TAX 4001 Final Exam
6 netting possibilities - ANS-Net long term gain (different signs with LT greater)
Net short term gain (different signs with ST greater)
Long term and short term gain (opposite signs)
Net long term loss (different signs with LT greater)
Net short term loss (different signs with ST greater)
Long term and short term loss (opposite signs)
Active income - ANS-- Wages/salary
- Profit from trade and business
- Gain from sale or disposition of asset used in active trade of business
- Income from intangible property created by the taxpayer
Adjusted basis - ANS-cost + addition + recovery
- Original basis adjusted to date of disposition
Alternate valuation - ANS-FMV 6 months after
- Tax return filed
- Not distributed before date
Amount realized - ANS-Money + FMV of the property
- Economic value received from property given up
- Selling expenses are deducted so it equals the net amount received
AMT is - ANS-An indirect calculation that starts with taxable income
At risk limitation reason - ANS-Designed to prevent deduction from loss in excess of
economic investment
- Limit the tax payer deduction to the amount they are "at risk"
- Created to limit loss in excess of investment
At risk limitation rules - ANS-Can deduct losses from activity only to extent the taxpayer
is at risk
- Any losses disallowed due to at risk limitation are carried forward and at risk amount
must increase in order to deduct later
- Previously allowed losses must be recaptured to extent they fall below zero
Basis for loss also = - ANS-Basis for depreciation
, - Prevent taxpayer from recovering loss indirectly
- Adjust gain and loss basis for depreciation deductions from conversion date to
disposition date
By employers - ANS-Withholding - income taxes and employee FICA
Paid - FICA match and FUTA
Calculation of non corporate capital gain/loss - ANS-Net capital gains and losses
- short term and long term seperate
If opposite signs for each = stop, if same sign net again
- 6 possibilities
Capital gain - ANS-Full recognition
Capital gains are - ANS-- Personal use assets
- Investment assets
Capital gains are not - ANS-- Inventory
- A/R and N/R for goods and services
- Depreciable property of real estate in business
- Property for business
- Copyrights
- Government publications
- Supplies
Capital gains use _________ rates - ANS-Preferential
Capital loss - ANS-3,000 max
Change of employment - ANS-- Location of new employment is at least 50 miles further
from old residence than old residence was to old job
- Must become principal residence when move
- Regradless of employer situation
Child and dependent care expense - ANS-Mitigate inequality felt by working taxpayers
who must pay child care to work outside the home
- Specified percentage of expenses incurred to work or seek employment
Child and dependent care expense calculation - ANS-Expense (%) - max being 3,000
- limited by individual earned income
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller lydiaomutho. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for £6.29. You're not tied to anything after your purchase.