[jeff]

REG Resources:

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REG Score Release: https://www.another71.com/cpa-exam-scores-results-release

[Heidi-O]

@icanhazcpa Becker states that you need to know what items are adjustments, the AMT credit carry-forward period (against regular tax) and Credits – ones that can be used to reduce AMT.

I believe you just took the FAR exam, right? If so, then these adjustments will make sense to you.

These items are listed as TIMING differences, and they may need to be added back in or deducted:

Passive Activity Loss – generally, add it back in

Accelerated Deprecation (Post 1986) add it back in (They want you to use straight line method for deprecation and using the AMT's life span – that's way further than we are going into on this exam – but just so you understand it conceptually. MACRS takes off 200% and Section 179 can allow you to take off a good chunki! AMT says, no, put it back. I'm not going to spend a tremendous amount of time on it. I'm just trying to help it stick a little better.)

Net Operating Loss of the individual tax payer – add it back in

Installment income of a dealer – add it back in

Contracts – on these you need to do the percentage of completion compared to the completed contract method. So, it is possible, that if you record income for AMT purposes of 1/3 in year 1 (pay taxes on it), 1/3 in year two (pay taxes on it) and then 1/3 in year three – (pay taxes on it) that the AMT taxes will be different from your normal taxable income because you were using the completed contract method that would show no income in year 1 of the contract, no income in year 2 of the contract and all the net income in year 3 – this creates a differences between AMT and Your taxable income. (Again, just think of how that concept would apply – what impacts it would make)

Ok, so those items above can create TEMPORARY differences.

These items create Permanent Differences and are part of the Schedule A Itemized calculations (if you itemized):

Tax Deductions – add them back in, can't have them.

Interest deduction on home equity loans used to substantially improve or purchase property is deductible – if it is used for some other purpose, like to buy a car – can't deduct it

Medical Expenses that are above the 10% floor are deductible (so if they give you 7.5% add back in the 2.5% to get to 10)

Miscellaneous Deductions are not allowed

Exemptions (Personal and Standard Deduction) is not allowed

The question will ask you, “Prior to exemptions, Bobs taxable income was 100,000” – Ok, that tells me that this income is AFTER the Standard or Itemized deductions. Then you have to look at what they have listed and add back in or adjust some of the amounts.

If the question states “Bob's AGI is 100,000” – Ok, that tells me that this is before his Itemized or Standard Deductions – so they may want you to calculate what he can deduct for AMTI.

Becker doesn't do a real good job of covering this material (at least for mine it doesn't) but I have spent some time researching it and looking at what is acceptable. Hopefully, for the exam, it will be using the 2013 10% medical deduction for itemized deductions anyway, so you don't have to worry about that too much.

I hope this helps some. Just keep on moving forward!! I know, you feel like you land on your face sometimes on these questions, but it does give you a chance to learn weak spots. (Like, Ouch! Now my nose is bleeding!!) 🙂

FAR Aug 2012 79
AUD Oct 2012 84
REG Aug 2013 87
BEC Jan 2013 80

[Heidi-O]

@icanhazcpa Becker states that you need to know what items are adjustments, the AMT credit carry-forward period (against regular tax) and Credits – ones that can be used to reduce AMT.

I believe you just took the FAR exam, right? If so, then these adjustments will make sense to you.

These items are listed as TIMING differences, and they may need to be added back in or deducted:

Passive Activity Loss – generally, add it back in

Accelerated Deprecation (Post 1986) add it back in (They want you to use straight line method for deprecation and using the AMT's life span – that's way further than we are going into on this exam – but just so you understand it conceptually. MACRS takes off 200% and Section 179 can allow you to take off a good chunki! AMT says, no, put it back. I'm not going to spend a tremendous amount of time on it. I'm just trying to help it stick a little better.)

Net Operating Loss of the individual tax payer – add it back in

Installment income of a dealer – add it back in

Contracts – on these you need to do the percentage of completion compared to the completed contract method. So, it is possible, that if you record income for AMT purposes of 1/3 in year 1 (pay taxes on it), 1/3 in year two (pay taxes on it) and then 1/3 in year three – (pay taxes on it) that the AMT taxes will be different from your normal taxable income because you were using the completed contract method that would show no income in year 1 of the contract, no income in year 2 of the contract and all the net income in year 3 – this creates a differences between AMT and Your taxable income. (Again, just think of how that concept would apply – what impacts it would make)

Ok, so those items above can create TEMPORARY differences.

These items create Permanent Differences and are part of the Schedule A Itemized calculations (if you itemized):

Tax Deductions – add them back in, can't have them.

Interest deduction on home equity loans used to substantially improve or purchase property is deductible – if it is used for some other purpose, like to buy a car – can't deduct it

Medical Expenses that are above the 10% floor are deductible (so if they give you 7.5% add back in the 2.5% to get to 10)

Miscellaneous Deductions are not allowed

Exemptions (Personal and Standard Deduction) is not allowed

The question will ask you, “Prior to exemptions, Bobs taxable income was 100,000” – Ok, that tells me that this income is AFTER the Standard or Itemized deductions. Then you have to look at what they have listed and add back in or adjust some of the amounts.

If the question states “Bob's AGI is 100,000” – Ok, that tells me that this is before his Itemized or Standard Deductions – so they may want you to calculate what he can deduct for AMTI.

Becker doesn't do a real good job of covering this material (at least for mine it doesn't) but I have spent some time researching it and looking at what is acceptable. Hopefully, for the exam, it will be using the 2013 10% medical deduction for itemized deductions anyway, so you don't have to worry about that too much.

I hope this helps some. Just keep on moving forward!! I know, you feel like you land on your face sometimes on these questions, but it does give you a chance to learn weak spots. (Like, Ouch! Now my nose is bleeding!!) 🙂

FAR Aug 2012 79
AUD Oct 2012 84
REG Aug 2013 87
BEC Jan 2013 80

[Heidi-O]

@terranz To me, personally, I would say the answer is 0. The reason I say this is because alimony has to be paid to an individual for the rest of their life, a set amount to that individual – unless they remarry. The fact that in year 3 of your question they paid 0.00 tells me that they are not paying alimony. It's just a distribution of property.

The IRS states:

“When to apply the recapture rule. You are subject to the recapture rule in the third year if the alimony you pay in the third year decreases by more than $15,000 from the second year or the alimony you pay in the second and third years decreases significantly from the alimony you pay in the first year.”

The amount in year 3 was 0. It's not alimony.

https://www.irs.gov/publications/p504/ar02.html#en_US_2012_publink1000176011

FAR Aug 2012 79
AUD Oct 2012 84
REG Aug 2013 87
BEC Jan 2013 80

[Heidi-O]

@terranz To me, personally, I would say the answer is 0. The reason I say this is because alimony has to be paid to an individual for the rest of their life, a set amount to that individual – unless they remarry. The fact that in year 3 of your question they paid 0.00 tells me that they are not paying alimony. It's just a distribution of property.

The IRS states:

“When to apply the recapture rule. You are subject to the recapture rule in the third year if the alimony you pay in the third year decreases by more than $15,000 from the second year or the alimony you pay in the second and third years decreases significantly from the alimony you pay in the first year.”

The amount in year 3 was 0. It's not alimony.

https://www.irs.gov/publications/p504/ar02.html#en_US_2012_publink1000176011

FAR Aug 2012 79
AUD Oct 2012 84
REG Aug 2013 87
BEC Jan 2013 80

[LSNYC]

Hi all! Long time no check in for this girl! So happy i pushed my exam back! Work has been crazy this week i hardly got study time in! So having the extra week and weekend hopefully will push me over the edge!

Going for 2 more hours tonight!

Happy studying – POWER WEEKEND THIS WEEKEND

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!

[LSNYC]

Hi all! Long time no check in for this girl! So happy i pushed my exam back! Work has been crazy this week i hardly got study time in! So having the extra week and weekend hopefully will push me over the edge!

Going for 2 more hours tonight!

Happy studying – POWER WEEKEND THIS WEEKEND

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!

[icanhazcpa]

@Heidi thank you so much! That is all going in my notes! Yeah I have a pretty big problem with how Becker covers AMT.

BEC - 83
FAR - 83
REG - 74, 78
AUD - 76

Becker Self Study

[icanhazcpa]

@Heidi thank you so much! That is all going in my notes! Yeah I have a pretty big problem with how Becker covers AMT.

BEC - 83
FAR - 83
REG - 74, 78
AUD - 76

Becker Self Study

[Heidi-O]

@icanhazcpa FYI, those items were just the adjustments portion. You still have Tax Preferences (which are ALWAYS added) and those are:

Private Activity Bond Interest Income (on certain bonds)

Percentage Depletion the excess over adjusted basis of property

Pre-1987 Accelerated Depreciation (if you noticed the Post 1987 was an adjustment – depending on the amount of depreciation taken – this one is adding it back in).

These items are in the Becker book, I just didn't want you thinking that I gave you the Adjustment and Preferences earlier, I was just trying to break it out. 🙂

@LSNYC Welcome BACK!! (Or was it the Backstreet Boys that were back?) 🙂 Anyway, good to see you back in the saddle!! I'm nervous about my exam and am thinking of moving it back too. Don't know yet. Still a few more days to keep working!!

FAR Aug 2012 79
AUD Oct 2012 84
REG Aug 2013 87
BEC Jan 2013 80

[Heidi-O]

@icanhazcpa FYI, those items were just the adjustments portion. You still have Tax Preferences (which are ALWAYS added) and those are:

Private Activity Bond Interest Income (on certain bonds)

Percentage Depletion the excess over adjusted basis of property

Pre-1987 Accelerated Depreciation (if you noticed the Post 1987 was an adjustment – depending on the amount of depreciation taken – this one is adding it back in).

These items are in the Becker book, I just didn't want you thinking that I gave you the Adjustment and Preferences earlier, I was just trying to break it out. 🙂

@LSNYC Welcome BACK!! (Or was it the Backstreet Boys that were back?) 🙂 Anyway, good to see you back in the saddle!! I'm nervous about my exam and am thinking of moving it back too. Don't know yet. Still a few more days to keep working!!

FAR Aug 2012 79
AUD Oct 2012 84
REG Aug 2013 87
BEC Jan 2013 80

[Heidi-O]

@mmp3 How did the exam go for you? Did you take it already?

FAR Aug 2012 79
AUD Oct 2012 84
REG Aug 2013 87
BEC Jan 2013 80

[Heidi-O]

@mmp3 How did the exam go for you? Did you take it already?

FAR Aug 2012 79
AUD Oct 2012 84
REG Aug 2013 87
BEC Jan 2013 80

[Ismael Antonio]

Reg is my final test, but I am anxious because in the last days I heard from candidates that the Sims are brutal. In my past experience I feel that the sims were fair.

I am using Becker and supplementing with gleim and ninja notes

Any tips for the Sims?

FAR: 91, first attempt

BEC: 86, first attempt

AUD: 99, first attempt

REG:???

[Ismael Antonio]

Reg is my final test, but I am anxious because in the last days I heard from candidates that the Sims are brutal. In my past experience I feel that the sims were fair.

I am using Becker and supplementing with gleim and ninja notes

Any tips for the Sims?

FAR: 91, first attempt

BEC: 86, first attempt

AUD: 99, first attempt

REG:???

[Heidi-O]

@Terranz I used the formula on the IRS website and got 47,500. HOW I got to 47,500, I have no clue yet. The formula might make more sense to you as I have not done the Payments Pursuant to a Divorce – this was material that was added to Becker on their website and I went hunting when I found more info on your question. THANK YOU!! This could have been on a Sim that I would have been WHAA???

Ok, Becker states that you must find the excess paid in year 2. Which is 25,000 – 15,000 = 10,000.

According to the IRS website, there is a Floor in their calculations of 15,000. And I find that a repeating thing.

Next you find the excess in year 1 which is calculated as:

Yr 1 Pmt – [15,000 + ((Yr 2 Pmt – Yr 2 Excess) + Yr 3 pmt)/2]

60,000 – [15,000 + ((25,000-10,000) + 0)/2)

60,000 – [15,000 + ((15,000) + 0)/2) I noticed how the year 2 calculation came out to 15,000 which makes sense if you always subtract 15,000 from it to get the excess.

60,000 – (15,000 + 7,500)

60,000 – 22,500 = 37,500 Excess Paid in Year 1

The amount to recapture is the Excess paid in year 1 + the Excess Paid in Year 2 = 37,500 + 10,000 = 47,500

I see a pattern up there of the (15,000 + (15,000 + Year 3)/2) to subtract from Year 1 Pmt to get the Year 1 excess pmt, but I do not have homework yet to try it out on.

As I said, this was added later to my Becker stuff and had you not posted that question, I wouldn't have looked it up. So THANK YOU!!! Honestly 🙂

FAR Aug 2012 79
AUD Oct 2012 84
REG Aug 2013 87
BEC Jan 2013 80

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