PASS-THRU" items regardless of whether of not the items have been ______ during the year.

Back 23

DISTRIBUTED TO THEM

Front 24

The Consent to form an S Corp. must be given by ___________

Back 24

ALL SHAREHOLDERS

Front 25

Built-in gains tax was enacted to prevent ___ Corp. planning on selling or distributing property from electing ______ Corp. status before the sale of distribution.

Back 25

C Corp.
S Corp.

Front 26

S Corp with C Corp. E&P
S Corp distributions are
1. Tax free to the extent of the
2. Taxable to the extent of
3 Any remaining distributions are

Back 26

1. Accumulated Adjustments Account AAA
2. Accumulated E&P of C Corp.
3. Return of Capital

Front 27

Requirement to be defined as Personal Holding Company
1 __% owned by ______
2. __% of Adjusted ordinary gross income consist of _______

Back 27

1. 50% owned by 5 or fewer INDIVIDUALS
2. 60% of Adjusted ordinary gross income consist of NIRD
N- NET RENT
I - INTEREST that is taxable
R - ROYALTIES
D - DIVIDENDS from an unrelated domestic corp.

Front 28

Corp. that is Personal Holding Company are taxed an additional 15% on company's Net Income not Distributed. Taxable income must be reduced by :
1, 2

Back 28

1.Federal tax
2 Net long-term Cap Gain net of tax

Front 29

Passive activity loss rules apply to (5)

Back 29

INDIVIDUALS
ESTATES
TRUSTS
PERSONAL SERVICE COPS.
CERTAIN CLOSELY HELD CORPS

Front 30

PASSIVE ACTIVITIES include the following:
(3)

Back 30

1. Trade or business in which the taxpayer does not materially participate
2. Rental activities - not materially participated
3. Limited partnership activity

Front 31

An 80% or more Parent does not generally recognize a G/L on the __________ of a Subsidiary company.

Back 31

LIQUIDATION

Front 32

A loss from Section 1244 is treated as ______ loss up to $___ and the rest - as Capital loss.

Back 32

ORDINARY
$50,000 if single

Front 33

ACCUMULATED EARNINGS TAX - is a penalty for not paying dividends. It is imposed on every ________ Except for Personal Holding companies.
It is imposed regardless of the number of shtockholders in a corp.

Back 33

Corporation and not Partnership

Front 34

A.M.T. Exemption is calculated as ________

Back 34

$40,000 less %25 of MTI over $150,000

Front 35

Any time a Corp is fromed and "PROPERTY" (NOT SERVICES RENDERED) is transfered to the Corp. "SOLELY IN EXCHANGE FOR STOCK" of that Corp. and immediately after the transfer, the transferresrs are "IN CONTROL - %80 of the voting power" -- G/L recognized?

Back 35

NO G/L IS RECOGNIZED

Front 36

Transfer of appreciated property to a controlled Corp. (%80) ARE TAX FREE to the extent they are exchanged solely in exchange for _________
If CASH or Other property is received, G/L is recognized = to the lesser of _______ or ________

Back 36

stock in the Corp.
CASH RECEIVED or THE APPRECIATION

Front 37

1. If a parent Corp LIQUIDATED a Subsidiary corp- G/L?
2. If a parent Corp ACQUIRED the assets of its wholly owned Subsidiary corp- G/L?

Back 37

1. G/L are not RECOGNIZED BY PARENT
2. ALL of Sub's carryovers will transfer to the Parent corp.

Front 38

Any time a Corp has E&P AND makes a PROPERTY ( non cash) NONLIQUDATING distribution to its shareholders, the Corp must recognize a Taxable GAIN = to the difference between ___________

Back 38

FMV and ITS BASIS