REG Study Group – Q2 2018 - Page 15

@Amor

Likewise. I have 3 mocks to do.
Well, Good Luck on your exam! 🙂

@Melanie B

I'm on the same boat as you and feel exactly the same way. I just felt so dumb when I started going through R1 again. What's worse is, I feel like I did better doing those MCQs the first time around. Now, it's all jumbled.

My plan is just keep doing MCQs and SIMS until my nose bleeds (doing all Becker first then supplementing with Ninja MCQs–I was thinking of doing Ninja Notes too, but I think I'm better off rewriting my own notes (?)). But, this is my first test, so other suggestions are welcome!

Falcon, Inc., is a calendar-year-end S corporation owned equally by two shareholders, Jennifer Sullivan and Marvin Darby. Falcon reports its income and expenses on the accrual method of accounting. Falcon has always been an S corporation and has no debt. Falcon's controller has provided information for the completion of Falcon's year 4 Form 1120S, U.S. Income Tax Return for an S Corporation. A copy of Falcon's income statement for the year ended December 31, year 4, and additional information related to Falcon and its shareholders can be found in the exhibits above.

You have been asked to review the documents provided by Falcon's controller and assist in the preparation of Form 1120S. For each item in column A, calculate the value and enter it in the associated cell in column B. Enter income and gains as positive values and losses and expenses as negative values. If an answer is zero, enter a zero (0).

2 Falcon's year 4 ordinary business income (loss) to be reported on Form 1120S
3 Sum of Falcon's year 4 separately stated items of taxable income and deductible expense to be reported on Form 1120S, Schedule K, Shareholders' Pro Rata Share Items
4 Falcon's year 4 nondeductible expenses
5 Falcon's December 31, year 4, accumulated adjustment account balance
6 Jennifer Sullivan's shareholder tax basis at December 31, year 4

Can someone explain answers for 2/3 on this sample SIM?
Thanks

@cpa_me_23

Its asking for what shall be reported on 1120S as ordinary income(loss) and what shall go to schedule K and K-1 -separately and non-separately stated income (loss)

1120S
Gross profit 700,000
Salaries and Wage (170,000)
Repairs and maintenance (10,000)
Depreciation expense (8,000)
Payroll taxes (15,000)
Business insurance (9,000)
Rent expense (36,000)
Total Ordinary income (loss) = 452,000
*Penalties and fines are non-deductible so the 2,000 is answer for 4

Schedule K
Charitable contributions 5,000
Bank interest income 1,000
Capital loss on sale of land (20,000)
Total Schedule K Income (Loss) = (14,000)

@cpa_me_23

I think you are missing more info on this sims tho, its one the AICPA sample SIMS and it mentions 20,000 MACRs Depreciation,

Which means:
1120S
Gross profit 700,000
Salaries and Wage (170,000)
Repairs and maintenance (10,000)
Depreciation expense (20,000)
Payroll taxes (15,000)
Business insurance (9,000)
Rent expense (36,000)
Total Ordinary income (loss) = 440,000
*Penalties and fines are non-deductible so the 2,000 is answer for 4

Schedule K
Charitable contributions (5,000)
Bank interest income 1,000
Capital loss on sale of land (20,000)
Total Schedule K Income (Loss) = (24,000)

@Dev12 Thank you for the explanation.

These REG sims are kicking my tail…. I don't understand the difference between the MCQs and Sims for tax but apparently I'm losing something in the shuffle. Thoughts? suggestions? Advice? all are welcome

@jsdailey

Same. I get a 90% on MCQ but fail miserably in SIMS.

Any suggestions on how to get the SIMS right ?