CPA Exam REG

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1. 
Personal Exemption Amount for 2009
 
$3,650
 
2. 
Qualifying Child Criteria for Dependency Exemption
 
CARES
Close Relative - direct descendant, legally adopted, foster child
Age Limit - under 19, or 24 if full time student, no age limit for permanently disabled
Residency Requirements - same household as taxpayer for more than half of the tax year
Eliminate gross income test - the gross income test does not apply
Support test changes - child did not contribute more than half of his/her support
 
3. 
Qualifying Relative Criteria for Depedency Exemption
 
SUPORT
Support over 50% of the persons needs (if 2 or more people support more than 50%, only one can claim the dependent, but must contribute more than 10%)
Under exemption amount of $3,650 for 2009 of taxable gross income test (no income test if meet ages limit under CARES)
Precludes dependent filing joint tax return test, can't claim dependent if they file jointly with someone else
Only citizens (residents of US, Canada, or Mexico) test
Relative test, or
Taxpayer lives with individual for whole year test, if not related (foster kids and cousins fall here)
 
4. 
Capital Gains untaxed for Individual Taxation
 
HIDEIT
Homewoners Exclusion - sale of primary residence S $250,000 / MFJ $500,000
Involuntary Conversions - insurance proceeds from destruction, theft, condemnation
Divorced Property Settlement
Exchange of Like-Kind Business/Investment Assets (tangible)
Installment Sale
Treasury and Capital Stock transactions (by corporation)
 
5. 
Non-deductible losses for Individual Taxation
 
WRaP
Wash Sale Loss - security is sold for a loss is repurchased within 30 days before or after the sale date
Related Party Transactions
And
Personal Losses - no deduction is allowed for the loss on a non-business disposal or loss
 
6. 
Operating Losses
 
Offset Income - Yes
Carry back - 2 Years
Carry forward - 20 years
 
7. 
Individual Capital Losses
 
Offset Income - Max $3000
Carry back - no
Carry forward - indefinitely

 
8. 
Corporate Capital Losses
 
Offset Income - No
Carry back - 3 years
Carry forward - 5 years
 
9. 
Itemized Deductions not subject to limitation (reduces, but not more than 80%, applicable itemized deductions by 3% of the amount of AGI exceeding thresholds)
 
GIMC
Gambling Losses
Investment interest expense
Medical Expenses
Casualty and theft losses (non-business)
 
10. 
Deductions from AGI below the line- Interest Expense
 
HIPPE
Home Mortgage Interest - interest up to 1 million in acquisition indebtedness is deductible for 1st/2nd home
Investment Interest Expense - for individuals is limited to the net taxable investment income
Personal (consumer) Interest - is not deductible
Prepaid interest - deduct when incurred and paid
Educational loan interest - is an adjustment (above the line), not an itemized deduction
 
11. 
AMT Adjustments that may increase or decrease the AMTI
 
PANIC TIMME
Passive activity losses
Accelerated depreciation
Net operating losses of the individual tax payer
Installment income of a dealer
Contracts - % of completion, vs completed contract
Itemized deductions - always adds back to regular taxable income
Tax deductions - taxes reduced by taxable funds
Interest deductions - Mortgage interest not used for the home, and investment interest exp is recalculated
Medical deductions (limited to 10% over AGI rather than 7.5%)
Mis deductions subject to the 2% floor are not allowed
Exemptions (personal) and standard deduction