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Regulation (REG)
47 flashcards
The Internal Revenue Code is the primary body of federal statutory tax law in the United States. It governs the overall federal tax system, including income, estate, gift, and excise taxes.
A deduction reduces taxable income, while a credit directly reduces the amount of tax owed.
The general tax formula is: Tax = Tax Rate × Taxable Income
A cash basis taxpayer reports income when received and deducts expenses when paid. An accrual basis taxpayer reports income when earned and deducts expenses when incurred.
The AMT is a separate tax system designed to ensure that individuals and corporations who benefit from certain exclusions, deductions, and credits pay at least a minimum amount of tax.
A C corporation is a separate taxable entity that pays corporate income tax. An S corporation is a pass-through entity whose income is taxed at the shareholder level.
Business expenses must be ordinary and necessary in carrying on a trade or business to be deductible.
FICA authorizes payroll taxes to fund Social Security and Medicare programs.
In a like-kind exchange, no gain or loss is recognized on the exchange of qualifying property. A taxable exchange results in realized gain or loss.
The passive activity loss rules limit the deductibility of losses from passive trade or business activities against other sources of income.
The Sarbanes-Oxley Act was enacted to enhance corporate governance, financial disclosure, and accountability for public companies.
Tax evasion involves illegally underpaying or failing to pay taxes owed, while tax avoidance involves using legal methods to minimize tax liability.
The Foreign Corrupt Practices Act prohibits U.S. companies from bribing foreign government officials to obtain or retain business.
The tax basis of an asset is generally its cost, adjusted for certain items such as depreciation, amortization, and depletion.
FUTA authorizes a federal payroll tax paid by employers to fund state workforce agencies and unemployment benefits.
The gift tax is a tax on the transfer of property by gift during the donor's lifetime. It serves to prevent avoidance of estate taxes.
Contributions to a traditional IRA may be tax-deductible, but distributions are taxable. Roth IRA contributions are not deductible, but qualified distributions are tax-free.
The Securities Exchange Act of 1934 regulates secondary trading of securities and requires periodic reporting by public companies.
The ATNOLD allows certain net operating losses to offset alternative minimum taxable income, subject to limitations.
Corporate estimated tax payments are quarterly payments made by corporations to pay estimated income taxes for the current tax year.
Circular 230 governs the practice of representatives before the Internal Revenue Service and outlines rules of professional conduct.
Damages received for physical injuries are generally tax-free, while damages for emotional injuries are typically taxable.
The unclaimed reimbursement method allows employees to exclude from gross income certain employer reimbursements that are not claimed.
FATCA aims to combat tax evasion by requiring foreign financial institutions to report information about financial accounts held by U.S. taxpayers.
A capital gain results from the sale or exchange of a capital asset, while an ordinary gain results from the sale of property used in a trade or business.
Section 1031 allows for the deferral of gain on exchanges of qualifying like-kind property held for productive use in a trade or business or for investment.
The hobby loss rules limit the deductibility of losses from activities not engaged in for profit against other sources of income.
The tax benefit rule requires that if a deduction in one year creates a tax benefit, the recovery of that amount in a later year must be included in income.
The partnership tax rules govern the taxation of partnerships, which are pass-through entities whose income and losses are reported by the partners.
The installment sale method allows for the deferral of gain recognition on certain sales where at least one payment is received after the close of the tax year.
The US Tax Court is a federal court that provides a forum for taxpayers to dispute tax deficiencies determined by the Internal Revenue Service.
The Subchapter S election allows certain corporations to be taxed as pass-through entities, with income and losses passing through to shareholders.
The reasonable compensation requirement limits the deductibility of excessive compensation paid to corporate officers and employees.
The cafeteria plan rules govern tax-advantaged fringe benefit plans that allow employees to choose between cash and certain qualified benefits.
The premium assistance tax credit provides financial assistance to eligible individuals and families to help cover the cost of health insurance premiums.
A disregarded entity is treated as a branch or division of its owner for tax purposes, while a regarded entity is treated as a separate taxpayer.
The nonqualified deferred compensation rules govern the taxation of compensation earned in one year but paid in a future year according to a plan or agreement.
The tax home rules determine whether a taxpayer is considered traveling away from home for purposes of deducting certain travel expenses.
The Dodd-Frank Act aims to promote financial stability and consumer protection by enacting new regulations for financial institutions and products.
The Section 1245 recapture rules require that certain depreciation deductions be recaptured as ordinary income upon the disposition of depreciable property.
The constructive receipt doctrine requires taxpayers to report income when it is credited to their account or made available to them without substantial limitations.
The depreciation recapture rules require that certain depreciation deductions be recaptured as ordinary income upon the disposition of depreciable property.
The Section 179 deduction allows businesses to deduct the cost of certain qualifying property in the year it is placed in service, subject to limitations.
The DPAD provides a deduction for certain domestic production activities, such as manufacturing, construction, and certain services.
Information return filing requirements mandate that certain payments and transactions be reported to the IRS to assist in detecting unreported income.
The anti-churning rules limit the availability of certain tax benefits for intangible property that is acquired from related parties in certain transactions.
Form W-2 reports an employee's total wages and withholdings for the year to the IRS and the employee.