[jeff]

Welcome to the Q3 2017 CPA Exam Study Group for REG. 🙂

Introduce yourselves and let your fellow NINJAs know when you plan to take your REG exam.

The Five Steps (NINJA Framework): https://www.another71.com/pass-the-cpa-exam/

[LA Livin]

Can someone please explain REG SIM #2 on the AICPA practice exam?

[Julia]

@Tracy. I really liked ur explanation. I got the right answer and was trying to remember y I chose 45,000. Thanks. Until regular tax is higher, the credit can't b used.

@tulip. I think u need to take some time to understand AMT. Its different for corp and individual. Ninja notes does a quick run and Becker had some good summary stuff.I skipped the in-depth detail. I did not look at the whole detail but I noted the basics.
Invid PANIC TIME and PPP. The exemption formula and phaseout.and AMT credits allowed.
Corp LID PPP MOLD. exemption formula, threshold and phaseout and forgein tax credit only one tested.
This topic comes up lots in mcq and sims.

[CPAIn2018]

@Tracy and @ Julia

Oh! Thanks for the explanation. Now I got it. I was still confused until I saw Julia's comment.
It looks like, i need to dig deep on AMT.

[Jsn3004]

Astor, a cash‐basis taxpayer, died on February 3. During the year, the estate's executor made a distribution of $12,000 from estate income to Astor's sole heir and adopted a calendar year to determine the estate's taxable income.

The following additional information pertains to the estate's income and disbursements for the year:
Estate income

Taxable interest: $65,000
Net long‐term capital gains allocable to corpus: 5,000

Estate disbursements:
Administrative expenses attributable to taxable income 14,000
Charitable contributions from gross income to a public charity made under the terms of the will 9,000

For the calendar year, what was the estate's distributable net income (DNI)?

Answer: 42,000

Can someone please explain to me why the answer is $42,000? And can someone please let me know why Net long-term capital gains allocable to corpus is not included in the computation? The DNI computation literally tells you to subtract net capital gains allocable to corpus, yet this question it doesn't.

[Sweet<3 soon to be CPA]

DNI is the maximum amount taxable to the beneficiary – when $$ is given to a beneficiary it can either be income (taxable to beneficiary) or corpus (not taxable to beneficiary)
the equation to figure out DNI is
Gross Income (not including cap gains & municipal bonds)
– Deductions (which are trust Mgmt fees & Charitable Contributions & Distribution Paid (Corpus)
=DNI

Then you take the above equation:
$65-14-9=$42 $42,000 is taxable to beneficiary therefore not taxable to estate -the estate takes this as a deduction- no double taxation.
(you can not include the $5,000 bc the rule is no capital gains)

Hope this helps. I know this is a forum for NINJA (which I am using for review and the MCQ) but I did my learning with Roger's course which is AMAZING!! I do not see anything on this specific topic on youtube but he has other tutorials on there which may be helpful for other topics.

Roger + NINJA = PASSING :):)

[LA Livin]

Anyone using Becker? If so, in R4, Simulation 1, Task 5, part 4, the solution states the basis of the property transferred to the corporation $10,000. Why is it $10,000? Shouldn't the basis to the corporation be the greater of the NBV (plus any gain recognized by the transferor) or the debt assumed by the corporation (States this on page R4-4)? The debt assumed is $20,000 and the NBV (plus any gain recognized by the transferor) is $10,000. Am I missing something?

[tmacpa]

figured it out.

[golfball7773]

I believe his medical expenses would be subjected to the 10 AGI floor which would be 5k. Thus only 1k of medical would count. Total Itemized would be 6000

FAR: 63, 55, 62
REG: 65, 77*
AUD: Fail, 64, 71
BEC: 72, 74, 81

*expired

[Holly]

Where in Becker does it talk about Subpart F income?

BEC - 79
REG - 85
AUD - 5/27/16

[Jsn3004]

@Tracy

That's odd because I have CPAExcel and my computation for DNI literally states:

Taxable Income
+ Net tax exempt income
+ personal exemption
+ Net capital Loss
– Net capital gains allocable to corpus

That's why i'm confused when I see that “Net long‐term capital gains allocable to corpus: 5,000” is not included

[Sweet<3 soon to be CPA]

@ jsn

The question you posted is not telling you what is taxable income, just the different components of estate income. Had you started with taxable income your equation would have backed you into the DNI amount.
My review course taught side by side calculating Taxable Income separately to calculating DNI – if I were to have seen a starting taxable income question I would be confused myself! 🙂

I have the “free flashcards” for CPA excel – I found the webinar SOOOOOO boring and decided not to purchase an additional review course. I am curious to know if you find them helpful.
I currently have Roger, Ninja and access the Wiley mcq – combining them all together I should have a good foundation if I can just buckle down and study.

[CPAIN2K17]

I sucked at studying this weekend… hopefully I can get back on track this week

[Holly]

It is becoming tedious to uncheck the categories from the do not study list on NINJA MCQ. You'd think I would have it memorized by now.

BEC - 79
REG - 85
AUD - 5/27/16

[Julia]

Please help me understand this:

Gary Berg, a farmer, exchanges a tractor with a basis of $40,000 and a value of $50,000 for a tractor with a value of $44,000 plus $6,000 cash. The basis of the tractor acquired by Gary is:

$40,000.
$44,000.
$46,000.
$50,000.

You answered C. The correct answer is A.

In a like-kind exchange, the basis of property received is the basis of the property given up plus any gain recognized, plus boot (cash or property not of a like kind) paid, less any loss recognized, less boot received. The basis of the tractor received is $40,000 ($40,000 + $6,000 gain – $6,000 boot received). The gain of $6,000 is the lesser of the realized gain of $10,000 or boot received of 6,000.
Question #: 882 Category: 4B Basis and Holding Periods of Assets

[appy]

@ julia, hope this helps
Basis in like kind property when boot is received = FMV of like kind property received – deferred gain + deferred loss
= $44,000-$ 4,000
= $40,000
deferred gain = realized gain – recognized gain
= $10,000( (new tractor $44,000+ cash 6,000)-basis of old tractor $40,000) – $6,000( lower of realized gain ($10,000) or cash received($6,000))
= $4,000

[Author]

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