[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

[Kenada]

For those of you that have the Wiley Homework book. Maybe you can help me with this Question

In the Wiley Homework book – Module 24

Question 3

A Tombstone Advertisement

a. May be substituted for the prospectus under certain circumstances

b. May contain an offer to sell securities

c. Notifies prospective investors that a previously-offered security has been withdrawn from the market and is therefore effectively “Dead”

d. Makes known the availability of a prospectus

I dont understand why the answer would be D instead of B

In the Wiley notes if you read page 78 at the bottom I understood “tombstones ads identify security, its price and who will take orders – Isn't that an offer to sell securities ?

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

[Kenada]

For those of you that have the Wiley Homework book. Maybe you can help me with this Question

In the Wiley Homework book – Module 24

Question 3

A Tombstone Advertisement

a. May be substituted for the prospectus under certain circumstances

b. May contain an offer to sell securities

c. Notifies prospective investors that a previously-offered security has been withdrawn from the market and is therefore effectively “Dead”

d. Makes known the availability of a prospectus

I dont understand why the answer would be D instead of B

In the Wiley notes if you read page 78 at the bottom I understood “tombstones ads identify security, its price and who will take orders – Isn't that an offer to sell securities ?

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

[Kenada]

Ok if i understand you correctly your asking why would a partner have a Ordinary Income and a Capital gain. Are you asking about Non Liquidating distributions and Liquidating Distributions ?

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

[Kenada]

Ok if i understand you correctly your asking why would a partner have a Ordinary Income and a Capital gain. Are you asking about Non Liquidating distributions and Liquidating Distributions ?

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

[Qlad]

i guess that's true…something to do with liquidating and non-liquidating…but i'm not able to understand…may be i'm missing some rule here

FAR 72,71,81 🙂
AUD 64,71, 72, 75 🙂 I'm done !!!
REG 73, 74, 74, 84 🙂
BEC 76 🙂

[Qlad]

i guess that's true…something to do with liquidating and non-liquidating…but i'm not able to understand…may be i'm missing some rule here

FAR 72,71,81 🙂
AUD 64,71, 72, 75 🙂 I'm done !!!
REG 73, 74, 74, 84 🙂
BEC 76 🙂

[Kenada]

I am going to try to explain this as best as I can.

You have to remember – the IRS does not want to “lose” out on its tax revenue. Capital Gains are taxed lower than Ordinary Income and therefore they created this rule for when a partner that sells his interest should pay Tax on Ordinary Income for balances that he would have gotten had he stayed on as a partner and received a distribution.

So the Rule is “The Gain on a sale of a Partnership must be reported as ordinary income to the extent of unrealized ordinary income assets (Like Inventory and AR) at the time of sale. Anything above will be capital gains.”

Example

A wants to buy B's 50% interest in a PS by paying $ 375.00 dollars cash and assuming B's liabilities.

Sales will be $ 425.00 (Cash 375 plus 50.00 (50% of PS Liability of 100.00))

B's basis was 75.00

AR receivable was 300.00

So

So B's Gain/Income will be

Sales 375.00

Debt relief 50.00

Total 425.00

Less Partners basis (75.00)

Less 50% of AR (150.00)

Capital Gain = 200.00

Ordinary Income 150.00 – this is the AR 50% portion

Does this help ?

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

[Kenada]

I am going to try to explain this as best as I can.

You have to remember – the IRS does not want to “lose” out on its tax revenue. Capital Gains are taxed lower than Ordinary Income and therefore they created this rule for when a partner that sells his interest should pay Tax on Ordinary Income for balances that he would have gotten had he stayed on as a partner and received a distribution.

So the Rule is “The Gain on a sale of a Partnership must be reported as ordinary income to the extent of unrealized ordinary income assets (Like Inventory and AR) at the time of sale. Anything above will be capital gains.”

Example

A wants to buy B's 50% interest in a PS by paying $ 375.00 dollars cash and assuming B's liabilities.

Sales will be $ 425.00 (Cash 375 plus 50.00 (50% of PS Liability of 100.00))

B's basis was 75.00

AR receivable was 300.00

So

So B's Gain/Income will be

Sales 375.00

Debt relief 50.00

Total 425.00

Less Partners basis (75.00)

Less 50% of AR (150.00)

Capital Gain = 200.00

Ordinary Income 150.00 – this is the AR 50% portion

Does this help ?

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

[Qlad]

hmmm…let me try this on the questions that i did wrong…thanks for keeping me sane this late at night. 🙂

FAR 72,71,81 🙂
AUD 64,71, 72, 75 🙂 I'm done !!!
REG 73, 74, 74, 84 🙂
BEC 76 🙂

[Qlad]

hmmm…let me try this on the questions that i did wrong…thanks for keeping me sane this late at night. 🙂

FAR 72,71,81 🙂
AUD 64,71, 72, 75 🙂 I'm done !!!
REG 73, 74, 74, 84 🙂
BEC 76 🙂

[Kenada]

Anytime 🙂 I usually stay up late till Mid night..

If you are stuck on a question – try to type it here. It would help me see what the question is and also give you a better explanation if I have one 🙂

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

[Kenada]

Anytime 🙂 I usually stay up late till Mid night..

If you are stuck on a question – try to type it here. It would help me see what the question is and also give you a better explanation if I have one 🙂

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

[Journhi]

Hi,

Could anyone help explain Net Operating Loss? I know it's carried back 2 yrs and forward 20yrs. How do you calculate the NOL? what can and cannot be included?

Thank you!

FAR: 62;79
AUD: 76
REG:67; 77
BEC: 68;66; 12/05/13

[Journhi]

Hi,

Could anyone help explain Net Operating Loss? I know it's carried back 2 yrs and forward 20yrs. How do you calculate the NOL? what can and cannot be included?

Thank you!

FAR: 62;79
AUD: 76
REG:67; 77
BEC: 68;66; 12/05/13

[Kenada]

I will try to answer the NOL question for you.

NOL is generally business loss but can also occur for an Individual through a personal casualty loss.

It will come through your Sch C – Business Income.

You will start with your

Taxable Business Income (xxxx.xx)

Non Business Deductions xxxx.xx

Non Business Income (xxxx.xx)

Personal Exemption 3900.00

NOL (xxxx.xx)

Example: – A owns a business and it incurred a loss of 20,000.00. He has Interest earned from his personal bank of 1800.00 and has deduction from interest and taxes of 9000.00. For 2013 the personal exempt it 3900.00

His NOL will be

(20,000) + 9000.00 – (1,800.00) + 3,900 = (8,900)

9,000.00 is added back as it is consider to be excess nonbusiness deductions (normally itemized deductions) over nonbusiness income.

You can not include the following :-

Personal Exemptions can not be included in the computation of NOL.

Excess if non Business Deductions

Do not include any NOL from another year in the computation

Excess Capital losses over Capital Gains.

Domestic Production Activities Deductions

Does this help?

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

[Author]

Replies