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Tax chapters 8-10
Terms in this set (42)
What activities generate a loss?
-business or rental activities
-sales of stock and other investment property
fully deductible; net loss from an "active" business or rental activity
net loss from a passive business or rental activity; net only with other passive activities; income goes on schedule E
suspended passive losses
carried forward and added to next year's loss or income from that activity
three classifications of income
active, passive, portfolio
when selling passive activity to related parties
cannot deduct suspended loss until the related party sells the activity to a non-related person
how often do you have to determine if an activity is passive?
every year, for each activity
are wages active or passive?
are dividends/interest income active or passive?
stock sales and investment sales A or P?
limited partnership A or P?
passive unless worked in for 500 hours in the year
rental activities A or P?
passive unless a "real estate professional"
real estate professional
spends 50%+ of business time in RE business AND 750 hours in a year
sole proprietorship/Gen Partnership/RRE A or P?
either depending on material participation
-substantially all the work in the activity
-100+ and more than anyone else
-100+ combines for a total of 500+
passive rental real estate with active participation
possible free up 25k; separate "pot"; own at least 10% and actively manage
phase out for active participation
1$ for every $2 of AGI in excess of 100k, none over 150k
prior suspended loss from the activity remains passive, but can be used against current income for THAT activity
when sell passive activity
all suspended losses from sold activity also deductible/reported; no netting
above AGI, C
allows all business deductions related to trip; 50% meals even if by self; usually overnight, away from tax home temporarily
local transport related to business, NOT commuting, not lodging
the place where you work, where you make your income
combination between business and pleasure travel
travel costs are all or nothing, so make it primarily business trip
only for business days, not for spouse unless have employee reason
miles in excess of commute count; home to client miles count
no regular office
do not count miles to first business location or from last to home; outside of normal vicinity counts
auto costs - actual method
log total op costs and also compute depreciation; only for business portion; no switching
auto costs - standard mileage method
.565 per business mile plus business related parking fees or tolls; no switching
associated with or directly related to a substantial business discussion
no business required during, if discuss before or after
directly related to
discussed during entertainment and specific business benefit intended
-not for production of income activities
-not social club dues
-gifts limited to $25 per donee
-tickets limited to 50% face value
employer deducts reimbursements, employee reimbursements NOT income; EE returnz excess and reports proper costs
employer deducts reimbursements from W2, income for employee
moving for primarily business reasons; (old res to new) - (old work to new) must be over 50 difference; must work 39 weeks in first 12 months
allowable moving expenses
limited to moving goods and taxpayer
home office requirements
office must have exclusive business use
home office business use
-principal place of business,
-regularly meet customers there, OR
-detached structure used in the business
employee business office
must prove that employer requires work to be done at home
amount for business office
-100% direct and portion indirect OR
-$5/sq foot not exceeding 1500
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