[jeff]

Resources:

REG 10 Point Combo: https://www.another71.com/products-page/ten-point-combo

REG Exam Experience: https://www.another71.com/cpa-exam-forum/topic/reg-exam-experience-official-thread

AUD - 79
BEC - 80
FAR - 76
REG - 92

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

[MCLKT]

I keep looking at the AAA to see if I'm missing something, but I got nothin'. I think I'll make sure to get the Wiley text out an work some problems from it.

Oh KipSnoodles, that's a way to practice a specific topic. If you have the 2013 Wiley text, each subtopic ends with a suggestion to work specific #s.

I have noted for S Corp Distribution:

Distribution = Cash + FMV property

<AAA Balance> not taxable, made of previously taxed income

<Acc. E&P from C Corp days> ordinary income (dividend), taxed???

<s/h basis>not taxable, return basis

===========

remainder taxable Gain from Sale of Stock

A:[73]97 F:[74]85 R:86 B:[74]82
*NINJA 10 Pt. COMBO & Yaeger*

[Mike1987]

Thanks I think I was just over thinking and confusing myself at the way it was being presented, the fact that it was distributed over what was in AAA. I should probably just stop studying and confusing myself at this point haha. Although looks like I'll have to quickly cram as much property law stuff into my head as possible.

[Mike1987]

Also 1 more quick question. Sorry for hogging all the attention. In Becker 2013 example 1 on page R6-39 it shows that a debtor gives a creditor a security interest and it is perfected giving it priority over a trustee in bankruptcy (this all happens a few days prior to an involuntary petition). So wouldn't this be a case of preferential treatment? Or is it not only because it was involuntary and the debtor did not give that security interest to benefit a creditor on purpose.

[MCLKT]

You aren't hogging anything that's what this thread is for! And it helps anyone involved in the discussion and everyone reading along 🙂

Was it a cash sale or on credit?

If the debtor provided full value for the goods, then the creditor is safe from any Preferential Treatment. But, there would be no security interest because it is a done deal. And the goods would become part of the estate.

Preferential treatment requires an existing debt that was paid. Sounds like this is a newly created debt?

I think the priority over trustee is referring to Administrative costs? Those providing services related to the BK are included in Admin costs. But the first creditors to receive funds are the Secured (perfected would definitely fit in here) Creditos.

Then Admin followed by any debt creating between filing date and the date of relief Gap.

Next are employee costs: Wages, Benefits

A:[73]97 F:[74]85 R:86 B:[74]82
*NINJA 10 Pt. COMBO & Yaeger*

[Mike1987]

So the part about the existing debt, would that mean it would be preferential if the debt existed before the 90 days/1yr for insiders and a security interest was given to the creditor within the 90 days while the debtor was insolvent? The example was a newly created debt.

[MCLKT]

The preferential treatment rule is basically saying you can't be insolvent and owe a ton of money and unjustly pick and choose to pay one creditor over another.

So, for creditors to be at risk of receiving preferential treatment, it isn't based on their security interest. It's based on the payment. So the payment or transfer of goods can't occur within 90 days (1 year if related party).

Also… the payment must,

1.Benefit the creditor

2.Worth more than creditor would recieve from BK proceedings

3.paid to settle existing debt

4. paid while the debtor is insolvent

A:[73]97 F:[74]85 R:86 B:[74]82
*NINJA 10 Pt. COMBO & Yaeger*

[Mike1987]

Thanks! goodnight gona need all the luck I can get tomorrow.

[MCLKT]

You got this Mike 🙂 Good luck!!!!

A:[73]97 F:[74]85 R:86 B:[74]82
*NINJA 10 Pt. COMBO & Yaeger*

[Anonymous]

Help anyone? I've been using Becker and decided to do some problems on cpareviewforfree…this one has me confused.

I thought that if you place 40% of depreciable property in service in the last quarter…you must use the mid-quarter convention?? The question goes as follows:

The Lambert Company bought a piece of equipment this year on October 9. The company’s tax return is filed on a calendar year basis. MACRS (the Modified Accelerated Cost Recovery ) is used to determine depreciation for income tax purposes. Which of the following is true as to the amount of depreciation that can be recognized in this initial year?

A Lambert can take no depreciation

B Lambert should take a full year of depreciation.

C Lambert can take depreciation for 3/12 of the year.

D Lambert can take depreciation for 1/2 of the year.

Their answer is D…I thought it was C. I'm sure I'm missing something so easy and right in front of my face…please enlighten me!?!

[kip_snoodles]

You are right. I guess since the question did not specifically say “40% in the last quarter,” you will have to use half-year. It is a poorly written question. Of course with tax there could be some crazy random rule we are both missing!

[Anonymous]

Morning all! I decided I'm decided I'm going to work through some property questions this weekend and bake a lemon jello cake. (When the CPA Exam gives you lemons, bake lemon cake – and all that.) I've not made a cake with lemon jello before, so going to bake it and if it tastes ok, bake another for a race party tomorrow. I got two different bottles of wine. I'll drink til I figure out which goes better with the cake. 😛

Still feeling like the chances that I passed are slim, but got my Wiley, my cake and some wine. So I'm in!

[Mike1987]

Just got back from my test. I realized I made some silly mistakes by confusing some concepts I knew at the very end. I was only able to fix half of it before time ran out. I'm sure I messed up on some of the mcqs too because I went too fast (finished them with 1hr 40 min left for sims, although I did spend every last sec on the sims). There was a very basic mcq in the very beginning that I stared at for 5 min but couldn't get any of the answer choices. I feel Becker covered the most important points. I felt 2 of my sims were very poorly worded and it took 5 min to figure out what it was even asking. Hopefully I scraped by with a 75.

I will probably move on to the FAR group now goodluck to all those taking REG.

[Pistachio7785]

Hey Guys,

I need some assistance. It is probably from exhaustion, but can someone clarify this for me? I have a question about inherited property.

In the REG Ninja notes, on page 58, it states,”If Alt. date is chosen but sold before 6 mo. window, use FMV at death”.

On page 56, it states, “If property is sold prior to 6 mo. date and the alternative date is used, FMV at date of sale is used to value property”.

Thanks for your help!

[Mike1987]

Your are right..I don't think what is on page 58 is correct. It should be if Alternative Valuation Date is chosen then use earlier of FMV on date it is distributed or FMV at the end of 6 months.

[Anonymous]

So lets say someone died on 1/1 and their estate selected the alternative valuation date, but the property was sold on 4/1.

Let's say on 1/1 the property was valued at $1,000 and on 7/1 it was valued at $1,100. The property was sold on 4/1 for $1,200. Is our gain $100 or $200?

[Author]

Replies