32813647
Description
Flashcards by Ms. Cassie Weitzenkamp, CPA, MPA, updated more than 1 year ago
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| Question | Answer |
| Bunching itemized deductions | a common planning strategy in which a taxpayer pays two years’ worth of itemized expenses in one year to exceed the standard deduction in that year. |
| Business activity | a profit-motivated activity that requires a relatively high level of involvement or effort from the taxpayer to generate income. |
| Capital gain property | any asset that would have generated a long-term capital gain if the taxpayer had sold the property for its fair market value. |
| Ceiling | limitation that is the maximum amount for adjustments to taxable income (or credits). The amounts in excess of the ceiling are either lost or carried to another tax year. |
| Deduction for qualified business income | subject to limitations, equal to 20 percent of the taxpayer’s qualified business income. |
| Excess business loss | excess of aggregate business deductions for the year over aggregate business gross income or gain of an individual taxpayer plus a threshold amount depending on filing status. |
| Floor limitation | a minimum amount that an expenditure (or credit or other adjustment to taxable income) must meet before any amount is allowed. |
| Investment activity | a profit-seeking activity that is intermittent or occasional in frequency, including the production or collection of income or the management, conservation, or maintenance of property held for the production of income. |
| Ordinary and necessary | an expense that is normal or appropriate and that is helpful or conducive to the business activity. |
| Ordinary income property | property that if sold would generate income taxed at ordinary rates. |
| Private nonoperating foundations | privately sponsored foundations that disburse funds to other charities. |
| Private operating foundations | privately sponsored foundations that actually fund and conduct charitable activities. |
| Qualified business income | net business income from a qualified trade or business conducted in the United States. This is the tax base for the deduction for qualified business income. |
| qualified education expenses | consist of tuition and related costs for enrolling the taxpayer, spouse, or a dependent at a postsecondary institution of higher education. |
| Qualified educational loans | loans whose proceeds are used to pay qualified education expenses. |
| Qualified trade or business | for purposes of the deduction for qualified business income, any trade or business other than a specified trade or business. |
| Specified service trade or business | any trade or business involving the performance of services in the fields of health, law, consulting, athletics, financial services, brokerage services, or any trade or business where the principal asset of such trade or business is the reputation or skill of one or more of its employees or owners, or which involves the performance of services that consist of investing and investment management trading, or dealing in securities, partnership interests, or commodities. Architecture and engineering services (their services build things) are specifically excluded from the definition of specified service trade or business. |
| Standard deduction | a fixed deduction offered in lieu of itemized deductions. The amount of the standard deduction depends on the taxpayer’s filing status. |
| Trade or business | a profit-motivated activity characterized by a sustained, continuous, high level of individual involvement or effort. |
| Traditional IRA | an individually managed retirement account with deductible contributions and taxable distributions. |
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