REG Study Group – Q1 2018 - Page 18

@Katie and Recked

Thanks for clearing up those questions.

I'll use the amount of shares repurchased times the (original basis per a share – original selling price per a share) to figure the amount of disallowed loss. I guess it makes sense that the repurchased stock's basis would be equal to repurchase price per share times number of shares purchased + amount of disallowed loss.

For the LKE problem that isn't a LIKE problem, that makes sense now.

@Lentil, from memory, I think that is correct. But the 2017 practice exam should let you go back at the end to see the answers.

@Katie

C-Corp:

Div to extent of Current E&P = taxable
Div to extent of Accumulated E&P = taxable
Excess of E&P Return of capital = Tax free (reduces basis of stock)
Excess of basis of common stock= Capital gain

S-Corp:

If company has C-corp E&P = taxable div.
AAA balance= no tax and reduces basis
Div in simplest form =Distributions to extent of basis is return of capital. Excess is capital gain.

Partnership:

If cash distribution exceeds basis it is a taxable gain. If cash and fixed asset received basis reduced by cash, remaining basis becomes the basis of the fixed asset.

hope this helps. I should get some sleep. good luck.

@Katie
C-Corp recognizes capital gain, as if asset was sold at FMV, for the excess over tax basis

same for S-Corp, except the gain is then passed through proportionally to owners

partnership: gains only if cash distributed is more than the partner's basis; no g/l on property distributions

The M2 has the following order for AAA.
Beg
Ordinary Income
Other additions
Loss
other reductions
then distributions at the end.

The 100 would first come from AAA, then from AEP if any existed.
Further distributions would be nontaxable to the extent of remaining stock basis
distributions in excess of stock basis are treated as a gain from the sale of stock.

I believe the M2 order is the proper order to follow in this situation.
AAA can be reduced before 0, basis cannot.
I would say $0 is the correct answer to that question.
Can you confirm that is correct?

Reviewing the AICPA released 2015 questions. Missed 3 of 20 on the Difficult, and 1 of 20 on the moderate. One was a “using my head to try and do math” mistake.
Not overly concerned about the MCQs, but the AICPA released questions for 15, 16 and 17 all seem to have some difficult SIMs.
Need to review and freshen up on property contributed to and distributed from entities. Partnerships seem to be the easiest, but the corps with assets that have appreciated in value, and with liabilities. Always throwing me a curveball.

Snowing here in NY, so I think I'll take a snowday tomorrow to focus on my review.
How is everyone else progressing?

Hey guys, I survived! It was everything I thought it would be (unfortunately). There were no surprises but I felt like I became fuzzy on a lot of the details, and a lot of my answers could have gone one way or the other. I'd say I felt unsure of about 10 MCQs, 15 at most. The SIMS were straightforward as far as subject matter, but I often got confused on what exactly it is that they were asking for. I think I could've done a few more practice SIMS to better prepare. But if you have the “Analysis” topics nailed down, you'll be just fine. I used the AL in almost all of my SIMS and found it very useful to lookup/validate my answers. Overall, I'm not feeling great and definitely felt more confident coming out of FAR. We'll see what happens in three weeks but I wouldn't be totally shocked with a pass or fail.