REG CPA
A contracting party can establish the defense of fraud if she can prove - ✔✔MAIDS - all 5
Misrepresentation of material fact
Scienter (intent to deceive)
Intent to induce reliance - make sale
Actual and Reasonable Reliance - on misrepresentation, independently check value
Damages - compensatory & punitive, liable to anyone who suffered a loss
bad debt expense - ✔✔only expenses that are written off during the year is deductible
bankruptcy involuntary petition - ✔✔if there are 12 or more creditors, at least 3 of the creditors who
are owned in the aggregate at least $15,775 in unsecured debt, must be joined in the petition.
Basis on distributed property - ✔✔- basis of distributed property cannot exceed the basis of the
partner's entire interest after deducting cash
- basis in distributed property is the lesser of the adjust basis of the property or the remaining basis
-no gain or loss is recognized when receiving distributed property.
Beneficiaries - ✔✔the people who will receive the benefit of the trust's assets. The Grantor (you) is the
original beneficiary, and those who receive benefits after your passing are known as "remainder
beneficiaries".
C Corp CE&P and positive A&P - ✔✔Dividend income is determined by CE&P and positive AE&P. Div
distributions are allowed to the extent of CE&P and positive A&P. excess distributions over CE&P and
AE&P is return of capital and reduces basis.
C Corp tax effect of SH for land contributed - ✔✔No gan or loss recognized if property is exchanged for
80% control (all together) IF not boot is rec'd
EXCEPTION:
1) Boot is rec'd = gain
, 2) Debt is assumed by corp;
gain = excess debt over SH's basis
C Corp tax effect of SH for services contributed? - ✔✔FMV is fully taxable
C Corp: Basis of Corp at contribution of SH - ✔✔- tax effect: no g/l
- corp basis is greater of:
1) SH's basis of property
2) debt assumed
C Corp: Basis of SH at contribution - ✔✔Adj basis = NBV + gain recognized - debt assumed by corp
distributions in complete liquidation of corp - ✔✔*two levels of taxation*:
1) Corp gain/loss = FMV of sold assets- corp's asset basis
2) SH gain/loss = FMV of asset's rec'd - SH's basis
duress - ✔✔freewill is overcome by unlawful use of threat of harm/ physical force. (void)
-economic/ social threat (voidable)
Effective on dispatch - ✔✔acceptance
Effective upon receipt - ✔✔revocation, rejections, & counteroffers
Exchange of consideration - ✔✔something of legal value given by each party and there must be a
bargained for exchange
Fraud in execution - ✔✔when a party is deceived into signing something (void)
A contracting party can establish the defense of fraud if she can prove - ✔✔MAIDS - all 5
Misrepresentation of material fact
Scienter (intent to deceive)
Intent to induce reliance - make sale
Actual and Reasonable Reliance - on misrepresentation, independently check value
Damages - compensatory & punitive, liable to anyone who suffered a loss
bad debt expense - ✔✔only expenses that are written off during the year is deductible
bankruptcy involuntary petition - ✔✔if there are 12 or more creditors, at least 3 of the creditors who
are owned in the aggregate at least $15,775 in unsecured debt, must be joined in the petition.
Basis on distributed property - ✔✔- basis of distributed property cannot exceed the basis of the
partner's entire interest after deducting cash
- basis in distributed property is the lesser of the adjust basis of the property or the remaining basis
-no gain or loss is recognized when receiving distributed property.
Beneficiaries - ✔✔the people who will receive the benefit of the trust's assets. The Grantor (you) is the
original beneficiary, and those who receive benefits after your passing are known as "remainder
beneficiaries".
C Corp CE&P and positive A&P - ✔✔Dividend income is determined by CE&P and positive AE&P. Div
distributions are allowed to the extent of CE&P and positive A&P. excess distributions over CE&P and
AE&P is return of capital and reduces basis.
C Corp tax effect of SH for land contributed - ✔✔No gan or loss recognized if property is exchanged for
80% control (all together) IF not boot is rec'd
EXCEPTION:
1) Boot is rec'd = gain
, 2) Debt is assumed by corp;
gain = excess debt over SH's basis
C Corp tax effect of SH for services contributed? - ✔✔FMV is fully taxable
C Corp: Basis of Corp at contribution of SH - ✔✔- tax effect: no g/l
- corp basis is greater of:
1) SH's basis of property
2) debt assumed
C Corp: Basis of SH at contribution - ✔✔Adj basis = NBV + gain recognized - debt assumed by corp
distributions in complete liquidation of corp - ✔✔*two levels of taxation*:
1) Corp gain/loss = FMV of sold assets- corp's asset basis
2) SH gain/loss = FMV of asset's rec'd - SH's basis
duress - ✔✔freewill is overcome by unlawful use of threat of harm/ physical force. (void)
-economic/ social threat (voidable)
Effective on dispatch - ✔✔acceptance
Effective upon receipt - ✔✔revocation, rejections, & counteroffers
Exchange of consideration - ✔✔something of legal value given by each party and there must be a
bargained for exchange
Fraud in execution - ✔✔when a party is deceived into signing something (void)
