Don't hate, Depreciate!
3 acceptable methods for depreciating personal property.
200% double declining balance, 150% declining balance, and straight line depreciation.
Filing an extension because you don't have enough money to pay your tax liability and therefore, failing to pay your taxes is a form of what?
Tax Evasion
The method in which you recognize income when earned or received rather than when only received.
The Accrual Method
Unlike tax deductions that take into account marginal tax rates to calculate the deduction, tax credits reduce a taxpayer's tax liability this for this.
Dollar for Dollar.
The type of income that is never included in a taxpayer's taxable income.
Excluded Income
Cars, light general purpose trucks and computers and peripheral equipment have a recovery period of 5 years. Office furniture, fixtures and equipment have a recovery period of this many years.
7 years
Deciding to accelerate your deductions and defer your income is considered to be?
Tax Avoidance
These types of businesses must use accrual method to record income.
Large corporations and partnerships with corporate partners.
Utilizing the Child Tax credit on a taxpayer with a tax liability of $12,377 would alter the liability to what amount?
$10,377 (total tax liability)
Income that is included in a taxpayer's income, but only included in a subsequent tax year.
Deferred Income
This type of method for MACRS would be utilized when 40% of the property is placed in service in the last quarter of the business's year end. Consider a machine placed in the fourth quarter costing $3,000 and a computer placed in the first quarter costing $1,000. What method qualifies this situation?
MACRS - Mid Quarter Convention
Shifting income from one taxpayer's property to their child, without legally changing ownership of the property and expecting the child to pay less taxes on that property is considered to be.
Tax Evasion
The alternative methods to recognize income that are permissible to use.
Cash method and Hybrid (Accrual and Cash)
This credit is eligible for expenses for the first 4 years of higher education and limited to a maximum credit of what amount?
American Opportunity Credit and $2,500
Bond interest is always taxable, unless it is this specific type. While this form is tax preferred, the bond most likely yields lower rates for return on the investment.
Municipal Bonds
The recovery period (outlined in Revenue Proc. 87-57) for nonresidential property placed in service on or after May 13, 1993.
27.5 years
Deciding to invest in a tax preferred investment, such as a municipal bond is an example of...
Tax Avoidance
In order to utilize the accrual method, the income is recognized or received when these two requirements are satisfied.
The "all events test" has occurred and the amount recorded can be determined with reasonable accuracy.
This category of tax credit can not exceed the amount of tax a taxpayer currently owns. Alternatively, the opposite of this would allow you to exceed your tax liability and receive a return amount.
Nonrefundable Tax Credits
Prizes and medals awarded to Olympic athletes are excluded from the taxpayer's income, however, this does not apply for those with a gross income higher than this amount.
$1 Million Dollars
Depreciation is used for tangible assets. Companies recover the cost of assets other than tangible assets using these two methods. One for intangible assets and the other for natural resources.
Amortization and Depletion
Reality TV stars, Todd and Julie Chrisley failed to report income from their reality show on their tax returns. This is considered to be...
Tax Evasion
Through filing this, a business has officially adopted the recording method they intend on using going forward.
Their first tax return.
The American Opportunity Credit requires the taxpayer to phase out the credit based on their Adjusted Gross Income after the first $2,000 of expenses. What is the amount a taxpayer can claim if their educational expenses total 4,000?
The taxpayer would claim the first $2,000 and then 25% of the remaining $2,000. The total amount the taxpayer can claim would be $2,500.
A taxpayer can exclude scholarships that pay for required tuition, fees, books and supplies thanks to what Internal Revenue Code section?
IRC section 117 (Qualified Scholarships)