[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

[gguzman]

@CPA, The last one I took for Becker I got a 76% out of 55 questions. Blaw is mainly what brought me down.

Instead of taking getting one wrong as a failure, I need to take it as a learning experience. I started getting better when I did not let the ones I got wrong ruin the rest of the questions. I get few wrong it makes me mad and I am not on point. You are right though, just keep plugging.

[mo3athn]

is it 19th Sep yet? that scores releasing timing this year is so ridiculous and killing me.

[CPAIN2K17]

@xyz107 I think its if it increases the value of the entire estate, not just one thing from the estate. So the FMV of the entire estate could have been worth less on the alternative valuation date, while that one distribution had higher FMV on the alternative date. I am not sure if that is correct though. What was the answer?

[BBHYX]

@cpain2k17 it was a small part of a becker sim problem, and the answer was the higher alternative valuation amount (which is why I was confused). I think you are right though, it is the value of the entire estate that matters, not individual assets. I overthought the question haha.

[CPA so close, so far away]

So Becker is kind of confusing me. When it comes to expenses in a trust and the calculation of DNI, is it only expenses that are explicitly stated as being from the production of income that are deducted? Or is it all expense? I have not come across any multiple choice that talk about expenses that are solely for principal.

[Anonymous]

Hi guys,

This has been discussed on previous threads but I thought I would bring it up again to confirm just how much we should commit to memory:

Social Security Benefits (SSB)
a. SSB are generally not taxable unless additional income is received. The GI inclusion is dependent upon the relation of provisional income (PI) to the base amount (BA) and the adjusted base amount (ABA).
b. PI = Adjusted GI (AGI) + Tax-exempt interest (excluded foreign income) + 50% of Social Security benefits.
c. Base amount (BA) is $32,000 if married filing jointly (MFJ), $0 if married filing separately and having lived with spouse at any time during the tax year (MFSLT), or $25,000 for all others.
d. Adjusted base amount (ABA) is $44,000 if MFJ, $0 if MFSLT, or $34,000 for all others.
e. If PI < BA, there is no inclusion. If PI falls between BA and ABA, up to 50% of Social Security benefits will be included. If PI > ABA, up to 85% of Social Security benefits will be included.

This explanation seems to clash with the following worksheet computation as it leaves out the final lesser of calculation:

Calculation of included Social Security benefits is as follows:
1) AGI, excluding SS benefits
2) + Tax-exempt interest (excluded foreign income)
3) = Modified AGI
4) + 50% of SS benefits
5) = Provisional income (PI)
6) – BA ($32,000, $25,000, or $0)
7) = Excess PI (If < $0, then $0 inclusion)
8) – Incremental base amount ($12,000, $9,000, or $0)
9) = Excess PI
10) Smaller of amount in line 7 or 8
11) 50% of line 10
12) Smaller of amount in line 4 or 11
13) Multiply line 9 by 85%
14) Add lines 12 and 13
15) SS benefits × 85%
16) Taxable benefits = Smaller of amount in line 14 or 15

Anyway, just wondering how much of the explanation and/or worksheet computation is necessary for the exam.

~Ben

[Anonymous]

Quick Follow Up on taxable SS benefits:

I typed up these equations to help me remember the process, but from previous threads it seems like they don't need to be committed to memory for the exam:

Taxable Social Security Benefits Shortcut Equations:

PI = AGI + TEI + EFI +(.50*SSB)

Married FS:

TSSB = lesser of (.85 * SSB) or (.85 *PI)

Married FJ:

If PI is $32,000 or less:
TSSB = 0

If PI = $32,000-$44,000:
TSSB = lesser of: (.50*SSB) or [.50*(PI-32,000)]

If PI = $44,000 + :
TSSB = lesser of: (.85*SSB) or [.85*(PI-44,000) + lesser of: (6,000) or (.50*SSB)]

Single:

If PI is $25,000 or less:
TSSB = 0

If PI = $25,000-$34,000:
TSSB = lesser of: (.50*SSB) or [.50*(PI-25,000)]

If PI = $34,000 + :
TSSB = lesser of (.85*SSB) or [.85*(PI-34,000) + lesser of: (4,500) or (.50*SSB)]

Key:
Adjusted Gross Income (AGI)
Tax Exempt Interest (TEI)
Foreign Excluded Income (FEI)
Provisional Income (PI)
Social Security Benefits (SSB)
Taxable Social Security Benefits (TSSB)

[pharaoh]

I don't like this type of questions, hope not get these on the real exam

What should be the main goal of tax planning?

A. Maximizing the taxpayer's tax liability

B. Optimizing the taxpayer's after-tax result

C. Optimizing the taxpayer's before-tax result

D. Minimizing the taxpayer's tax liability

FAR 8/2016
AUD 1/2017
REG TBD
BEC TBD

[CPAIN2K17]

B. I hope to get a question like that on the test lol.

[brokeonbecker4]

I'm 6 days out from REG. I still have to take Becker Mock 2 tomorrow and review it, but does anyone have advise on what I should be doing the other few days? Progress tests and MCQ? Rewriting high-level notes on topics I'm not strong in? (I learn better by writing things in my own handwriting.) Redoing the TBS? Ah it's so close, but I know it's enough time do learn a couple more things.

[CPA so close, so far away]

Anyone else take Becker's 2nd mock exam? I got an 88%. Thought some of the MCQ were difficult, and the SIMS seemed easy.

[BBHYX]

Can someone explain to me/summarize whole “personal losses are disallowed” thing? I'm very confused.

So if an individual has a personal use car, ANY losses on it are not recognized (sale, casualty, involuntary conversion)? But if they had a car they used for business/self employment, would that loss become a capital loss that they can potentially use to offset other stuff?

[CPA so close, so far away]

Personal assets that depreciate in value generally cannot have a loss. That is due to the fact that most personal assets loose value over time and the IRS doesn't want a ton of people taking large deductions every time they sell a house or car. Businesses are extremely different. Assets use in a business are depreciated. Therefore, the cost of these assets reduce ordinary income overtime through depreciation expense. That is why you have to recapture income as ordinary for 1245 property and then reduce rates for 1250.

[Fee FIFO Fum]

I've been trying to find an updated SIM list or a list of the ones that were removed because I can't target study as efficiently. Anyone know if there has been an updated SIM list for REG since they removed the obsolete topics? I could just be missing it.

[CPAIN2K17]

@jtvande I hope I am not too late in answering your question, I was just looking at the AICPA practice questions tonight so I was going to answer your question on how they got the answer for the last part on question 2 (the basis before the asset was sold).

To calculate the basis, you just subtract the depreciation from years 1 and year 2 from the original purchase price.

Year 1 deprecation was 20,000*.20*75%(because vehicle was used only 75% for business) = 3000
Year 2 depreciation was 20,000*.16(32% is yr 2 amount and you have to divide by 2 since it was sold this year)*75% = 2400

Total depreciation taken in years 1 and 2 is 5,400

Original purchase price = 20,000
Less: Depreciation (5,400)
Basis = 14,600

Let me know if something doesn't make sense here!

[Author]

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