Regulation Questions

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  • #174242
    hmesalguero
    Member

    Hello,

    I have 2011 Wiley Test Bank, Does anyone recommend I buy the 2012 one?

    Can someone explain why they didnt include the inheritance? Isn’t that subject to 13,000 limit just like the gift tax?

    Or is this not included because my Wiley outdated? Is 2011 already outdated?

    Please help

    Lore

    In the current year Jensen had the following items:

    Salary

    $50,000

    Inheritance

    25,000

    Alimony from ex-spouse

    12,000

    Child support from ex-spouse

    9,000

    Capital loss on investment stock sale

    (6,000)

    What is Jensen’s AGI for the current year?

    A. $44,000

    B. $59,000

    C. $62,000

    D. $84,000

    Answer B is correct. The requirement is to determine Jensen’s AGI for the current year. Jensen’s AGI consists of the $50,000 salary plus the $12,000 alimony received, less a deduction for a net capital loss which is limited to $3,000. The inheri­tance and child support that Jensen received are excluded from gross income.

    FAR - 76
    AUD - 74,84 🙂
    REG - 76
    BEC - 72, 80

    Roger's CPA Review

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  • #378863
    hmesalguero
    Member

    This is another question… Please please help. My exam is coming up

    At December 31, 2009, Lincoln and Ebert were equal partners in a partnership with net assets having a tax basis and fair market value of $150,000. On January 2, 2010, Gregory contributed securities with a fair market value of $75,000 (purchased in 2007 at a cost of $51,000) to become an equal partner in the new firm of Lincoln, Ebert, and Gregory. The securities were sold on July 1, 2010, for $78,000. How much of the partnership’s capital gain from the sale of these securities should be allocated to Gregory?

    A. $0

    B. $ 9,000

    C. $24,000

    D. $25,000

    close

    If property is contributed by a partner to a partnership, related items of income, deduction, gain, or loss must be allocated among partners in a manner that reflects the difference between the property’s tax basis and its fair market value at the time of contribution.

    EXAMPLE: Partner X contributes property with a tax basis of $1,000 and a fair market value of $10,000 to the XYZ Partnership. If the partnership subsequently sells the property for $12,000, the first $9,000 of gain must be allocated to X, with the remaining $2,000 of gain allocated among partners according to their ratio for sharing gains.

    close

    Answer D is correct. The requirement is to determine the amount of the partnership's capital gain from the sale of securities to be allocated to Gregory. Since the securities were sold for more than their fair market value on the date of contribution, the entire precontribution gain of $24,000 ($75,000 – $51,000) would be allocated to Gregory. In addition, Gregory would be allocated 1/3 of the postcontribution gain from the securities, which is $1,000 [($78,000 – $75,000) x 1/3]. Gregory should therefore be allocated $25,000 ($24,000 + $1,000) of the partnership's capital gain.

    FAR - 76
    AUD - 74,84 🙂
    REG - 76
    BEC - 72, 80

    Roger's CPA Review

    #378864
    momto5
    Member

    Inheritance is not taxable income. It is not the same as a gift, for which there is a $13,000 limit for the giver per person per year. Two different things.

    Not sure exactly what your question is on the second one – it seems to be explained pretty well in the answer explanation. What part don't you understand?

    FAR - 92 (4/27/12)
    AUD - 96 (7/17/12)
    BEC - 92 (8/30/12)
    REG - 91 (11/12/12)

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