[jeff]

Welcome to the Q4 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/

[pharaoh]

@Matt The 600,000 included the 50,000 accrual but they paid 60,000, that additional 10,000 can be part of Year 1 tax return if it is paid within 2.5 months (Before 3/15), so you will add the 10,000 in year 1 expenses

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

[Matt]

@CoachEmUp

Thanks.

I've these types of questions with dividend payments, for some one reason this one broke my brain for a half minute but I see it now.

FAR 74

[pcunniff]

@coachmeup

I actually took a closer look at that sim and it seems entirely wrong. The exemptions should be 4 total vs 2 and the HOH standard deduction is 9350 when they give you 2016 rates (9300).

[pcunniff]

Thomas, a U.S. citizen, made the following gifts in 2017:

Stock valued at $29,000 (basis to Thomas was $15,000) to his sister.
How much of the stock gift to Thomas's sister is considered a taxable gift in 2017?

An exemption of $14,000 per donee is allowed in 2017 for gifts of a present interest. Therefore, the taxable gift is $29,000 − $14,000, or $15,000.

Why wouldnt you get the carry over basis from the donee $15,000-14,000 to get $1,000 or is it always FMV when gifting stock to someone?

[Operation_CPA]

Are charitable contributions an allowable deduction for individual AMT?

[pcunniff]

@operation_CPA

yes they are

[Operation_CPA]

@pcunniff Thanks!

[j3cpa]

1120-S and Partnerships basis are driving me nuts!

Anybody use any special online resources or flow chart that is helpful to them? Please share!

Study Material:
GLEIM
BEC - FEB/2012
AUD - FEB/2012
FAR - JULY/2012
REG - JULY/2012

[pcunniff]

j3CPA

I think you just need to do partnership MCQ over and over then transition over to S-corps.

The basis is generally the same. The pass key in becker states:

Basis + direct shareholder loans – losses gives you basis in 1120-S for S-corps

Direct shareholders loans don't increase your basis for partnerships. I know that is a key difference. Hopefully this helps

[pcunniff]

Can someone look into this TBS Sim for CPA EXCEL (tbs.REGDocrev005)? I have a question with why income reported on Hazel's final Form 1040 is $8,000, and income in respect of a decedent is $2,000.

After reviewing the income and expense items, i understand that $8,000 was earned and paid before death. That would make sense as to why it is on the 1040. IRD is $2,000 because it is paid after death. OKAY GREAT I get that…

Now my question – is the income that is received in June and July for the amount of $4,000 included in the estate return (706) because it was earned after his death? I would assume so, but it is not part of the question/answer and I would like to know in case something like this comes up on the test.

Thanks in advance!

[pigbide]

Guys what is/are the best way(s) to research IRC questions or any IRS issues?

[pharaoh]

Under the Securities Exchange Act of 1934, a corporation with common stock listed on a national stock exchange:

A.is prohibited from making private placement offerings.

B.is subject to having the registration of its securities suspended or revoked.

C.must submit Form 10-K to the SEC except in those years in which the corporation has made a public offering.

D.must distribute copies of Form 10-K to its stockholders.

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

[pcunniff]

A?

[pcunniff]

Theres a question that is really confusing me..

Carson owned 40% of the outstanding stock of a c-corp. During a tax year, the corp reported $400,000 in taxable income and distributed 70,000 in cash dividends to its shareholders. Carson accurately reported 28,000 in gross income on carsons individual tax return. If the corporation had been an s corp and the distributions to the owners had been proportionate, how much income would carson have reported on carsons individual return?

A) 28,000
B) 132,000
C) 188,000
D) 160,000

The answer is D.

S Corps work in a similar fashion to partnerships. The income is passed through to the shareholder and included in taxable income whether or not it was actually distributed. Therefore, Carson will report 40% of the 400,000 taxable income or $160,000. The 28000 will not affect the taxable income but will reduce carsons basis in the s corps stock.

My question is … why on earth would the cash dividends not flow through to the K-1 and be reported on Schedule B, which ultimately ends up on the 1040 (being taxed)? I would think this would still show up on his individual return no?

[pharaoh]

@pcunniff For S corp what is considered taxable is his share of the income, so he made 160k whether he took cash out of it or not. And I think in this case it is going to be just a distribution not dividends. distribution doesn't affect the tax return, it only affects the basis

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

[Author]

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