[jeff]

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

[jfernandes256]

The suspense is killing me….:)

[Anonymous]

D is correct! “When business-use assets have been held for the long-term holding period, more than 1 year, and are sold at a loss, only Section 1231 is applicable. By definition, all Section 1231 losses are long-term capital losses because the assets had to have been held for over a year to be considered a Section 1231 asset. IRC Sections 1245 and 1250 are only applicable if the Section 1231 assets are sold at a gain. Therefore, all of the losses in this question are considered to be Section 1231 long-term capital losses.”

[Anonymous]

That's the only one I could find like that. Sorry. Here's a basis question:

Tank Corp., which had earnings and profits of $500,000, made a nonliquidating distribution of property to its shareholders in 2014 as a dividend in kind. This property, which had an adjusted basis of $20,000 and a fair market value of $30,000 at the date of distribution, did not constitute assets used in the active conduct of Tank's business. How much gain did Tank recognize on this distribution?

A. $30,000

B. $20,000

C. $10,000

D. $0

[Amay]

That's it. We are all scoring in the 90's.

BEC: 73, 81
AUD: 85
FAR: 71, 77
REG: 74, 75...finally DONE! 😀

*This is my 2nd attempt at the CPA exam. For all of you who have failed this exam many times, given up on it, or taken a break like me, remember that it is still possible to finish what you started...failure is the opportunity to begin again more intelligently 🙂

[Amay]

OK, what is the main difference between Sec 1245 and Sec 1250 rules when it comes to depreciation recapture?

BEC: 73, 81
AUD: 85
FAR: 71, 77
REG: 74, 75...finally DONE! 😀

*This is my 2nd attempt at the CPA exam. For all of you who have failed this exam many times, given up on it, or taken a break like me, remember that it is still possible to finish what you started...failure is the opportunity to begin again more intelligently 🙂

[jfernandes256]

Bass Corp., a calendar-year C corporation, made qualifying year 2014 estimated tax deposits equal to its actual 2013 tax liability. On March 15, 2015, Bass filed a timely automatic extension request for its 2014 corporate income tax return. Estimated tax deposits totaled $7,600. This amount was 100% of the total tax shown on Bass's final 2013 corporate income tax return. Bass paid $400 additional tax on the final 2014 corporate income tax return filed before the extended due date. Bass was subject to:

I. interest on the $400 tax payment made with tax return.

II. a penalty for underpayment of estimated taxes.

A. I only

B. II only

C. Both I and II

D. Neither I nor II

[Amay]

@J Is the answer D?

BEC: 73, 81
AUD: 85
FAR: 71, 77
REG: 74, 75...finally DONE! 😀

*This is my 2nd attempt at the CPA exam. For all of you who have failed this exam many times, given up on it, or taken a break like me, remember that it is still possible to finish what you started...failure is the opportunity to begin again more intelligently 🙂

[jfernandes256]

@CPAMommyof3 I choose C as my answer.

[Anonymous]

@Amay–I have in my notes that if SL is used, then the entire gain is 1231 (ordinary). Depreciation recapture is for 1245 assets (primarily equipment used in business and some specified real property).

[Anonymous]

@Jfern–It is C

Your question–I think It's A–Interest is charged on the $400 because it was filed after the original due date, but no penalty is charged because they paid 100% of the prior year's tax and was filed before the extension. I think that extensions are fine as long as you are getting a refund, but if you owe money you have to pay it at the time you file for the extension or you get charged interest.

[Amay]

@Amor what is the answer to this question?

Which is taxable?

a. Interest on [SGO] State Government Obligations

b. Tax-Exempt interest income from investments in municipal bonds

c. Interest on State Income Tax Return

d. Interest on [LGO] Local Government Obligations

BEC: 73, 81
AUD: 85
FAR: 71, 77
REG: 74, 75...finally DONE! 😀

*This is my 2nd attempt at the CPA exam. For all of you who have failed this exam many times, given up on it, or taken a break like me, remember that it is still possible to finish what you started...failure is the opportunity to begin again more intelligently 🙂

[Anonymous]

In 2014, Wein Corporation had a net loss from operations of $50,000, which included a deduction for charitable contributions of $2,000. In addition, Wein received dividend income of $10,000 from a 15%-owned domestic corporation. What is the amount of Wein's net operating loss for 2014?

A. $45,000

B. $49,000

C. $55,000

D. $59,000

[jfernandes256]

@Amay The answer is A.

Since Bass Corp. made estimated tax deposits (which totaled $7,600), and this was 100% of the total tax shown on Bass' final 2013 corporate income tax return, Bass will not have to pay a penalty for underpayment of estimated taxes.

A “safe harbor” provision allows that no penalty for underpayment of estimated taxes will be imposed on a corporation if the estimated tax deposits equal the lesser of 100% of the current-year tax or 100% of last year's tax.

Bass will pay interest on the $400 paid with the return, accrued from the original due date, March 15 through the date of payment.

[Anonymous]

@Amay–Amor posted that it was C–State Tax refund is taxable

[Anonymous]

@Amay, the correct answer is C. Interest on State Income Tax Return is taxable, the rest are nontaxable. I am still taking notes from R1-R2 and I am already collecting 35+ nontaxable items compiled on my spreadsheet.

[Author]

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