📏CPA EXAM PREP

Individual Tax Compliance (Complex)

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Question

When does the kiddie tax apply?

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Answer

When a child has net unearned income above the threshold.

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Question

Why does TCP emphasize sequencing more than routine 1040 preparation for individuals?

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Answer

Because losses and taxes interact across multiple limitation layers.

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Question

How do ISOs differ from NQSOs for regular tax and AMT?

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Answer

ISOs have no regular-tax income at exercise; the bargain element is an AMT preference. NQSOs trigger ordinary income at exercise.

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Question

When do RSUs create ordinary income?

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Answer

At vesting, measured by fair market value.

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