[jeff]

REG Resources:

Free REG Notes & Audio – https://www.another71.com/cpa-exam-study-plan

REG 10 Point Combo: https://www.another71.com/products-page/ten-point-combo

REG Score Release: https://www.another71.com/cpa-exam-scores-results-release

Jeff Elliott, CPA (KS) | Another71 | NINJA CPA | NINJA CMA | NINJA CPE

[Kenada]

When do you take the exam cupcake?

FAR 05/27/14; 786/110 - Done !

[Kenada]

Clarification needed – An award from a employeer is tax free up to 400 dollars or was it 450 ? Would an award from an employeer also be considered a gift from the employeer?

During the year, Barbra Carrey received an inheritance of $15,000 and a $500 gift from her employer. What amount of gifts received should Barbra include in her income tax return?

A. $15,000

B. $500

Answer (B) is correct.

A gift is a transfer for less than full or adequate consideration which results from the detached and disinterested generosity of the transferor. The IRC provides for exclusion from the gross income of the recipient the value of property acquired by gift. Gift transfers include inter vivos gifts and gifts by bequest, devise, and inheritance. However, voluntary transfers from employer to employee are presumed to be compensation, not gifts. Accordingly, the $500 gift from Barbra’s employer must be included in her income tax return.

C. $0

D. $15,500

FAR 05/27/14; 786/110 - Done !

[Kenada]

Clarification needed – An award from a employeer is tax free up to 400 dollars or was it 450 ? Would an award from an employeer also be considered a gift from the employeer?

During the year, Barbra Carrey received an inheritance of $15,000 and a $500 gift from her employer. What amount of gifts received should Barbra include in her income tax return?

A. $15,000

B. $500

Answer (B) is correct.

A gift is a transfer for less than full or adequate consideration which results from the detached and disinterested generosity of the transferor. The IRC provides for exclusion from the gross income of the recipient the value of property acquired by gift. Gift transfers include inter vivos gifts and gifts by bequest, devise, and inheritance. However, voluntary transfers from employer to employee are presumed to be compensation, not gifts. Accordingly, the $500 gift from Barbra’s employer must be included in her income tax return.

C. $0

D. $15,500

FAR 05/27/14; 786/110 - Done !

[terranz]

@Cupcake et all:

so the DENT question should have asked WHICH ONE of the following is correct Right cupcake?

a. Jardine may choose to proceed against the surety for the entire loan when the loan is due.

b. when the loan is due, if the collateral doesn’t contribute to half of the loan, jardine may seek to recover the entire remainder from the surety without resorting to the corporation

c. if jardine recover’s more than half of the loan amount upon resale of the collateral, Jardine must pay the excess to dent.

d. When the loan is due, jardine must first seek collection of the loan from dent before resorting to the surety or the collateral.

A is correct. I KNOW THIS – pretty sure i'm NOT CRAZY

creditor can go against SURETY or PRINCIPAL immediately upon default.

that emans, jardine is NOT required to seek collection of loan from dent before resorting to surety or collateral.

after reading pg 8 i think i got confused – We are all agreeing that the other 3 ANSWERS are incorrect right?

hmm as i'm typing i think i get why C is incorrect. even if jardine gets more than half of loan upon resale of collateral, he is still owed money. jardine does NOT have to pay excess to dent.

can someone confirm please?

[terranz]

@Cupcake et all:

so the DENT question should have asked WHICH ONE of the following is correct Right cupcake?

a. Jardine may choose to proceed against the surety for the entire loan when the loan is due.

b. when the loan is due, if the collateral doesn’t contribute to half of the loan, jardine may seek to recover the entire remainder from the surety without resorting to the corporation

c. if jardine recover’s more than half of the loan amount upon resale of the collateral, Jardine must pay the excess to dent.

d. When the loan is due, jardine must first seek collection of the loan from dent before resorting to the surety or the collateral.

A is correct. I KNOW THIS – pretty sure i'm NOT CRAZY

creditor can go against SURETY or PRINCIPAL immediately upon default.

that emans, jardine is NOT required to seek collection of loan from dent before resorting to surety or collateral.

after reading pg 8 i think i got confused – We are all agreeing that the other 3 ANSWERS are incorrect right?

hmm as i'm typing i think i get why C is incorrect. even if jardine gets more than half of loan upon resale of collateral, he is still owed money. jardine does NOT have to pay excess to dent.

can someone confirm please?

[terranz]

Sanity checks:

probably very easy questions for you all:

1. The state homestead exemption ordinarily could exempt a debtor’s equity in certain property from post-judgment collection by a creditor. To which of the following creditors will this exemption apply?

Valid Home mortgage Lien —- Valid IRS Tax lien

Is it YES to valid home mortgage lien and NO to valid irs tax lien?

Why?

2. Donald Fisk is a limited partner of Sparta Oil Development. He paid $10,000 for his limited-partnership interest. In addition, he lent Sparta $7,500. Sparta failed to find oil and is in financial difficulty. Upon dissolution and liquidation,

a. Fisk and all outside general creditors will receive repayment of their loans prior to any other distributions.

b. Fisk will receive repayment, along with the other limited partners, in respect to his capital and loan after all other creditors have been satisfied.

c. The last distribution, if anything remains, is to the general partners in respect to capital.

d. If Fisk holds partnership property as collateral, he may resort to it to satisfy any deficiency if other partnership assets are insufficient to meet creditors’ claims.

3. Electing MACRS depreciation (accelerating the depreciation deduction) over straight-line depreciation is an example of which tax planning technique?

a. Conversion.

b. Shifting.

c. Timing.

d. Assignment.

4. In a bona fide transaction, Jesse transferred land worth $50,000 to his controlled corporation for stock of the corporation worth $20,000 and cash of $20,000. The basis of the property to him was $15,000 and was subject to a $10,000 mortgage, which the corporation assumed. Jesse must report a gain of

a. $15,000

b. $20,000

c. $30,000

d. $35,000

this has to be B right? boot was received by jesse…!

[terranz]

Sanity checks:

probably very easy questions for you all:

1. The state homestead exemption ordinarily could exempt a debtor’s equity in certain property from post-judgment collection by a creditor. To which of the following creditors will this exemption apply?

Valid Home mortgage Lien —- Valid IRS Tax lien

Is it YES to valid home mortgage lien and NO to valid irs tax lien?

Why?

2. Donald Fisk is a limited partner of Sparta Oil Development. He paid $10,000 for his limited-partnership interest. In addition, he lent Sparta $7,500. Sparta failed to find oil and is in financial difficulty. Upon dissolution and liquidation,

a. Fisk and all outside general creditors will receive repayment of their loans prior to any other distributions.

b. Fisk will receive repayment, along with the other limited partners, in respect to his capital and loan after all other creditors have been satisfied.

c. The last distribution, if anything remains, is to the general partners in respect to capital.

d. If Fisk holds partnership property as collateral, he may resort to it to satisfy any deficiency if other partnership assets are insufficient to meet creditors’ claims.

3. Electing MACRS depreciation (accelerating the depreciation deduction) over straight-line depreciation is an example of which tax planning technique?

a. Conversion.

b. Shifting.

c. Timing.

d. Assignment.

4. In a bona fide transaction, Jesse transferred land worth $50,000 to his controlled corporation for stock of the corporation worth $20,000 and cash of $20,000. The basis of the property to him was $15,000 and was subject to a $10,000 mortgage, which the corporation assumed. Jesse must report a gain of

a. $15,000

b. $20,000

c. $30,000

d. $35,000

this has to be B right? boot was received by jesse…!

[Anonymous]

@IY247 I take it next Saturday, 10/19.

@ terranz I was was thinking that C was incorrect because of the “more than half of the loan amount” I don't think it has to be more than half of the amount, I think that they have to pay the excess to Dent no matter the amount, as long as it is in excess of debt. Not sure about this though.

[Anonymous]

@IY247 I take it next Saturday, 10/19.

@ terranz I was was thinking that C was incorrect because of the “more than half of the loan amount” I don't think it has to be more than half of the amount, I think that they have to pay the excess to Dent no matter the amount, as long as it is in excess of debt. Not sure about this though.

[Anonymous]

@ Terranz…On your next questions.

1. I have never even heard of the state homestead exemption! So definitely not an easy question. Sorry I am of not help. I would like to know the answer though!

2. I think it is B.

3. I think it is C. timing.

4. I think it is B too…The recognized gain is equal to the boot received (not including liabilities because it is Section 351). So that is just the cash of $20,000. The mortgage of $10,000 isn't greater than the AB of the property transferred either ($15,000)…so this wouldn't cause additonal gain.

[Anonymous]

@ Terranz…On your next questions.

1. I have never even heard of the state homestead exemption! So definitely not an easy question. Sorry I am of not help. I would like to know the answer though!

2. I think it is B.

3. I think it is C. timing.

4. I think it is B too…The recognized gain is equal to the boot received (not including liabilities because it is Section 351). So that is just the cash of $20,000. The mortgage of $10,000 isn't greater than the AB of the property transferred either ($15,000)…so this wouldn't cause additonal gain.

[Anonymous]

@IY247 the award is $400 but it has to be for length or employment or a safety award (I think). I don't think this gift from the employer would be considered an award…it is almost as if it is a bonus.

[Anonymous]

@IY247 the award is $400 but it has to be for length or employment or a safety award (I think). I don't think this gift from the employer would be considered an award…it is almost as if it is a bonus.

[UCMCPA]

@terranz @cupcake..

Also recall that assumption of liabilities by the corp are treated as boot received to the shareholder, so I would say they received 30,000 in boot.

FAR - 84
AUD - 94
REG - 86
BEC - 86

[UCMCPA]

@terranz @cupcake..

Also recall that assumption of liabilities by the corp are treated as boot received to the shareholder, so I would say they received 30,000 in boot.

FAR - 84
AUD - 94
REG - 86
BEC - 86

[Author]

Replies