REG MCQ
the life insurance premium on the coverage in excess of ______ must be included in gross income
$50000
joint liability
In the event of a lawsuit, all the partners must be sued together
The Securities Act of 1933 applies to the initial issuance of securities and has the purpose of providing investors with full and fair disclosure concerning these securities.
The Securities Exchange Act of 1934 applies to the subsequent trading of securities but not necessarily all securities required to register under the 1933 Act. Thus, a security may be issued under the 1933 Act without needing to be registered under the 1934 Act.
this statement is correct with respect to the differences and similarities between a corporation and a limited partnership
a corporation and a limited partnership may be created only pursuant to a state statute and a copy of its organizational document must be filed with the proper state agency.
the at-risk limitation provisions of the IRC may limit
a partner's deduction for his or her distributive share of partnership losses.
Tax Preparer Penalties which include unreasonable position must pay
a penalty of greater of $1000 or 50% of the income derived by the preparer for preparing the return
under the 1933 act, subject to some exceptions and limitations, it is unlawful to use the mails or instruments of interstate commerce to sell or offer to sell a security to the public unless
a registration statement has been properly filed with the SEC, has been found to be acceptable and is in effect.
a PMSI includes a 3rd party giving a loan who retains
a security interest in the same items purchased by the loan.
homestead exemption
a state law that gives homeowners a tax break for property that is their primary residence. applies to general creditors and the bankruptcy trustee, not secured creditors or lien holders
without obtaining prior approval from the IRS, a newly formed partnership may adopt
a taxable year which is the same as that used by one or more of its partners owning an aggregate interest of more than 50% in profits and capital
composition of creditors
agreement among creditors that each shall accept a part payment as full payment in consideration of the other creditors doing the same will generally release debtor from its debts
in regard to scholarship,
amounts spent for room and board and spring break vacation must be included in gross income
a personal service corporation is a
an architecture and engineering firm. PSC is a regular c corporation whose principal activity is the performance of personal services that are substantially performed by owners-employeeds generally, c corporations performing services in health, law, engineering, architecture, accounting and consulting would be considered personal services corporations.
purchase money security interest
an interest a creditor automatically obtains when he or she extends credit to a consumer to purchase consumer goods
the 1933 act exempts from registration, securities offer by any person other than
an issuer, underwriter, or dealer. the size of the company is irrelevant
a writ of attachment is usually a prejudment remedy, which allows
an officer of the court to attach (take) nonexcempt property of the debtor into custody prior to the creditor receiving a judgement.
A payment of less than the originally agreed-upon price will serve as complete discharge of an obligation under a contract only if there is a bona fide dispute as to the amount owed,
and both parties agree to the lesser sum.
a taxpayer may file a joint return with his or her deceased spouse for the year in which the spouse died.
assuming that the surviving spouse does not remarry before the close of the tax year, when a joint return is filed, it is treated as if the tax years of both spouses ended on the closing date of the surviving spouse's tax year.
if an accountant is negligent, he may have liability for
audit: yes review: yes
a partner can use property she owns in the partnership without it
automatically becoming partnership property.
a general business credit in excess of the limitation amount is carried
back 1 year and forward 20 years.
in a S corporation, each shareholder's allocated loss is deductible to the extent of
basis in the corporation.
expenditure for state lottery tickets is deductible as a misc itemized deduction not subject to the 2% AGI floor
but is limited in amount to the $200 of lottery winnings included in hall's gross income
only 50% of meal expenses are deductible for book purposes
but not deductible for tax purpose
an unlimited marital deduction is allowed for gift
but you have to be officially married.
realized gain must be recognized to the extent of
cash boot received. (when sole owner transfers asset to the corporation and received cash )
accumulated earnings and profits are reduced by
cash distributed during the year.
this must be contained in articles of incorporation
classes of stock authorized for issuance. in addition, the corporation's proposed name, purpose, powers
the fact that there was an unreasonably warm winter will not change your obligation to thrifty since this was change of circumstances which
could be foreseen by the parties.
tax income to book income
deducted: provision for federal income tax, depreciation per books included: depreciation on tax returns, life insurance proceeds.
with regard to an agreement for the sale of real estate, the statute of frauds
does not require that the agreement be signed by all parties
if an exempt organization derives income from conducting bingo games, in a locality where such activity is legal, and in a state that confines such activity to nonprofit organizations, then such income is
exempt from the tax on unrelated business income, entire amount is exempt
this is an amortizable organization expenditure
expenses of temporary directors meetings
services received should be valued at
fair market value (included in gross income)
a deduction for a NOL carryover is not allowed in computing a NOL
furthermore, a deduction for charitable contributions is generally not allowed, since the charitable contributions deduction is limited to 10% of taxable income before the charitable contributions and dividends received deductions.
if the understated tax liability is due to an unreasonable position and the preparer willfully tries to understate the tax liability or recklessly or intentionally disregards rules or regulations, the penality is
greater of $5000 or 75% of the income earned by the tax preparer for preparing the return or claim.
the offeror can revoke an oral offer if
he receives a better offer from a third party before the original offeree accepts.
stockholders do not have the right o manage their corporation.
however, stockholders who are also directors or officers do have the right to manage as part of their rights as directors and officers.
Parol Evidence Rule
if an agreement between two parties is made in writing, the parties may not present evidence in court of any oral or implied agreement that contradicts what is written down.
a corporation's charitable contribution deduction is limited to 10% of its taxable income before the charitable contribution and dividends-received deductions
if the corporation's taxable income already included a dividend-received deduction, the DRD must be added back to arrive at corporation's contribtuion base.
in the absence of a specific provision in a general partnership agreement, partnership losses will be allocated
in the same manner a partnership profits
a decedent's gross estate generally includes all property in which the decedent had an ownership interest at the time of death,
including the value of revocable transfers, as well as all transfers over which the decedent had, at the time of death, the power to change the enjoyment of what was transfer by altering, amending, revoking, or terminating an interest. thus, a decedent's gross estate would include the value of a revocable trust at its date of death or alternate valuation date value.
reg Crowd funding does not protect investors by limiting the ability to invest to investors with certain qualifications.
instead, it protects investors by putting a ceiling on the amount of money they can invest, and thereby lose, in the reg CF offering. an investor needs not to be accredited or even sophisticated.
this is true regarding the 1934 act?
issuers whose securities are registered under the act are required to comply with its reporting requirements.
this is an attribute of a complex trust
it distributes corpus (sum of money or property that is set aside to produce income for a named beneficiary)
even though the issuer may comply with the 1933 act
it must also comply with any applicable state"blue sky" laws that regulate the securities at the state level.
committee reports
legislative sources of authority which provide insight into the intention of the house ways and means committee, senate finance comittee, and joint conference committee
a writ of execution only allows a judgement creditor to
levy on nonexempt property "owned" by the debtor
if a corporation's charitable contributions exceed the limitation for deductibility in a particular year, the excess
may be carried forward to a maximum of 5 succeeding years.
alternative minimum tax adjustments include
net long-term capital gain in excess of net short term capital loss (no) state income tax ( yes)
is year end bonus deductible in the current year?
no, year end bonus will be deductible for the next year.
A gain that is recognized on a sale of property between a partnership and a person owning a more than 50% partnership interest will be treated as
ordinary income if the property is not a capital asset in the hands of the transferee.
lottery winning must be reported as
other income on form 1040
schedule M1 of the form 1120 to reconcile a corp's book income to taxable income
premiums paid on key-person life insurance policy(deducted per books but would not be deductible for tax purposes bc it an expense of producing tax exempt income) the amount of premium would be added back to book income in order to arrive at taxable income on schedule m1
rule 147a
promulgate to make it easier for issuers to raise money both intrastate and using crowdfunding.
mortgage interest on your residence is a
qualified residence interest
the partnership that is formed by express agreement need not be in writing,
rather, it may be formed orally.
prepaid rent must be included in income in the year received
regardless of the period covered or the accounting method used.
a practitioner may charge a contingent fee for
representing a client in connection with a judicial proceeding.
gramm-leach bliley act
requires financial institutions to ensure the security and confidentiality of customer data accountants are responsible for maintaining the confidentiality of information that is outsourced for processing.
generally an offeror may revoke an offer at any time prior to acceptance by the offeree
revocation is effective when it is received by the offeree. revocation also occurs if the offeree learns by a reliable mean that the offeror has already sold the subject of the offer. offeree can accept if the subject has already been sold
article 9 of the UCC which governs security interests has added some items that now are covered by security interests law, this is true
security interests in tort claims already assessed by a court of law are covered. after-acquired commercial tort claims are not covered under the revised UCC secured transactions article.
a director of a corporation can sell his land to the corporation as long as he
sells the land to the corporation in a fair and reasonable transaction for the corporation at the FMV
this body has the authority to revoke A CPA's license to practice public accounting
state board of accountancy
standards on tax position
substantial authority: equal to or greater than 40% reasonable basis: equal to or greater than 20%
a receivership only permits a receiver to
take and sometimes manage the property of the debtor,
if you're an accountant and you exchange service with a painter
the accountant must recognize income equals to the FMV of the assets or services rendered.
if both cash and noncash property are received in a single distribution,
the basis for the partner's partnership interest is first reduced by the cash. the distributed property's basis will be limited to the non cash property equals basis less cash
a seller has the right to resell goods to another if
the buyer refuses to accept the goods upon delivery
a corporation is investigating an offering under rule 147a,this will its lawyers learn once they have completed their research
the corporation will not be allowed to rule rule 147a if it is an investment company. the corporation must have its principal place of business in the state where it intends to hold the offering. it may also be incorporated there, but it need not be.
accumulated earnings credit
the greater of 1) the earnings and profits of the tax year retained for business need 2) current year earnings and profits less previous year earning and credit.
a person admitted as a partner into an existing partnership in only liable for existing debts of the partnership to the extent of
the incoming partner's capital contribution.
this is true of a limited liability company under the laws of the majority of states
the limited liability company is a separate legal entity apart from its owners. it may sue or be sued in its own name all owners have limited rather than personal liability limited liability is normally retained even if the owners fail to follow the formalities usual in conducting the business
is a limited partner acted like a general partner and the customer thought he was a general manager, how much liability does the limited partner have
the limited partner has the liability of a general partner.
If goods have been delivered to a buyer pursuant to a sale or return contract, the:
the risk of loss for the goods passed to the buyer
under what circumstances is a shareholder who receives an illegal dividend not obligated to repay the dividend
the shareholder was not aware the dividend was improper and the corporation was solvent at the time of payment
an individual receives less than $20 in tips during one month while working for one employer,
the tips do not have to be reported to the employer and the tips are included in the individual's gross income when receivd. if the tips received are $20 or more during the month while working for one employer, the individual must report the total amounts of tips to that employer by the tenth day of the next month. then the tips are included in the gross income for the month in which they are reported to the employer.
under this circumstance is trust property with an independent trustee includible in the grantor's gross estate
the trust is revocable.
in general, this statement is correct with respect to ownership, possession, or access to workpapers prepared by a CPA firm in connection with an audit
the workpapers may be obtained by third parties where they appear to be relevant to issues raised in litigation.
when the 3rd party knows that the partner with whom he deals lacks actual authority,
there can be no apparent authority, with such knowledge, the third party can no longer reasonably believe that the partner has authority to represent the partnership
if the taxpayer is financially unable to pay their tax debt immediately,
they can make monthly payment through an installment agreement online if they owe $50,000 or less.
cause of action(legal claim)
third party is permitted to have a cause of action against both the agent and the partially disclosed principal
an incoming partner has the same rights as all of the existing partners,
thus, an incoming partner has right to participate in the management of the partnership
the trustee has the power to set aside preferential transfers made to a creditor within 90 days before the filing of the bankruptcy petition while the debtor is insolvent
to be a preferential transfer, it must be a transfer for an antecedent debt that enables the creditor to receive more than he otherwise would have in a chapter 7 liquidation.
for regulations regarding practice as as accountant before the IRS, a CPA should look to
treasure department circular 230
a partnership involves
two or more persons to carry on a business as co-owners for a profit. partnerships do not include nonprofit associations such as charitable organizations, labor unions or clubs.
if you're a limited partner but the customer believes you're a general partner, what kind of liability do you have
unlimited liability
a net unrealized built-in gain is FMVt less adjusted basis
when a C corp makes an S selection, the built in gain is subjected to 21% tax rate.
Several Liability
when a party is responsible for his own obligation (separately from another's liability) so that the plaintiff may bring a separate action against that party without suing other responsible parties.
under the revised uniform limited partnership act and in the absence of a contrary agreement by the partners, this element is most likely to dissolve a limited partnership
withdraw of the only general partner. dissolution requires unanimous consent of all partners
primary source when conducting tax research
1. IRC 2. tax court cases 3. IRS publications
to practice before the IRA
1. all paid tax return preparers must register with the IRS 2. merely preparing tax returns for others does not constitute practice before the IRS 3. practice before the IRS is generally limited to CPAs, attorney, and enrolled agents.
sources that provide congregational intent
1. committee report of house ways and means committee 2. a senate finance committee report: 3. the congressional records
casualty loss must be reduced by
10% of AGI limitation and $100(floor)
the late filing penalty is capped at ___% of the amount of taxes owned
25
only ___% of business meals are deductible
50
excess business loss deductible in the current year is limited to
80% of current year's taxable income before the NOL
tax preferences increase AMT
AMT credits may be carried forward to future tax year
a substantial understatement
General rule: 20% of underpayment attributable to substantial understatement (portion for which no substantial authority and no disclosure exists)
The tender of performance by the principal debtor completely releases the surety from his obligation.
However, such tender does not release the principal debtor if the contractual duty consists of the obligation to pay money.
