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285 Cards in this Set

  • Front
  • Back
Inclusion of SS inc in GI
The amount of social security benefits that is taxed is dependent on whether be combination income AGI plus interests on tax exempt bonds and 50% of the social security benefit is greater than the threshold amount if the combined income is less than the threshold amount the amount tax is the lesser of 1) 50% or of the benefit or 2) 50% of the excess of the combined income over the threshold. if the combined income is greater than a threshold the amount taxed is the lesser of 1) amount calculated above 85% of the excess of the combined income over the threshold or 2) 85% of the benefit thus 85% of the benefit is the maximum out of tax that may be included in gross income

Inclusion of SS inc in GI

The amount of social security benefits that is taxed is dependent on whether be combination income AGI plus interests on tax exempt bonds and 50% of the social security benefit is greater than the threshold amount if the combined income is less than the threshold amount the amount tax is the lesser of 1) 50% or of the benefit or 2) 50% of the excess of the combined income over the threshold. if the combined income is greater than a threshold the amount taxed is the lesser of 1) amount calculated above 85% of the excess of the combined income over the threshold or 2) 85% of the benefit thus 85% of the benefit is the maximum out of tax that may be included in gross income

Tax exempt awards

Generally the fair market value of the prizes and awards is taxable income. However an exclusion from income for certain prizes and awards applies when the winner is selected for the award without entering into a contest [i.e. Without any action on the individual's part] and when they assigns the award directly to a Government or charitable organization

Wages and unemployment compensation

Gross income includes all income unless it is specifically excluded in the tax code. Wages and all unemployment compensation are not excluded from being taxable; therefore, there are included in the taxpayer's gross income for tax purposes ....

Accruable expense

one in Which the services have been received/performed but have not been paid for by the end of the reporting. ....


Scholarships are non taxable for degree seeking student to the extent that the proceeds are spent on tuition, fee, books and supplies. ....

Series EE bond interest

  • Qualified higher education expenses are tuition and and fees required for the enrollment or attendance of the taxpayer, the taxpayer's spouse, or any dependent for whom the taxpayer is allowed as a dependency exemption, at an eligible educational institution.
  • the expenses otherwise taken into account must be reduced by the amounts received for excludable qualifying scholarships, certain educational assistance allowances, and other tax exempt payments (other than gifts, bequest, devises, or inheritance).

Property settlements

Non taxable

Ira withdraw

  • Generally unless an exception applies, retirement money cannot be withdrawn until the individual reaches the age of 59.5.
  • If retirement money (without an Exception) is withdrawn before the age of 59.5, the premature distribution is subject to a 10% penalty tax (in addition to be applicable regular income tax that applies to all distributions of traditional Ira money).

Premature distribution

Generally a premature distribution (prior to retirement or other allowable age) from an individual retirement account is subject to a 10% penalty tax. Certain exceptions allowed.

Exceptions to 10% tax penalty

  • home buyer 1st time $10000 Max if Used towards 1st home
  • Insurance
  • medical medical expenses in excess of 10% of AGI
  • disability
  • education
  • death

Circular 230

  • Circular 230 addresses the practices before IRS of:

  1. 1. Rules governing the authority to practice before the IRS
  2. 2. Duties and restrictions related to practice before they IRS
  3. 3. Sanctions of violations of the regulations
  4. 4. Rules applicable to disciplinary proceedings

Rules governing practice before the IRS apply to

  • attorneys
  • certified public accountant
  • Enrolled agents
  • enrolled actuaries
  • enrolled retirement plan agents individuals providing appraisals used in connection with tax Matters ( charitable Contribution or is; eststes and gift assets; fair market value for sales gain, etc) ....

Circular 230 duties and restrictions

The information to be furnished

the time in which matter should be addressed with the IRSAssistance from or to disbarred or suspended persons and former IRS employees Practice by former government government employees, their partners, and their associates Fees Conflicts of interests Advertising Fee informacion Best practices for tax advisers Other various issues including client refunds, notary, practice of Law, referral agreements, and standard email disclaimer used in practice ....


An agency is a legal relationship in which the principal appoints an agent to act on his behalf

Creation of the agency relationship

The principal must have capacity (not a minor )

Writing is not generally required. Unless you buy or sell land or agency is last more than a year

Agent (capacity not required)Minor can be an Agent

Consideration is not required for an agency relationship

Implied duties agency relationship

  • Loyalty: agent must act solely in the principles best interests
  • Obedience: Agent must obey principles reasonable instructions
  • Reasonable care: agent must not act Neglectfully
  • Duty to account: for money and property received and paid out
  • Sub Agent if agent is authorized to hire sub agent sub agent those duty of care to both agent and principal

Basis of a non taxable stock split dividend

The receipt of a non taxable stock dividend will require the shareholder to spread the basis of his original share over both the original and new shares received resulting in the same total basis, but a lower basis per share of stick held.

Property acquired as a gift

Generally retains the rollover cost basis as it had in the hands of the donor At the time of the gift. Basis is increased By any gift tax paid Attributable to the appreciation In the value of the gift. There is exception to the General role: if the fair market value at the date of the gift Is lower than the roll over cost basis from the donor The basis for the donee depends upon the donee's future selling price of the asset

Alternate evaluation date

The executor can elect to use an alternate valuation date rather than the date the defendant died to value the property included in the gross estate . Generally 6 mths after decedants death or the earlier date of sale or distribution

The de minimise rule

Must have written policy to expense certain property as of the beginning of the year for financial stmts. Max $5k

Dividend from unaffiliates

Allowed a 70% div received deduction

Meals and entertainment

Only 50 percent deductible

Schedule M-1

  • Reconciliation of income (loss) per books to tax return
  • Both permanent and temporary differences

  1. 1) reported as income for book purposes but not tax purposes
  2. 2) reported as an expense for book purposes but not tax purposes
  3. 3) reported as taxable income for tax purposes but not as income for book purposes
  4. 4) reported as deductible for tax purposes but not as an expense for book purposes

Premiums paid on key person life insurance policy

Deductible for GAAP not book

Schedule M-2

Reconciliation of unappropriated earnings

Organizational cost in the year of organization

Max $5k deductible remainder must be amortized over 180 months

Agents power to contractually bind principle

  • Principle is bound by agent if agent acted with authority
  • 2 kinds of authority
  • Actual
  • Apparent

Actual Authority

  • Authority agent reasonably believes that he possesses because of the principal's communication to agent
  • Express principle agent specifically grants the power
  • Implied agent reasonably believes that he has authority based on dealings between principle and agent ; includes authority necessary to run the business or carry out agency agreement
  • Termination actual authority can be terminated by agreement of the parties, accomplishment of objective, or expiration of stated time. Also terminated by death of either party, incapacity of principle, principle's discharge in bankruptcy, failure to have a required license, destruction of subject matter or subsequent illegality

Apparent authority

Power that a third party reasonably believes agent has, based on principle's conduct or communication toward 3rd party

Holding agent out under a specific title(e.g., an agent held out ad a store manager has apparent authority to do whatever store managers in a similar business in the area do

Failure to give notice of agents termination

Ratification of a previously unauthorized act

  • Can also bind principle
  • Requirements:
  • Agent must have indicated that she was acting on behalf of principle;
  • All material facts must be disclosed to principle
  • Principal must ratify entire transaction

Disclosed principle

If principle existence and identity are known to the third party agent is not liable

Partially disclosed or undisclosed principle

If third party does not know that agent is an agent or does not know principle's identity, agent is liable under contract along with principle

Tort liability

GR: principle is not liable for torts commited by agent; only agent is liable

Respondeat superior

  • Employer can be held liable for employee tort committed with in the scope of employment (while employee is performing services for employer)
  • Difference between employee and independent contractor is that the employer principle has right to control manner on which employee work is performed


Uses employer tools

Compensated on a timely basis

Subject to supervision of employer in the details of the work

Independent contractors

  • Has a calling of his own
  • Uses his own tools
  • Is hired for a particular job
  • Is paid a given amount for the job
  • Follows his own direction


Is one who assists the agent in the performance of his or her duties. Owes a duty to both the agent and principle

Writing requirement for agency

  • Generally not required even if contract that the agent enter on the principle's behalf must be evidenced by right
  • Exception:
  • Land
  • Takes more than a year to complete

Simple trust

  • Can only make distribution out of current income
  • Is required to distribute all of its current income
  • Is not allowed a charitable contribution
  • Has an exemption of $300

Order that stock basis is changed

  1. 1. Increased from income item and excess depletion
  2. 2. Decreased for distribution
  3. 3. Decreased for nondeductible, non-capital depletion and expenses
  4. 4. Decreased for items of loss and deductions

Computing shareholder baisis (s corp)

  • Initial basis
  • +income items
  • -addt'l sh investment in
  • -distribution
  • -losses

Capital Assets

  • Real and personal property held by individual taxpayer:
  • * personal auto for individual txpyr
  • * furniture and fixture for home of individual txpyr
  • * stocks and securties of all types
  • * personal property of individual not used in trade/ business
  • * real property of individual not used in trade/ business
  • * interest in partnership
  • * goodwill of corporation
  • *Copyright, literary, musical, or artist composition that have been purchased
  • * assets held for investment

Netting rules for short term capital gain/loss

1. First offset against ST gain that would be taxable at ordinary income rates

2. LT cap gains from 28% rate group

3. 25% rate group

4. Lower (15%) rate.

Netting rules for long term capital gain

1. If there any long term capital losses (this includes any long term capital loss carry overs) from the 28% rate group, they are 1st offset against any net gains from the 25% rate group and then against any net gains from the 15% rate group

2. If there any long term capital losses (this includes any long term capital loss carry overs) from the 15% rate group , they are offset first against gains from a 28% rate group and then against Net gain from the 25% rate group

Section 1231

Depreciable business property

Machinery and equipment

  • Half Year convention
  • Mid quarter convention (if over 40% is in last quarter

Real estate

Mid month convention

IRC sec 179

Tangible property acquired from an unrelated party for use in the active conduct of trade or business

Mid- Quarter convention

One attacks pair of places 40% or more of its property (other than certain qualifying real estate properties ) Into service in the last quarter of the taxable year the corporation must use the mid quarter convention for macrs depreciation purposes.

Nonresident property

Depreciated over 39 years straight line if placed in service after 1993

MACRS 5 yr property

  • Automobiles
  • Light trucks
  • Computers
  • Typewriters
  • Copiers
  • Duplicating equipment
  • And other such items

MACRS 7YR property

  • Office furniture and fixtures
  • Equipment and property with no ADR midpoint classificationRail road track
  • n
  • Rail road track

Chap 7

A discharge discharges most debts whether or not there is a bankruptcy estate.

Chap 9

Municipal debt adjustment

Chap 7

Provides for liquidation of debtor estate

Debtor may not obtain another bankruptcy for 8 yrs

Chap 11

  • Debt reorganization
  • Requires:
  • Reorganization plan must me filed
  • Plan must be approved by court
  • Each class of claimants has the opportunity to accept the plan

Chap 13

Adjustment of debts of individuals with regular income

Bankruptcy estates

Includes property the debt receives from a bequest, devise, inheritance, property settlement, divorce decreeor beneficial interest in a life insurance policy or death benefit plan within 180 days after the filing of petition. Any income generated by estate property ( rent interest dividend) after petition is filed.

Earned income after the case is generally excluded

Excluded from Bankruptcy estate

  • Earned income
  • Alimony or support payments
  • Gov't benefits
  • Income after 180 days

Involuntary petition for bankruptcy

If fewer than 12 creditors:

One or more with unsecured and undisputed claims that aggregate at least $15,775 more than the value of any collateral securing the claim

If more than 12 at least 3 must join

The filing of a petition in bankruptcy invokes an automatic stay against all attempts to collect on most debts

Chap 7 proceeding events

  • Trustee appointed
  • Stay against creditor. Collection proceedings will go into effect

Preferential treatment

A transfer of the debtors property to or for the benefit of a creditor for an antecedent debt ar a time when the debtors wad insolvent and within 90 dausbof filing the bankruptcy petition constitutes a preference if the transfer gives the transferee more the transferee more than they would have obtained under the bankruptcy code

Not a preferential payment if it is made in the ordinary course of business, according to the ordinary business terms, and for the purpose of repaying a debt incurred in the ordinary course of business

Corporation capital loss

A corporation may not deduct any NOL from ordinary income instead they can carry it back 3 years or forward 5 years as a short term loss against capital gains or 1231 gains

Liquidating distribution

When a corp liquidates and distributes assets to shareholders, gain is recognized to the extent that the fair market value of assets distributed to a shareholder exceeds the shareholder basis

Type b reorganization

The acquisition of a controlling interest (80%) by one corp in then stock of Another company solely for stock is. Tax free reorganization

Stock of target corporation is acquired solely for the voting stock either the acquiring corporation or its parent

Complete liquidation

Shareholder should treat property received in complete liquidation of a corp as a payment for their stock. Must recognize capital gain or loss

Type A


Generally no gain or loss is recognized by shareholders of various corp except to the extent they receive cash or other consideration in addition to the stock or security.

In addition neither corporation pursuant to a tax free re org

gain realized

the realized gain is claculated as the fair market value of the property contributed for value in corporation less the shareholder's basis in property

gain recognized

the gain recognized is the gain that is reported (recognized) on the tax return of the taxpayer. If there is a realized gain and boot (e.g. cash) gain may be recognized, but only to the extent of boot. If there is no boot received, no gain is recognized for tax purposes

tax basis in shares

the shareholder's tax basis in the shares is generally equal to the shareholder's net book value of the property immediately before the contribution plus any cash contributed. Remember the transfer of property is generally a non-taxable event, which means that basis is the net book value of the shareholder.

Debt exceeds the basis of the contributed property

if debt exceeds the basis of contributed property -> taxable boot stemming from the debt relief on the contribution

Benefits received from a traditional non-dedicutible IRA

the principal, which was not decutible when contributed, is non-taxable. the accumulated earnings on the principal are taxable when withdrawn

Personal Residence exclusion

the sale of the taxpayer's personal residence is subject to an exclusion from gross income for gain. For qualified single individuals, the exclusion from tgain is $250K.

Legal liabilities

  • Breach of contract
  • Tort
  • Violating statues

Civil actions

  • Civil actions for tax malpractice usually based on either:
  • traditional contract
  • traditional tort principles

  • sue for damages

Contract principles

contract principles impose the obligation to prepare the tax return diligently and competently

Tort Principles

Tort Principles provide that professional has a duty to exercise the level of care, skill, and diligence commonly exercised by other members of the profession under similar circumstances.

prove malpractice

  • owed duty
  • breach of that duty
  • suffered injuries
  • cause between injury suffered and the duty of the tax preparer

  • adhere to contract terms or certain standard of care

Breach of contract

best defense - client failure to cooperate

can only be sued by people privity to contract


client and named third party beneficiary


  • wrongful action
  • unintentional
  • intentionally/ willfully / fraud
  • negligence, ordinary
  • constructive fraud - grossly negligence
  • fraud


punitive damages


  • breach duty to perform due care

  • best defense - due diligence

Element to sue for ordinary negligence

  • duty of care
  • breach of that duty
  • caused plaintiff's injury and damages

  • * must properly supervise
  • * failure to warn of known internal control weakness

Negligence ( Who do you owe a duty to)

generally only to clients and any person or limited foreseeable class of persons whom the CPA knows will be relying on the CPA's work ( current creditor/ investors

more than just privity

minority - Ultramares decision - negligence is just like breach of contract - so only privity ( name 3rd party and client )

Fraud ( constructive)

bad faith - punitive damages as well and more people can sue

element for intentional misrepresentations

  • Misrepresentation of material act

  • Intent to deceive ( scienter)

  • An intent to induce plaintiff to rely on misrepresentation

  • Damages

  • actual and justifiable reliance


"reasonable care"

due care is taken = no negligence = not liable

Lack of reasonable care

  • ordinary negligence

  • CPA is liable to anyone he or she knows or reasonably should expect will rely on his/her work

Lack of even slight care

gross negligence or constructive fraud

Actual Fraud

Actual intent to deceive

criminal fraud

actual intent to deceive

Compensatory Damages

  • tax return prep malpractice have mutlple components:

  • Taxes

  • penalties

  • Interest

  • Cost Incurred to correct tax returns

  • Consequential damages ( lost investment opportunties or income opportunties

Duty of confidentials

  • rules of evidence protect info exchanged in confidential relationships ( attorney client, doctor patient, husband wife)

  • information exchanged within the scope of the relationship may not be disclosed as evidence in court without consent of the privilege holder

CPA privilege

  • attorney client privilege ( hired by the attorney)

  • work product privilege ( preparation for litigation)

  • Tax practioner-taxpayer privilege - only for federally authorized tax practioners under IRC Sec 7525

IRC Sec 7525

  • same common law protections of confidentiality that apply to a communication between a taxpayer and an attorney also apply to a communication between taxpayer and any federally authorized tax practitioner

  • only applies in noncriminal cases
  • does not apply to tax shelter

Federally authorized tax practicioner

  • authorized under federal law to practice before the IRD. IT is a category that includes certified public accounts, enrolled agents, and enrolled actuaries

  • they and work papers can not be forced or

tax shelter

primary purpose tax avoidance or tax evasion

S - corp stock basis

adjusted annually, as of the last day of the year


1. increased for income items and excess depletion

2. decreased for distributions

3. decreased for non-deductible, non-capital expenses and depletion

3. decreased for items of loss and deduction

taxability of a non-dividend distribution

the shareholder looks solely to stock basis (debt basis is not considered)

s corp election revocation

s corp status can be revoked if shareholders owning more than 50% of the total number of issued and outstanding shares consent. The specific percentage of voting and nonvoting shareholders is not considered , just the total.

qualifications to be a S Corp

  • S corp can only have one class of stock outstanding ( just common stock)

  • One class of stock with different voting rights is allowed for S corp

  • Individuals estates and certain trust maybe s corps

  • Grantor trusts, Section 678 trusts, qualified Subchapter S trusts (QSSTs), certain testamentary trusts, voting trusts

trusts allowed to be in S Corps

  • Grantor trusts

  • Section 678 trusts

  • qualified Subchapter S trusts (QSSTs)

  • Certain testamentary trusts

  • voting trusts

Partnership termination

  • among other events, a partnership terminates if more than 50% of its interests change hands within 12 months

  • When a partnership is terminated for tax purposes and its remaining partners decide to carry on the partnership business is a (deemed) new partnership,
  • tax law treats this as a distribution of the prior partnership's assets followed by a recontribution of the (deemed) distributed assets to the new partnership

Qualified Stock Options

1. options granted under a plan approved by the shareholders

2. options granted within 10 years of earlier of the date when the plan was adopted or approved

3. the options were exercisable within 10 years of the grant date and employees do not own more than 10% of the combined voting power of the corporation, parent, or subsidiary as of the date of the grant

employee's do not pick up any income on the grant date, or exercised date. All income is picked up on the date stock is sold as capital income

non-qualified plan

  • taxed when granted if the option has a readily ascertainable value

  • if the stock does not have a readily determined value you pay the tax on the date stock is exercised and then when you sell it

  • employer may recognized a deductible expense for a nonqualified stock option in the same year the employee will recognize ordinary income

incentive stock option

  • Type of qualified stock options

  • must be granted under plan approved by shareholders that sets out total number of shares and who may be issued them

  • option must be granted within ten yeras of the earlier of date when plan was adopted or approved. options must be exercisable within 10 years of grant date

  • exercise price may not be less than the FMV of the stock at the date of the grant

  • the employee may not own more than 10 percent of the combined voting power of the corporation, parent or subsidiary as of the date of the grant

  • Once exercised the stock must be held at least two years after the grant date and at least one year after the exercise date

  • employee must remain an employee of the corp from the date the option is granted until 3 mths ( one year if due to permanent and total disability) before the option is exercised.

employee stock purchase plan

  • type of qualified stock option

  • must be written and approved by the shareholders

  • can not grant options to any employee who has more than 5% combined voting power of the corp, parent, or subsidiary

  • must include all employees

  • Option exercise price may not be the less than the lesser of 85% of the FMV of the stock when granted or exercised

  • the option cannot be exercised more than 27 months after the grant date

  • no employee can acquire the right to purchase more than $25,000 of stock per year

  • Once exercised it must be held for at least 2 yrs and after the grand date date and at least 1 yr after exercise date

  • employee must remain employed by corp from the date the option is granted until 3 mth before the option is exercised

readily ascertainable value

  • if the option is traded on an established market

  • * Option is transferable
  • * option is exercisable immediately in full when it is granted
  • * there are no conditions or restrictions that would have a significant effect on the value
  • FV of option privilege is readily ascertainable

Employee taxation: readily ascertainable value of nonqualified stock

  • taxable when granted
  • recognize ordinary income
  • no taxation on the exercised date
  • basis of stock is the exercise price + any income previously recognized
  • future sale - capital gain/loss
  • holding period begins on exercised date

Employee taxation: readily not ascertainable value of nonqualified stock

  • taxed at exercise date

  • ordinary income

employer taxation ( nonqualified option)

deduct expense that employee reports income

Employee taxation: ISO

  • not compensation when granted or exercised
  • capital gain/loss when sold

  • generally if the option lapse there is no deduction

  • employee can exercise up to $100k of ISO a year

  • the excess FMV of the stock on exercise date - purchase price is preference item for alternative minimum tax

Employer taxation: ISO

no tax deduction

Employee taxation: ESPP

not taxable as comp when granted or exercised

capital gain/loss when sold

stock basis is exercise price plus any amount paid for the option

  • Generally any gain or loss on subsequent sale of stock is capital. if holding period requirements are not satisfied any gain is ordinary up to the amount that the stock's FMV on exercise date exceeded the option price

  • generally if the option lapse, no deduction is available. maybe deduction loss if any maount was paid for the option itself

  • If option price is less than FMV of the stock on the grant date, then ordinary income is recognized as the lesser of the difference of the FMV of the stock when sold and the exercise price, or the difference between the exercise price and the FMV of the stock on the grant date

Individual Income Tax Formula

  • Gross Income
  • (Adjustments)
  • Adjusted Gross Income
  • (Standard or itemized Deduction)
  • (Exemptions)
  • Taxable Income
  • * Tax rate equals
  • Federal Income Tax
  • (tax credits)
  • Other Taxes
  • (payments)
  • Tax due or refund

Filing requirement for individuals

generally, a taxpayer must file return if his or her income is greater than:

  • * personal exemption, plus
  • * the regular standard deduction ( except for married filing separately)
  • * additional standard deduction amount for taxpayers age 65 or Older or blind ( except for married persons filing separately)

Filing Status

GR: use the status as of Dec 31 ( except in case spouse dies)

Qualifying widow

  • * dependent child
  • * full year residency requirement

Multiple support

  • * when two or more tax payers contribute more than 50% of support of a person but none more than 50%

  • * the contributions may decide who claims the dependency exemption

  • * must contribute more than 10% to be eligible

Gross income

all income whatever the source unless specifically excluded


also includes FMV of property received for services

Life insurance proceeds

Generally not taxable

however the interest portion of deferred payout is taxable

Interest Income

Interest on state and federal tax refunds are taxable


if distribution is from Earnings and profit it is considered a dividend

* tax rate - 15% for most tax payers
* tax free distirbutions: stock dividends, and life insurance dividends
* maximum rate of tax 20% for qualified dividends

state tax refunds

taxable only if itemized in prior tax return


partially taxable ( interest), and partially not taxable (principle)

Exceptions: annuitant outlives life expectancy

unemployment comp


worker's comp


SS Income

0 to 85 percent is taxable at various levels

Schedule C

* Sole proprietor

* Meals and Entertainment 50% deduct ( also applies to employee unreimbursed expenses)

* prepaid interest can be deducted; but accural method must be used

* bad debt actually written off maybe deducted only if accrual basis taxpayer

* nondeductible expenses: personal expenses, federal taxes, and salaries paid to sole proprietor

* self employment taxes are not deductible ( adjustment to AGI)

* NOL - 2 years back/ 20 yrs forward

Farming Income

* income from farming activities treated similar to income from other business

* Schedule F

Rent Income

* passive

* prepaid rent or nonrefundable deposit is taxable when received

Included on Sch E

Individual txpyr: Capital Loss

limited to capital income + $3K


Separate income tax paying entities

Distributions made by trust are deductible to the trust - but taxable to the recipient

Guaranteed pymts

made by partnership to partners for services rendered to the partnership, that are deductible business expenses:

* deductible on form 1065, Line 10 to arrive at partnership ordinary income
* Included on schedule K-1 to be taxed as ordinary income to the partners

Partnership NOL

Ordinary losses are limited to basis and any at risk amount

S Corp "at risk" Rule

limit the deductiblity of t distributive shares of losses of an S corp to the amount the taxpayer has at risk as opposed to non recourse loans and could loss from activity

Form 1120S

Gain or loss from S corporation's sale of collectibles is separately reported on the Schedule K-1 of IRS form 1120S

Form 141

if grantor is does not retain beneficial enjoyment of the corpus or

the power to dispose of the trust income without approval or consent of any adverse party they are a separate entity for tax purposes and must file a Form 1041and issue K-1 to their beneficiaries

Teachers adjustment to Gross income

teachers can take a $250 adjustment to Gross income

if two teacher they both get $250, so $500 in total.

Regular IRA

If you are rich and in a plan you can't participate in a regular IRA

+/- Adj items to Income

Adjustments for gain/loss

Long-Term Contracts

Installment Sales

Excess Depreciation

add-back PREFERENCES (increase income)

Percentage depletion

Private Activity -- Issued post 1986 ( tax exempt interest income)

Pre-1987 ACRS excess deprecation

Adj Current Earnings

-/+ ( negative adjustment limited to past positive)

Municipal Interest

Organizational expense amortization

Life insurance proceeds on key employees

Difference between AMT and ACE depreciation

Dividends received deduction under 20%

AMT summary

Regular taxable Income




Alternative Minimum taxable income (AMTI)

Alternative mini tax base

x 20%

Gross alternative mini tax

Tentative mini tax

Alt Mini Tax

Intercompany gain/ losses

are eliminated with consolidation

original basis is maintained

affiliated group

means that a common parent owns

  1. 80% or more of the voting power of all outstanding stock and
  2. 80% or more of the value of all outstanding stock of all outstanding stock of each corporation

an affiliated group of corporations may elect to be taxed as a single unit, thereby eliminating intercompany gains and losses.

Rules for consolidated returns

  • must have been members of affiliated group at some time during the tax year
  • must have filed a consent ( act of filing a consolidated return qualifies as consent)
  • an affiliated

Corporations that cannot file Consolidated tax return

  • S Corp
  • Foreign corporations
  • Real estate investment trusts (REIT)
  • some insurance companies
  • brother-sister corps in which an individual ( not a corp) owns 80% /> of stock of corps

Home equity indebtedness

Debt other than acquisition debt that is secured by a qualified residence to the extent that it does not exceed the fmv of residence less acquisition debt

Kiddie Tax

  • the amount of money for a child under 18 that is taxable at the parent's maximum rate
  • up to standard deduction is udntaxed
  • next $950 is taxed at child's rate
  • anything above standard deduction + $950 at child's rate is taxed at parents rate

Alternative minimum tax ( individuals)


Passive activity losses
Accelerated depreciation (post -1986) 
Net Operating Loss of individual taxpayer 
Installment income of a dealer 
Contracts - percentage completion vs completed contract 
Tax deductions 
Interest deductions on some hom...
  • Passive activity losses
  • Accelerated depreciation (post -1986)
  • Net Operating Loss of individual taxpayer
  • Installment income of a dealer
  • Contracts - percentage completion vs completed contract
  • Tax deductions
  • Interest deductions on some home equity loans
  • Miscellaneous deductions are not allowed
  • exemptions ( personal) standard deductions

Credits that can reduce AMT

Foreign tax credit

Adoption credit

Child Tax credit

Contributions to retirement plans credit

Residential energy credit

Net Investment Income Tax

  • 3.8% to certain investment income
  • $250K if married /$200K for single or HH
  • interest, dividends, capital gains, rental and royalty income, non-qualified annuities, and income from businesses involved in the trading of fin instruments or commodities and businesses that are passive activities to the taxpayer
  • Expenses allocable to the income can be deducted

political contributions

are not charitable donations and are not deductible

Wash Sale

  • when a taxpayer sells stock at a loss and invests in substantially idential stock within 30 days before or after the sale
  • losses are not deductible


Same type of investment (e.g. realty for realty, personalty for personalty, assuming the personal property falls within the same asset class for tax depreciation purposes)

Calculation for " Recognized Gain with no Boot"

Gain/loss realized:

Amount realized= Fair market value of auto received -- Adjusted basis of auto given up

Gain/loss recognized:

amount recognized = the less of gain realized or boot received

Basis of new property:

New basis = adj basis of property given up + gain recognized

Homeowner's exlusion

  • Sale of taxpayer's personal principle residence is subject to an exclusion from gross income for gain. Qualifications must be met to take benefit of the exclusion.
  • 500K for MFJ (both have to meet residency test to get full deduction) and 250 for Single/ MFS and HHC.

  • two year test

Involuntary conversion

Gains realized on involuntary conversion of property.

Tax payers reinvestment of the involuntarily received proceeds restores him to position he held prior to the conversion

if you don't spend all of the proceed it is considered boot. must recognize gain on it

Divorce settlement

when divorce settlements provide for lump sum payments or property it is a non-taxable event

Exchange of like kind property

property used in trade or business or held for investment ( except inventory, stock securities, partnership interests, goodwill/going concern value, and real property in different country)

Installment method

is a tax method of reporting gains for sales made by a "non-merchant" in personal property and "non-dealer" in real estate when part of the payments are received in a tax year after the year of the sale. Under the installment method, revenue is reported over the period in which cash payments are received.

Treasury stock

when a corp issues, buys back and reissues stock transaction is exempt from gain/loss recognition

Related party gain/loss


personal losses

non losses is recognized on nonbusiness disposal or loss. An itemized deduction maybe available in the category of casualty and theft

Gain realized on Like Kind Exchanges

  • Value of property Received
  • plus: Cash ( boot received)
  • Plus: net ( reduction in mortgage debt (boot received)
  • Total received on exchange
  • less: basis received on relinquished property
  • Gain realized

Basis of new asset on like kind exchanges

  • Fair value of property received
  • less: deferred gain
  • plus: deferred loss

inherited property

  • Unless the executor elects the "alternative valuation date" method, the basis of property acquired by bequest or inheritance is the property's FMV on date of decendant's death.

  • Property is always considered to be long term capital gain regardless of how long the beneficiary held on to it

Individual tax payer estimated taxes

in computing the amount of estimated payments due, an individual taxpayer may choses between the annualized method or the prior year method unless the taxpayer's AGI exceeds $150,000 then they must use 110% of last year's tax

annualized method

90% of current year's tax

Foreign Tax Credit

A taxpayer may claim a credit against federal income taxes due for foreign income taxes paid to a foreign country or a US possession. There is a limitation on the amount of the credit an individual can obtain.

Adoption Tax credit

  • Agency fees
  • Legal expenses

Child and dependent Care Credit

  • Refundable
  • a credit of 20% to 35% of eligible expenditure
  • Eligible people:
  • A qualifying child under age of 13 whom an exemption may be claimed
  • any disabled dependent of any age who is unable to care for himself whether or not he can be claimed as a dependent, but who must meet the support test of a dependent ( half of support provided for by the tax payer
  • spouse who is disabled and not able to take care of him or her self
  • Earned income requirement unless full time student or physically or mentally incapacitated

Child and dependent care credit computation

the credit is computed by using the lowest of :

  1. the earned income of the spouse with he lesser amount of :
  2. the actual child care expenditure or
  3. maximum amount 3K or 6K for 2017
  4. This lowest amount would be multiplied by the applicable percentage to get the amount of credit

Eligible expenses

  • babysitter
  • nursery school
  • Day care
  • not grammar school

Child and dependent care credit computation

  • Maximum 35% : the maximum child car credit against the tax liability is 35%. in order to obtain the maximum credit, the taxpayer's AGI must be $15K or less
  • Phaseout 20 to 35 percent: the credit decreases by 1 percent for each 2000 ( or fraction ) of AGI over 15,000 but not below 20 %
  • Minimum percent: the child care credit at the minimum rate of 20% for individuals with AGI of mor than $43,000 is $600 (20% of 3,000) or $1,200 (20% of 6,000

) if the taxpayer has two or more qualifying dependents

Credit for ederly and/or permanently disabled

15% of eligible amount

S - 7.5K



Refundable Credits

  • Child tax credit ( refund is limited)
  • earned income credit
  • Withholding taxes
  • Excess Social Security paid
  • American opportunity credit (40 % refundable)

Earned income tax credit

  • Refundable tax credit
  • encourage low-income workers to offset the burden of US tax.
  • A claimant can have one qualifying child or two or more qualifying children for the credit

Earned income tax credit Requirements

  • The taxpayer must meet certain earned low income thresholds
  • the taxpayer must not have more than the specified amount of disqualified income
  • the taxpayer must be over age of 25 and less than 65 if there are no qualifying children
  • if married, the taxpayers must generally file joint return with spouse
  • a qualifying child can be up to and including age 18 at the end of the tay year provided the child shared a residence with the taxpayer for 6 months or more
  • the taxpayer must be related to the qualifying child ( or children ) through blood or marriage, or law
  • the child must be either in the same generation or a later generation of the taxpayer
  • a foster child qualifies if officially placed with the taxpayer by an agency

Taxation of a C corp

  • Filing is due on 15th day of the fourth month ( Apr 15 for calendar year tax payers)
  • estimated payments of corporate tax are due on the 15th day of the fourth, sixth, ninth and 12th months. Corporations not classified as larger corps are required to pay the lesser of 100% of current year tax or 100% of preceding year tax
  • Tax credits: general business, research and development, foreign tax credit
  • Accumulated earnings tax is imposed on C corp who retained earnings are in excess of $250K of those funds are improperly retained. Personal service corps are entitled to only $150K of retained earnings
  • Personal holding corporations are more than 50 % owned by 5 or fewer individuals and have 60% of adj ordinary gross income consisting of net rent, interest, royalties and dividends. An additional tax of 20% is imposed on personal holding company net income not distributed.

Corporate Alternate Mini Tax

  • Subject to a mini tax amt of 20 % on alternative minimum taxable income AMTI, less exemption amount
  • Certain smaller C corps are exempt from AMT

Contributions to a corporation in exchange for stock

Formations are generally nontaxable if the 80% rule is met

Corporate distribution

  • Cash dividends from a corporation are taxable to the shareholder who receives the dividend. Distributions come out of E& P first = dividends; then out of accumulated E&P = dividends; then out of stock basis = return of capital (tax free); and then they are taxed as capital gains

Stock dividends

generally not taxable to the shareholder ( it depends on whether the shareholder had a choice of receiving cash or other property)

Corporate liquidation

  • Generally with a standard liquidation the corporation recognizes gain on the sale of the assets and the shareholder recognized gain to the extent of the basis in the stock, which results in double taxation. Basis in the assets in the shareholder's hands is FMV.
  • There are several typles of tax-free reorganizations--Type A to Type F. Because these events are nontaxable, neither the corp nor the SH recognizes gain. Thus, the basis of the assets in the SH hands is the adj basis (NBV)
  • Section 1244 stock allows for an ordinary loss up to $50K or (100K MFJ) rather than a capital loss in event of a sale or the stock becomes worthless
  • A noncorp SH who holds qualified small business stock for more than 5 yr may exclude 100% of the gain on the sale or exchange of the stock

Basis of property contributed to corporation in exchange for stock

There is no gain or loss to the corp issuing stock in exchange for property for the issuance of stock. the general rule is that the basis of the property received from the transferor/SH is the greater of:

  1. adj NBV of the transferor/SH plus any gain recognized by the transferor/SH or
  2. Debt assumed by the corp

Accrual method

will be required by tax shelters, large C corps and manufactures.

Charitable Contribution deduction for Corp

  • if contribution exceeds the limit for the deduction in one year it can be carried over the succeeding 5 years, it cannot be carried back

Cost of organizing corporation

  • expensable subject to $5K limitation
  • remainder is amoritzable

Cost of selling stock

are not expensable/amortizable

Accuracy-related penalties

apply to the portion of tax underpayments attributable to negligence or disregard of tax rules and regulations as well as to any substantial understatement of income tax

The negligence penalty

with respect to understatement of tax is an accuracy based penalty for negligence or for disregard of tax rules and regulation

Exempt property

an individual debtor is entitled to exempt certain property under the bankruptcy code, but states can opt out and supply their own exemptions

Preferential payment

a transfer for the benefit of a creditor or account of an antecedent debt made within 90 days ( or one year for insiders) prior to filing the petition while the debtor was insolvent and the creditor received more than the creditor would receive under the bankruptcy code. Contemporaneous exchanges for new value are excluded, as are payments of ordinary business bills and payments by consumer debtors of less than $600

Fraudulent transfers

any transfer for less than equivalent value made with the intent to hinder, delay or defraud creditors. The Trustee has the power to set aside fraudulent transfers made within two years of the filing date.

Claims against the estate

  • A claim is a right to payment from the debtor's estate.
  • To have an allowed claim a debtor must file a proof of claim and a shareholder must file a proof of interest.
  • An unsecured creditor who fails to timely file may not take part in the distribution of the estate


The trustee can serve as a professional ( e.g. tax preparer) for the estate if the court approves and may receive compensation

Donation of services

Value of services donated not deductible


Is the right of a surety prior to payment To get a court order demanding the debtor pay


The right of a co surety to demand pro rata payment from other co surities not available prior to payment


The right of a surety to recover from the debtor payments made to the creditor. Not available prior to payment

Charitable contributions of property

if proerty is capital asset help for over a year before being contributed, it qualifies to be deducted at the higher FMV without capital gains being recognized

30% of AGI limitation applies

Fraud penalties

For the IRS to prevail in a case with a criminal penalty, the IRS must prove beyond a reasonable doubt that taxpayer willfully and deliberately attempted to evade tax

FICA Taxes

are fully deductible on a schedule C

Passive activity

activity that tax payer does not materially participate in

passive activity losses

  • may not be deducted against other types of income. ( wages, other ordinary or active income, portfolio income (interest and dividends) or capital gains)
  • if it exceeds passive activity gains it is carried forward to a year when it may be used to offset passive income or when then final disposition of the property occurs

mom and pop exception

taxpayers who own more than 10% of rental activity, have modified AGI of under 100K and have active participation may deduct up to 25K of net passive losses

phase out provision from 100-150K

Chapter 7
Gives debtor a fresh start
Chapter 7 - Objection to discharge
Reason to deny a discharge of all debts. the reasons that commonly appear on the exam: the debtor is not an individualfraudulent transfers of propertyunjustifiably failed to keep adequate booksreceived a prior discharge within eight years commision of bankruptcy crim
Chapter 7 - Execptions to discharge
There are a few execeptions to discharge: debt arising from willful and malicious injury, alimonydebts arising from fraudtaxeseducational loansdebt undisclosed at bankruptcy
Chapter 7 - Reaffirmation of discharged debts
Allowed if the agreement to reafffirm was made before the granting of discharge
Chapter 7 - revocation of discharge
creditor or trustee may request a revocation if the debtor obtained the discharge fraudulently, the debtor acquired property that would consititute property of the estate and fraudulently failed to disclose, the debtor failed to obey a court order, or debtor could not explain why the debotr failed to make documents available to the auditor
Chapter 7 - Distribution of debtor's estate
1. Secured claiments - paid first to the exent of the value of collateral2. priority claim - paid next in specific order3. General creditior - paid last
Chapter 7 - priority claimants
1. Support obligations to spouse and child2. Adminstrative expenses3. Involuntary cas Gap claims4.Wage claims of each employee up to $12,850 earned within 180 days prior to bankruptcy 5. Employee benefit plan contributions for each employee arising within 180 days prior to bankruptcy, up to $12,850 redced by wage claims6. Grain farmers' and fishermen's claim against storage/ processing facilities up to $6,3257. Consumer deposits up to $2,8508. Tax claims9. Personal injury claims arising from intoxicated drivers
Chapter 11
Create a creditor committee or a stockholder's committeeTrustee generally is not appointed, but can be when there is fraud, dishonesty, incompetence or gross mismanagement by debtor
Chapter 11 - reorganization plan
unless a trustee is appointed, the debtor has an exclusive right to file a plan during the first 120 days afte rthe order for relief is effectiveCreditors may file a plan if a trustee has been appointed; the debtor has not filed a plan within 120 days; or the debtor has filed a plan but has not obtained acceptance of the plan by every impaired class within 180 days of the entory of the order of relief
Chapter 15
US court can recognize as a foreign main proceeding ( ie a country where the debtor's main interest are located) or a foreign non-main proceeding ( ie a country other than one whre the debtor's main interest are locatedAutomatic stay takes effect upon recognition of foreign main proceeding prohibits discrimination against foreign creditors and requires cooperation with foreign courts and representatives
Creditor forwarns debtor that if they default they will "reposses" property in a oeaceful mannerprotect yourself from the debtorallows creditor to seize property from debtor without getting a court order
notice to the world that creditor has security interest in collateral and because of this notice, give the creditor the right in the collateral superior certain 3rd parties
types of collateral
goodsintangible/ semi intangibleinvestment propertyproceeds
Consumer goods
depends on what the debtor is using it for. Automatic perfection if there is a PMSI creditor
Investment property
You have to controll it
Purchse money security Interest
Has priority over all other types of security in the same collateral, if PMSI is properly perfected\
Alt Min Tax exemption
$40Kit must be reduced by 25% of the amout by which AMTI exceeds 150K Exemption is completely phased out at $310K
personal holding company tax
paid in addtion ot its regular and alt min taxes
amt calculation
AMTI base * 20%compare tentitive mini tax to regular tax liability
tentative min tax credit
can only be used to offset a corporation's regular income tax liabilityamt liabilities will result in additional minim tax credit carryforward
personal holding company
  • more than 50% owned by 5 or fewer individuals either directly or indirectly at any time during the last half of the tax year) have 60% of adj ordinary gross income consisting of :

  1. Net Rent
  2. Interest
  3. Royalties
  4. Dividends

  • Taxed additional 20% on undistributed income
Additional tax assessed on PHC
addtional 20% on net income not distributedtaxable income must be reduced by federal income taxes and net long term capital gain net of tax to determine the undistributed personal holding company income prior to the div paid deduction
Chapter 11 Plan confirmation
only the court can confirm a plan creditiors and security interest vote whether to accept the plan unimpaired parties such as secured creditors are presumed to have affirmed, so their vote is not necessary
Chapter 11 Plan affirmation
plan needs to be affirmed by 2.3 of the interests ( e.g. 2/3 of the oustanding shares) through the cram down provision of . the Bankruptcy Code (BC) a plan may be confirmed by a court even if only impaired class votes to affirm the plan
can not be discharged in bankruptcy
Dischargeable in bankruptcy
Contract claimsdebt owed to secured creditors beyond the value of the collateral ( treated like any other unsecured debt) Debts arising from negligent conduct are dischargeable in bankruptcy ( if the auto accident arose from drunk driving or injuries were willful, debt would not be discharged)
Bankruptcy Code Section 727
sets out the reasons for revoking a discharge. the grounds include failing to answer material questions on the bkrpty petition if the question has been approved by the court, unless the fifth amendment privilege against self incrimination is appropriately claimed
Foreign enity
May file an ancillary proceeding under chap 15, and may also file a proceeding under chapt 7 and 11 the automatic stay arises after a petiion for recognition is granted by the court
Limited Partnership
Limited partners generally have no liability beyond their investment and unpaid capital commitments. Limited partners generally have no right to participate in management of the businessIn some states if they manage or control, they are liable to any party who reasonably beleive that they were a general partner must have at least one GP
partners have unlimited personal liability for all contracts of the partnerships and all torts commited y other partnerships within the scope of partnership business. also absent agreement to the contrary, partners have equal rights to manage the business
Limited liability Partnership
Unless otherwise agreed, patnership have the right to participate in the management of the business, just as partners in a general partnership have the right to manage Partner in LLP is generally not liable for the debt or contracts of business. A business liabilty partnership does not pay federal income tax. the limited partnership has " flow through taxation"
Limited Liability Company
  • An LLC offers all of its owners limited liability.
  • Moreover they are not prohibited from participating in control of the business in any way unless the articles or an operating agreement provides otherwise.
Sole Proprietorship
unlimited liability for obligations of the business
Pays federal income taxshareholders have no liability beyon their investment and unpaid captial commitments. Shareholders generally have no right to manage the corporationshareholders do have the right to elect and remove directorsright to vote for fundamental changes in corporation ( dissolution, amendments to the artivles, mergers, consolidations, compulsory share exchanges, and sale of substantially all the corproations assets outside the ordinary course of business
Required to file with state
Limited partnershipLimited liability company Corporation
Joint venture
an association of persons or entities with the intent of engagaing in a single business ventrue for profit.The legal requirement and consequence and advantages and disadvantages of forming a joint venture generally idential to those of a general partnership
Cumulative preferred stockholder
entitled to receive a dividend for the current year and all prior years for which the preferred dividend was not paid before any dividend is paid to the common stockholders
business manager
  • Manage business
  • not destroy it
  • no implied authority to sell or mortgage business fixtures or other property of principle (other than inventory)
  • does not have implied authority to borrow money on the pricncipals behalf ( must be expressed)
Termination of actual authority
Actual authority automatically terminated by law if:

  • death of either principle/agent
  • incapacity of principle
  • discharge in bkrptcy of principle
  • failure to acquire license
  • destruction of subject matter
  • subsequent illegality
Create a contract under Common Law
Identity of offeree and subject matterprice to be paidtime of performancequantity involvednature of work to be performed
Common law
Services or real property
Statute of Fraud: Contracts that requiring a writing
must be signed by to be enforacable1.marriage2. cannot be performed in a year3. Land ( real property for sale/ lease) 4. Contracts ny executors or similar rep to pay estate debts out of personal funds5. goods more than $5006. Contracts to act as surety ( pay the debt of another)
Death of offeror
death of an offer prior to acceptance terminates the offer by operation of law without notice to the offeree
unilateral contract
promise is exchanged for an act
statue of limiation for an alleged breach of contract
generally begins on the date of alleged breach. refers to the time period in whcih case must be filed time period varies from state to state depending on type of case
Material breach of contract
generally discharge the nonbreaching party
the agreement is unchanged but one of the orignal parties is released and a new party is substituted int heir place
substituted contract
the orginal parties are both released from orginal agreement, but both are bound to new agreement
Consequential damages
recoverable for breach of contract only to the extent the are foreseeable. In every case, a nonbreaching party has a duty to mitigate damages- a duty to make reasonable effort to cut down on losses resulting from breach. failure to do so will preclude party from collecting damages that may have been avoided
unilateral mistake
a defense to a contract if the nonmistaken party knew or should have known of the mistake
parol evidence rule
prohibits introduction of prior written statements to vary the terms of a fully intergrated contract, but it does not bar the introduction of subsequent oral or written agreements
Contract conditions
Can be precedent, subsequent, or concurrent
undue influence
a person in a position of trust or confidence takes unfair advantage of the relationship such that the other party's free will to contract is overcome
Domestic Production Deduction(DPD)
Overview: a business may deduct a specific %-age of their qualified production activities income.
Domestic Production Deduction limitation
the deduction may not exceed 50% of the w-2 wages paid by the corporation for the year
Calc for DPD
the deduction is 9% of the less of : 1 - qualified production activties income(QPAI) 2 - Taxable income (disregarding the QPAI deduction)
Domestic production gross receipts --------------------------------------------------------------Qualified production activities income
Domestic production gross receipts
derived in the US manufactured, produced, grown, extracted, constructed, engineering services, architecutral services
Charitiable Contribution for C corp
max deduction of 10% of adjusted taxable income limitationcarried forward for 5 yrs any accural must be paid by april 15thno political gifts
Adjusted taxable income limiation
Chartiable contributions for C corps Calculated before the deduction of : chartiable contribution deductiondiv-received deductionany NOL carrybackcapital loss carrybackU.S. production activities deduction
Business Losses casualty losses related to business C corp
100% Deductible as ordinary loss or capital loss depending on asset type Partially destroyed : loss is limited to lesser ofthe decline in the value of the propertythe adjusted basis of the property immediately before the casuality Fully destroyed (NBV) amount of loss is the adjust basis of the proporty
Organizational Expenditures and Start up Costs
$5K deductionExcess is amortized over 180 mths
Allowable Org and start up costs
fees paid for:Legal servicesdrafting the corp charter, bylaws, minutes of org meetingsaccounting servicesincorporation fees
Disallowed Org and start up costs
issuing and selling stockcommisionsunderwriter feescost incurred in transfer of assets to corp
Purchased good will
amortized on straight line basis over 15 years
Dividends- received deduction
First corp must be taxed owned 45 days before or after
personal service corporation
accounting, law, consulting, engineering, architecture, health and actuarial science
regulated investment company
registared under the investment compay act of 1940some venture capital companiesat least 90% of gross income must be qualified investment source incomemust distribute 90% of dividends and interest incomecorporation is not taxed on amounts distributed to shareholders
accumulated earnings tax
imposed on corporations whose accumulated (retained) earnings is in excess of $250K if improperly retained instead of being distributed to shareholders. personal service corps are only entitled to $150K
Elements of Constructive fraud
  • 1. misrepresentation of a material fact
  • 2. Defandant acts with gross negligence or recklessly
  • 3. intent to induce plaintiff's reliance
  • 4. actual and justifiable reliance by plaintiff
  • 5. damages
limits accuontant's liability for negligence to (1) parties in privity(2) intended 3rd party beneficiaries parties who ware merely "foreseen" cannot recover
knew that the statement was wrong or recklessly disregarded the truth
Non residential real property using MACRS
straight line method over 39 years
MACRS 5 year property
Autombileslight truckscomputerstypewriterscopiesduplicating equipment