REG Study Group July August 2017 - Page 71

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  • August 23, 2017 at 5:17 pm #1614344
    Lamis
    Participant

    Brand New, Inc., was organized and began active business on January 2, Year 5. Brand New incurred the following expenses in connection with creating the business:

    State incorporation fees $ 5,000
    Legal fees for drafting the charter 35,000
    Printing costs for stock certificates 10,000
    Professional fees for issuance of stock 15,000
    Broker's commission on sale of stock 25,000
    Expense for the temporary directors 20,000
    ——–
    Total $110,000

    What is the maximum amount of organization expense that Brand New may deduct on its Year 5 tax return?

    $4,000
    $5,000
    $8,667
    $12,000

    August 23, 2017 at 5:52 pm #1614359
    pcunniff
    Participant

    @cpaty

    I agree. As I think I know the rules – it definitely is a little tricky. Thanks for the heads up on that. I just don't want a sim on exam day and second guess myself on these rules. What I do know is investment int exp is deducible on schedule A to the extent of income. Passive income and losses are generally passed through to either trusts, individuals, estates, s-corps on the K-1 (form 1065).

    August 23, 2017 at 6:27 pm #1614386
    Croweater
    Participant

    Can some explain to me why grant research for university student is consider income?

    August 23, 2017 at 6:38 pm #1614396
    2017cpa
    Participant

    @Lamis thanks for the pep talk… I'm still struggling to focus but trying really hard not to fall behind



    @pcunniff     thanks for the clarity

    I understand the difference between realty and personalty but now I'm confused on when to use the mid-quarter convention. I understand that this is for when an asset is placed into service (40% or more) in the last quarter of the year but if its always dependent on being put into service in the last quarter, why is there a 1st, 2nd, and 3rd quarter table? I understood you use the same table through the life of the asset until its sold or disposed of. So I guess what I'm confused by is if it will always be in the 4th quarter why even have the other tables? Or maybe I'm missing something.

    August 23, 2017 at 6:47 pm #1614401
    Lamis
    Participant

    @2017cpa not always last quarter because u may have purchased 2 or more assets during the year one in the first quarter and another in the last quarter , but the % of the total assets purchased was 40% in the last quarter . I guess I had a sim on this in Becker sim

    August 23, 2017 at 7:06 pm #1614417
    HoldMyBeerCPA
    Participant

    If you guys only had 17 days to prepare for this exam and were half way through your review book, how would you do so?

    Asking for a friend. 🙂

    August 23, 2017 at 7:33 pm #1614429
    pharaoh
    Participant

    @Croweater because it will be considered “earned” income that the person getting paid for service performed

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

    August 23, 2017 at 7:41 pm #1614404
    HoldMyBeerCPA
    Participant

    Hey future CPAs,

    I have REG coming up on the 10th of September and have decided to pull another Hail Mary. I'm about 60% through reading my Roger review book, but won't time to make my own notes. With that said, do you guys feel as if the following preparation would give me a fighter's chance come exam day?

    August 23 (today) – August 28: Finish Roger Book/Light Note Taking/Read Ninja Notes
    August 29 – September 4: All of the Roger MCQs/Note Re-Write Ninja Notes
    September 5 – September 9: Final Review with a practice exam on the 8th just to see if I'm comfortable with timing.
    September 10th: Hail Mary. Regulation style

    My only concern would be the difficulty of Roger's MCQs. In the past, I've heard that his test bank isn't as challenging as other test banks and may be slightly easier than the exam.

    Thoughts?

    August 23, 2017 at 8:09 pm #1614461
    HoldMyBeerCPA
    Participant

    Sorry about the double post

    August 23, 2017 at 9:55 pm #1614530
    rwglapalma
    Participant

    @TurboSandwichCPA Honestly, I think you got this, I've been reading your posts since Q2 FAR and you are my hero/motivation to win. I have heard both that Roger is plenty good at preparing you for the exam and that the questions are too easy, the truth, who knows? I hope it's good enough because despite passing FAR with the Ninja 10point combo, I purchased Roger so I hope it's enough to get me through. I also feel like REG is a good test to try and cram as I have forgotten things I learned when I first started studying (back in July). Since you have the NINJA MCQ I think you'll be good, I am kicking myself for not purchasing it before Jeff changed the product offerings. Also, have you taken the AICPA sample exam? I always take that twice… Good luck, hope you pass!

    August 23, 2017 at 11:10 pm #1614572
    passantsalama
    Participant

    During the current year Steve Maslan received a 20% capital interest in Gress Associates, a partnership, in return for services rendered plus a contribution of assets with a basis to Maslan of $15,000 and a fair market value of $20,000. The fair market value of Maslan’s 20% interest was $38,000. How much is Maslan’s basis for his interest in Gress?
    $15,000
    $20,000
    $33,000
    $38,000

    Please I need help with this!

    August 23, 2017 at 11:28 pm #1614533
    HoldMyBeerCPA
    Participant

    @rwglapalma: I'm a bit honored to be a source of motivation for you. Thanks for keeping tabs on me as well. It definitely has been a stressful journey up to this point.

    I've done a handful of questions so far with Roger's test bank and they haven't been overly difficult. Although I've scored 22/30 to this point, I think with a couple more weeks of studying I'd have a much better chance.

    I don't have NINJA MCQ this time around for REG. Just the notes and the audio. I don't think I'll purchase it this time around given how close I am to the exam and the price of course.

    Thanks for the well wishes and best of luck to you as well!

    August 23, 2017 at 11:30 pm #1614584
    pharaoh
    Participant

    @passantsalama I think it is only the $38,000. was that the right answer?

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

    August 23, 2017 at 11:37 pm #1614590
    HoldMyBeerCPA
    Participant

    This is a tricky one. Don't think this was covered in the Roger review, but in order to solve this you must do the following:

    1. Take the FMV of the total interest of the incoming partner. In this case it is the $38,000
    2. Subtract the FMV of the asset provided to determine the FMV of services. In this case, we subtract $20,000
    3. Determine the FMV of the services provided. In this case, it would be $18,000.
    4. Add the ADJUSTED basis of the asset provided, in this case $15,000 to the FMV of services provided, in this case $18,000 to determine the BASIS that the partner has.

    So to summarize

    FMV of TOTAL interest of incoming partner: $38,000
    Less: FMV of asset provided ($20,000)
    Equals: FMV of services provided: $18,000

    Add: Adjusted basis of asset provided: $15,000
    Equals: Partner basis $33,000

    This only makes sense to me because we're breaking down what constitutes the FMV of total interest acquired in order to determine the FMV of the services provided which is the required factor, in addition to the adjusted basis of the property given, to calculate the partner's basis.

    August 23, 2017 at 11:46 pm #1614597
    passantsalama
    Participant

    The answer is 33,000
    Thank you !! you are smart

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