[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/

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

[jeff]

Video: Taking Too Many CPA Exam Notes

HIYA!

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

[jtvande]

Thanks for the clarification @Jeff

[Holly]

Check out Becker R2-21 it specifically says that 7.5% was only through 2016.

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

[Jsn3004]

Wilk bought an apartment building from Dix Corp. There was a mortgage on the building securing Dix's promissory note to Xeon Finance Co. Wilk took title subject to Xeon's mortgage. Wilk did not make the payments on the note due Xeon, and the building was sold at a foreclosure sale. If the proceeds of the foreclosure sale are less than the balance due on the note, which of the following statements is correct regarding the deficiency?

A: Xeon must attempt to collect the deficiency from Wilk before suing Dix.
B:Dix will not be liable for any of the deficiency because Wilk assumed the note and mortgage.
C:Xeon may collect the deficiency from either Dix or Wilk.
D:Dix will be liable for the entire deficiency.

Correct Answer: D.

For some reason this is just one of those questions that isn't clicking although I read it and feel that this question should be easy.

[Holly]

jsn3004 I feel the same way about blaw questions and auditing for that matter – people say it's common sense but I must not have any. I don't know if this will help you but this is how I think about it:
W – Second owner has building with mortgage still in D's name
D – First owner, sold title subject to mortgage but not the mortgage itself – RESPONSIBLE FOR MORTGAGE
X – Mortgage holder

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

[CPA8675309]

Will you all verify my understanding of this question:

Paul Pappas owns all of the stock of an S corporation which had previously been a C corporation. The S corporation had the following balances at the beginning of its tax year:

Accumulated adjustments account $ 8,000
Accumulated earnings and profits 10,000

Paul's stock basis was $20,000 at the beginning of the tax year. The S corporation made a distribution of $19,000 to Paul during the year. What amount of the distribution is taxable to Paul?
Incorrect
A. $0
B. $8,000
C. $10,000 <– Correct answer!
D. $18,000

From Ninja: “S corporation distributions are (1) tax-free to the extent of the accumulated adjustments account (previously taxed to Paul), (2) taxable to the extent of accumulated earnings and profits (C corporation earnings), (3) any remaining distributions are a return of capital.”

So my undertanding: First the distribution is reduced by the $8000 in accumulated adjustments. The next $10,000 would be taxable as there's a balance in accumulated E&P. The remaining $1000 is a return on capital to Paul, bringing his stock basis to $19,000. I answered $0 before because the stock basis was > the distribution. However, when there are balances in the accumulated adjustment and accumulated E&P accounts, these accounts are affected first before the adjusted basis is reduced by the distribution. Am I understanding these shenanigans?

[jyoung117]

I was wondering if anyone had any good Mnemonic Devices for REG; I know when I took Audit they had a lot in the Becker stuff, but I'm using Wiley now and I didn't recall seeing any. I do still need to go through my Ninja notes, but I don't recall any during the Ninja audio for REG either (I remember some coming from the Ninja audio for AUD also).

[Holly]

What does gift taxes paid do to the basis of gifted property?

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

[CPAIN2K17]

@holly increase your basis in the gift by the amount of gift tax paid by the donor.

[CPA8675309]

I take REG tomorrow! So excited!

Has any one found any good resources that lay out the effects on the shareholder & the entity for property transfers to the different entity types? My brain cannot keep it straight.

Also, I like to bring a notebook with a few key points to go over in my car at the test center (I arrive about 15 minutes early). I'm probably going to bring notes on property transfers (see above), but do you all have any other thoughts on what to stress in those last few minutes?

Finally, if I am found dead tomorrow or in the next few days, will you please tell my family & the police, that it was REG that killed me? That is all. (comment is a joke btw)

[BBHYX]

Good luck @CPA8675309, please let us know how it goes!

[Operation_CPA]

Can someone explain the differences b/n these two questions: one of them deducts the guaranteed payment while the other does not. Also, what about the cash distribution of $5,000. I appreciate all the help guys.

As a general partner in Greenland Associates, an individual's share of partnership income for the current tax year is $25,000 ordinary business income and a $10,000 guaranteed payment. The individual also received $5,000 in cash distributions from the partnership. What income should the individual report from the interest in Greenland?

A. $5,000
B. $25,000
C. $35,000
D. $40,000

Evan, a 25% partner in Vista Partnership, received a $20,000 guaranteed payment in 20X1 for deductible services rendered to the partnership. Guaranteed payments were not made to any other partner. Vista's 20X1 partnership income consisted of:

………….Net business income before guaranteed payments…..$ 80,000
………….Net long-term capital gains……………………10,000

What amount of income should Evan report from Vista Partnership on his 20X1 tax return?

a. $20,000
b. $37,500
c. $22,500
d. $27,500

[BBHYX]

Also, for anyone using becker, does anyone remember any of the things they emphasize/say is heavily tested in the lectures? I used becker but I'm going through the book instead so I have no idea what things to put more weight on…

[jtvande]

I Know it has been posted on the forum before but I can not find it. Has anyone done the AICPA SIMS? I am looking for an explanation to problem 2.

Thanks

[gguzman]

@operation it looks like the first question is giving us the partners share of income that would appear on schedule K-1, without us having to compute it. The second question is asking us to calculate the amount that would appear on Evans Schedule K-1, using form 1065 and Shecdule K information.

[Author]

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