AC371 Spring 2008
Exam 2 – Study Guide
**This does not mean I have indicated every single question on the test below; I am just
trying to assist you in understanding what topics we emphasized in class and in
homework problems and those we did not.**
Ex = example in the text of that chapter
DQ = Discussion Question at end of that chapter
P = Problem at end of that chapter
§162 vs. §212 – activity rules, differences, the relationship rules:
Ex 1 and 2, DQ4.
Ordinary and necessary rules:
Ex 6, P22.
treatment of excess as dividend:
Cash basis taxpayer – basic rule for when paid/incurred.
Restrictions on use of cash method:
inventories, capital expenditures.
not be tested in detail on prepaid expenses, but please skim.
Skip accrual method rules (pg 13-19).
Importance of classification of for AGI vs. from AGI deductions:
Deductions for AGI:
those discussed in chapters 6-11 (#1, #2a, 3, #4, #7, #8, #10,
#11, #13, #14, #15, #16:
many of these are discussed in chap 8 and 11)
see chapter 11 outline as these are discussed in great detail in Chap 11.
However, pg 22-23 of Chap 7 serve as an excellent overview of Chap 11.
Self-employed vs. employee – where are deductions taken on tax return?
does it matter how classified?
Reimbursed vs. unreimbursed expenses of an
Ex 24 and 25; DQ7, P40, P41, P56, P57, P58.