REG CPA Exam Review Questions and
Answers 100% Solved Guaranteed
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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.
Schedule E - ✔✔Supplemental Income and Loss (RRF-COP)
Rental Income, Royalties (Copyrights, Oil/Gas leases, Patents) and
Flowthrough entities
Individual Retirement Account (IRA) - ✔✔A qualified retirement plan for any
individual with earned income.
Itemized Deductions (Schedule A) (COmMITT) - ✔✔Charitable
Contributions (overall contributiond limited to 50% of AGI - give me 5 years
forward), Other Misc. Expenses (gambling losses to the extent of
winnings), Medical Expenses (10% AGI), Interest Paid, Taxes Paid
($10,000), and Theft/Casualty (10% AGI and less $100 per event)
An individual is only subject to an underpayment penalty if the balance of
tax due is greater than - ✔✔$1,000. The penalty may also be avoided by
paying the lesser of 90% of the current year tax liability or 100% of the prior
year tax liability (110% if the current year taxable income is over $150,000).
Dividend Received Deduction (DRD) - ✔✔0 - 20% ownership = 50% DRD
20-80% ownership = 65% DRD
Answers 100% Solved Guaranteed
Success
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.
Schedule E - ✔✔Supplemental Income and Loss (RRF-COP)
Rental Income, Royalties (Copyrights, Oil/Gas leases, Patents) and
Flowthrough entities
Individual Retirement Account (IRA) - ✔✔A qualified retirement plan for any
individual with earned income.
Itemized Deductions (Schedule A) (COmMITT) - ✔✔Charitable
Contributions (overall contributiond limited to 50% of AGI - give me 5 years
forward), Other Misc. Expenses (gambling losses to the extent of
winnings), Medical Expenses (10% AGI), Interest Paid, Taxes Paid
($10,000), and Theft/Casualty (10% AGI and less $100 per event)
An individual is only subject to an underpayment penalty if the balance of
tax due is greater than - ✔✔$1,000. The penalty may also be avoided by
paying the lesser of 90% of the current year tax liability or 100% of the prior
year tax liability (110% if the current year taxable income is over $150,000).
Dividend Received Deduction (DRD) - ✔✔0 - 20% ownership = 50% DRD
20-80% ownership = 65% DRD
