[jeff]

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

[Sam]

After doing some practice sims today I'm a little confused on depreciation. In the sims they gave the class of property and the depreciation tables to use to calc the depreciation for the various years. In most of the material that I read and the practice questions it's been more a case of determining mid-year, quarter or month. When should the tables be used instead of mid-year, mid-quarter, mid month?

Also, how's depreciation computed in the year of disposal? I'd think it would be similar to year of acquisition where you determine mid-year, quarter or month…

[ssiegri]

FYI: Make sure you guys know the ins and outs of the trickier MC questions for the simulations or pray for a lucky roll of the dice.. I rocked the MC per my fail report (scored higher in every category) and obviously bombed the simulations.. Ended up as a 73..

[ssiegri]

FYI: Make sure you guys know the ins and outs of the trickier MC questions for the simulations or pray for a lucky roll of the dice.. I rocked the MC per my fail report (scored higher in every category) and obviously bombed the simulations.. Ended up as a 73..

[UCMCPA]

Sam… seems you're a bit confused.

The tables are in mid-month, HY, MQ etc. The percentages you would use are already accounting for that, you just have to make sure you have the correct table.

Additionally, you are correct about year of disposal. If it's HY you get 1/2 year depr in year of acquisition and year of disposal.

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

[UCMCPA]

Sam… seems you're a bit confused.

The tables are in mid-month, HY, MQ etc. The percentages you would use are already accounting for that, you just have to make sure you have the correct table.

Additionally, you are correct about year of disposal. If it's HY you get 1/2 year depr in year of acquisition and year of disposal.

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

[terranz]

@UCMCPA:

how did you memorize if something should be an increase, decrease to E&P, or no effect on E&P?

it's like m-1 and AMT with all of the rules of what will increase or decrease E&P.

[terranz]

@UCMCPA:

how did you memorize if something should be an increase, decrease to E&P, or no effect on E&P?

it's like m-1 and AMT with all of the rules of what will increase or decrease E&P.

[Sam]

Thanks. That makes sense…and sounds like I should get to the same answer either way.

[Sam]

Thanks. That makes sense…and sounds like I should get to the same answer either way.

[UCMCPA]

@ Terranz… I looked at it like this, if it has the ability to increase or decrease the companies ability to pay a dividend, then it influenced E&P.

Say if something was NOT tax deductible that they paid out in cash, but it lowered their ability to pay a dividend, then it will likely influence E&P and decrease E&P.

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

[UCMCPA]

@ Terranz… I looked at it like this, if it has the ability to increase or decrease the companies ability to pay a dividend, then it influenced E&P.

Say if something was NOT tax deductible that they paid out in cash, but it lowered their ability to pay a dividend, then it will likely influence E&P and decrease E&P.

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

[UCMCPA]

@ Terranz… I looked at it like this, if it has the ability to increase or decrease the companies ability to pay a dividend, then it influenced E&P.

Say if something was NOT tax deductible that they paid out in cash, but it lowered their ability to pay a dividend, then it will likely influence E&P and decrease E&P.

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

[UCMCPA]

@ Terranz… I looked at it like this, if it has the ability to increase or decrease the companies ability to pay a dividend, then it influenced E&P.

Say if something was NOT tax deductible that they paid out in cash, but it lowered their ability to pay a dividend, then it will likely influence E&P and decrease E&P.

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

[terranz]

@UCMCPA

i'm not sure I follow :[

1. unrealized losses at year end on securities own = no (effect I get this)

2. increase in cash surrender value of life insurance policies owned by the company = E&P increase

3. gain on prior year installment sale recognized in the Current year = E&P decrease

don't understand 2-3.

to me a gain in the current year should increase E&P, and increase the amount the company can pay out as a div?

[terranz]

@UCMCPA

i'm not sure I follow :[

1. unrealized losses at year end on securities own = no (effect I get this)

2. increase in cash surrender value of life insurance policies owned by the company = E&P increase

3. gain on prior year installment sale recognized in the Current year = E&P decrease

don't understand 2-3.

to me a gain in the current year should increase E&P, and increase the amount the company can pay out as a div?

[Author]

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