Bus 123 TAX Final
General Business Credits include:
1. Tax credit for rehabilitation expenditures 2. Work opportunity tax credit 3. Research activities credit 4. Low-income housing credit 5. Disabled access credit 6. Credit for small employer pension plan startup costs 7. Credit for employer-provided child care 8. Family and medical leave credit
General Business Credit
Any unused General Business credit is carried back 1 year, then forward 20 years
A business meal with a business associate or customer is always deductible.
F
If a new business organized as a C corporation incurs start-up losses, the tax benefits of those losses will be recognized immediately.
F
In general, an NOL deduction is limited to 90 percent of taxable income, determined without regard to the NOL deduction itself.
F
The annual limitation on business gifts can be circumvented by having the donor's spouse join in the gift.
F
The deduction for the cost of a ticket for an entertainment activity is limited to the face value of the ticket. This limitation is applied after the 50 percent rule.
F
For noncorporate taxpayers, a net capital loss (NCL) is deductible from gross income to the extent of ? per tax year. If the NCL includes both long-term and short-term capital loss, ? capital loss is counted first toward the annual limitation. Noncorporate taxpayers are allowed to carry over unused capital losses ? Both the short and long-term capital losses retain their character when carried over.
For noncorporate taxpayers, a net capital loss (NCL) is deductible from gross income to the extent of $ 3,000 per tax year. If the NCL includes both long-term and short-term capital loss, the short-term capital loss is counted first toward the annual limitation. Noncorporate taxpayers are allowed to carry over unused capital losses indefinitely. Both the short and long-term capital losses retain their character when carried over.
When can a bad debt deduction be taken for a nonbusiness debt?
In the year of total worthlessness.
How is a nonbusiness bad debt classified?
Short-term capital loss
Beginning in 2018, an NOL can be carried forward indefinitely.
T
Business gifts are deductible only to the extent of $25 per donee per year.
T
Even though country clubs dues are not deductible, actual entertainment at a club may qualify as a deduction.
T
If a business is formed as a regular corporation, the income may be subject to double taxation.
T
No dividend received deduction is allowed if the corporation held the common stock of the dividend paying corporation for less than 46 days during the 91-day-period that starts 45 days before the ex-dividend date and end 45 days after the ex-dividend date.
T
Partnerships offer more flexibility in allocating income among owners than S corporations.
T
The basis of the property for cost recovery purposes is reduced by the § 179 amount. The business income limitation does not affect basis.
T
The basis of the property received in a liquidating distribution by a shareholder is its fair market value on the date of the liquidation.
T
The deduction for qualified business income will not create or increase a net operating loss.
T
Which of the following statements is not correct? a. The basis of an asset that is purchased must be adjusted for depreciation allowable. b. The general rule for the basis of property acquired by gift is a carryover of basis from the donor. c. If an asset is acquired by gift and the FMV on the date of gift is lower than the donor's carryover basis, the recipient's basis cannot be determined until the asset is disposed of. d. The basis of property acquired from a decedent is always the FMV on the date of death.
d
municipal bonds
tax-exempt bonds issued by state and local governments ex: City of Lexington bond, Nevada state school board bond, US treasury bond, San Jose City Bond. Especially, Commonwealth of Puerto Rico bonds is exempt from all Federal, State & Local taxes [Triple exempt]
