[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/

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

[ignaciopc]

Hi, I just starts preparing the REG, could you give me any tip?. I am using Roger and I am not planing to change. I can not afford the money.
REG looks like huge!. Is correct that the split of the exam is around… tax (80%), Ethics (10-20%) and Business law (10-20%)?.

Thank you a good luck

[Manal]

Hello,
I have just started studying for REG section. This will be my first exam in the CPA journey.
Am still a bit hesitated which course review to use especially that I will start from scratch, with no solid tax background. I have Wiley textbook, but I need to practice SIMs & MCQs. please help.

[McGboye]

If the same SIM question appears in the REG exam in different windows, is there any possibility that for the second time it is a pre-test question?

[mashloum]

Q; Eddie received a $600 dividend from a fund he owned under the state’s Gifts to Minors Act. He will not file separately, and this is his only income for the year. Not includible in gross income
Answer/For beneficiaries under 19 (as is Eddie), the first $1,000 of income is tax-free, the second $1,000 is taxed at the minor's rate (typically zero or 15%), and the amount over $2,000 is taxed at the parent's rate.

I am confused since Only unearned income from investments /If the child has only unearned income—capital gains or dividends and interest from investments—the threshold for having to file a tax return is $1,050 for 2017 and taxed if he exceeded $2,100
can anyone help to understand this!

[mashloum]

@McGboye

it might be and might be not, difficult to detect the pre tested Q

[teejaypark]

Question: Jim agrees orally with West Bank to guarantee a loan that West Bank will make to Susan to purchase an existing restaurant upon Susan's agreement to pay Jim 10% of the gross revenues for two years. All parties orally agree. Jim's guaranty agreement with West Bank is unenforceable under the Statute of Frauds

Answer: False

Why is Jim's oral agreement with West Bank enforceable under the Statute of Frauds? Is this an original promise to West Bank rather than a promise to pay the debt of Susan?

[pharaoh]

@Manal – I would recommend that you do the trial period of different review courses if you are looking for one that has videos (I think all of them do now). I personally like Roger because he explains with examples and Ninja Mcq is the cheapest supplement – I know they just made a change recently which made Ninja a bit more expensive but still cheaper than many others.

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

[AScott89]

Hi guys, currently in module 7 in Gleim and I am just not getting passive activity losses and NOLs. Does anyone have a simpler way of explaining these? I get the rule about being able to deduct up to $25,000 of loss for an activity in which you materially participate but that's about all I can seem to grasp on this topic.

Any insight would be appreciated!

BEC-65
AUD-72(8 '14); 68(11 '14)
FAR-
REG-

[hawk77]

Here we go. I have attempted to complete the CPA in the past, with not much to show for it.

Graduated 2009, been working in tax world ever since. Feel it's the right time to pursue and defeat this monster.

Step 1: Regulation, exam date November 2017

Study materials: Wiley book, Ninja MCQ

Plan: Read Wiley front to back, take notes along the way. Once finished, purchase Ninja MCQ and grind it out.

FAR - April 5, 2016
AUD - May 28, 2016
REG - TBD
BEC - TBD

[HT415]

Inheritances are not taxable, meaning the initial transfer of the property to the recipient. You recognize the inheritance at its FMV (but are not taxed on it) and once the recipient of the inheritance sells the asset or property, that is when it becomes taxable.
Also be cognizant of any interest or any other type of income derived from the property (by the recipient) once the property is in the recipient's hands.

Proceeds from working injuries are nontaxable as well (Worker's Compensation), basically it would be a bit excessive for the IRS to tax you on proceeds that you need to use for your health and ability to function.

Hope this helps!

[HT415]

Can anyone help explain to me what exactly is going on here? I am questioning an explanation in the answer section, but for perspective I've provided the question.

“Parent company X and subsidiary company Y file a CY consolidated federal income tax return. Company X reported a 120,000 tax loss, which included a 10,000 dividend from Y. Company Y reported 140,000 of taxable income, which included 30,000 of dividends received from less than 20% owned stock investments. Neither company took into account any applicable dividends received deduction. What is the group's consolidated tax loss for the year?

A) <4,000>
B) <20,000>
C) 7,000
D) <11,000>

C is correct.
Because X and Y are a consolidated entity, X should not include the 10,000 dividend from Y in its income.
So <120,000> – 10,000 = <130,000> (makes sense)
<130,000> is netted with the 140,000 to get 10,000 taxable income (makes sense)

Here's where I'm lost:
“the dividends received deduction on the 30,000 received by Y is limited to the taxable income limitation to 30% of consolidated taxable income before the dividends received deduction, or 30% of 10,000, or $3,000. Consolidated taxable income after the dividends received deduction is therefore 7,000. 10,000 of consolidated taxable income before the dividends received deduction less the 3,000 dividends received deduction of 11,000.”

The 11,000 in the last sentence, I'm guessing it's a typo…

But I am wondering where that 30% came from? I thought the taxable income limitation would be (10,000 x 70% = 7,000 DRD) –> (10,000 – 7,000 = 3,000) but obviously 3,000 is not one of the answers.
I initially thought it was <11,000> because I used the 30,000 dividends received to determine the DRD and ended up with <21,000> (30,000 x 70%) –> <21,000> + 10,000 = <11,000>

[pharaoh]

@temnewo which review course has that question? I think I saw that before but the answer was 11,000 loss which I understand but I don't understand the 7000

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

[kikee_07]

Hi All, what REG reviewer are you using that's great for TBS? I'm using roger but it seems like it isn't very user friendly…

[joonpark1212]

@AScott89 Hopefully my understanding on the whole active loss and passive loss can help you. Whenever i see a question on passive loss i think of income losses from rental property or partnership or s-corporation. Non-material participating individual's or shareholder's losses from rental property/partnership/s-corporation can be deducted to the extent of their other passive incomes while material participants can offset their losses to ordinary income. The $25,000 of loss you mentioned would be an exception which allows rental expense loss to ordinary income.

[AScott89]

@joonpark1212 So if a question is asking about passive losses, I should assume it's from rental property/partnerships/s-corps unless otherwise stated? And non-material participation = deduct to extent of other passive income, while material participating = that $25,000 if your agi is $100,000 or lower and completely phased out at $150,000?

Can you have both a deduction of passive loss to the extent of passive income and then have a materially-participating passive loss that allows you to deduct that up to $25,000 against non-passive income in the same question? I guess I'm asking if having one of those things would automatically exclude the other from occurring?

BEC-65
AUD-72(8 '14); 68(11 '14)
FAR-
REG-

[Author]

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