[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

[nolifecpa]

@musicamor

Its corp and more than 80% will be had

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

[WishfulThinking17]

Heyyy Everyone!! I just wanted to wish everyone who is sitting for REG in this testing window, the best of luck!!! 🙂

I sit for it on Tuesday (yikes), and my anxiety is starting to kick in!!! I've done over 3,300 multiple choice questions, over 120 simulation practice problems, and read my review material books 3 times each, and i still feel like i am not ready!! So we will see!!

good luck again!!!

B - 5/23/2012
A - 82
R - 4/10/2012
F - 75

[musicamor]

@nolifecpa…here's what I came up with:

What is M and G basis in stock if:

M contributes

noncash property FMV: 80,000

liab on property: 50,000

basis of property: 40,000

cash: 20,000

MY RESPONSE:

$40,000 – adj basis of property

+$20,000 – cash contributed

-$50,000 – liability assumed by corporation

=$10,000

I don't see where there is a gain is recognized here because the cash and adj basis of the property is taken into account. The basis is not adjusted to zero (yet).

G contributes

noncash property FMV: 70,000

liab on property: 0

basis of property: 50,000

cash: 0

G also received 20,000 cash

MY RESPONSE:

I believe G has a basis of $30k as follows:

$50,000 – adj basis of property

-$20,000 – cash received

=$30,000

Texas CPA - licensed in 2012!!!

[nolifecpa]

@musicamor

this is what i came up with

M

40 basis

+20 cash contributed

– 50 liab assumed

+10 gain recognized from liab exceeding basis

=20

G

50 basis

– 20 cash received

+20 gain recognized from cash received

=50

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

[musicamor]

@nolifecpa, re: the basis of M…I don't think you have a recognized gain because the liability assumed doesn't exceed the adjusted basis plus the cash received. I believe you have to take into account all items before determining whether or not the liability is greater.

Re: the basis of G…assuming sec. 351 applies, there wouldn't be gain recognition. If sec. 351 does not apply, then I agree with your answer.

Texas CPA - licensed in 2012!!!

[mena je twa]

Allornothing….

AT THIS TIME , i would say you have a 50-50 shot at it. Depends on multiple factors like, difficulty of questions, how you did on the simulations, how many people appeared for the exam and some other funky math that they might have.. I passed it on my 4th try after 2 74's, hang in there…

Licensed CPA, Texas - 2012

[musicamor]

@ mena je twa…I still don't comprehend how they can even issue 74's…it's like a slap in the face, or something. It just puzzles me.

Texas CPA - licensed in 2012!!!

[mena je twa]

musicamor…

74's have been story of my life…since the last 18 months. ThankGod i passed all within 18 months. I had a 74 in Audit & BEC as well….But it made me stronger and i went at it with full force…..

Licensed CPA, Texas - 2012

[Anonymous]

Hi Friends,

I need help with the NOL calculations.

Q.) Destry, a singe taxpayer, age 35 reported the following in his 2011 tax return.

Income: Wages $5000, Interest in savings account $1000, Net Rental Income $4000

Deductions : Personal Exemption $3700, Standard Deduction $5800, Net Business Loss $16000,

Net short term capital loss $2000.

Calculate NOL available for carryback or carryforward?

Answer: Net Business Loss (16000)

Wages 5000

Net rental income 4000

NOL (7000)

It says further that the non business capital loss cannot be deducted. The non business deductions (standard deduction) exceed the non business income (interest) and both items are excluded from NOL calcualtion. No deduction is allowed for personal exemption in arriving at NOL.

I am not too comfortable with this topic and do not understand why we are taking the non business deduction over non business income and personal exemption in NOL calculation?

Please help

BEC (75 – expiring May 2012)

FAR (73, 76)

REG (68, Apr 2012)

AUD (71, May 2012)

[Anonymous]

Small error correction with the question mentioned above – why we are NOT taking the non business deduction over non business income and personal exemption in NOL calculation?

[nolifecpa]

@aartim11

you can only offset NOL with personal wages and net rental income. you can not use capital gains, personal exemptions, or std deductions to offset

for individuals, capital losses is first offset with capital gains, if there is still capital losses leftover you can offset it with up to $3000 of gross income, if there is still capital losses leftover you carry it forward indefinitely

i think personal exemptions and std deductions may not be used to offset because NOL is generally a business loss (business related) and these items are personal

let me know if that helps

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

[Anonymous]

@nolifecpa

I have a formula for NOLcalculation which goes as follows:

Taxable amount (negative amount)

+ NOL's c/f or c/bk into current year

+ Personal exemptions

+ Nonbusiness deductions – Nonbusiness income OR Standard deduction

= NOL

When do we use this. Do you have some notes on NOL which is easy to understand. Thanks for the help.

BEC (75 – expiring May 2012)

FAR (73, 76)

REG (68, Apr 2012)

AUD (71, May 2012)

[nolifecpa]

@aartim11

these questions are so darn tricky!

your formula is showing what NOL would be if everything was included, it adds back all the stuff that you should NOT have subtracted.

the original question you posted (net business loss of $16,000) already had everything added back

let me know if you want me to further clarify, i know its confusing

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

[Anonymous]

@nolifecpa

Thank you. So they have given us NOL (business loss) and reduced it by wages and rental income (business income).

It would be really helpful if you can share some easy to understand notes or examples on NOL.

REG is very tricky…

[nolifecpa]

@aartim11

i don't have any easy to understand notes but i will use the examples to further explain

EXAMPLE 1

George single w/ no dependents, started his own delivery business and incurred a loss from the business for 2011.

Income: interest on personal bank deposits of $1,800

Deduction: itemized deductions for interest and taxes of $9,000, and his personal exemptions of $3,700, the loss shown on George’s Form 1040 was $20,700. George’s NOL would computed as follows:

Taxable amount (negative #)

+ Nonbusiness deductions (personal exemptions, std deductions, itemized deduction, STCL)

– Nonbusiness income (interest)

= NOL before offset

– Wages

– Net rental income

= NOL after offset

(20,700) [taxable amount]

+ 12,700 [9,000 itemized deduction and 3,700 personal exemption]

– 1,800 [interest]

= (9,800) [NOL before offset]

– 0 [wages]

– 0 [net rental income]

= (9,800) [NOL after offset]

EXAMPLE 2

Destry, a singe taxpayer, age 35 reported the following in his 2011 tax return.

Income: Wages $5,000, Interest in savings account $1000, Net Rental Income $4,000

Deductions : Personal Exemption $3,700, Standard Deduction $5,800, Net Business Loss $16,000,

Net short term capital loss $2,000.

Calculate NOL available for carryback or carryforward?

(26,500) [taxable amount]

+ 11,500 [3,700 personal exemption,5,800 std deduction, 2,000 STCL]

– 1,000 [interest]

= (16,000) [NOL before offset]

– 5,000 [wages]

– 4,000 [net rental income]

= (7,000) [NOL after offset]

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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