ACCY 312 Final Exam Cheat Sheet

Cost RecoveryRecover:Assets to be used >1 year, business useReal property:land and buildings permanently affixed to the land.Personal property: other than realtyMACRS:initial basis, method (DDB, 150% for personal, SL for real),recovery period (regulated), convention (HY/MQ/MM) Adjusted basis= Initial or historical cost (invoice cost + other costs incurred in acquiring the property) + capital improvements -accumulated depreciation (MAX of allowed, allowable)Convention:personal property = half-year (IFpersonal property placed in Q4 > 40%, MQ); real property: MM, SL; >50% personal-use SL Initial basis: PurchasedFMVConvertedMIN(cost, FMV on date of conversion) GifCarryover (basis of old asset)InheritanceFMV at time of deathDepreciation for Asset DisposalsAsset disposed in same year placed in service - no depreciationDepreciation in year of deposition:HY 50%, MQ (1.5,4.5,7.5,10.5/12),MM (0.5,1.5/12, etc.)Gain or loss:computed in year of dispositionAccelerated DepreciationBonus Depreciation: personal property, default, additional deductionpercentage based on year placed in serviceSection 179:personal property, elect, limitations based on tax year(dollar limitation, asset acquisition limitationphase-out dollar-to-dollar), limited to taxable income (can't create losses). Elect != deductOrder of depreciation: Section 179 - Bonus - MACRS Other Limitations ListedProperty>50%business-use: MACRS, bonus, 179 (limited to bizuse %).<50%:SL.IFdominant bizpersonal:recapture difference between tax and SL depreciation Luxury AutoLimitationIF<6,000 lbs, recovery ceilings MIN[MACRSdepreciation, limit].IFeligible for bonus 1styeardepreciation +$8,000.IF6,000-14,000lbs, Section 179deduction limited to $27,000 ('22) and eligible for bonus.Luxury lease incl.:FMV > $56k, incl. amt. in GI Deduct vs. Capitalize: Improvement (betters, restores, adapts)capitalize. Repair/maintenanceexpense.Depletion and Amortization CostDepletion= Basis / Est. Recoverable units * Units soldPercentageDepletion= MIN[%depletion rate * GI, 50% (100% for oil/gas) *TI]. Can be in excess of basis.Depletion = MAX[Cost, Percentage]179 AcquiredIntangiblesRecovery period 180 months. Self-created: notamortizable, exc. Patents and copyrights Org. & Start-up CostsFirst $5,000 of organization AND start-up costs immediately deductible. Limitation: dollar-to-dollar phase out if exceed $50,000 for each Patents andCopyrightsPurchased: 180 months. Created: legal lives (patent 20yr, copyright life of author + 70yr) R&D Expense2022 and before: elect immediately expense or amort. 2022 and afer: expense over 60 months. Choice of EntityC-CorpMaximum tax rate at entity-level 21%. Doubletaxation: entity-level on profits, individual tax oncash flows distributed. Tax-free contribution.Distributions are non-deductible.Payroll taxes on wages. Not QBI eligible. Losses creates NOLs S-CorpSimilar to Partnerships, payroll taxes on comp. PartnershipsFlow-through: income and losses flow through to the partners. Maximum individual tax rate. Tax free contributions and distributions. Guaranteedpayments (not QBI) and distributive share of NI ofgeneral partner subject to SE tax. Eligible for QBI. Gain or Loss on Asset Disposal Amount realized= cash received + FMV of property received + assumed liabilities - seller's expenses Realized Gain= amount realized - adjusted basis Recognized Gain= MIN[Boot received, realized gain] Basis of LK property received= Basis of property given out + Adj. basisof boot given up + Gain recognized - FMV of boot received - LossrecognizedSpecial Treatment for G/L on Asset Disposal Adjusted taxbasisConverted: dual basis rules, IF FMV < cost basis.IFsales price < FMV, FMV basis for loss.IFFMV <sales price < cost, no gain/loss. IF sales prices > cost, cost basis for gain.Gift:carryover. IF FMV on date of gif < donor's basis, dual basis rules. Inheritance: FMV on date of death, HP LT. LK propertyexchangeReal property. Boot (non-LK property) recognize gains, NO loss.IFloss, basis = FMV c/o. HP Boot (date of exchange), LK (carryover). TCJA:before 2018, personal prop. is eligible.InvoluntaryconversionRecognized gain = MIN[Realized gain, amt.realized not reinvested in replacement prop]Sales ofresidence (121)Gain excl. from GI up to $250k (MFS) $500k(MFJ).Test: 2 years as principal residence duringthe last 5 years.Partial exclusion:# qualimonths/24*exclusion (IF employment, health,