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Cards In This Set
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What are the tax consequences to the corporation at formation?
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- No gain or loss- Basis is greater of basis of shareholder and debt assumed by corporation
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What are the tax consequences to the shareholder at formation?
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- No gain or loss if the shareholder owns over 80% and no boot is received (cash, C.O.D., debt)- Basis is cash + property basis (basis-debt+boot) + FMV of services
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What GAAP income items are not includible as taxable income?
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- Interest income from municipal bonds- Proceeds from life insurance where the corporation is the beneficiary
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How are bad debts treated for cash basis taxpayers?
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- Bad debts are not deductible
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What are the charitable contribution rules for corporations?
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- Deductible up to 10% of taxable income before deduction of charitable contributions, dividends, NOL's, production activities deduction- Can be carried forward 5 years
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What are types of organizational costs and start up costs?
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- fees paid for legal services in drafting the charter- fees paid for acct services- fees paid to the state of incorporation
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How are intangible assets amortized?
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- Over 15 years in tax
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What are the capital loss rules for corporations?
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- Capital losses can only be used to offset capital gains- Capital losses are treated as short term - Capital losses can be carried back 3 years and forward 5 years
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What are the net operating losses for corporations
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- Carryback 2 years, forward 20 years- Calculated before charitable deductions and dividend deductions
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What are the limits of the dividend received deduction?
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Lesser of:70 or 80% of the dividends received, or70 or 80% of taxable income without the DRD, NOL, or capital loss carryback
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What entities does the dividends received deduction not apply?
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"Don't Take it Personally!"
- Personal service corps.- Personal holding companies- (Personally taxed) S corporations |
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Who receives the full 100% dividend deduction?
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- Affiliated Corporations (>80%)- Small business investment corporations
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What does the half year convention apply to? Mid quarter? Mid Month?
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- Half year: personal property placed during the year- Mid quarter: If more than 40% of depreciable property placed in the last quarter- Mid Month: For Real Estate properties
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What is a section 179 deduction?
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A fixed amount deducted instead of depreciation (250,000 max, reduced by an amount over $800,000)
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What are the depreciation rules for residential and non-residential property?
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- Residential (apts, homes) is straight lined over 27.5 years- Non-residential (offices, warehouses) is straight lined over 39 years
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