REG CPA Exam Review
1933 Federal Securities Act - ✔✔Requires corporations to provide complete information of all stock
offerings and made them liable for misrepresentations (truth in securities act)
7 Tests for Material Participation - ✔✔Taxpayer must meet at least one of the
following tests on an annual basis (Note: the first 3 are the most important to know):
-Taxpayer participates in the activity more than 500 hours.
-Taxpayer's participation is substantially all of participation by all
owners/nonowners
-Taxpayer participates more than 100 hours and not less than any other
owner/nonowner.
-Activity is a "significant participation activity" (ie, more than 100 hours
participation) and taxpayer participated in all significant participation
activities for more than 500 hours.
-Materially participated in activity for 5 of last 10 years.
-Materially participated in activity for any 3 prior years for personal service
activities.
-Depending on facts and circumstances, participation occurs on a regular,
continuous, and substantial basis.
A "personal holding company" - ✔✔is defined as a corporation where at least 60% of its adjusted
ordinary income is personal holding company income from passive sources and more than 50% of its
outstanding stock is owned by or for no more than 5 individuals.
A "personal holding company" is defined as - ✔✔a corporation where at least 60% of its adjusted
ordinary income is personal holding company income from passive sources and more than 50% of its
outstanding stock is owned by or for no more than 5 individuals.
, A bailment exists - ✔✔when the owner of personal property delivers it to the possession of another
party, who is entrusted with the item with the obligation to return or dispose of it according to the
owner's directions.
A company will be an emerging growth company until the earliest of: - ✔✔the year end of its 5-year IPO
anniversary, the year end of any year it has more than $1 billion in annual revenue, when it issues more
than $1 billion in non-convertible debt, or when it becomes a large accelerated filer.
A contract right is an - ✔✔intangible asset, because a contract is not a physical object that can be
possessed or used by itself.
A corporation is a personal holding company if 60% of adjusted ordinary gross income consists of: -
✔✔Dividends.
Taxable interest.
Royalties, but not mineral, oil, gas or copyright royalties.
Net rent, if less than 50% of ordinary gross income.
A general partner may be - ✔✔both a general and a limited partner and they may also be a secured
creditor of the limited partnership
A gratuitous promise - ✔✔is generally not enforceable.
A limited liability company - ✔✔may be managed by managers (manager-managed) or by its members
(member-managed).
A limited liability company gives owners protection from - ✔✔personal liability for obligations of the
entity.
A liquidated-damages clause is enforceable if it is - ✔✔a reasonable approximation of the loss resulting
from the breach.
1933 Federal Securities Act - ✔✔Requires corporations to provide complete information of all stock
offerings and made them liable for misrepresentations (truth in securities act)
7 Tests for Material Participation - ✔✔Taxpayer must meet at least one of the
following tests on an annual basis (Note: the first 3 are the most important to know):
-Taxpayer participates in the activity more than 500 hours.
-Taxpayer's participation is substantially all of participation by all
owners/nonowners
-Taxpayer participates more than 100 hours and not less than any other
owner/nonowner.
-Activity is a "significant participation activity" (ie, more than 100 hours
participation) and taxpayer participated in all significant participation
activities for more than 500 hours.
-Materially participated in activity for 5 of last 10 years.
-Materially participated in activity for any 3 prior years for personal service
activities.
-Depending on facts and circumstances, participation occurs on a regular,
continuous, and substantial basis.
A "personal holding company" - ✔✔is defined as a corporation where at least 60% of its adjusted
ordinary income is personal holding company income from passive sources and more than 50% of its
outstanding stock is owned by or for no more than 5 individuals.
A "personal holding company" is defined as - ✔✔a corporation where at least 60% of its adjusted
ordinary income is personal holding company income from passive sources and more than 50% of its
outstanding stock is owned by or for no more than 5 individuals.
, A bailment exists - ✔✔when the owner of personal property delivers it to the possession of another
party, who is entrusted with the item with the obligation to return or dispose of it according to the
owner's directions.
A company will be an emerging growth company until the earliest of: - ✔✔the year end of its 5-year IPO
anniversary, the year end of any year it has more than $1 billion in annual revenue, when it issues more
than $1 billion in non-convertible debt, or when it becomes a large accelerated filer.
A contract right is an - ✔✔intangible asset, because a contract is not a physical object that can be
possessed or used by itself.
A corporation is a personal holding company if 60% of adjusted ordinary gross income consists of: -
✔✔Dividends.
Taxable interest.
Royalties, but not mineral, oil, gas or copyright royalties.
Net rent, if less than 50% of ordinary gross income.
A general partner may be - ✔✔both a general and a limited partner and they may also be a secured
creditor of the limited partnership
A gratuitous promise - ✔✔is generally not enforceable.
A limited liability company - ✔✔may be managed by managers (manager-managed) or by its members
(member-managed).
A limited liability company gives owners protection from - ✔✔personal liability for obligations of the
entity.
A liquidated-damages clause is enforceable if it is - ✔✔a reasonable approximation of the loss resulting
from the breach.
