[jeff]

NINJA Study Notes, Flashcards, and Audio: https://www.another71.com/products-page/

Wiley Software: https://www.another71.com/wiley-cpa-software/

Jeff Elliott, CPA (KS) | Another71 | NINJA CPA | NINJA CMA | NINJA CPE

[Anonymous]

Hi guys, I'm taking my first part of the CPA April 12th.. so I'm a complete noob.

I was wondering for all the annual changes in deductions and limitations, are we given a sheet for it or just assumed to know it? For Tax purposes we are still using 2011's… so would the tests be based off of 2011 numbers or 2012?

[nolifecpa]

@amyluo818

you are not given a sheet showing deductions and limitations and are expected to know them if they are asked, BUT typically the exams do not ask you these types of questions because the numbers change every year

test is based off of 2011 numbers

REG-65,71,74,73,70,74,79
BEC-60's,60's,69,71,76*,78
FAR-67,66,65,79
AUD-54,60's,65,83*,69,80
*expired

DONE

[PistolPete]

12 hour live Final Review today. God help me.

FAR - 68, 79
AUD - 82
REG - 71, 71, 80
BEC - 76

CMA
Part 1: October 2013
Part 2: January 2014

[Veronica75]

HELP!

If I understand correctly, start up costs of $10k can be expensed with the remainder amortized over 180 months. I just came across partnership start up costs which Becker says $5k can be expensed. Has this also been updated to $10k?

So confusing with all the updates….

FAR - 79 (2x)
AUD - 81 (expired), 77!
REG - 74! omg (3x) 87!!!!!!! I'm done! OMG!
BEC - 81 (4x)

[Anonymous]

Veronica,

Here is the link to the IRS's website dealing with Start Up Costs.

https://www.irs.gov/publications/p535/ch07.html

“Business start-up and organizational costs are generally capital expenditures. However, you can elect to deduct up to $5,000 of business start-up and $5,000 of organizational costs paid or incurred after October 22, 2004. The $5,000 deduction is reduced by the amount your total start-up or organizational costs exceed $50,000. Any remaining costs must be amortized. For information about amortizing start-up and organizational costs, see chapter 8 .”

I don't know if that has changed to $10,000 for 2012. I'm lost! If you get the answer please let me know.

[Veronica75]

@Kricket – are you using Becker? There was an update to $10k for sure under my corporate tax chapter (R3) but then I got to partnerships and I'm not sure if it applies there also? There was no update.

Hopefully someone else can help point us in the right direction….

FAR - 79 (2x)
AUD - 81 (expired), 77!
REG - 74! omg (3x) 87!!!!!!! I'm done! OMG!
BEC - 81 (4x)

[Tina82]

Organizational costs = 5k/reduction if over 50k

Start-up costs = 10k/reduction if over 60k for 2010 only (Veronica – becker says this is for 2010 only and for 2011 it goes back to $5k)

R - 74;88
A - 84
B - 74;89
F - no study = 67; May 15 = 87 & done

[Anonymous]

Veronica – I'm using the NINJA notes and Wiley, plus some notes that I had made when I used other review courses. I've never used Becker.

Tina – Thank you! I thought there was a change to $10,000 but I didn't know how long it was in effect. I think it is safe to assume that for a 2012 exam we should use $5,000. What do y'all think?

[Tina82]

Organizational expenditures for corps are under Sec. 248, for partnerships under Sec. 709 and both provide the 5/50 rule.

If you research the small business act of 2010 it says that the increased 10/60 deduction is for taxable years beginning in 2010, meaning if you're calendar year you get to deduct in 2010, if you're fiscal year beginning say June 1, you would deduct on your fiscal year return if your taxable year begins 2010 (see excerpt below)

This is consistent with becker so hopefully we resolved the issue.

‘‘(3) SPECIAL RULE FOR TAXABLE YEARS BEGINNING IN 2010.—

In the case of a taxable year beginning in 2010, paragraph

(1)(A)(ii) shall be applied—

‘‘(A) by substituting ‘$10,000’ for ‘$5,000’, and

‘‘(B) by substituting ‘$60,000’ for ‘$50,000’.’’

R - 74;88
A - 84
B - 74;89
F - no study = 67; May 15 = 87 & done

[Tina82]

Just to be clear – the increased 2010 applies to start-up costs only (don't want to confuse people). The corp/partnership 5/50 rules apply to organizational expenditures.

R - 74;88
A - 84
B - 74;89
F - no study = 67; May 15 = 87 & done

[Veronica75]

my books tend to lump start-up costs and organizational expenditures together…?

So if asked how much we can expense for start-up costs of a partnership, $5k is the answer?

And if asked how much we can expense for organizational costs of a corporation, $10k is the answer?

Poop. I'm still confused.

FAR - 79 (2x)
AUD - 81 (expired), 77!
REG - 74! omg (3x) 87!!!!!!! I'm done! OMG!
BEC - 81 (4x)

[Tina82]

The 10k for start-up only applies to 2010. On the exam, they likely will ask about 2011 so go with the $5,000.

On the questions I've seen so far they typically list organizational expenditures only.

R - 74;88
A - 84
B - 74;89
F - no study = 67; May 15 = 87 & done

[musicamor]

Thanks nolifecpa and Tina for help me!!

Texas CPA - licensed in 2012!!!

[sboggs74]

A bit confused on determining basis in property received from partnership distribution. Hypothetical question:

Jim Bob is 50% partner in EFG partnership. EFG makes a non-liquidating distribution to Jim Bob in the amounts of $8,000 cash, property with tax basis of $10,000 and FMV of $17,000 and a $10,000 distribution in the partnership basis. Jim Bob's basis in EFG was $12,000 prior to the distribution. What is Jim Bob's basis in the property distriution?

What I have never encountered is the “a distribution in the partnership's basis”…..What does mean? How does effect the basis in the land? Generally, the amount of cash received reduces the partner's basis first. Basis in the property is the residual amount (not below zero). In above example, Jim Bob's basis would've been reduced from $12,000 to $4,000 ($12,000 – $8,000). Basis in property = $4,000. I don't know how the “$10,000 distribution in the partnership's basis” comes into play.

Hopefully someone can put me straight.

Thanks.

[nolifecpa]

@sboggs74

hmm…does the question say what the 10,000 distribution is? cash? property?

if its cash then property basis to Jim Bob is zero

if its property then basis will be figured prorata

REG-65,71,74,73,70,74,79
BEC-60's,60's,69,71,76*,78
FAR-67,66,65,79
AUD-54,60's,65,83*,69,80
*expired

DONE

[Author]

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