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Section 1
Reconcile gross receipts, cost of goods sold, inventory, and net business income
Preview
Preview: 2. Business Tax Preparation (37 of 85 scored questions)
Preview includes- 4 of 9 lesson topics
- 1 overview segment
- 3 core concepts
- 2 exam tips
Lesson Topics
- Initial Record Review
- Categorization of Business Items
- Income Reconciliation
- Expense Reconciliation
Overview
Business-income reconciliation begins with complete records and then traces gross receipts, returns/allowances, cost of goods sold, inventory, other business income, and deductible expenses to taxable business profit.
Core Concepts
- Gross receipts/sales are business receipts before subtracting cost of goods sold and operating expenses.
- Returns and allowances reduce gross sales when applicable.
- Borrowed money is generally not gross business income because it creates a repayment obligation.
Exam Tips
- Classify every cash flow before doing arithmetic.
- Keep COGS, capital assets, and operating expenses in separate columns.
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Section 2
Classify entities, elections, tax years, accounting methods, and startup records
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Section 3
Prepare estate and trust returns and beneficiary reporting
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Section 4
Classify compensation, fringe benefits, family employees, and worker status
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Section 5
Apply partnership contribution, allocation, distribution, basis, and disposition rules
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Section 6
Determine depreciation, amortization, capitalization, and recapture treatment
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Section 7
Apply C corporation formation, operation, distribution, redemption, and liquidation rules
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Section 8
Identify exempt-organization filing and unrelated-business-income issues
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Section 9
Substantiate ordinary business expenses and separate personal costs
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Section 10
Apply S corporation eligibility, election, pass-through, basis, and termination rules
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Section 11
Apply at-risk and passive activity limitations in sequence
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Section 12
Apply small-business retirement-plan rules
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Section 13
Analyze accounting methods, books, return schedules, and method changes
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Section 14
Distinguish sole proprietorship, hobby, rental, and business activities
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Section 15
Prepare pass-through reporting and reconcile owner basis and distributions
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Section 16
Handle entity formation, dissolution, cancellation of debt, and audit considerations
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Section 17
Classify farm income, expenses, rentals, and disaster-related items
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Section 18
Advise on filing, deposits, records, entity choice, property transfers, and lifecycle events
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Section 19
Classify rental income, expenses, personal use, depreciation, and passive losses
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