 Hello and welcome to the session in which we would look at few differences or similarities between C corporations and individuals, especially if you are studying for the CPA exam. And we will be discussing charitable contribution, capital losses, casualty losses, long term capital gains, ordinary income and penalty related issues. Starting with charitable contribution. What are the limitation for individual for taxpayer who claim the standard deduction, they put those individuals don't itemize under those circumstances, you can deduct $300 if you are single and $600 if you are married filing jointly. So you don't have to itemize and you could have those deductions. If you itemized, so if you are claiming itemization, the charitable contribution is limited to 60% of AGI for cash contribution, 50% of AGI for ordinary income property, and 30% of AGI for capital income property. So you have to know which one are you dealing with, just know that the limitation for the cash contribution was increased to 100% of AGI in 2021. So this is for individuals, let's talk about corporations. For corporations, you are limited to 10% of taxable income. Now, how do we compute this taxable income? This taxable income is before, before you take your dividend to receive deduction, obviously before you take your charitable contribution, and before you take any capital, capital loss carry back. Now, if you don't know what capital loss carry back, but you don't know your dividend to receive deduction, those are covered in a separate session. This is basically an overall review. And the percentage was temporarily increased to 25%. For 2021, the government was pretty generous for year 2021, for both individuals and corporation. Now, what happened if you did not, you were not able to deduct a certain amount? Well, non deductible amount may be carried forward five years. This is for corporation. And guess what? For four individuals, it's the same may be carried forward five years. Let's move to capital losses. Capital losses, you need to, you need to memorize this. Many students, they wonder why you just need to memorize it. Individual may deduct up to $3,000 of capital losses against ordinary income, only 3000. That's it. You are limited to 3000. Non deductible losses, if you have additional non deductible losses, they cannot be carried back. They may be carried forward indefinitely. This is for individuals. For corporations, you can use capital losses to offset any capital gains. And non deductible losses may be carried back three years and carry forward five. So a little bit different than individuals. And this is, they will try to trick you just this way. Make sure you're aware of the differences. Let's talk about casualty losses starting with individuals. Losses sustained only in presidential declared disaster area are qualified. So just make sure you're aware of this. And the deduction is subject to a $100 per loss. Plus, you have to exceed 10% of AGI to be able to take the loss. And the loss is always determined as the lesser of the decrease in the property fair market value, or was the decrease, the lesser of that, or your basis, the lesser of the decrease, or the lesser of your basis. This is for individuals. And many people don't qualify unless again, they sustained the loss in the presidential, presidential declared disaster area. And I believe this law will be applied till 2025. So we are in 2022, we still have time for C corporation losses sustained during the tax year and not compensated by insurance is simply put, if you're not compensated by insurance, the loss is fully deductible. Now we have to differentiate whether the loss is the loss depends on whether the property is fully or partially destroyed fully means the whole thing is gone or partially you still have some of it. If fully destroyed, the loss equal to the property adjusted the basis, if partially destroyed, the loss is the lesser of notice the lesser of the decrease in fair market value or the basis just like here in the visuals. Now, before we proceed any further, most likely you are a CPA candidate. And if that's the case, please visit farhatlectures.com. I do provide you additional resources that's going to complement and supplement your CPA review course. Take a look at my material also connect with me on social media LinkedIn, Facebook, Instagram, Twitter, and Reddit. Let's keep going with long term capital gains, long term capital gains, well for corporations, their tax as ordinary based on the ordinary ordinary tax rate. So there's the corporation don't differentiate whether you have a capital gain or ordinary income, they're all the same for individual their tax as a preferential tax rate either 015 or 20%. Again, you need to know when do we use 0, when do you when do we use 15 and when do we use 20%. Again, this is just to show you the differences. Ordinary income tax at a flat rate as of right now of 21%. Basically, this is the Trump rate, you can say this for individuals, the ordinary income is progressive, and the rates could go up to 37%. Again, I'm doing this recording in 2022, who knows if Biden will change the law, and the tax rate could go up the tax rate could go down, but it could change. So FYI, now minimum required payment to avoid delinquent penalty. So if, so if you don't, if you want to avoid paying delinquent penalty on your taxes, well, you must stay the lesser of 90% of the current tax liability. So pay 90% of your liability or 100% of last year liability. If your AGI is greater than 150, you have to pay 110% to avoid the liability. Bear in mind, there are no restrictions as to the application of this alternative applicable, even if last year tax liability was zero. So simply put, if your last year tax liability is zero, well, I would say I'm going to go with prior year, which is a zero. And if the prior year is zero, then I'm good to go. I would use last year liability. Now for corporation, they should pay large corporations should pay at least 100% of the current year tax liability. Other C corporation should pay the lesser of 100% of the current year tax liability or 100% of the prior year tax liability. Now bear in mind, they have no alternative. The alternative is not available if no tax was owed in the prior year, or if the prior year was less than 12 months. So even if it's zero, that zero for individuals where you don't, you can use last year doesn't apply for C corporation. So penalty may also be avoided if you are a corporation and the amount due is less than 500. For individual, they're a little bit more generous. It's the double amount. If it's 1000, you have no penalties. What should you do now? Go to farhatlectures.com and work MCQs, look at resources, multiple choice through false exercises that's going to help you do better on your CPA exam. It's worth it. Invest in yourself. Invest in your career. Good luck. Study hard. And of course, stay safe.