Really Money
Timmy earns $3000 in interest from a UTMA account his grandparents set up for him. What are the income tax implications?
$1050 deducted
$1050 at Timmy's Rate
$900 at Trust Rates
(100pts each)
Brie has a vacation home she rents from Sept-June every year and uses the rest of the time. She has rental income of $2,000 per month, depreciation of $8,000, maintenance expenses of $15,000, property taxes of $15,000 related to the vacation home. How much can she deduct (ignoring AGI Limits)?
$20,000
Allocated between rental and personal uses
SALT first/Operating second/Depreciation last
Deductions limited to income
I sleep during the day and am active at night. What am I?
Nocturnal
Kristy is finally starting her dream bakery business and wants to know how to organize it. If she doesn't want to pay self-employment taxes, what are her options?
LLC
S-Corp
C-Corp
100pts each
Taylor was gifted stock worth $75,000 from her uncle. He originally purchased the stock for $20,000 10yrs ago. The annual exclusion was used and he also paid gift tax of of $12,000 on the transfer. What is Taylor's basis?
$31,000
[(75k-20k)/(75k-15k)]*12k
Amy has significant private activity bond interest of $20,000. What is her marginal AMT if her AGI is:
I: $50,000
II: $150,000
III: $250,000
III:
I: 0%
II: 26%
III: 28%
200pts each
What are some of the basics of Charitable Deductions?
LTCG Basis usually limited to 50% AGI
LTCG FMV usually limited to 30% AGI
Cash deduct 60% AGI
OI/STCG lesser of basis or FMV up to 50% AGI
Private non-operating have lower limits
200pts each
Spring forward....
Fall back
What are some consequences of Sole Proprietorship?
Hard to raise capital
Unlimited liability
Hard to pass on after death
200pts each
Poppy inherited 100 shares of MNLOP stock from her father, who died Monday Jan 1st. The stock's most recent trades are as follows:
Dec 26th @ $12
Dec 28th @ $15
Jan 4th @ $21
Jan 5th @ $24
What was the value of the inheritance?
$1,740
[(15x3)+(21x2)]/(3+2)
John (69) and Dotty (67) have been living on selling wood carvings and knitted clothing for $2,000 monthly and monthly Social Security Benefits of $3,750. How much, if any, of their benefits are taxable?
$38,250
Ken had previously invested $50,000 into a Master Limited Partnership and $50,000 into Limited Partnership. The MLP has income of $50,000 this year and the LP has losses of $50,000 this year. What is his taxable income from these partnerships this year?
$50,000
When was the first cell phone created?
Bonus: What company?
1973
Motorola
None
Timmy is making a like-kind exchange with Tommy. Timmy has a building with a basis of $40,000 and FMV of $100,000. Tommy has a building with a basis of $70,000 and FMV of $150,000, and the building has a current mortgage of $20,000. Timmy gives Tommy Timmy's building and Tommy gives Timmy Tommy's building with the mortgage. What are Timmy and Tommy's new basis's?
Timmy: $60,000
Tommy: $70,000
300pts each
In return for forgiving his $20,000 debt with his bank, Jackie has agreed to work as an unpaid overnight security guard for 6 months with no benefits. He must also continue to work at his normal job as a stock broke where he makes a net income of $45,678. What is his taxable income?
$65,678
What is the standard deduction for dependents?
Greater of $1050 or earned income + $350 up to $12,000
Which company produces the most tires annually?
LEGO
What is the total self-employment tax rate?
15.3%
Johnny is selling stock to his son Jimmy. Johnny purchased the stock 3yrs ago for $10,000. The current FMV is $4,000, which Jimmy pays. If Jimmy sells the stock to Timmy 5yrs later for $12,000, what are the tax consequences of these sales?
Johnny realize $6k loss
Johnny recognize $0
Jimmy realize $8k gain
Jimmy recognize $2k gain
400pts each
Nalda (56) has an annuity she purchased in January of 1982 for $20,000. It is currently worth $75,000. She also has a 401(k) Plan with her employer where her vested balance is $100,000 and a traditional IRA with a balance of $50,000. She is looking to purchase her first home (she preferred renting until recently). She withdrew $15,000 from her annuity, $10,000 from her IRA, and took out a loan from her 401k for $25,000. What are the tax consequences of these transactions?
Annuity: tax free
IRA: Tax on full amount
IRA: no penalty
401k: tax free
500pts each
Gronk purchased a house for $3,456,789 1yr ago. Due to work relocating, he was forced to sell it for its current FMV of $3,581,789. How much tax must he pay?
None
What is the national animal of Scotland?
Unicorn
Katie is highly-compensated employee and majority owner of a corporation. The corporation offers Long-term disability insurance to its employees, and pays for significantly more coverage for Katie. What are the tax effects of the disability insurance on Katie
Premiums added to her income
Katie receives benefits tax-free
500pts each
Norma has Section 1250 real estate property that she purchased for $80,000 7 years ago. She has depreciated $50,000 (Straight-line would have been $30,000) and the FMV is currently $200,000. She also had 1231 gains of $5,000 2yrs ago, losses of $8,000 3yrs ago, and gains of $3,000 5yrs ago. If she sells the property at the current FMV, what are the tax consequences?
$30,000 tax free
$23,000 recapture as OI
$30,000 recapture at max 25%
$120,000 LTCG
500pts each