EA Part 2

Question 1

Form 8832

Answer 1

entity classification election

Question 2

what kind of entity is LLC for federal taxes

Answer 2

as a partnership

Question 3

Form 1065

Answer 3

partnership INFORMATIONAL return

Question 4

Form 1120

Answer 4

Corporation Tax return

Question 5

Form 1128

Answer 5

To adapt, change, retain a tax year

Question 6

What are the 4 acct methonds

Answer 6

cash, accrual, special, hybrid

Question 7

Form 3115

Answer 7

Application for change in accounting method

Question 8

When can accrual count a payment/expense made to cash basis?

Answer 8

when payment is made AND recorded (corresponding amount is includible in the related person’s gross income)

Question 9

Inventory Methods

Answer 9

LIFO
FIFO,
Specific Identification Method
COST

Question 10

Valuing Inventory methods

Answer 10

Retail
lower of cost or market
Cost

Question 11

Rolling Average Method

Answer 11

will be deemed to clearly reflect income if:
recomputes
-Each time the taxpayer purchases or produces an additional unit
-On a regular basis, but no less frequently than once per month; and

AND
The variance percentage does NOT exceed 1%
OR
The entire inventory of business turns at least four times per year, as determined under Section 4.03 of the Revenue Procedure.

Question 12

1250 (real estate property)

1245 (personal propery = business property)

Answer 12

Real Estate Property (1250 Gain is EXCESS depression taken)

Business Property

Question 13

Like kind exchange/basis

Answer 13

REDUCED by: money received and loss

INCREASED by: money gave and gain

Question 14

Form 4562

Answer 14

Depreciation and Amoritization

Question 15

vehicle placed in service

Answer 15

1 st depreciation, 179, MACRS is $11,160 (3,160 if elected not to claim special depreciation allowance)

Question 16

Form 4797

Answer 16

Recapture of 179 / Sale of Business property

Question 17

Section 197 intanglibles

Answer 17

15 yr amoritization

Question 18

Section 1231 (gain or loss)

Answer 18

Gain or Loss or depreciable business property held for more than 1 yr (capital tax rates)

Question 19

Taxable gain in exchage

Answer 19

cash, mortgage, FMV of unlike property

Question 20

Depreciation and amortization recaptured as what income?

Answer 20

ordinary income

Question 21

Section 1031

Answer 21

Like-kind exchange (non taxable gain and loss) unless cash, debt releph, or FMV of unlike property.

Question 22

Form 8824

Answer 22

Like-kind exchange even if no gain or loss

Question 23

related parties how treat loss and gain

Answer 23

no loss allowed and ALL gain as ordinary income (unless complete liquidation of a corporation)

Question 24

If property is condemned how is gain recorded?

Answer 24

taxpayer can postpone reporting gain (or part of a gain) from a condemnation if the taxpayer buys replacement property.

Question 25

Small business stock

Answer 25

ordinary loss of ($50k per taxpayer or $ 100k for joint return) over $100k loss is capital loss
GAIN is CAPITAL
Stock from domestic S or C corp *small business

Question 26

Form 8949

Answer 26

Sales and Other Dispositions of Capital Assets (non business bad debt,

Question 27

activity carried on for profit if…

Answer 27

produced profit 3 of 5 yrs

Question 28

golden parachute

Answer 28

3 times

Question 29

Travel outside US for Buisness must meet ONE or 4 requirements

Answer 29

• less than 25% on personal activities.
• Vacation was not a major consideration.
• outside the U.S. no more than a week. In counting the days, do not count the day the taxpayer leaves the United States, but do count the day he returns to the United States.
• Had no substantial control over the trip.

Question 30

Business Trip on Cruise ship how much can you DEDUCT each year

Answer 30

$2000

Question 31

For $25 gift limit

Answer 31

spouses are treated as ONE taxpayer

partnership and partner treated as ONE taxpayer

Question 32

Form 8829

Answer 32

Expenses for Business Use of Your Home

Question 33

Limit on entertainment facility

Answer 33

Generally, taxpayer CANNOT deduct any expense for the use of an entertainment facility. This includes expenses for depreciation and operating costs such as rent, utilities, maintenance, and protection.

Question 34

Form SS-8

Answer 34

Determination of Worker Status for Purposes
of Federal Employment Taxes and
Income Tax Withholding

Question 35

employers are responsible to report federal income taxes, Social Security taxes, and Medicare taxes on Form

Answer 35

Form 941. In general, employers are responsible to report federal income taxes, Social Security taxes, and Medicare taxes on Form 941, Employer’s Quarterly Federal Tax Return.
Form 943, Employer’s Annual Federal Tax Return for Agriculture Employees is used by farm employers. Employers who have an employment tax liability of $1,000 or less for the year may file Form 944, Employer’s Annual Federal Tax Return instead of Form 941, Employer’s Quarterly Federal Tax Return. Use Form 945 to report withheld federal income tax from nonpayroll payments.

Question 36

If an employee is reimbursed for business expenses through a nonaccountable plan

Answer 36

, the employer is REQUIRED to withhold federal income tax, and the expense reimbursement amount is taxable for both Social Security and for Medicare.

Question 37

key employee is

Answer 37

1. An officer having annual pay of more than $170,000
2. An employee was either of the following:
   - A 5% owner of the business
   - A 1% owner of the business whose annual pay was more than $150,000

Question 38

De Minimus is never

Answer 38

cash

Question 39

Archer Medical Savings Account (MSAs

Answer 39

The interest or other earnings on the assets in the MSA are tax-free.
The contributions remain in the MSA from year to year until the employee uses them.
The employee can claim a tax deduction for contributions he makes even if he does NOT itemize deductions on Form 1040.
An Archer MSA is “portable” so it stays with the employee if he changes employers or leaves the work force.

Question 40

Form 3800

Answer 40

General Business Credit (all business credits must be reported on this form)

Question 41

Investment Credit (Form 3468)

Answer 41

The investment credit is the total of the following credits:
Energy credit
Qualifying advanced coal project credit
Rehabilitation credit
Qualifying gasification project credit
Qualifying advanced energy project credit
The Qualifying therapeutic discovery project credit has expired.

Question 42

Form 8882

Answer 42

The employer applies for the credit on Form 8882, Credit for Employer-Provided Child Care Facilities and Services.
The credit allows for 25% of qualified expenses paid for employee childcare.
The credit allows for 10% of qualified expenses paid for childcare resource and referral services.

Question 43

Director income of a Corp is

Answer 43

Self Employed, must pay SE taxes

Question 44

Limited partners share of earnings

Answer 44

are generally not SE income

Question 45

farm income averaging for how many yrs

Answer 45

3 yrs. nursery or sod(grass farm) Schedule J

Question 46

which will not qualify for 501(3)C

Answer 46

Individual or partnership

Question 47

Form 1023

Form 1024

Answer 47

Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) of the IRC
Form 1024, Application for Recognition of Exemption Under Section 501(a)

Question 48

which form can’t be efiled

Answer 48

Form 990-T, Exempt Organization Business Tax Return

Question 49

Form 8283 must be filed if

Answer 49

Noncash Charitable Contributions if $5000 or more non cash contribution

Question 50

Form 8282

Answer 50

donee information return

- must file if sold, transferred property within 3 yrs and its cost is $500 or more.