[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/

[Lamis]

Obviously this is a large corporation since its taxable income was more than $1m , so you have no options rather than paying 100% of the tax this year”annualizing method”
If the taxable income was less than $1m , you would have to choose to pay either 100% last year or 100% of this year

[pcunniff]

Got a sim in Becker that I am confused on. Says Mr.G sold his personal residence at a loss. Why is this not deductible on the 1040? This wouldn't be included ANYWHERE? I find that hard to believe…

Reg- TBD
AUD-77
BEC-79
FAR-78

[GinjaNinja]

@pcunniff Individuals cannot deduct a loss on the sale of a personal residence. But they can exclude a gain on the sale of a personal residence of up to $250,000 ($500,000 for MFJ) if the residence was the taxpayer's principal residence for 2 out of the previous 5 years. This is allowed every 2 years.

[Jsn3004]

During the current year. Hal Leff sustained a serious injury in the course of his employment. As a result of this injury, Hal received the following payments during the year:
Workers' compensation $2,400
Reimbursement from his employer's accident and health plan for medical expenses paid by Hal and not deducted by him 1,800
Damages for physical injuries 8,000
The amount to be included in Hal's gross income for the current year should be
$12,200.
$ 8,000.
$ 1,800.
$0.

Answer: D: $0.

This is starting to get really frustrating. How is the answer zero? I've read so many times and read answers where worker's compensation is included in gross income? I thought the $2,400 would be included. I'm guessing it's because they were injured? I'm just pretty confused right now. And i'm just going to assume damages from physical injuries.

[pcunniff]

Ginja thanks for the explanation.

@jsn3004 workers comp is not gross income. From Becker – Exclude from gross income damages received as comp for personal injury.

Think of it as a benefit that you got injured and werent at fault. You want to work, but can't due to injury. The workers comp might be less than your actual salary so you dont have to include it. HOWEVER, I would just memorize that it is NOT included in gross income. Dont overthink it 😉

Reg- TBD
AUD-77
BEC-79
FAR-78

[CPATY]

@Jsn3004 you might also be confusing workers comp with unemployment compensation. Unemployment Compensation is included.

[pcunniff]

Im getting these property and casualty loss problems correct, but think I am getting them correct because they are easier questions. I need some examples in which I am challenged in the beginning (Lost cost or adj basis versus decrease in FMV). If you get that part wrong – you get the whole problem wrong. Can someone provide some examples?

Thanks!

[pharaoh]

Are we supposed to know this kind of stuff?

The federal minimum wage as prescribed by the Fair Labor Standards Act (FLSA) after July 24, 2009, is:

A.$6.55/hour.

B.$4.25/hour.

C.$5.15/hour.

D.$7.25/hour.

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

[Lamis]

@pharaoh that was included in the old version before April 2017 ,
I don't think it's testable in the new version since I can't find anymore in the new material.

[GinjaNinja]

@pcunniff
The value of Seth's personal automobile decreased by $3,000 as a result of a casualty. The adjusted basis of the auto before the casualty was $8,000. Seth received $1,300 of insurance. Seth's AGI was $10,000. Seth's casualty loss deduction is:
a. $3,000
b. $2,900 ($3,000 100)
c. $ 700 ($3,000 1,300 10% of AGI)
d. $ 600 ($3,000 1,300 10% of AGI 100)

The first step is to determine the loss, which is the lesser of the decreases in value or the AB. Since the decrease in FMV is lower, then you would use $3,000 as your starting point.

$3,000 –> Loss
($1,300) –> Insurance proceeds always subtracted
($100) –> Deduct $100 per event
($1,000) –> $10,000 x 10%
= $600 –> Deductible amount of loss

So the answer is D. Hopefully this helps

[GinjaNinja]

@pcunniff
And I should add that the above example only applies to casualty losses for individuals. Casualty losses for corporations exclude the $100 floor and the 10% of AGI limitation.

[CPATY]

I see Becker focuses on Chapter 7,13 and 11 bankruptcy cases. However Gleim expands and goes into more detail. I took the exam and I don't remember needing to go into that much detail but i'm afraid with the change we may need to know more about Chapter 12, 9 and 5. Does anyone have a chart of the different bankruptcy plans by any chance?

[GinjaNinja]

@CPATY
I found this site helpful for summarizing the different types of bankruptcy:

A Guide to Bankruptcy Facts, Misconceptions and Tips to Protect Yourself from Derek Prosser

I still plan on mainly focusing on remembering Ch. 7, 11 , and 13 and just quickly brush up on the others. I hope that's not a mistake, but you got to draw the line somewhere since there is loads of information to remember for this exam.

[CPATY]

@GinjaNinja thank you!! and i plan to do the same! there's no way you can remember everything.

[LCros]

Anybody have a way or mnemonic to remember the different types of corporate reorganizations?

Thanks.

[Author]

Replies