[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/

[joonpark1212]

@AScott89 Based on the review materials passive losses are on rental property/partnerships/s-corps. This active loss and passive loss can get real confusing, I'm still not 100% but after watching random youtube videos and going over forms 6198 and 8582 helped me understand it a little better.

First I would like to suggest you to know that active loss and passive loss should be considered totally different and calculated separately. Try to get the difference between these two before getting hung up on the $25,000 which is an exception to a general rule that mess up the general rule concepts.

Let's say you are an individual(not a real estate professional), nonmaterial participant of ACE partnership, and a material participant of BCE S-corporation.
Your share of loss on the rental activity is $50,000, share of loss in ACE partnership $20,000, share of loss in BCE S-corp is $30,000. And lets also assume you have other activity income of $100,000 and other passive income of $80,000. Then what would be the final activity income and passive income after applying the above losses?

The final activity income will be $70,000 (other activity income of $100,000 – share of loss in BCE S-corp is $30,000)
The final passive income will be $10,000 (other passive income of $80,000 – share of loss on the rental activity is $50,000 – share of loss in ACE partnership $20,000)

These are the basics of the topic

[AScott89]

Ok @joonpark1212 I think that's starting to click a little more, thanks for your help.

So can anyone explain how to calculate NOLs for business vs individuals? I'm still a little confused on those as well.

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

[mashloum]

@temnewo

Choice “c” is correct. The facts are given before the consideration of any dividend-received deduction (DRD).
Y can exclude $21,000 (70%) of the $30,000 dividend. This reduces Y’s income to $119,000 ($140,000 – $21,000 = $119,000).

Because X and Y are a consolidated entity, X should not include the $10,000 dividend from Y in its income.

This brings X’s loss to $130,000 [($120,000) – $10,000 = ($130,000)]. The consolidated loss for the year is then X’s $130,000 loss netted with Y’s $119,000 income, for a net loss of $11,000.

[HT415]

I understand that part, that makes sense.

However, my question is regarding this part of the answer explanation…

“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.”

I do not recall reading or ever seeing that 30% rule, what I am accustomed to seeing is the DRD being limited to the lesser of:
1) 70% of dividends received, or
2) 70% of TI (without consideration of the DRD), unless #1 results in NOL.

In this case, isn't the TI, without consideration of the DRD, $10,000? If so, I would assume you take 70% of that to get a $7,000 DRD, but obviously that wasn't the answer.

I just want to know why $7,000 is the answer and where that 30% limitation came from.

[abbycsun]

Hi all! Long time reader – first time poster.

I just started my Reg studies and was wondering if anyone can help summarize Employee Stock Options? This part of the lecture has flown right above my head. It is such a abstract concept to me… Based on what I know:

Nonqualified options: 1) Ascertainable value 2) Nonascertainable value

1) Ascertainable – Income recognized at grant date
2) Nonascertainable – income recognized at exercise date

Qualified options: 1) Incentive Stock Options 2) Employee Stock Purchase Plan
Recogninze taxable income when sold (capital gain/loss)

Would this work as a high level summary? If anyone can provide some more color to this – that would be absolutely helpful. 🙂

FAR 9/6/16 - Please wish me luck....
BEC 12/3/16

[KimmmayBaby]

Hey everyone, studying for Reg right now. I'm not new to the exam, I gave up for a while during my short, short tenture in Wall Street Regulation. I'm back in internal audit and ready to get this sucker over with. Studying with strictly Ninja this round, I've used Roger (I did like but didn't feel like paying) and Becke (hated it) before. Right now, I am scheduled to take the exam on October 20th. I still think this will be do able and just keeping my head down and eating through the information.

[CoachEmUp]

Finally got into the tax portion of Wiley today. They seemed to really dive into Section 1250 assets and I'm not sure of the value of it since the building would have to be pre-1987. Has anyone seen this come up? I just find it hard to believe they'd test 1250 over 1245.

This next month is going to really suck!

[Anonymous]

@Temnewo

I'm going to take a run at this, but I'm not positive I've got it right:

“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.”

I think what the bold part above should say or is trying to say is that since 70% of the dividend can be excluded, then logically 30% must be included in taxable income. It could also be referring to the fact that since you only are allowed up to 70% of TI for the DRD, then 30% of TI is excluded when considering the DRD for < 20% owned corporations. I think its just a typo, or something that was designed to trick the person reading the question, but when actually written out didn't make sense.

Just my two cents, I could be missing something here as well.

[KimmmayBaby]

Going through the Ninja MCQ's, can anyone confirm this for me?

The opposite of fraud is good faith.

[pharaoh]

@KimmmayBaby – I would say Yes. Fraud is “Intentional”, Good Faith is “unintentional mistake happened or didn't catch it”

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

[Determined24]

Hi Guys

I took REG twice already. I need to be reviewing as the material seems to not stick weeks into going through my review course.

Can anyone suggest a good approach for reviewing whilst I study the chapters.

[Determined24]

Is there anyone using Wiley CPA as there primary course?

Which Ninja course is a good supplement? Notes, MCQ, Audio…

[pharaoh]

@Determined24 I think Ninja now is sold as packages, MCQ, notes and audio, so you can buy a package and it will have all of them. You can try and see what works for you. I only use the MCQ, I make my own notes and I never used the audio, so I guess you will have to try different ways until you figure out what works for you.

There is no one way that fits all and actually I had to change my way depending on the section. I am not studying REG the same way I was studying FAR, with FAR I had no problem while doing 30 random mcq for the whole FAR but with REG I had to break it down by topic, so I do 20 mcq individual, then 20 corporate, etc … I feel that REG is so big and I have to focus on each topic separately first and then do them combined …am I making sense?

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

[Determined24]

@pharaoh thanks. REG is indeed huge. How do you incorporate the text into your study plan? I was thinking for my third time to just do strictly MCQs and SIMs. I just feel strained going through chapter by chapter, assessments.
I have 9 weeks before exam.

[almostCPA]

Hi folks, quick question. How does credit expiration work? I am trying to register for REG in October and my AUD credit expires on October 11th. Can I take REG on Oct 11th? Or it should be Oct 10th the latest?

[Author]

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