REG Study Group Q1 2015 - Page 119

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  • February 16, 2015 at 10:25 pm #652819
    Anonymous
    Inactive

    True or False: (And why)

    The promise to act as a gratuitous surety need not be supported by consideration.

    February 16, 2015 at 11:26 pm #652820
    BEACPA
    Participant

    NJPRU,

    Thank you for your response and for referencing that table. It is very helpful! I'm beginning to become aware of how much tax law I have forgotten over that past few weeks – while my head was buried in BLAW. I continued to review tax law during that time too but there's just too much. Thanks again!

    Cheers…

    FAR - 2/28/14 PASS Praise be to God!
    AUD - 7/5/14 PASS Praise be to God!
    BEC - 11/29/14PASS Praise be to God!
    REG - 2/28/14 PASS Praise be to God!

    February 16, 2015 at 11:31 pm #652821
    BEACPA
    Participant

    Like-Kind Exchanges:

    Becker provides the following formula for determining the “basis” of new property in a like-kind exchange:

    FMV of property received “minus” Deferred Gain “plus” Deferred Loss

    The problem? I have memorized it, but I can't conceptualize it. With that said, I'm concerned that I may get it reversed if I have a problem related to this on the exam. Could anyone help me to understand the logic? Thank you in advance!

    FAR - 2/28/14 PASS Praise be to God!
    AUD - 7/5/14 PASS Praise be to God!
    BEC - 11/29/14PASS Praise be to God!
    REG - 2/28/14 PASS Praise be to God!

    February 16, 2015 at 11:38 pm #652822
    BEACPA
    Participant

    Amor D,

    Thanks for the question! Let's dissect a gratuitous surety by looking at the definition of “gratuitous”. Gratuitous means to do something for free, therefore unlike a compensated surety – a gratuitous receives nothing. Therefore, a gratuitous surety need not be supported by consideration.

    FAR - 2/28/14 PASS Praise be to God!
    AUD - 7/5/14 PASS Praise be to God!
    BEC - 11/29/14PASS Praise be to God!
    REG - 2/28/14 PASS Praise be to God!

    February 16, 2015 at 11:46 pm #652823
    Anonymous
    Inactive

    Not a problem Beacpa!

    Let me rephrase my question by replacing gratuitous to compensated:

    True or False: (And why)

    The promise to act as a COMPENSATED surety need not be supported by consideration.

    I think the answer would be the same and same rule applies. Would that be correct?

    In the beginning, I was doubting if the first question was true so I posted it on here. Then later, I was confusing this suretyship with agency.

    Ergo, CONSIDERATION need not be required in agency.

    Please clarify. Thanks!

    February 17, 2015 at 12:01 am #652824
    NJPRU
    Member

    BEA – I think what helped me is Becker's examples in the book. When I get a like-kind exchange, I literally set it up with what you received @ fmv on the left side of scratch paper and the basis I'm giving up on the right.

    I then calculate realized first (right minus left), then calculate recognized (lesser of realized gain and boot received), then figure out if there was a deferred gain or loss (realized amount – recognized amount).. if there is anything left over from the realized equation after deducting the recognized amount, that is deferred gain or loss. then really, the only thing left to do is add the loss and subtract that gain.

    I would really take a look at how they format the different scenarios in the book and then try to do the 20 or so problems in the MCQs. They are great for learning and then you can apply the format of the answer to any problem you get.

    AUD: DONE
    FAR: DONE
    BEC: DONE
    REG: DONE

    IM GOING TO BE A CPA!!!!!

    February 17, 2015 at 12:14 am #652825
    Anonymous
    Inactive

    I am comfortable now with like-kind exchange. My issue is recognizing G/L on liquidating/nonliquidating distributions for the various business structures. I am so lost after studying them two weeks ago. When I read the posts above, I am panicking like crazy that I could not tell the difference of one business structure to another. It's like watching people playing ping pong and seeing many balls being tossed like there were more than six balls bouncing on the table.

    February 17, 2015 at 2:04 am #652826
    PasstheCPA7
    Participant

    Hi,

    For those that are using Becker, I wanted to ask a quick question. When we talk about “Fraud in the inducement” – is this basically the “MAID” mnemonic? However, if we are talking about “Fraud in the execution”, is this the “MAIDS” mnemonic now (with scienter)?

    Thanks.

    February 17, 2015 at 2:11 am #652827
    lauren725
    Member

    The “MAIDS” mnemonic is used in general for all fraud.

    Fraud in the execution is void – the person did not know they were signing a contract, where fraud in the inducement is voidable – they knew they were signing a contract but they were not aware of the details.

    AUD - 73,91
    FAR - 79 - Thank you God!
    BEC - 73,79!!!!
    REG - 92 whatttt??!

    I used Becker review + flashcards, Ninja Audio, Ninja MCQ supplement on BEC and REG.

    Done! Praise God!

    February 17, 2015 at 2:12 am #652828
    lauren725
    Member

    I think you just need to know the definition of both and then know the characteristics of fraud (maids).

    AUD - 73,91
    FAR - 79 - Thank you God!
    BEC - 73,79!!!!
    REG - 92 whatttt??!

    I used Becker review + flashcards, Ninja Audio, Ninja MCQ supplement on BEC and REG.

    Done! Praise God!

    February 17, 2015 at 2:21 am #652829
    lauren725
    Member

    falalala commercial paper still sucks

    AUD - 73,91
    FAR - 79 - Thank you God!
    BEC - 73,79!!!!
    REG - 92 whatttt??!

    I used Becker review + flashcards, Ninja Audio, Ninja MCQ supplement on BEC and REG.

    Done! Praise God!

    February 17, 2015 at 2:23 am #652830
    PasstheCPA7
    Participant

    @ Lauren – thanks! But, I want to ask you something. On page R6-14, Becker says that Innocent misrepresentation is the “MAID” mnemonic (without the scienter). But, why does innocent misrepresentation even have all the elements of fraud (except scienter) in the first place?

    That’s what I don’t get because the act was done “innocently” or unintentionally. There was never a time where the party tried to defraud the other party. It was done innocently and the party had no idea at all that he misrepresented. So, not sure why “MAID” even applies to innocent misrepresentation. Do you see my logic?

    Thanks!

    February 17, 2015 at 2:24 am #652831
    BEACPA
    Participant

    NJPRU,

    Thanks for the time that you dedicated to answering my question regarding like-kind exchanges. I'm in review mode right now, which is what caused this question to surface. I agree with what you said about doing the plethora of MCQs that are in R4 on Partnerships. That's where I was when I asked the question on determining the basis. It's much easier for me if I “learn” something as oppose to memorize it – if possible (i.e, math vs history). Let's slay this beast!

    FAR - 2/28/14 PASS Praise be to God!
    AUD - 7/5/14 PASS Praise be to God!
    BEC - 11/29/14PASS Praise be to God!
    REG - 2/28/14 PASS Praise be to God!

    February 17, 2015 at 2:26 am #652832
    BEACPA
    Participant

    Amor D,

    Perfect analogy of REG using the ping pong example.

    FAR - 2/28/14 PASS Praise be to God!
    AUD - 7/5/14 PASS Praise be to God!
    BEC - 11/29/14PASS Praise be to God!
    REG - 2/28/14 PASS Praise be to God!

    February 17, 2015 at 2:37 am #652833
    BEACPA
    Participant

    Amor D,

    I was partially wrong in my response to a gratuitous surety (GS). There is a consideration with a GS. The consideration for a GS is the promise or performance that the creditor makes to the principle (i.e., debtor). This is the definition that Becker provides in the back of their book. The main thing to member is that it doesn't take much to discharge a GS, as oppose to a compensated surety. A compensated surety may only be discharged when the creditor makes a “material” change in the contract. My apologies for my inaccurate response.

    FAR - 2/28/14 PASS Praise be to God!
    AUD - 7/5/14 PASS Praise be to God!
    BEC - 11/29/14PASS Praise be to God!
    REG - 2/28/14 PASS Praise be to God!

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