REG Study Group – Q1 2018 - Page 15

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    Topic
  • December 11, 2017 at 10:58 am #1676693
    jeff
    Keymaster

    Welcome to the Q1 2018 CPA Exam Study Group for REG. 🙂

    Introduce yourselves and let your fellow NINJAs know when you plan to take your exam.

    The Five Steps (NINJA Framework): https://www.another71.com/pass-the-cpa-exam/

Viewing 15 replies - 211 through 225 (of 428 total)
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  • January 13, 2018 at 2:29 pm #1692658
    dj
    Participant

    Thank you @reckedracing! I didn't include MACRS in the scenario but I believe I understand how that works (Use MACRS tables on adjusted basis).

    I was just unsure about the adjusted basis used for depreciation after the first year. Your explanation makes sense (using adjusted basis of $150K after the first year to calculate MACRS in future years).

    January 13, 2018 at 2:37 pm #1692659
    Lentilcounter
    Participant

    @dj

    a good Becker mnemonic to remember the order is “IBM”.

    I = section 179
    B = bonus depreciation
    M = MACRS

    2015-2017 bonus depreciation rates = 50%
    2018 = 40%
    2019 = 30%

    BEC = 72 (6/08/16)
    FAR = ?
    REG = ?
    AUD = ?

    January 13, 2018 at 4:24 pm #1692691
    Katie
    Participant

    Another AICPA sample test question. Does anyone know which method was used to determine the basis of the delivery van in testlet 5, sim 2?

    I understand that they took adjusted basis of 2,088 + FMV new van 32,300 – 9,000 trade in. But they new basis of 25,388 doesn't follow the rules on like-kind exchange as far as I understand, and I can't think of what other rule could apply here.

    January 13, 2018 at 5:13 pm #1692712
    Recked
    Participant

    Isn't it the basis of the old plus the additional cash paid for the new?
    I don't have the calcs in front of me but I think it was 2088 plus 23k ish for new van and sales tax, etc.

    I got that one wrong because I did not assume it was a LKE, foolish mistake on my part.

    January 13, 2018 at 5:25 pm #1692715
    Katie
    Participant

    I have in my notes that the basis of the new property = adj basis of old property + gain recognized – boot rep'd + boot given

    I wasn't considering the cash paid boot given for some reason. It's making much more sense now. Hopefully these silly mistakes don't happen on exam day. I'm getting so frustrated with myself.

    January 13, 2018 at 5:28 pm #1692716
    Recked
    Participant

    You just have to be better prepared than 55-60% of the people to pass, statistically speaking.

    January 13, 2018 at 5:42 pm #1692721
    Katie
    Participant

    That perspective makes me feel a bit more confident. I generally don't find myself in the 40th-50th percentile, but REG is really kicking my butt…

    January 13, 2018 at 6:06 pm #1692722
    Lentilcounter
    Participant

    @Katie

    I feel the same way as you.

    @Recked

    Thanks for putting it in perspective.

    BEC = 72 (6/08/16)
    FAR = ?
    REG = ?
    AUD = ?

    January 13, 2018 at 9:19 pm #1692770
    Gugu
    Participant

    @ Recked
    Absolutely true!

    I had only less than 3 weeks to prepare myself for REG and I was with the undesirable , other side of the statistics. For the other three I was well prepared and I was within the desirable statistics. The key is, prepare well.

    I love this vibrant forum which helped me learn more and more every day!

    I did not see the AICPA sample test last time around, and I am planning to give it a go sometimes next week. Way to GO

    Cheeeeers!

    January 14, 2018 at 12:21 am #1692800
    scattershot
    Participant

    These 2018 sample sims are a real morale killer. I don't remember seeing anything like testlet 4, sim 2 in all of Roger's content on actually figuring out what goes into AAA — as best as I can figure out with the answer key, it's existing AAA + current year ordinary income + separately stated items + nondeductible expenses?

    January 14, 2018 at 7:39 am #1692817
    Recked
    Participant

    I also got the AAA part wrong on Friday and have not reviewed yet.
    I'm going to go over it again in the office on Monday.
    Page 3-5 (2017) of the Roger book has a blerb on AAA that might help explain what we did wrong.
    My tax software takes cares of the AAA for me so I rarely have to get into the calculation, but I am sure once we see the errors we'll remember for test day, when its not on our tests LOL.

    Gleim page 301 (2017) has the following 5 points. AAA Represents current cumulative balance of S Corp
    Calculated without regard for net negative adjustments (excess of losses and deductions over income and gains)
    Not affected by transactions from when it was a C corp (federal income taxes, etc)
    Non-deductible expenses reduce basis in stock and AAA
    AAA not affected for tax exempt income which increase stock basis, nor for RELATED nondeductible expenses which reduce basis(These go to OAA)
    AAA can be reduced below zero

    January 14, 2018 at 7:45 am #1692820
    Lentilcounter
    Participant

    The accumulated adjustments account (AAA) represents the cumulative balance of the S corporation. AAA is zero at the inception of the S corp.

    Beginning AAA + separately and non-separately stated income and gains except for tax-exempt income/certain life insurance proceeds which goes to the other adjustments account – corporate distributions (cannot reduce AAA below zero) – separately and non-separately stated expense items and losses except for certain nondeductible items that do not affect capital accounts – nondeductible expenses that relate to income other than tax-exempt income

    BEC = 72 (6/08/16)
    FAR = ?
    REG = ?
    AUD = ?

    January 14, 2018 at 9:27 am #1692830
    Recked
    Participant

    Some of these REG questions got me like…

    https://media.giphy.com/media/aZ3LDBs1ExsE8/giphy.gif

    Landed a 56% on 15MCQs and a 50% on 10MCQs.
    I feel bad for you non-tax people trying to do REG.
    Curve balls and trick questions galore.
    There is no such thing as skimming a REG question. One missed word = wrong answer.

    January 14, 2018 at 9:33 am #1692833
    Katie
    Participant

    @Recked I'm with you, and unfortunately, I'm one of those non-tax people. The most important thing I learned in the past week is that I'm going to have to read very carefully and pay attention to detail. I think I have the concepts down, just need to concentrate on my exam taking skills.

    January 14, 2018 at 12:02 pm #1692869
    Lentilcounter
    Participant

    For 2018 AICPA REG practice SIM, how is the gain taxed to Fred Patel and Melissa Green on the distribution of land computed? The correct answer is $50K for both. Thanks.

    BEC = 72 (6/08/16)
    FAR = ?
    REG = ?
    AUD = ?

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