REG Study Group – Q2 2018 - Page 14

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  • May 18, 2018 at 10:11 am #1801303
    Anonymous
    Inactive

    In the current year, Fitz, a single taxpayer, sustained a $48,000 loss on Section 1244 stock in JJJ Corp., a qualifying small business corporation, and a $20,000 loss on Section 1244 stock in MMM Corp., another qualifying small business corporation. What is the maximum amount of loss that Fitz can deduct for the current year?

    $50,000 capital loss

    $68,000 capital loss

    $18,000 ordinary loss and $50,000 capital loss

    $50,000 ordinary loss and $18,000 capital loss

    The taxpayer is allowed to deduct a maximum of $50,000 as an ordinary loss under IRC Section 1244. The balance of the loss would then be a capital loss (($48,000 + $20,000) – $50,000 = $18,000).

    Hoping someone can help me out with this one… I understand why the answer is 50K ordinary loss, but shouldn't the maximum amount of capital loss be 3K? It doesn't mention offsetting the capital gains with the capital loss.

    May 18, 2018 at 10:22 am #1801309
    CS
    Participant

    @ CPA_ME_23 I ran into the same question a couple of days ago. I think they just have the 18,000 capital loss assuming no capital loss limitations taken yet (ptherwise would be $ 3,000 loss as you stated). I don't know why they have it instead of $ 3,000 either but your logic is correct.

    Edit*** Actually, on second thought, say taxpayer had $ 20,000 capital gains due to stocks etc., then theoretically, he/she could take the full $ 18,000 capital loss to offset against the $ 20,000 capital gain.

    May 18, 2018 at 10:28 am #1801316
    CS
    Participant

    BLaw sucks. I hammered out about 100 Blaw MCQs between Gleim & NINJA at work yesterday (so you can imagine how ‘productive' I was at work), freakin' headache. I get the feeling I'm going to be slaughtered with BLaw come exam day which is why I'm going hard at it. My weakness is mainly UCC. I get the general ideas and get the easier questions correct, but once exceptions and multiple concepts come into play I get kicked in the teeth. I'm taking a few days off and just hitting taxation though.

    May 18, 2018 at 4:36 pm #1801900
    Apii
    Participant

    @vinti
    Sims are mostly according to blue prints like for eg- compute AGI/ corporate income/ scenario based letter drafting,there would be details of some transactions and will ask abt tax implications to firm or partners / corporate/ individual for which there would be documents attached to the questions which has to be read and understood according to related scenarios..for me its like if you are good with tax laws and regulations you can solve sims/ drs.

    May 19, 2018 at 1:59 pm #1802702
    shivp45
    Participant

    Hi Guys,

    I was wondering why the answer on this question is what it is.

    A taxpayer is trading an automobile used solely for business purposes for another automobile to be used in his business. The automobile originally cost 35k with 18k depreciation. Is worth 20k. The new automobile is worth 22k. Taxpayer assumed liability of 2k. What is taxpayers basis in new automobile.

    Becker says it is 19,000(Adjusted basis of 17k plus debt assumed of 2k.)

    Why is it not 22k? Shouldn't the formula be FMV of prop received (22k)- Deferred gain (0) + Deferred loss (0)

    Thanks

    May 19, 2018 at 2:47 pm #1802729
    Anonymous
    Inactive

    There are two ways or formulas to get to the New Basis:

    #1: Basis (New) = AB (Old) + Recognized G – Boot Received + Boot Paid
    OR
    #2: Basis (New) = FMV (New) + Deferred L – Deferred G

    And there are two ways or formulas to get to Realized Gain (Abbreviated to RLG; Recognized Gain to RCG; & Deferred Gain/Loss to DGL):
    Realized G/L = FMV (Old) – AB (Old)
    OR
    Realized G/L = FMV (New) – AB (Old) + Boot Received – Boot Paid

    What Becker says is based on Formula #1 above. (Becker says it is 19,000(Adjusted basis of 17k plus debt assumed of 2k.)
    RLG = 22,000 – 17,000 – 2,000
    =$3,000

    RCG = Lower of RLG or Boot Received
    = Lower of $3,000 or $0
    = $0

    DGL = RLG – RCG
    = $3,000 – $0
    = $3000

    $22,000 FMV of New Asset
    <$3,000> DGL
    —————-
    =$19,000 New Basis
    ==========

     Exchange of Like-Kind Business/Investment Assets (Tangible)

    May 19, 2018 at 2:56 pm #1802743
    Operation_CPA
    Participant

    @Shivp45

    Received:

    22
    (2) liability assumed
    =20

    Given up:

    35
    (18)
    = 17

    Amount realized = (20-17) = 3,000
    Amount recognized (lessor of amount realized [3] or boot received [0]) = 0

    FMV of new: 22,000 – deferred gain of 3,000 (because you recognized NONE of it, it is all deferred) + deferred loss of 0 = basis of 19,000.

    Hope this helps!

    May 19, 2018 at 5:38 pm #1802915
    Lexi
    Participant

    I have been studying SIMS for S Corps and C Corps today with Roger and boy have they all been hard…someone out there please tell me they are worse in the study material than the actual test…

    May 21, 2018 at 7:48 am #1804568
    itooshallpass
    Participant

    @Lexi in my experience with FAR and AUD Roger's sims are harder than the exam. Hoping it's the same way with Reg! I also read some people on here saying that the reg sims this quarter were quite doable…

    May 21, 2018 at 5:33 pm #1805444
    Anonymous
    Inactive

    I am really stuck with REG, I am scheduled to take my exam on 6/7. I am trying to write down as much as I remember but am stuck on BLaw with Secured Transactions. Any suggestions where I can find solid notes on it ?

    May 21, 2018 at 8:03 pm #1805639
    Anonymous
    Inactive

    @Dev12
    What material are you using?
    I think Peter Olinto did a GREAT job in this area. I have 2 pages of solid notes from Becker REG R7.

    May 21, 2018 at 8:38 pm #1805702
    Anonymous
    Inactive

    @Amor

    I am using Beckers as well! Peter is great! I am the slow one. And I think I am starting to panic with REG. Can I please request you to share your notes if possible. Also, if you can suggest how to review when 15 days are left for the exam. I am kind of lost.

    May 21, 2018 at 9:24 pm #1805755
    Anonymous
    Inactive

    I used Becker’s outline as my pattern in writing my personal notes.

    REG – Secured Transactions

    We just have to nail the concepts of attachment (VAC) and their connection with filing and perfecting. I still trip up with the PMSI and Non-PMSI, perfected, and not perfected scenarios.

    May 21, 2018 at 9:29 pm #1805756
    Anonymous
    Inactive

    @Amor
    Thank you so much!

    And how are you revising before the exam, do you do a lot of questions ? or study the materials over and over again ?

    I am trying to re-write as much as possible and do my marked questions. Is there a better way you suggest ? 🙂

    May 21, 2018 at 10:17 pm #1805833
    Anonymous
    Inactive

    I’ve completed my Becker REG yesterday from R1-R8, whew. I have 3 Mock Exams to do, then work on as many MCQs as I can before my actual test.

    I passed REG in 2016 using Becker and NINJA MCQs, the final and my real deal!

    I prefer NINJA MCQs over Becker’s Progress Test Bank.

    So if you can, give yourself time to utilize NINJA MCQs after completing Becker material.

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