[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

[GinjaNinja]

@Pharaoh I think the answer to your inter vivos trust question would be “C” because only extraordinary items are allocated to principal and regular payments are allocated to interest. In this case, the insurance proceeds are considered “extraordinary” since they are unusual and only made once and the mortgage interest payments are considered “regular” since they are made on a reoccurring basis.

I think the answer to the UCC question is “D” because parties must act in “good faith” under the UCC. For merchants, this includes observing reasonable commercial standards.

[NVeg]

The amount required to be paid in estimated tax installments by a corporation is the lesser of 100% of the tax shown on its return for the preceding 12-month tax year (if some income tax was due) or what percentage of the tax shown on its return for the current year? (determined on the basis of actual income or annualized income)

A.
100%

D.
90%

Correct Answer: A (100%)

Explanation:
The estimated tax payment required in installments is the lesser of:

100% of the tax shown on the return for the preceding year or
100% of the tax shown for the current year.

I'm confused because the Ninja Notes state:
ESTIMATED TAX PAYMENTS (Individual)
The lesser of:
o   90% of current total tax
o   100% of prior year's total tax
o   110% of prior year's total tax
If AGI is $150,000 or more

Am I just missing something really obvious?

[CPAIN2K17]

@NVeg the question is asking about a corporation and the ninja notes you listed are for an individual. The requirements are different for a corporation than for an individual.

[Karrie]

@CPAIN2K17 How long have you been studying for REG? How many hours a day/week do you study? You seem to have a lot of answers on here, so just wondering! 🙂 I feel like I am so behind.

[BBHYX]

Which of the following conditions must be present in a post-1984 divorce agreement for a payment to qualify as deductible alimony?

Payments must be in cash.
The payments must end at the recipient’s death.

Answer: Both

Becker taught it as “payment in cash and cash equivalents” so I would have gotten this wrong even though I understand the concept. I thought I remember a becker question where the divorced ex-husband paid for the ex-wife's tuition or something and it counted because it was a cash equivalent? Does anyone remember something like that or maybe I'm confusing questions together.

[CPAIN2K17]

@karrie started studying in June so about 2 months! I test next week so hopefully I know a lot of the material haha.

@xyz yes it doesn't have to technically be CASH, but for example property wouldn't count. If you pay for the spouses tuition with a check, or pay the mortgage, that still counts even though you aren't literally giving them cash, it is the same as a cash payment.

[BBHYX]

What exactly is nonrecourse vs recourse debt when it comes to at-risk for partnerships? Will we be ever asked to make the call on what type of debt is it, or will the Q tell us? Are there keywords that make it one or the other? For example, “collateralize” — is that always recourse or non recourse? I believe that means…recourse?

[maj1028]

Hi all,

What are your trending score in Ninja MCQ? What have you done to improve?

I am testing at the end of the month and really nervous about this one… as always

[In it to earn it]

@BBHYX, non-recourse debt is debt that is secured by collateral. If the borrower defaults, then the lender can recoup the collateral, but cannot proceed against the assets of the borrower. With recourse debt, the debtor can take more than the collateral.

[pharaoh]

Tom Lewis, an individual taxpayer, paid an annual personal property tax amount based on the total weight of his automobile. Select the appropriate tax treatment on Tom's tax return.

A.Not deductible on Form 1040

B.Deductible in full on Schedule A—Itemized Deductions

C.Deductible on Schedule A—Itemized Deductions, subject to a threshold amount of 2% of adjusted gross income

D.Deductible on Schedule A—Itemized Deductions, subject to a $500 floor and a threshold of 10% of adjusted gross income

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

[GinjaNinja]

@Pharaoh This question showed up in the Ninja MCQ Audio! The answer is “A.” It is not deductible since the tax amount is based on the total weight of the automobile, rather than the actual value.

[pharaoh]

Correct Ginja 🙂

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

[gguzman]

Alrighty, doing Mock Exam 2 today. Got a 62 the last time. I know I am not solid on everything, hopefully this will narrow it down for me.

All of these posts are so helpful! keep up the good work! We got this!

[BBHYX]

@gguzman good luck! mock 2 on becker is always much harder than mock 1 so keep your head up no matter what! When is your exam?

I have a question for everyone else. I am a little confused about how distribution works for Corps when there is a liability involved with the asset.

For example:
Aztec, a C corporation, distributed an asset to Burn, a shareholder. The asset had a fair market value of $30,000 and was subject to a $40,000 liability, assumed by Burn. The asset had an adjusted basis of $25,000.

In this case, I know that the liability (40) is used to calculate the company's gain since it is larger than the actual FMV. Aztec would recognize 40-25 = 15 in gain.

BUT what about the shareholder?

Do they get the asset with a basis of 40? As well as assume liability of 40? So their net effect is 0, so they didn't actually get any distribution? This seems weird to me… but maybe this is correct?

[rwglapalma]

Hi everyone, I have a REG study strategy question. I'm 29 days out (9/10 test date) and using Roger and the Ninja Notes. I have read the book, watched all lectures, copied down the NINJA notes once and have been attacking the MCQs. Already I can tell Corporate Taxation and Depreciation are my weakest areas. Should I re-read those chapters now or just keeping hammering questions until I've seen all of them and then review? Is re-reading the chapter a waste of time? I've taken FAR and BEC, waiting on both of those scores and I feel like REG is the most difficult to study for so far. Thanks for any advice and/or input!

[Author]

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