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My CPA-REGmodule33

Notecards I made from Wiley's 2012 CPA Exam Review

What programs are covered under the federal social security act? How are they funded? old age insurance, survivors/disability insurance, Medicare, unemployment insurance 1.taxes from employers, employees, and self employed. Except unemployment, funded from employer taxes only
What does the Federal Insurance Contributions Act (FICA) do? What amount are employees held to? 1.impose social security and medicare tax (tax rate the same for employer employee) 2.SS base amount, if pay over(2 employers could cause) then has right to refund for excess. Medicare has no earnings cap
Who's duty is it to pay the government FICA taxes? the employer must withhold employees share and pay their's and employers in a timely manor(fined if not timely, neglect to withhold held liable for employees share)
How much FICA taxes must an employer pay? required to match employees FICA contributions dollar for dollar
Can an employee deduct taxes paid on his tax return? what about employer? 1. No 2. Yes employer should deduct taxes paid from their tax return
What is the self-Employment contributions act? requires self employed to report their own taxable earnings and pay required social security tax
What is thought of as self employment income for tax purposes? Since their is no employer matching, what is the tax rate of the self employed? Can the base amount be reduced? Any personal income tax breaks? 1.NET earnings 2.employer and employee combined 3.Yes by wages earned from another employer(those wages subject to FICA already) 4.Yes can deduct half of FICA tax paid
When must an employer pay federal unemployment tax? May the deduct it? Does paying state employment tax count against federal unemployment tax? 1.employ 1pers portion of day for 20 weeks or pay>=1,700 wages calendar 1/4 2.yes business expense 3.yes entitled credit against fed for amt state tax paid, also if pay low state unemployment b/c good employment record then entitled addtl fed tax credit
Can state unemployment tax be raised or lowered against individual employers? Yes according to the number of claims against an employer
What is excluded from wages that factor into calculating FICA? wages>base amount, reimbursed travel expense, employee medical expenses paid by employer, employee insurance premiums paid by employer, payment to employee retirement plan by employer
Who is not covered by unemployment provisions? partners, self-employed persons, directors of corporations, and independent contractors b/c they are not employees (not controlled by an employer?
What does the availability of old-age, survivors, and disability insurance benefits depend upon? attainment by individual of insured status. Insured status requires certain lengths of working time
What benefits is an individual who is fully insured eligible for under old-age, survivors, and disability insurance benefits? survivor benefits for widow/dependents, benefits for disabled worker/dependents, old-age retirement benefits to retired worker/dependents (reduced if retire 62, younger), lump sum death benefits
What benefits is an individual who is currently insured eligible for under old-age, survivors, and disability insurance benefits? survivor benefits limited to dependent minors/those caring for dependent minors, benefits for disabled worker/dependents, lump sum death benefits -survivor/dependents no need pay in program to receive -divorced spouses may receive benefits
What goes into the calculation for the amount of benefits received under old-age, survivors, and disability insurance benefits? average monthly earnings, relationship of beneficiary, benefits increased based on cost of living and for delayed retirement
In what ways may social security benefits be reduced? early retirement, returning to work after retirement
Who are unemployment benefits available to? persons unemployed through no fault of their own (not available to seasonal workers), must have worked for specified period of time and earned specified amount of wages
What is the workers compensation act? Can employee waive their rights? 1.form of strict liability where employer is liable to employee for injures or disease that arise out of employment 2.No
What does an employer do with the cost of someone being injured under the workers comp act? cost passed on as expense of production
Under the workers comp act NO FAULT NEED BE SHOWN, what does this mean in respect to the employer's common law defenses? can't use assumption of risk, negligence of fellow employee, or contributory negligence
What are the two type of statutes for employer payment under workers comp? -elective. employer may reject but w/o 3 common law defenses at disposal most accept -compulsory. all employers within coverage of statute must provide benefits (most states have compulsory coverage)
Does an employer need an insurance policy to ensure coverage of potential workers comp payments? No, may assume liability for workers comp claims but must show proof of financial responsibility to carry own risk
Are preexisting diseases that are aggravated by employment still covered by workers comp? Yes
Can employers who are covered for workers comp by having insurance still be sued by employees? Can employees who are covered by workers comp sue for damages? Are there exceptions to this? 1.No, if employee didnt receive benefits must sue insurance company 2.No benefits received under workers comp are replace the ability to sue for damages 3.Yes if employer injured employee intentionally, then sue based on intentional tort and get benefit
Is there anyway an employee can be bared from recovery under workers comp? yes if injuries caused intentionally or intoxication -negligence/gross negligence/failure to follow employers rules do NOT bar employee from recovery
What happens if an employer fails to provide workers comp or their coverage is inadequate? Many states have a fund to pay employee in this case. what would the states options be? 1.employee can sue in common law for damages (employer still cant use common law defenses of assumption of risk, negligence of fellow employee, or contributory negligence) 2.can proceed against uninsured company, impose penalties
If an employee accepts workers comp benefits, are they barred from recovery from 3rd parties whose negligence/unreasonably dangerous product caused harm? Can the employer sue the third party? 1.No, but amount awarded goes to employer/insurance company first for compensation of workers comp benefits paid and only excess goes to to injured employee 2.yes employer is subrogated rights of employee
Who does the Occupational Safety and Health Act apply to? what is its purpose? 1.All employers except federal/state governments and industries subject to other safety regulations 2.promote safety standards and job safety
What does the Occupational Safety and Health Administration do? What does it require of employers? 1.develop/enforces health and safety standards in work place, investigates complaints, inspects workplace (employers may require search warrants), may asses civil penalties for violations 2.keep records of job related injuries, report serious accidents
Under Occupational Safety and Health Act, can an employer be held criminally liable? Yes if WILLFUL violation results in death of employee -fine,imprisonment or both
Who does Title VII of the 64 Civil Rights Act, regarding employment discrimination, apply to? employers and labor unions having 15 or more employees whose business affects interstate commerce, government employers and employment agencies
What areas of work does Title VII, employment discrimination, apply to? hiring, promotions, transfers, firing, compensation
Who enforces title VII, employment discrimination? What are they? 1.Equal Employment Opportunity Commission (or private individuals lawsuits) 2. federal government administration
What defenses would a company have against Title IV, employment discrimination? Bonafide occupation qualification when reasonably necessary to normal operation (applies only to sex, religion, national origin), Bona fide seniority/merit system, professionally developed employment test/education requirements, national security reasons
For discrimination based on religion is there a special defense that an employer may use? yes, only needs to make reasonable accomidations
What does quid pro quo refer to in regards to sexual harassment in the work place? intentional harassment involving promotions, job offers, job benefits in exchange for sexual relations. Also includes sex in exchange for not being fired, demoted
What remedies are available for a successful claimant under Title IV, employment discrimination? back pay, job or promotion, retroactive seniority, compensatory damages -punitive damages in extreme cases involving intentional discrimination
Who does the age discrimination in employment act apply to? unions, employment agencies, federal government, and employers with 20 or more employees
What is the vocational rehabilitation act of 1973? Who does it apply to? 1.employers required to take affirmative action to employ and advance qualified handicapped individuals 2.employers with FEDERAL contracts over $2,500
Under the Americans with Disabilities Act what is meant by qualified person? reasonable accommodation? 1.person who can perform essential functions of job either with or without reasonable accommodation 2.may include acquiring new equipment, modifying facilities, restructuring jobs, modifying work schedules
Is an employer ever protected against not higher a qualified individual under the Americans with Disabilities Act? yes if employer can show undue hardship based on significant expense or hardship to make reasonable accommodation
What does the Americans with Disabilities Act guarantee disabled people equal access to? public services including public transportation and public accommodations, even if public services are operated by private entities
What does the pregnancy discrimination act say about insurance? employers health and disability insurance must cover pregnancy the same as any other medical condition
Who does the vietnam era veterans readjustment assistance act impact? employers with federal contracts of $10,000 must take affirmative action hiring/promoting vietnam vets
What does the equal pay act require? who enforces? what remedies are available? 1.equal pay for equal work between sexes (differences may be on merit, quality, seniority, shift differences) 2.Equal employment opportunity commission 3.back pay, wages raised to eliminate disparity (cant lower other employees wage)
Who is covered under the family and medical leave act? What does it allow? 1.employees of >=yr for >=1250hrs by employer having>=50 employees 2.employees have right up to 12work weeks leave during yr for own serious health problem, care for parent/spouse/child, birth/care of baby, child placed w/employee for adoption/foster car
What does the family and medical leave act guarantee employees who take leave? What happens if the employer doesnt? 1.when return employee must get back same or equivalent position, cannot lose benefits due to leave 2.employer is civilly liable for damages
What does the health insurance portability and accountability act do? Who does the whistle blower protection act protect? 1.restricts using exclusions for preexisting conditions in employer sponsored group health insurance policies 2.protects FEDERAL employees from employer retaliation, majority of states have own laws protecting whistle blowers
Who does the federal fair labor standards act apply to? what does it require? Who enforces and how? 1.all business that affect interstate commerce 2.employees must be paid at least minimum wage, time and a half if work more than 40 hours per week 3.Department of labor with fines and/or prison
What does the National Labor relations act provide for? Who enforces and what do they do? 1.employees have right to join, assist, or form labor organizations 2.National Labor Relations Board, runs and supervises union elections
If a union is created what are the mandatory bargaining subjects that most sides must negotiate in good faith? What are illegal bargaining subjects? What does permissive bargaining subjects mean? 1.wages, hours, benefits, condition of employment(benefits, safety conditions, seniority rules) 2.featherbedding(pay employes for work not actually performed), involving other parties not directly involved 3.topic subject MAY(not must) negotiate about
Under the National Labor relations Act, what must strikes be about? What employees arent covered under it? 1.mandatory bargaining subject 2.government employees, agricultural employees, management level employees, railroad employees
What did the Landrum-griffin act do to the National Labor Relations Act? How? 1.amended to regulate union abuses against its own members 2.requires extensive financial reporting, provides for civil/criminal action against misdeeds of union officers, provides for bill of rights for union members in conduction meetings/elections
What does the federal consolidated omnibus budget reconciliation act (COBRA) provide for? Who applies to it? 1.when employee quits he may keep same group health insurance coverage for 18 months (employee pays for it) 2.employers with 20 or more employees
Is an employer required to set up a pension plan? What standards must it meet? 2.if do set up-be in writing, name manager, employee contributions vest immediately, employer contributions vest 5-7years after employee start, standards on investment, employer cannot delay participation, covered plans give annual report to employe
What is a noncontributory pension plan? What are the maximum punishments for violating Employee Retirement Income Security Act (ERISA)-pensions? Do employees need to be notified of impending blackout periods(rights temp suspended to make changes to plan)? 1.employER pays all 2.ten years prison fine 100,000 3.yes 30 days in advance
What does the worker adjustment retraining notification act provide for? Who does it apply to? 1.employers must give 60 days notice to employees before they close or plant or have mass layoffs (exception made in emergencies or failing companies) 2.employers with more than 100 employees
Under the federal employee polygraph protection act and drug test, who can use a polygraph test? when can a private entity use one? services who protect public health and safety, employers dealing with national defense issues, drug manufacturers and distributors 2.part of investigation of economic loss and has reason to suspect individual
Why do courts hold that preemployment drug screening is legal? when is current employee drug testing legal? 1.job applicants have a lower expectation of privacy than current employees 2.employer has reasonable suspicion employee is drug impaired or all employees who had accidents tested
What are an employer's rights to emails? employees have no expectation of privacy using employers email systems (employer no need to give warning)
If an entity causes a problem within the environment, what can they be held liable for under common law? doctrine of nuisance, negligence, strict liability if involved in ultra hazardous activities
What is the EPA? What do they do? How? 1.federal administrative agency ensure compliance with environmental protection laws 2.enforce federal environmental laws, adopts regulations, conducts research on environment and affects of pollution 3.criminal (if blameworthy), usually use civil suits
What is the National Environmental Policy Act? What is an environmental impact statement? Who does it affect? If none warranted what must the entity do? 1.all federal agencies must consider environmental factors in all major decisions 2.shows expected environment impact, describe unavoidable consequences, examine alternatives 3.environment, cultural,aesthetic 4.prepare 'finding of no significant impact
What is the Clean Air Act? What are the standards? What is a state implementation plan? Who does it allow citizens to sue? 1.requires EPA to create national ambient air quality standards 2primary protect public health, secondary protect welfare(crops/animals/structures) 3details how state will achieve clean air 4violaters of act and state/fed officials who fail to take act
What does the Clean Air Act allow entities to trade? What can the federal government do to autos that violate emissions regulations? Who can be held criminally liable for violations? What amount of civil fines can the EPA levy? 1.can trade some rights to pollute 2.may force recall 3.any responsible corporate officers 4.penalty equal to benefit entity received by not complying
What is the clean water act? Who is responsible for making sure the standards are met? Who does it apply to? 1.EPA set standards to reduce, eliminate, prevent pollution of rivers/seas/ponds/wetlands 2.states (like clean air act) 3.broad in scope (regulates discharge of heated water, owners of floating vessels,pipes, ditches, animal feed operations)
What is the Safe Drinking Water Act? What must the EPA do every three years? 1.regulate safety of water supplied to homes by public water systems 2.prepare new lest identifying contaminants EPA is considering for future regulation
What is the oil pollution act? requires establishment of oil pollution clean up plans (under worst case spill in worst conditions) by tanker owners and handlers, new tankers have double hulls, phase in of double hulls on old tankers
What is the noise control act? regulates noise pollution and encourages research on its effects, EPA establishes noise standards for products
What is the Resource Conservation and Recovery Act? creates permit system to regulate business that store/use/transport hazardous waste, keep strict record of waste, household waste also regulated
What is the Toxic Substances Control Act? mandates testing/regulation of chemicals that pose unreasonable risk to health/environment, special labeling of toxic substances
What is the Federal INsecticide, Fungicide, and Rodenticide Act? What can the EPA do? 1.pesticides/herbicides must be registered w/EPA before sale, limits amount of pesticide residue on crops for human/animal consumption 2.Deny registration, certify for general or restricted use, suspend registration, grant conditional registration
What is the federal environmental pesticide control act? How does the EPA decide to register pesticides? 1.all who distribute pesticides must register them with EPA 2.Cost-Benefit analysis rather than if they will pose a health hazard
What is the Comprehensive Environmental, Compensation, and Liability Act (Superfund legislation)? levies taxes on manufacturer of certain dangerous chemicals, identifies hazardous waste sites needing cleaning, regulate generation/transportation of hazardous substances (no petroleum/natural gas)
Under CERCLA (Superfund legislation), who can the government impose liability for cleanup costs and environmental damages? How are the parties liable? How much can they be responsible for? 1.current owners and operators of site, past owners and operators of site, persons who transported waste to the site, persons who arranged to have the waste transported 2.joint and several liability 3.can be liable for all, so long as liable for a porti
What acts dont make a lender liable under CERCLA (superfund legislation) lender liability? How is possession under a foreclosure treated? property, monitor/enforce terms of security agreement, provide for financial advice, restructure loan terms, mandate debtor to take action on hazardous materials 2.most situations excluded from liability
What is the emergency planning and community right to know act? companies with specified amounts of extremely hazardous substances must notify state and local agencies and issue annual reports of releases of toxic chemicals that result from operations
What is the international protection of ozone layer? agreement amongst countries to reduce/eliminate chemicals believed to harm ozone layer
What is the Nuclear Wast policy act? creates national plan to dispose of highly radioactive nuclear waste, state can regulate emissions of radioactive particles under Clean Air Act
What is the purpose Energy Independence and Security Act? move US toward greater energy independence, increase production of clean renewable fuels, increase efficiency of products/vehicles/buildings
What does the Energy Independence and Security Act require? What did it create? boost fleetwide gas milage, vehicle tech & transport electrification(hybrid incentives), greater efficiency of lightbulb, improve efficiency of highway/sea/railroad infrastructure, modernize electric grid 2.Office of Climate Change & Environment
What is the marine protection, research, and sanctuaries act? Endangered Species Act? Pollution Prevention Act? what does the sec require in financial statement reports? 1.regulates dumping into oceans, establishes marine sanctuaries 2.protects endangered/threatened species(EPA/dept. commerce regulate) 3.provides incentives to industry to prevent pollution from start 4.companies to report their environmental liabilitie
What are environmental compliance audits? Whats their purpose? 1.systematic, objective review designed to evaluate compliance with laws violations/questionable practices & allow company to avoid litigation, voluntary discovery avoids criminal liability, meet disclosure requirements under securities laws
What is the telephone consumer protection act? Anyone exempt? 1.restricts use of prerecorded messages -to use prerecorded messages a live person must introduce message and receive from telephoned person permission to play message 2.nonprofits, emergency calls, calls to business (doesnt cover personal phone calls)
What is the federal telecommunications act? prevents local or state governments from preventing entry to the telecommunications industry
What does the identity theft act do? Who helps victims? 1.increased penalties, requires banks/saving associations/credit unions to have an identity theft prevention program 2.FTC to restore victims credit and minimize impact of theft
What is the purpose of federal antitrust law? Who regulates, what does that mean? 1.promote the production and distribution of goods and services in the most economical and efficient manner by preserving free, competitive markets 2.Federal law so must conduct interstate commerce to be affected
What contracts in restraint of trade are legal and enforceable (antitrust law)? seller of a business agrees not to compete with the buyer(valid only for reasonable time and area), same idea with partners and employees while relationship lasts, buyer of property may agree not to use it competition to seller
What are some exceptions to the antitrust laws? labor unions, patents(20yr monopoly), copyrights, trademarks, insurance business, US exporters(to compete with foreign entities), agricultural co-ops, legislative activities (lobbying), MLB (only mlb)
Who enforces antitrust laws? Justice Department (sherman and Clayton acts, only one to seek criminal penalties), Federal Trade Commission(FTC and Clayton acts), Private parties (entitled to treble(triple) actual damages and reasonable attorney fees if successful
What does section 1 of the Sherman act cover? How do courts determine if restraint is unreasonable? 1.contracts/combinations/conspiracies/AGREEMENTS in unreasonable restraint of trade 2.Per se rule(horizontal restraints, activities inherently anticompetitive,theres no valid justification), rule of reason(more anticompetitive then procompetitive=illegal
What are some per se horizontal restraints covered under the sherman act? What are legal? 1.price fixing(no agreement necessary, just tacit understanding), joint boycotts, horizontal territorial limitations 2.joint venture, trade and professional organization agreements (both examined under rule of reason tho)
How are all vertical restraints of trade judged to determine if they are unreasonable? What does it usual focus on? What does focus usually make legal? How are vertical territorial limitations treated? 1.the rule of reason 2.interbrand(diff brand same product) and intrabrand(same brad different places) 3.limit intrabrand competition, enhance interbrand are legal 4.franchisee receives exclusive right to sell in specific area are legal unless unreasona
What does section 2 of the Sherman act cover? Is there an agreement necessary? Is 100% of the market necessary to have a monopoly? 1.illegal for a firm to obtain or maintain a monoply (not illegal to actually have a monopoly) 2.unlike section 1, NO 3.No, just power to exclude competition and/or control prices
Under section 2 of the Sherman act what are the percentages of market controlled where there is no presumption of monopoly power? Monopoly power is presumed? What else is required to violate section 2? 1.50% 2.70% 3.Intent, growth from having a superior product, management, or accident is not illegal
What are the sanctions allowed under the Sherman act? -injunctions, forced divisions, forced divestiture (individuals, corporations, or government) -criminal penalties (government) -treble damages (individuals and corporations)
What is the clayton act? supplements Sherman act, prohibit a corporation from acquiring stock (or assets) of a competing corporation (merger) where effect might substantially lessen competition or tend(no actual creation) to create a monopoly
Under the clayton act, when may a suit be brought up? What is the failing company doctrine? What factors are used to determine if a merger will result in substantial lessening of competition? 1.before or after merger 2.anticompetitive merger allowed if acquired company is failing and no other willing purchaser concentration (#firms in market), entry barriers
What is the clayton acts thoughts on interlocking directorates? Not allowed -applies to director sitting on boards of two or more large competing corporations, no proof needed to show it will lessen competition
Under the clayton act what is a typing arrangement? What elements must be met to be considered illegal? 1.seller forces buyer to take one or more additional product as condition to acquiring desired product 2.two separate products, economic power in tying(desired product) market(market share>30%, unique product), substantial commerce in tied(added on)marke
What is the Robinson-Patman Act? prohibits price discrimination (different prices to different buyers of same good)
What is the Federal Trade Commission Act? When can FTC stop unfair and deceptive practices? 1.created the FTC, prohibits unfair methods of competition and deceptive practices involving advertising, telemarketing, electronic advertising 2.incipiency(before violation occurs) and after violation
Created by: Bsantoro
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