Questions and Answers
What does the acronym CARES stand for in relation to Qualifying Child?
What does the acronym SUPORT stand for in relation to Qualifying Relative?
What does HIM DEAD stand for regarding Exceptions to Early IRA 10% Penalty Tax?
What does the acronym PANIC TIMME relate to?
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What are the Individual AMTI Tax Preference Items represented by PPP?
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What does the acronym LID represent in relation to Corporate AMTI Adjustments?
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What does the acronym FAIDS represent regarding Real Defenses against Instruments?
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What does the acronym MY LEGS refer to in contracts?
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Exceptions to the Goods $500 or more statute are represented by which acronym?
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What does the acronym SAG WEG CTI represent regarding Priority Claimants in Bankruptcy Distribution?
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What is needed for a Personal Holding Company as per the definition provided?
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What does the acronym BRINGS refer to regarding exemptions from 1933 Act registration?
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What are the defenses of a Surety represented by the acronym CPR'S?
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What does the acronym HIDE IT refer to regarding Nontaxable Gains?
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Study Notes
Qualifying Child Criteria
- CARES acronym helps remember qualifications: Close Relative, Age Limit (under 19 or 24 for college students), Residency (lived with taxpayer more than half the year), Gross Income Test (not needed for exemptions), Support Test (taxpayer must provide over half support).
Qualifying Relative Criteria
- SUPORT acronym outlines requirements: Support Test (over 50%), income limit (under $4,000), no joint return filing, residency (U.S. citizens or residents of U.S., Mexico, or Canada), must be a relative or have lived with taxpayer for the full year.
Exceptions to Early IRA 10% Penalty Tax
- HIM DEAD represents exceptions: First-time Home Buyer ($10,000), unemployment insurance, medical expenses exceeding 10% of AGI, permanent disability, qualified education expenses, and death.
Individual AMTI Adjustments
- PANIC TIMME indicates AMTI changes: Passive Activity Losses, Accelerated Depreciation, Net Operating Loss, Dealer Installment Income, Percentage Completion vs. Completed Contract, specific Tax deductions (some home equity, medical over 10% AGI for individuals over 65), miscellaneous deductions denied, and personal/standard exemptions removed.
Individual AMTI Tax Preference Items
- PPP identifies tax preferences: Private Activity Bond Interest Income, excess Percentage Depletion over adjusted basis, and Pre-1987 Accelerated Depreciation.
Individual AMTI Credits
- FACCE for AMTI credits includes: Foreign Tax Credit, Adoption Credit, Child Tax Credit, Contributions to Retirement Plan Credits, and Earned Income Credit.
Corporate AMTI Adjustments
- LID describes adjustments for corporations: Long-Term Contracts, Dealer Installment Sales, and Depreciation Adjustments.
Corporate AMTI Preferences
- PPP highlights corporate preferences: Percentage Depletion, Private Activity Bonds, and Pre-1987 ACRS Depreciation.
Corporate Adjusted Current Earnings "ACE"
- MOLDD denotes items added back: Municipal Bond Interest, Organizational Expense Amortization, Life Insurance Proceeds on key employees, discrepancies in AMTI vs. ACE depreciation, and dividends received deductions (70%).
Definition of Personal Holding Company
- Defined by ownership (>50% by five or fewer individuals) and income criteria: 60% of Adjusted Gross Income comprised of Net Rent, Taxable Interest, Royalties (excluding mineral, oil, gas, or copyrights), and Dividends from unrelated corporations.
Exemptions from 1933 Act Registration
- BRINGS reveals exemptions: Banks and Savings & Loans, Not-for-Profits, Government entities (with exceptions), Railroads/Common Carriers, Short-Term Commercial Paper (9 months or less), and Insurance Policies.
Contract Fraud Defenses
- MAIDS presents key defenses: Misrepresentation of Material Fact, Scienter (knowledge of wrongdoing), Induction of victim reliance, Actual and Justifiable reliance, and Damages incurred.
Statute of Frauds: Must be in Writing
- MY LEGS indicates transactions requiring written contracts: Marriage considerations, agreements extending over one year, Land transfers, Executors paying estate debts, Goods valued over $500, and Surety agreements.
Exceptions to Goods Worth $500 or More Statute
- SWAP outlines exceptions: Specifically manufactured goods, Written confirmation not objected within 10 days, admissions in court, and performance accepted beyond partial contributions.
Real Defenses Against Instruments
- FAIDS identifies strong defenses: Fraud in Execution, Forgery, Adjudicated Insanity, Material Alteration, Infancy, Illegality, Duress, Discharge in Bankruptcy, Surety-ship defenses (with prior notice to HDC), and Statutes of Limitations (3 years post-dishonor/acceptance, 6 years post-demand).
Exceptions to Chapter 7 Discharge (Individuals)
- WAFFTEED describes debts not dischargeable: Willful and malicious injuries, Alimony and support obligations, Government fines/penalties, Fraud debts, Recent tax obligations, Embezzlement and fiduciary frauds, Educational loans, and Undisclosed bankruptcy debts.
Priority Claimants in Bankruptcy Distribution
- SAG WEG CTI details distribution order: Support to spouses and children, Administrative expenses, Gap claims, Wage claims (up to $12,475, 180 days prior to filing), Employee benefit plans, Claims by grain farmers/fishermen (up to $6,150), Consumer deposits (up to $2,775), Tax claims, and Injury claims from intoxicated driving.
Defenses of a Surety
- CPR'S outlines defenses available: Creditor's Bad Faith, Payment and Tender of Payment, Release of Principal Debtor, and Surety's Incapacity or Bankruptcy.
Fundamental Changes Needing Shareholder Approval
- DAMS indicates necessary approvals for: Dissolution, Amendments to corporate structure, Mergers, consolidations, and compulsory share exchanges, and Sale of substantially all corporate assets outside regular business operations.
1933 Act Section 11 Liability
- LAM determines three key components for liability: Loss by the plaintiff (damages), Acquisition by the plaintiff (not limited to IPOs), and material misrepresentation or omissions in the registration statement.
Common Law Contracts Categories
- RISE categorizes common contracts: Real Estate, Insurance, Services, and Employment contracts.
Nondeductible Losses
- WRaP identifies losses that cannot be deducted: Wash Sale Losses, Related Party Transactions, and Personal Losses (non-business disposals).
Nontaxable Gains
- HIDE IT signifies non-taxable gains: Homeowners Exclusion (owning and using for 2+ years), Involuntary conversions (2 years for personal, 3 years for business), Divorce property settlements, Like-kind exchanges (exclusion for certain items), Installment sales recognized when received, and certain transactions of Treasury and capital stock by corporations.
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Description
Test your knowledge of essential acronyms related to CPA regulations with this quiz. Learn about the definitions and criteria for 'Qualifying Child' and 'Qualifying Relative'. Perfect for anyone studying for the CPA exam.
