[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/

[robertchapa0719]

@holly sexton Purchased “these” shares is referring to the 500 that were sold.

Think about it first without the purchase of the 100 shares.

He sold 500 for $20.. He purchased these two years prior @ $22.. This give us a loss of $1000 on 500 shares ($2/share)

Purchased 100 shares ($18 dollars is irrelevant unless we need are calculating Basis, which we aren't)

So the loss can't be taken on 100 shares (Wash Sale) 100 x $2 = 200 of the loss that is disallowed.

1000 loss – 200 disallowed loss give us the 800 loss that is allowed (Capital Loss)

[Holly]

@robertchapa0719 that makes much more sense but I guess I need to figure out how to read questions like these.

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

[Holly]

Anyone notice that Gearty doesn't have us highlight nearly as much?

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

[Cyn]

Hi all! First time taking the CPA exam here – scheduled for mid-August. I already finished studying the business law section, and I'm finding myself struggling to understand all the tax concepts. My studying pace has definitely slowed down, and now I'm worried I will have to rescheduled my test. Any tips on how to tackle tax? Thank you!

[Jsn3004]

Drew bought a computer for personal use from Hale Corp. for $3,000. Drew paid $2,000 in cash and signed a security agreement for the balance. Hale properly filed the security agreement. Drew defaulted in paying the balance of the purchase price. Hale asked Drew to pay the balance. When Drew refused, Hale peacefully repossessed the computer.
Under the UCC Secured Transactions Article, which of the following remedies will Hale have?

A: Obtain a deficiency judgment against Drew for the amount owed.
B: Sell the computer and retain any surplus over the amount owed.
C: Retain the computer over Drew's objection.
D: Sell the computer without notifying Drew.

Answer: A

I understand why the answer isn't B because any surplus goes back to Drew (I believe)
I understand why the answer isn't C because Drew has paid more than 60 percent of the consumer good.
I understand why the answer isn't D because I'm assuming because the creditor has to give notice to the debtor for the sale.

But I DON'T understand why the answer is A. Yeah I can do process of elimination, but I still want to know why. I thought since Drew paid $2,000 out of 3,000 (66%), then Hale would have to sell the computer.

[Holly]

@Jsn3004 I see what you're saying. It's confusing. The only thing that's making me think they're saying A is because of the lines – Hale asked Drew to pay the balance. When Drew refused… – is this Drew waiving his rights?

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

[wakefern58]

Could someone clarify the following sentence for me as I believe the print in my review course book is wrong but it could very well just be my misunderstanding.

“A loss for a partner in a partnership may be deducted only if the loss is greater than three limitations: tax basis, at risk basis, and passive loss limitations.”

Isn't a loss deduction LIMITED to these three amounts? Not sure why it states the loss must EXCEED these three limitations.

[Julia]

@wake my 2015 becker says “losses must clear three hurdles: tax basis, at risk and passive activity. ”
Maybe that is what they r trying to say.

[Holly]

I like these pre-assessment things on Becker!!

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

[pcunniff]

@Julia

How do u treat a complete corp liquidation if land distributed has liability ?
Do u ignore it and only compare FMV and adj basis – and recognize a gain or loss?

If you are receiving a distribution and the liability is greater than the gain, you recognize the greater of the two. Hope this helps.

[pcunniff]

Note that corp distributions are different than partnership distributions. Partnership distributions are different because you have to think about it as if you put equity into the business and are pulling it out. With corporations, you will for sure recognize that taxable gain because you are simply a shareholder. Think about it like that and you'll be good.

AUD- tested and killed on 5/31
Reg- tested on 5/4
BEC- Pass
FAR- Pass

[dave]

Hi! Can someone explain this question to me?

On Dec 1 of the current taxable year, Karen, a self-employed cash basis taxyaer, borrowed $200,000 to use in her business. The loan was to be repaid on Nov 30 of the following year. Karen paid the entire interest amount of $24,000 on Dec 1 of the current year. What about of interest was deductible on Karen's current year income tax return?

A. $0
B. $2,000
C. $24,000
D. $22,000

The answer is B, $2000. You take $24,000 x 1/12 months for the month Dec of which it was paid. But, I originally thought it was C, $24,000. If you're preparing returns on cash-basis, don't you deduct the amount that was actually paid and not accrue?

Thanks! and good luck studying everyone!!

[Operation_CPA]

Hello REG study group! I am sitting in early August and just started studying this week. What is the best way to study for this exam? Any pointers on how to approach the material off the bat would be helpful. Seems like a ton of detail, is this straight memorization?

[Julia]

@Dave
I was confused by this too. Interest must one of those exceptions. I have seen question in Becker stuff too. It mmust be because u have to earn the interest. I read it in a couple diff places. I think Med exp are similar.
In doing both Becker & ninja.

[Lou]

@Dave
Itemized deductions have their own special rules hence it doesn't matter that this is a cash basis taxpayer. Similarly, for a cash basis taxpayer, medical expenses are deductible even if they are incurred and paid with a credit card.

[Author]

Replies