CPA REG Exam (All Becker
Flashcards) questions and answers
State the basic tax formula - AnswerGross income
- Deductions for AGI (Adjustments)
=AGI
- Deductions from AGI (Standard or Itemized deductions)
=Taxable Income before QBI deduction
- QBI deduction
=Taxable Income
Identify the various filing statuses - Answer-Single
-Married filing jointly
-Married filing separately
-Head of household
-Qualifying widow(er) with dependent child
What are the criteria for filing single? - Answer-Unmarried or legally separated from spouse at the
end of tax year
-Does not qualify for another filing status
What are the criteria for filing married filing jointly? - AnswerAt year-end of tax year:
-Married and living together as spouses
-Living together in a recognized common law marriage
-married and living apart but not legally separated or divorced
What are the criteria for filing married filing separately? - AnswerAt year-end of tax year:
-Married
-If one spouse wants to be responsible only for own tax
-If both spouses do not agree to file a joint return
,What are the criteria for filing head of household? - Answer-Individual is not married, legally
separated, or is married and has lived apart from his/her spouse for the last six months of the year
-Individual is not a "qualifying widow(er)
-Individual is not a nonresident alien
-Individual maintained a home that, for more than half the taxable year, is the principle residence of
a:
*son or daughter who is a qualifying child or qualifies as the taxpayer's dependent (qualifying
relative)
*a dependent relative who reside with the taxpayer
*a dependent father or mother, regardless of whether they live with the taxpayer
What are the criteria for filing qualifying widow(er) AKA surving spouse? - Answer-Unmarried at end
of tax year
-Surviving spouse must maintain a household, which for the entire taxable year was the principal
place of abode of a son, stepson, daughter, or stepdaughter
-The son, stepson, daughter, stepdaughter qualifies as a dependent of the taxpayer
The taxpayer qualifies for this status for two years after year of death of the spouse.
Name the requirements for an individual to meet the definition for a "qualifying child" (CARES) -
AnswerClose relative
Age limit (19/24) and younger than the taxpayer
Residency and filing requirement
Eliminate gross income test
Support test
Name the requirements for an individual to meet the definition of a "qualifying relative" (SUPORT) -
AnswerSupport (over 50%) test
Under a specific amount of (taxable) gross income test
Precludes dependent filing a joint tax return test
Only citizens test
Relative test OR
Taxpayer lives with individual for the whole year test
*Only have to satisfy R or T, not both
,What are the requirements for a multiple support agreement? - Answer-Two or more people
together provide more than 50% of support, but no one contributes more than 50%
-To claim as a dependent, a person must provide more than 10% of support, and meet the other
dependency tests
-A multiple support declaration, Form 2120, must be filed
When should a cash basis taxpayer report income? - AnswerA cash basis taxpayer should report
income in the year in which income is either actually or constructively received, whether in cash or
property
Define gross income - AnswerGross income includes all income from whatever source derived,
unless specifically excluded
What are the four categories of individual income? - AnswerCategories of individual income:
-Ordinary (wages, salaries)
-Portfolio (dividends, interest)
-Passive (real estate, limited partnership income, and some S-corps)
-Capital
Name some nontaxable fringe benefits (exclusions) - Answer-De minimis fringe benefit
-Qualified tuition reduction
-Qualified employee discounts
-Employer-paid accident, medical, and health insurance
*Unless specifically excluded by law, the fringe is includable in gross income
Are life insurance premiums paid by an employer taxable to an employee? - AnswerPremiums on the
first $50,000 (face amount) of group term life insurance are not includable in gross income.
Premiums paid for coverage above $50,000 should be included in gross income. This is calculated
from an IRS table, and is not the entire amount of the premium over $50,000.
Give some examples of exempt interest - AnswerExempt interest examples:
-State and local government bonds
-Bonds of a U.S. possession
, -Series EE (U.S. Savings Bond) if used for higher education
-Interest on Veterans Administration insurance
State the tax treatment of property settlements in a divorce - AnswerFor a property settlement in a
divorce, the transferring spouse gets no deduction for payments made (or property transferred), and
the payments are not includable in the gross income of the spouse receiving the payment or
property. This is still true even if the divorce was finalized on or before 12/31/18.
What are the requirements for alimony to be deductible by the paying former spouse and includable
by the recipient? - Answer-Divorce or separation agreement must have been executed on or before
12/31/18
-Payments must be legally required pursuant to a written decree
-Payments must be in cash or its equivalent
-Payments cannot extend beyond death of payee
-Payments cannot be made to members of same household
When are funds in a nondeductible traditional IRA taxable? - AnswerWithdrawals from
nondedeuctible traditional IRAs are partially taxable.
When withdrawn, amounts previously contributed (principal) are nontaxable. Any earnings on those
contributions are taxable when withdrawn.
What is the formula to determine the excludable portion of an annuity? - AnswerExcludable amount
in current year = Investment in contract / Age factor (in months)
*Note: If the annuitant lives longer than the factor in months, further payments are fully taxable. If
the annuitant dies before the factor payments are collected, the unrecovered portion of the
investments is a miscellaneous itemized deduction on the annuitant's final tax return (not subject to
the 2% limitation).
In premature distributions of an IRA, what are the exceptions to the penalty tax? (HIM DEAD) -
Answer-Homebuyer (first time): $10,000 max if used toward first home (within 120 days)
-Insurance (medical)
*Unemployed with 12 consecutive weeks of unemployment compensation
*Self-employed (who are otherwise eligible for unemployement compensation)
-Medical expenses in excess of 10% of AGI
Flashcards) questions and answers
State the basic tax formula - AnswerGross income
- Deductions for AGI (Adjustments)
=AGI
- Deductions from AGI (Standard or Itemized deductions)
=Taxable Income before QBI deduction
- QBI deduction
=Taxable Income
Identify the various filing statuses - Answer-Single
-Married filing jointly
-Married filing separately
-Head of household
-Qualifying widow(er) with dependent child
What are the criteria for filing single? - Answer-Unmarried or legally separated from spouse at the
end of tax year
-Does not qualify for another filing status
What are the criteria for filing married filing jointly? - AnswerAt year-end of tax year:
-Married and living together as spouses
-Living together in a recognized common law marriage
-married and living apart but not legally separated or divorced
What are the criteria for filing married filing separately? - AnswerAt year-end of tax year:
-Married
-If one spouse wants to be responsible only for own tax
-If both spouses do not agree to file a joint return
,What are the criteria for filing head of household? - Answer-Individual is not married, legally
separated, or is married and has lived apart from his/her spouse for the last six months of the year
-Individual is not a "qualifying widow(er)
-Individual is not a nonresident alien
-Individual maintained a home that, for more than half the taxable year, is the principle residence of
a:
*son or daughter who is a qualifying child or qualifies as the taxpayer's dependent (qualifying
relative)
*a dependent relative who reside with the taxpayer
*a dependent father or mother, regardless of whether they live with the taxpayer
What are the criteria for filing qualifying widow(er) AKA surving spouse? - Answer-Unmarried at end
of tax year
-Surviving spouse must maintain a household, which for the entire taxable year was the principal
place of abode of a son, stepson, daughter, or stepdaughter
-The son, stepson, daughter, stepdaughter qualifies as a dependent of the taxpayer
The taxpayer qualifies for this status for two years after year of death of the spouse.
Name the requirements for an individual to meet the definition for a "qualifying child" (CARES) -
AnswerClose relative
Age limit (19/24) and younger than the taxpayer
Residency and filing requirement
Eliminate gross income test
Support test
Name the requirements for an individual to meet the definition of a "qualifying relative" (SUPORT) -
AnswerSupport (over 50%) test
Under a specific amount of (taxable) gross income test
Precludes dependent filing a joint tax return test
Only citizens test
Relative test OR
Taxpayer lives with individual for the whole year test
*Only have to satisfy R or T, not both
,What are the requirements for a multiple support agreement? - Answer-Two or more people
together provide more than 50% of support, but no one contributes more than 50%
-To claim as a dependent, a person must provide more than 10% of support, and meet the other
dependency tests
-A multiple support declaration, Form 2120, must be filed
When should a cash basis taxpayer report income? - AnswerA cash basis taxpayer should report
income in the year in which income is either actually or constructively received, whether in cash or
property
Define gross income - AnswerGross income includes all income from whatever source derived,
unless specifically excluded
What are the four categories of individual income? - AnswerCategories of individual income:
-Ordinary (wages, salaries)
-Portfolio (dividends, interest)
-Passive (real estate, limited partnership income, and some S-corps)
-Capital
Name some nontaxable fringe benefits (exclusions) - Answer-De minimis fringe benefit
-Qualified tuition reduction
-Qualified employee discounts
-Employer-paid accident, medical, and health insurance
*Unless specifically excluded by law, the fringe is includable in gross income
Are life insurance premiums paid by an employer taxable to an employee? - AnswerPremiums on the
first $50,000 (face amount) of group term life insurance are not includable in gross income.
Premiums paid for coverage above $50,000 should be included in gross income. This is calculated
from an IRS table, and is not the entire amount of the premium over $50,000.
Give some examples of exempt interest - AnswerExempt interest examples:
-State and local government bonds
-Bonds of a U.S. possession
, -Series EE (U.S. Savings Bond) if used for higher education
-Interest on Veterans Administration insurance
State the tax treatment of property settlements in a divorce - AnswerFor a property settlement in a
divorce, the transferring spouse gets no deduction for payments made (or property transferred), and
the payments are not includable in the gross income of the spouse receiving the payment or
property. This is still true even if the divorce was finalized on or before 12/31/18.
What are the requirements for alimony to be deductible by the paying former spouse and includable
by the recipient? - Answer-Divorce or separation agreement must have been executed on or before
12/31/18
-Payments must be legally required pursuant to a written decree
-Payments must be in cash or its equivalent
-Payments cannot extend beyond death of payee
-Payments cannot be made to members of same household
When are funds in a nondeductible traditional IRA taxable? - AnswerWithdrawals from
nondedeuctible traditional IRAs are partially taxable.
When withdrawn, amounts previously contributed (principal) are nontaxable. Any earnings on those
contributions are taxable when withdrawn.
What is the formula to determine the excludable portion of an annuity? - AnswerExcludable amount
in current year = Investment in contract / Age factor (in months)
*Note: If the annuitant lives longer than the factor in months, further payments are fully taxable. If
the annuitant dies before the factor payments are collected, the unrecovered portion of the
investments is a miscellaneous itemized deduction on the annuitant's final tax return (not subject to
the 2% limitation).
In premature distributions of an IRA, what are the exceptions to the penalty tax? (HIM DEAD) -
Answer-Homebuyer (first time): $10,000 max if used toward first home (within 120 days)
-Insurance (medical)
*Unemployed with 12 consecutive weeks of unemployment compensation
*Self-employed (who are otherwise eligible for unemployement compensation)
-Medical expenses in excess of 10% of AGI
