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32 Cards in this Set

  • Front
  • Back
Contracts that must be in writing to be enforceable
-A promise to answer for the debts of another
-A contract to transfer an interest in real estate
-A contract which cannot, by its terms, be performed within one year from the date the agreement was made
-The UCC sale of goods of $500 or more
Elements necessary for contract
-Mutual/Real Assent
-Legal capacity
3 Elements for Offer
Firm offer requirements
1. Must be in writing
2. Must be signed by a merchant
3. The merchant must promise to keep the offer open
4. A firm offer must relate to the sale of goods
Option contract
An offer that is irrevocable for an agreed time and is supported by consideration
Accountant's liability for fraud?
Accountant is not liable for the failure to detect fraud unless it would have been detected by a normal audit.
Negotiable Instrument Requirements
1. Be written
2. Be signed by the maker or drawer
3. Contain an unconditional promise or order to pay
4. State a fixed amount in money
5. Be payable on demand or at a definite time
6. Be payable to order or bearer
Types of endorsements
-Blank endorsement
-Special endorsement
-Restrictive endorsement
-Qualified endorsement
Requirements to be a Holder in Due Course
-Be a holder of a properly negotiated instrument
-Give value for the instrument
-Take in good faith
-Take without notice that it is overdue, has been dishonored, or that any person has a defense or claim to it
When one of the original parties to contract is released and a new party is substituted in his/her place
Quitclaim deed
Provides no warranty as to title
Special warranty deed
Warranties are limited to defects which occurred during the time that the grantor owned the property
General warranty deed
1.The grantor is the true owner
2. There are no liens or claims to the property other than those disclosed in the deed
3. The grantee will have quiet enjoyment
4. The grantor will defend the title
Requirements to attach a security interest
1. The debtor must have rights in the collateral.
2. The secured party must have given value.
3. A security agreement must exist.
Requirements to perfect a security interest
-Filing a financing statement in the public records or appropriate office
-Taking physical possession
-(Neither is necessary for a purchase money security interest in consumer goods)
Purchase money security interest
Arises when a borrower uses loan proceed to purchase the items that are the collateral for the loan. It doesn't matter whether the lender is the seller of the items or is a third party, such as a bank
Taxability of life insurance dividends
Not taxable to the extent they do no exceed premiums.
When to use mid-quarter convention?
Is used if more than 40% of all personal property is placed in service in the last quarter of the taxpayer's tax year.
When to use mid-month convention?
Is used to depreciate real property.
271/2 Year depreciation life used?
Residential rental real property
Alimony Requirements
1. Payments must be made in cash
2. Payments must be to or for the benefit of the spouse
3. Lump-sum property settlements are not taxable
Deductions for business gifts are limited to?
$25 per recipient each year
Passive activity
Any activity that involves the conduct of a trade or business in which the taxpayer does "not materially participate," any rental activity, and any limited partnership interest.
Dependent's Standard Deduction
Limited to the lesser of (1) the basis standard deduction for single taxpayers of $5,700 or (2) the greater of (a) $950 or (b) the dependent's earned income plus $300
Corporate Gain/Loss Property Distributed in a non liquidating distribution
The distributing corporation recognizes gain on the distribution of appreciated property as if such property were sold for its FMV. However, no loss can be recognized on the nonliquidating distribution of property to shareholders.
Current E&P
(1) Add: Tax-exempt income, dividend received deduction, excess of MACRS depreciation over depreciation computed under ADS, etc.
(2) Deduct: Federal income taxes, net capital losses, excess charitable contributions, expenses related to tax-exempt income, penalties, etc.
-Is increased by gains on distribution of appreciated property
-Reduced by the adjusted basis or FMV of property, whichever is greater
-Increased by liabilities distributed
Personal Holding Company
1. During anytime in the last half of the tax year five or fewer individuals own more than 50% of the value of the outstanding stock directly or indirectly
2. The corporation receives at least 60% of its adjusted gross income as "personal holding company income" (ex. dividends, interest, rents, royalties, and other passive income)
Termination of S-Corp
(A) Shareholders owning more than 50% of the shares of stock of the corporation consent to revocation of the election
(B) The corporation's failing to satisfy any of the eligibility requirements. If this occurs termination is effective on the date an eligibility requirement is failed
(C) Passive investment income exceeding 25% of gross receipts for three consecutive taxable years if the corporation had subchapter C earnings and profits at the end of those years
"Above the Line" Deductions
1. One-half of self-employment tax
2. Moving expenses
3. Self-employed health insurance deduction
4. IRA deduction
5. Payment to a Keogh retirement plan
6. Penalty on early withdrawal of savings
7. Student loan interest deduction
8. Alimony paid
9. Tuition and fees deduction
10. Health savings account deduction
Itemized Deductions
1. Medical and dental expenses
2. Taxes
3. Interest expense
4. Charitable contributions
5. Casualty and theft losses
6. Miscellaneous:
(a) Subject to 2% of AGI limitation
(b) Not subject to 2% of AGI limitation
Wash sale
(1) Occurs when stock or securities (or options to acquire stock or securities) are sold at a loss and within 30 days before or after the sale, substantially identical stock or securities (or options to acquire them) in the same corporation are purchased
(2) Wash sale loss is not deductible, but is added to the basis of the new stock
(3) Wash sale rules do not apply to gains
(4) Does not apply to dealers in stock and securities where loss is sustained in ordinary course of business