Download CPA Regulation 2024: Tax Credits, Deductions, and Corporate Tax Overview and more Exams Business Administration in PDF only on Docsity!
CPA Reg 2024 correct answer Refundable Tax Credits correct answer Child Tax Credit Earned Income Credit Federal Income Tax Withheld Excess Social Security Withheld American Opportunity (40% refundable) Penalty for underpayment of estimated taxes correct answer No penalty if owed amount is less than $1, Child and Dependent Care Credit correct answer - Nonrefundable
- Child must be under 13
- Expenses are limited to lowest earned income of either spouse
- Depending on AGI you get ~20% of expenses covered
- maximum is 3, Retirement Savings Contribution Credit correct answer - Nonrefundable
- Covers up to $2,000 for contributions to Traditional or Roth Excess Social Security Withheld correct answer Refundable if withholdings were made by more than one employer Safe Harbor for penalty for underpayment of estimated taxes correct answer The lesser of: 90% of the tax on current year's return OR
110% of the tax on last year's return (if AGI is >150k, otherwise 100%) Donee's Basis of Property correct answer Exception kicks in when FMV < NBV Scenario 1 for Donee's Basis correct answer Sales Price > NBV use NBV as basis Scenario 2 for Donee's Basis correct answer Sales Price < FMV use FMV as basis Scenario 3 for Donee's Basis correct answer Sales Price is in between FMV and NBV Sales Price is Basis - no G/L Basis for Depreciation of Transferred Property correct answer Lesser of FMV and original Basis Tax Basis for G/L for Transferred Property correct answer If there is a Gain: Basis is adjusted basis at time of sale If there is a Loss: Take lesser of Basis and FMV at Conversion, then deduct depreciation Inherited Property: LT or ST correct answer Always LT. No matter what Nonresidential Property correct answer Depreciated over 39 years, using mid month depreciation Residential Property correct answer Depreciated over 27.5 Years, using mid month convention
Organizational and Start-Up Costs correct answer Deduct up to 5k of each If expenses are over 50k (e.g. 51k) minimize deduction $ for $ (e.g. 4) Excess costs can be amortized over 15 years Capital Loss Deduction for Corporations correct answer 3k for individuals is not allowed
- losses can be used to offset gains
- excess can be carried back 3 years
- and forward 5 years Dividend Received Deduction (DRD) is not available to: correct answer Personal Serving Corp Personal Holding Corp S-Corps Banks Saving Institutions Dividend Received Deduction (DRD) Ownership % correct answer Ownership 0-20% DRD is 50% Ownership 20-80% DRD is 65% Ownership 80-100% DRD is 100% Dividend Received Deduction (DRD) Calculation correct answer Lesser of: Respective DRD% of Div. Received and Respective DRD% of taxable income disregarding DRD, NOL etc.
Take greater of if one number creates a loss C Corp NOL Rule Breakdown correct answer Prior to 2018: Carry back 2yrs Carry forward 20yrs 2018, 2019, 2020 Carry back 5yrs Carry forward forever 2021 and future Cannot carry back Carry forward forever Can offset 80% of TI for 2021 and future C Corp Capital Losses correct answer - Can only deduct to the extent of capital gains
- Can carry back 3 years or forward 5 years S Corp can be terminated when correct answer 1. Shareholders own more than 50% and vote to do so
- requirements are not met: Foreign owner Corporate or partnership owner more than 100 members (2 spouses may be 1) (ex, sister, cousin, nephew, granddaughter is fine)
No Jury correct answer U.S. Tax Court U.S. Court of Federal Claims - has jurisdiction over most claims for money damages Court with Jury correct answer U.S. District Court Frivolous Tax Return correct answer patently improper, merely arguable, <20%, no defense must pay full penalty Reasonable Basis Standard correct answer - At least 20% chance of succeeding
- Will avoid the negligence penalty for understatement that is not substantial, if disclosed Substantial Authority Standard correct answer >40% chance of succeeding avoids penalties on most undisclosed positions more likely than not standard correct answer Greater than 50% likelihood of a tax position being upheld by the courts Who files FBAR correct answer File if aggregate value of accounts exceeded 10k at any point in time use exchange rate on last day of calendar year Failure to Pay Penalty correct answer 0.5% per month up to 25% Due 4/15 even if filed extension Compensatory Damages correct answer for ordinary negligence and breach of conduct may have to reimburse client
Scienter correct answer intent to deceive Fraud 4 elements of negligence correct answer duty of care, breach, causation, damages/injury 3 Elements of a Legally Enforceable Contract correct answer Offer + Acceptance Exchange of consideration Lack of defense (minor, fraud etc.) Common Law applies for: correct answer R I S E Real estate insurance services employment Common law terms must include correct answer Offeree Price Time Quantity UCC terms include correct answer only requires quantity Contracts are valid when: correct answer Everything but acceptance is valid once received
Specially manufactured goods Written confirmation Admission in court Performance has occurred Noncarrier Cases correct answer If the seller is not a merchant, risk of loss passes to buyer upon seller's tender of delivery. If the seller is a merchant, risk of loss only passes when the buyer gets physical possession. Carrier Cases correct answer 1. SHIPMENT CONTRACT (FOB seller city) ---Risk passes upon delivery to carrier
- DESTINATION CONTRACT (FOB buyer city) ----Risk passes at destination express warranty correct answer - stmt of fact made by seller
- goods must conform to warranty
- can be made by any seller
- cannot be disclaimed Implied Warranty of Title correct answer indicates the seller has the right to sell the product warranty can be made by any seller can be disclaimed Implied Warranty of Merchantability correct answer - good is fit for ordinary purpose
- implied by law, no writing required
- can only be made by merchants
- easy to disclaim Implied Warranty of Fitness for a Particular Purpose correct answer - fir for particular purpose, not just ordinary purpose
- anyone can do this , not just merchants
- easy to disclaim Implied duties of Agent to Principal correct answer LORA L: Loyalty - act on behalf of principal O: Obey reasonable directions (legal, ethical) R: Reasonable care: not negligent, reckless A: Account for all property / money received and paid Termination of Actual Authority correct answer 1. Act of parties (firing, quitting)
- Accomplishment of objective
- Termination by law Actual authority terminated by law correct answer BID LID Bankruptcy of principal Incapacity of principal Death of either party License failure Illegality
chapter 7 correct answer liquidation chapter 11 correct answer reorganization chapter 7, 11 involuntary case correct answer must owe at least 18,600 (to petiioners) must unsecured, undisputed debt if <12 creditors, one must petition if >12 creditors, 3 must petition do not care about amounts for voluntary case Property included in bankruptcy estate correct answer DIII Divorce settlement Inheritance Insurance Income generated from estate property usually when received within 180 days of filing Exceptions to Dischargeable Debts correct answer WAFTED W Willful and malicious injury A Alimony F Fraud / Fines T Taxes
E Educational loans D Debts undisclosed in petition Order of payment priority to claimants correct answer 1. Secured claimants
- Priority claimants SAG WEG CTI
- General claimants (if anything is left) SAG WEG CTI correct answer Support (child) Admin expenses (court, filing, trustee) Gap Claims Wage Claims (up to 15,150) Employee benefit plans (up to 15,150) Grain farmers/fishermen Consumer Deposits (up to 3,500) Tax claims Injury/Intoxication Qualifying Surviving Spouse correct answer -Available for the two years following the year of spouse's death -Surviving spouse must maintain household for dependent child for whole year Qualifying Child correct answer CARES Close relative Age limit (19/24 student)
- no age limit for permanently disabled Residency (at least 6 months) Eliminate gross income text
Section 179 Deduction correct answer max deduction: 1,160, phase out begins: 2,890, dollar for dollar decrease Order of depreciation correct answer 179 Bonus (80%) MACRS unused credit carryover c-corp correct answer back 1 year forward 20 years unused foreign tax credit correct answer back 1 year forward 10 years Apportionment correct answer ( Property and rent expense / total property + payroll paid in state / total payroll + sales within state / total sales ) / exoneration correct answer -suit to compel payment -before the surety pays the creditor subrogation correct answer enforcement of creditor's right against principal Reimbursement and Indemnification correct answer suit against principal after payment Fundamental changes that require shareholder approval correct answer DAMS
Dissolution Amendments to articles Mergers, Acquisitions Sale of all assets
