[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/

[Sooner1693]

@Tipofga80 what was your study method between your Q3 attempt and your last retake?

[Lentilcounter]

Hey all,

I'm joining the REG study party officially today. I just took FAR yesterday hopefully for the last time. I'm taking REG in mid-Janaury. For those who have taken and passed FAR, is REG on the same level or easier? FAR just had way too many topics to know and understand.

BEC = 72 (6/08/16)
FAR = ?
REG = ?
AUD = ?

[Lentilcounter]

https://www.another71.com/cpa-exam-forum/topic/potential-reg-sim-topics-from-the-aicpa/

Check out this thread guys.

BEC = 72 (6/08/16)
FAR = ?
REG = ?
AUD = ?

[jeff]

Ask the NINJAs – How to Study 20 Hours a Week

Ask the NINJAs: How to Study 20 Hours a Week for the CPA Exam

[mashloum]

Francis Corporation had taxable income of $260,000 for its initial taxable year. A review of company records revealed the following information:
The current-year tax depreciation expense on furniture and fixtures, the only asset owned by Francis Corporation, was $10,000. If Francis had used the alternative depreciation system (straight-line method), depreciation expense deducted would have been $5,000.
Francis had tax-exempt interest income of $22,000 that has not been included in taxable income.
Francis paid dividends of $16,000 that were not deducted.
Francis had $20,000 of returns and allowances that were deducted on the return.
Francis reported a $20,000 gain on an installment sale of a noninventory item. The total gain on the sale was $100,000.
Earnings and profits for Francis Corporation at the close of the current year were
Graded Submit $271,000
Submit $346,000
Submit $266,000
Correct Submit $351,000
This answer is correct.
In computing earnings and profits of a corporation, all income that is nontaxable or exempt from tax is added to taxable income. The earnings and profits are reduced by any expenditures or expenses of the corporation that are not deductible for tax purposes. Depreciation is usually determined under the alternative depreciation system (straight-line method). If depreciation reported for tax purposes exceeds straight-line depreciation, the difference is added back to taxable income. A corporation that sells property on the installment basis is treated for earnings and profits purposes as if it had not used the installment method. No adjustment is required for returns and allowances since deducting returns and allowances is an acceptable tax accounting procedure for computing taxable income and earnings and profits. The computation of earnings and profits for Francis Corporation in the current year is as follows:
Taxable income $260,000
Depreciation ($10,000 – $5,000) 5,000
Tax-exempt interest income 22,000
Installment sale gain not reported for tax purposes ($100,000 – $20,000) 80,000
Current earnings and profits $367,000
Less: Dividends paid out of current earnings and profits (16,000)
Earnings and profits balance $351,000

My question, regarding the installment sale of a noninventory item, shouldn't we keep it as it is since it's the same treatment in both tax and reporting? or only for tax purpose we have to use?
Because of the number of MCs solved I become totally confused!

[Nikki]

I'm re-taking the exam in Q4 My notes all need to be updated for the new tax exemption rates, etc. Does anyone have a sheet cheat they would be willing to share for 2017 tax rates?

[pcunniff]

You dont need to know that. All of those rates are indexed for inflation. WAY more important topics to worry about like basis, business law, etc.

[pcunniff]

@mashloum – installment is actually different and I had the same confusion. Remember that under the installment method – gains are deferred for financial statement purposes, but for tax purposes you need to report it right away. Think about it like rental income in the sense that you need to report that income as earned right away, hence the tax M-1 difference. Hope this helps.

[sayed586]

Is Uniform commercial code deleted in the new updates of REG with all the following sections?

1- Sales
2- Negotiable instrument
3- Secured transactions

[LCros]

No, the only one that is deleted, (not testable) is negotiable instruments. The other two are testable.

[Lentilcounter]

https://www.another71.com/cpa-exam-forum/topic/potential-reg-sim-topics-from-the-aicpa/

updated.

BEC = 72 (6/08/16)
FAR = ?
REG = ?
AUD = ?

[hopingtogetFAR]

Hi!

I just cracked opened the Becker for this today, and I am sitting for it December 9th. Hoping, I can see three passing scores on the 19th. Is anyone else testing on that day or close to it?

[56_Moves]

Hey @hopingtogetFAR, I've been studying Becker Regulation for about three weeks and am scheduled to take it on December 6. Good luck.

[Anonymous]

At the beginning of 2017, Paul owned a 25% interest in Associates partnership.
During the year, a new partner was admitted and Paul's interest was reduced to 20%.

The partnership liabilities at January 1, 2017, were $150,000, but decreased to $100,000 at December 31, 2017. Paul's and the other partners' capital accounts are in proportion to their respective interests.
Disregarding any income, loss or drawings for 2017, the basis of Paul's partnership interest at December 31, 2017, compared to the basis of his interest at January 1, 2017 was
Decreased by $37,500.
Increased by $20,000.
Decreased by $17,500.
Decreased by $5,000.
You Answered Correctly!
At January 1, 2017, Paul owned a 25 percent interest in Associates partnership and partnership's liabilities were $150,000, putting the value of Paul's interest at $37,500. During the year, a new partner was admitted and Paul's interest was reduced to 20%. The partnership's liabilities also were reduced, decreasing to $100,000. Paul's 20 percent interest puts his basis in the partnership interest on December 31, 2017 at $20,000.
Thus, the basis of Paul's partnership interest at December 31, 2017, compared to the basis of his interest at January 1, 2017, decreased by $17,500.

Can someone please explain why it was decreased by $20,000? what I understood from reading the material is that the basis would go down by the decrease in liabilities which in this case would be 50,000 (beg-end) x the 20%. no? did I misunderstand the rules?

[LCros]

@drzflow4:

I think you are overthinking it. They are asking you to compare the basis of liability for Paul at the beginning of the year versus the end of the year.

Beginning of Year: 150,000 x .25 = 37,500
End of the Year: 100,000 x .20 = 20,000

Therefore his basis decreased by 17,500. (37,500-20,000)

When the liability amount in the partnership goes up down, your basis also decreases by your percentage share. And, when your liabilities increase, your basis increases by your percentage share.

Hope that helps.

[Author]

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