[jeff]

I’ve had a few requests for April/May Study Groups…March will be here before you know it.

In order to take an early April exam, you should begin studying…now. 🙂

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

[Anonymous]

See below the two similar Questions with different approach/answers, from Becker , Why is that?

………………………………………………………………………………..

A taxpayer is trading in an automobile used solely for business purposes for another automobile to be used in his

business. The automobile originally cost $35,000 and he has taken $18,000 in depreciation. The old automobile is

currently worth $20,000 and the new automobile the taxpayer wants in exchange is only worth $17,500. The other

party agrees to give the taxpayer a trailer worth $3,500 in addition to the new auto, and the taxpayer agrees to pay

$1,000 cash in addition to the trade-in. What is the gain or loss recognized by the taxpayer in this transaction?

a. $2,500 gain

b. $3,000 gain

c. $0

d. $3,500 gain

Gain/Loss Recognized:

Gain recognized = $3,000 (the lesser of realized gain of $3,000 or boot received of $3,500)

ANOTHER VERY SIMILAR QUESTION

A taxpayer is trading in an automobile used solely for business purposes for another automobile to be used in his

business. The automobile originally cost $35,000 and he has taken $18,000 in depreciation. The old automobile is

currently worth $20,000 and the new automobile the taxpayer wants in exchange is only worth $17,500. The taxpayer

agrees to assume a liability secured by the new auto of $1,000. The other party also agrees to assume a liability

secured by the taxpayer's old auto of $3,500. What is the gain or loss recognized by the taxpayer on this

transaction?

a. $3,500 gain.

b. $3,000 gain.

c. $2,500 gain.

d. $0

Gain/Loss

Recognized:

Gain recognized = $2,500 [the lesser of realized gain of $3,000 or net relief from liabilities (boot received)

of $2,500]

---

why the first one has just the boot received and and why second has net boot received? can anyone explain?

[TargetCPA]

@ MikeHoncho and PorterAJ1,

Answer: A

Explanation:

The requirement is to determine the amount of income from Manning (an S corporation) that should be reported on Kane’s 2013 tax return. An S corporation’s tax items are allocated to shareholders on a per share, per day basis. Since Manning had income of $73,200 for its entire year, its per day income is $73,200/366 = $200. Since there

are 100 shares outstanding, Manning’s daily income per share is $200/100 = $2. Since Kane sold 25 of his shares on the 40th day of 2013 and held his remaining seventy-five shares throughout the year, the amount of income to be reported on Kane’s 2013 return would be determined as follows:

75 shares × $2 × 366 days = $54,900

25 shares × $2 × 40 days = 2,000

$54,900 + $2,000 = $56,900

[TargetCPA]

@ cpa2012, This question previously asked by someone and here is the link:

https://www.another71.com/cpa-exam-forum/topic/help-with-a-becker-question-requested

I think the only difference is:

1st Question = The other party agrees to give the taxpayer a trailer worth $3,500 in addition to the new auto, and the taxpayer agrees to pay $1,000 cash in addition to the trade-in. (cash transactions)

2nd Question = The taxpayer agrees to assume a liability secured by the new auto of $1,000. The other party also agrees to assume a liability secured by the taxpayer's old auto of $3,500. (non-cash transactions)

– both the cash boot paid can only offset with cash boot received or mortgage boot received

– If seller gave 1k cash and buyer gave 3.5k cash then net boot would be 2.5k.

– If they aren't both cash they don't offset.

Hope this helps you.

[Anonymous]

I was thinking the same; its the cash and non cash transactions differences.

[Anonymous]

Well took Final Exam #1 from Becker this morning and the results are:

MCQ #1: 67%

MCQ #2: 87%

MCQ #3: 83%

SIM's I scored 30/34 points for an 88%

My questions is – I had taken this version of the Final exam before (in October 2013). Do you think enough time has passed where I can really rely on these results? I didn't feel like I remembered a lot of the questions, but I don't want to give myself a false sense of confidence and then get owned on the real exam.

For those of you retaking REG and are using the same study materials and Final exams, how do you compensate for this or interpret your results?

[TargetCPA]

Ola Associates is a limited partnership engaged in real estate development. Hoff, a civil engineer, billed Ola $40,000 in 2013 for consulting services rendered. In full settlement of this invoice, Hoff accepted a $15,000 cash payment plus the following:

Fair market value:

3% limited partnership interest in Ola $10,000

Surveying equipment 7,000

Carrying amount on Ola’s books:

3% limited partnership interest in Ola N/A

Surveying equipment $3,000

What amount should Hoff, a cash-basis taxpayer, report in his 2013 return as income for the services rendered to Ola?

a. $15,000

b. $28,000

c. $32,000

d. $40,000

[TargetCPA]

Ola Associates is a limited partnership engaged in real estate development. Hoff, a civil engineer, billed Ola $40,000 in 2013 for consulting services rendered. In full settlement of this invoice, Hoff accepted a $15,000 cash payment plus the following:

Fair market value:

3% limited partnership interest in Ola $10,000

Surveying equipment 7,000

Carrying amount on Ola’s books:

3% limited partnership interest in Ola N/A

Surveying equipment $3,000

What amount should Hoff, a cash-basis taxpayer, report in his 2013 return as income for the services rendered to Ola?

a. $15,000

b. $28,000

c. $32,000

d. $40,000

[keochuoi]

@TargetCPA: I would say C. $32,000. His income would be the cash plus FMV of what he received, regardless of how much he normally bills for his services.

[TargetCPA]

@ keochuoi: You are right!!!

Answer: C

The requirement is to determine the amount that Hoff, a cash-basis taxpayer, should report as income for the services rendered to Ola Associates. A cash-basis taxpayer generally reports income when received, unless constructively received at an earlier date.

The amount of income to be reported is the amount of money, plus the fair market value of other property received. In this case,

Hoff must report a total of $32,000 = which includes the $15,000 cash + $10,000 FMV of the limited partnership interest + $7,000 FMV of the surveying equipment received.

Note that since Hoff is a cash basis taxpayer, he would not report income at the time that he billed Ola $40,000, nor would he be entitled to a bad debt deduction when he accepts $32,000 of consideration in full settlement of his $40,000 invoice.

[LSNYC]

I'm back….after two very stressful weeks here with no studying so I just pushed my exam back to May 27, i may move it up to May 23 i need a few days to think about it but wanted to get a new date on the calender. I am in the middle of quarter end so my study time is limited for the next few days, should be able to get back to full time by next Sunday.

Hopefully i can pick up where i left of with good momentum and put this exam behind me for good.

Happy studying all

A - 61, 91!!
B - 78!
F - 76!!!
R - 71, 73, 74, 69, 77!!!!

Finally done!

This is my 2nd attempt at the exam, I had two parts passed (failed many) and I stupidly quit, big mistake. Now I'm back and with a vengeance!

[Finishorgiveup]

Finally I am back to study mode.

For the past of few days I have been trying to clean up my work. (Yes, I quit)

Now I can spend more time on my study and finish this journey as soon as possible.

Partnership ~ here I come

Go fighting!

REG - 70. Retake on 5/30/14
AUD - 8/31/14
FAR - target 11/30/14
BEC - target 2/28/15
California Candidate

[TargetCPA]

@ LSNYC & Finishorgivup: Welcome to the REG battle.

I just finished Partnership videos, have to take intense notes for P/Ship and MCQs.

[Anonymous]

working through WTB Agency questions…I think Wiley is wrong with this one:

AGEN-0005

Pell is the principal and Astor is the agent in an agency coupled with an interest. In the absence of a contractual provision relating to the duration of the agency, who has the right to terminate the agency before the interest has expired?

Pell / Astor

A) Yes / Yes

B) Yes / No

C) No / Yes

D) No / No

WTB is telling me that B is the answer. But shouldn't C be the correct answer? In an agency coupled with an interest w/o a contractual duration, only the agent has the right to terminate the agency. The principal cannot terminate the agency.

I just want to make sure I'm not going crazy over here…

[MassCPA2014]

@CPAcoug you are correct, Wiley is wrong. You should probably report that to them. Only the agent has a right to terminate the contract when it's an agency coupled with an interest.

FAR: 86
AUD: 88
REG: 85
BEC: 84
DONE!

[CPA soon]

@CPAcoug haha it's funny I had the same exact post on page 2 of the thread

FAR - 71, 68, 74, (8/31/14) 78 ✔
REG - 67, 71, 71, (10/18/14) 78 ✔
BEC - (11/29/14) 86 ✔
AUD - 73, (4/4/15) 86 ✔

I can't believe this is over! 2 years and 3 months..

[Author]

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