REG Study Group Q4 2014 - Page 268

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  • November 28, 2014 at 6:15 pm #633221
    Anonymous
    Inactive

    And for IRAs, I don't get all the rules about participating in another pension or profit sharing plan, or being covered by an employer. Can someone explain this to me?

    November 28, 2014 at 6:17 pm #633222
    REGTaker
    Member

    For life insurance:

    If the employer pays on behalf of the individual, then it is not included in the individual's income up to $50,000 worth of coverage. This phases out over $50K per $1,000 over the $50K. For example, If the employer pays for life insurance worth $56,000 of coverage, you would have to add $6 to your ordinary income. $56K-$50K=$6K. $6K/$1K=$6

    November 28, 2014 at 6:25 pm #633223
    REGTaker
    Member

    If you pay for your own life insurance and you have a relative as a beneficiary, you cannot deduct the premiums for tax purposes. AND the person that gets the proceeds cannot include the proceeds in income.

    November 28, 2014 at 6:28 pm #633224
    REGTaker
    Member

    I am a little fuzzy on the one where the employer is the beneficiary, but I think they cannot deduct the expenses until they get the proceeds. When they get the proceeds, they will deduct the premiums they paid and include the difference in income. Don't quote me on that though.

    November 28, 2014 at 6:39 pm #633225
    REGTaker
    Member

    IRA Contributions:

    The maximum deduction is $5,500 per spouse if NEITHER is an active participant in an employer-sponsored retirement plan.

    There are rules to this: Their combined EARNED income has to be at least the amount contributed.

    If an individual is an active participant in an employer-sponsored retirement plan then there are phaseouts. Wiley has 2013 info and the phaseout for an individual was AGI between $59K-$69K and married $95K-$115K. The phaseout is higher if one spouse is active and the other isn't. The calculation is the difference between the AGI and the start of the phaseout/$10K or $20K if married. Then multiply that by the difference you first calculated. We had an example many pages ago where the couple made $185,000 AGI and the start of the phase out was $181,000. So the calculation of the phaseout was $4K-($4K/$20K)=$3,200. I know this is confusing, but just remember that there is not a good likelihood that the phaseouts will be on the test so don't memorize them. If they give you a phaseout in the problem, know how to use it.

    November 28, 2014 at 6:52 pm #633226
    Anonymous
    Inactive

    That was huge help, thank you very much.

    November 28, 2014 at 7:14 pm #633227
    Anonymous
    Inactive

    I noted that alimony recapture is in my Ninja Notes, but not in my Wiley book. Is this a concept that is well known? I'm totally going to get a question on it now that I asked.

    November 28, 2014 at 7:22 pm #633228
    REGTaker
    Member

    I know of the concept. I know nothing about the calculation. I keep finding things I don't know and it's irritating me. My scores in corp tax continue to decrease. I'm just not sure what to do at this point to truly understand corp tax.

    November 28, 2014 at 7:23 pm #633229
    Anonymous
    Inactive

    @REGTaker, would you like to quiz? Or do flashcards? Or just ask about concepts you are questioning? I think (keyword: think) I understand C-Corps now. Let me know…

    November 28, 2014 at 7:24 pm #633230
    REGTaker
    Member

    What I would like to do is throw all of these materials into a fire pit, but I guess quizzing is okay. 🙂

    November 28, 2014 at 7:26 pm #633231
    REGTaker
    Member

    I don't really know what areas in corp I have problems with. I feel like I know it and then I quiz and get stuff wrong. I think I have partnerships and estates/trusts down pat so really it is just C-Corps and S-Corps that I have problems with. Basis and distribution recognition.

    November 28, 2014 at 7:26 pm #633232
    Anonymous
    Inactive

    You make me laugh. Soon, you can throw all this stuff in a fire pit.

    1–During 2014, Nale Corp. received dividends of $1,000 from a 10%-owned taxable domestic corporation.

    When Nale computes the maximum allowable deduction for contributions in its 2014 return, the amount of dividends to be included in the computation of taxable income is

    A. $0

    B. $200

    C. $300

    D. $1,000

    November 28, 2014 at 7:27 pm #633233
    Anonymous
    Inactive

    I am still really struggling with Estates/Trusts…

    November 28, 2014 at 7:28 pm #633234
    REGTaker
    Member

    These are my scores in Ninja. Blaw and corps are going to be 90% of my test. Just watch.

    Ethics/Prof/Legal Responsibilities 81% 90%

    Business Law 63% 67%

    Federal Tax Process, Procedures, Accounting, an… 74% 90%

    Fed Taxation of Property Transactions 83% 90%

    Federal Taxation of Individuals 76% 90%

    Federal Taxation of Entities 72% 72%

    November 28, 2014 at 7:30 pm #633235
    REGTaker
    Member

    1-C

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