CPA Exam

CPA Exam What are the sources of taxable income? -Wages&Salaries -Portfolio Income -Passive Income -Capital Income What are some nontaxable fringe benefits? -Insurance premium -De minimis fringe benefits -Qualified tuition reduction -qualified employee discounts Are insurance premiums paid by employers taxable? <$50,000 ... No >$50,000 ... Yes, use tax table to figure out how much (not entire amount over 50k) Give some examples of exempt interest -State and local government bonds -bonds of US possession (territory) -Series EE if used for higher education -Interest on VA insurance What is the tax treatment of unearned income of a child who falls under the "kiddie" tax" rules? First 100ish is tax free, second is taxed at child's rate, anything over about 2500ish is taxed at parents rate State the tax treatment of property settlements in a divorce Tax free transfer/division of property What are the requirements for alimony to be deductible by the paying former spouse and includable by the recipient? -must be pursuant to written decree -cash or its equivalent -can't extend beyond life of payee -can't be made to the same members of the household -no joint tax return is filed Describe the self-employment tax -2.9% medicare tax on earnigns up to 118,500 and 12.4 ss tax on everything -one half is available to take as a for AGI deduction On what property do the Uniform Capitalization Rules apply? -Manufacturer's inventory, regular inventory, rental inventory -N/A if gross recipients in past 3 years do not exceed 10m annually. When are funds in a nondeductible IRA taxable? Principle is taxable when incurred and interest when withdrawn What is the formula to determine the excludable portion of an annuity? in years = (investment in contract/Age factor in months) What are the exceptions form the early withdrawal penalty for pensions? Home buyer (first time) 10k max Insurance (for SE or 12wk UNEmp) Medical expense >10% AGI Disability Education (tuition, books, fees) And Death How is rental income from a vacation house treated? <15 excluded from income >15 days rented <15 days lived in ... rental property .15 days rented and used(or 10% of days rented) allocated rental expense to the extent of rental income Define and give examples of passive activity Activity that the investor does not have significant management say in how his/her money is managed (rental<<always, interests in lp, s-corps)