REG Study Group Q1 2015 - Page 129

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  • February 20, 2015 at 11:55 pm #652972
    Anonymous
    Inactive

    Bravo!

    Thank you all guys!!

    I can better understand it when people explain to me using nonfiction examples. Makes my ‘miserable' life easier, LOL.

    February 21, 2015 at 1:32 am #652973
    Anonymous
    Inactive

    Per my notes, “ILLEGALITY” falls under both real and personal defenses. Would this be correct?

    February 21, 2015 at 2:00 am #652974
    NJPRU
    Member

    I think Illegality is only a real defense; however, a non HDIC is subject to both real and personal defenses.

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

    IM GOING TO BE A CPA!!!!!

    February 21, 2015 at 3:17 am #652975
    FIFOisbetterthanLIFO
    Participant

    Can someone explain to me how for corporate AMT you could have a negative ACE adjustment? I understand the adjustments and preferences, but how can any of them ever make AMT go negative?

    ACE Adjustments are as follows:

    1. Seventy percent DRD

    2. Life insurance proceeds on key employees

    3. Municipal bond interest

    Thank you!

    FAR - Passed (82)
    BEC - Passed (76)
    AUD - Passed (89)
    REG - Passed! (81)
    AICPA Ethics

    Licensed CPA

    February 21, 2015 at 4:17 am #652976
    Anonymous
    Inactive

    @NJ, you are right again!

    I found this somewhere out there:…

    “Illegality: Acts that render a contract voidable create a defense against an ordinary holder, but not against an HDC.”

    https://www.shsu.edu/klett/CHAPTER%2026%20gBA%20362.htm

    February 21, 2015 at 4:22 am #652977
    s2sylvir
    Member

    Can the person talking about ACE and AMT rephrase? I don't understand…

    BEC - PASS (79)
    AUD - PASS (63, 71, 74, 74, 83)
    REG - PASS (88)
    FAR - PASS (58, 89)

    Becker for all + FAR 10 Point Combo

    February 21, 2015 at 4:23 am #652978
    lauren725
    Member

    FIFO- I have no explanation (yet) but am wondering the same thing too. I had a SIM a few days ago that had that on it and I didn't understand the logic since I thought those items would only increase.

    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 21, 2015 at 4:26 am #652979
    lauren725
    Member

    I think he is asking if ACE adjustments can decrease the AMT deduction. I thought those items:

    Muni bond interest

    Org amortization

    Life insurance key employees

    Depreciation adj diff AMT/ACE

    DRD for 70% corp ownership

    would only increase the adjustment?

    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 21, 2015 at 4:31 am #652980
    NJPRU
    Member

    I think it's being asked because Becker has a +/- next to the ACE adjustment…

    Here's what Google has to say and it has a pretty in depth example: https://tax.cchgroup.com/downloads/files/contemporary-tax-practice/Module4/Topic3/B-Corporate-Alternative-Minimum-Tax-Computations.asp

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

    IM GOING TO BE A CPA!!!!!

    February 21, 2015 at 5:32 am #652981
    WANNABE_CPA
    Member

    Wine purchased a computer using the proceeds of a loan from MJC Finance Company. Wine gave MJC a security interest in the computer. Wine executed a security agreement and financing statement, which was filed by MJC. Wine used the computer to monitor Wine’s personal investments. Later, Wine sold the computer to Jacobs, for Jacobs’s family use. Jacobs was unaware of MJC’s security interest. Wine now is in default under the MJC loan. May MJC repossess the computer from Jacobs?

    A.

    No, because Jacobs was unaware of the MJC security interest

    B.

    No, because Jacobs intended to use the computer for family or household purposes

    C.

    Yes, because MJC’s security interest was perfected before Jacobs’s purchase

    D.

    Yes, because Jacobs’s purchase of the computer made Jacobs personally liable to MJC

    FAR : 68, 74, 83 Thank you God 🙂
    BEC : 78 (8/27) 🙂
    REG : 72 ,80 (2/25) 🙂
    AUD : 69,67, 07/23

    February 21, 2015 at 5:32 am #652982
    FIFOisbetterthanLIFO
    Participant

    NJ I had also found that in-depth example. It appears that all of the negative adjustments are probably beyond CPA exam testing. The only adjustments/preferences mentioned in my Roger book (and it sounds like your guys' Becker books) increase AMT. I never thought twice about it until I got two different Wiley test bank questions that discussed offsetting AMT with negative AMT. Seems odd that there isn't a whole lot more information in the CPA books.

    FAR - Passed (82)
    BEC - Passed (76)
    AUD - Passed (89)
    REG - Passed! (81)
    AICPA Ethics

    Licensed CPA

    February 21, 2015 at 7:21 am #652983
    Anonymous
    Inactive

    1)—-Signed John Smith—-

    2)—-Signed Ed Jones

    3)Pay to the order of ABC & Co.

    4)Pay to Jo Miller, without recourse, ABC & Co.

    Per —-Signed Ann Kirk—-, President

    Endorsement Number 4 eliminates all the contractual liability of the endorser.

    Endorsing with the words “without recourse” is a qualified endorsement. A qualified endorsement means there is no guarantee of payment and eliminates the contract liability of the endorser.

    I am not understanding what this phrase ‘without recourse' really means. Please help. Thanks!

    February 21, 2015 at 12:49 pm #652984
    Anonymous
    Inactive

    Wannabe_CPA: Answer A.

    I remember Becker using an example saying that if a stereo was bought second hand and used at home, it could not be repossessed. But if the stereo was bought second hand and used at their place of work, it could be repossessed by the original creditor. However, that's just legal mumbo jumbo saying when and where MJC can step in.

    The key is that it was sold second hand to another consumer buyer and Jacobs was not aware of the security interest. They didn't know that Wine was not acting in good faith.

    February 21, 2015 at 12:54 pm #652985
    Anonymous
    Inactive

    Amor: Without Recourse is a qualified endorsement.

    Let's say there are 3 endorsers on a Note from Bob. Al, Steve, and Lisa

    Al is the original endorser and signs it over to Steve.

    Steve endorses the check and signs it over to Lisa but also marks it as Without Recourse.

    Lisa now owns the Note. Bob defaults and refuses payment. Lisa is able to go after other endorsers for payment on the Note (the idea being that they didn't simply give her the note but exchanged the note for something of value). So Lisa would look at Steve, see he signed it Without Recourse, and be forced to skip him and go after Al for payment of the Note.

    A little confusing but does that make sense?

    February 21, 2015 at 2:36 pm #652986
    Anonymous
    Inactive

    @Angel, thanks for your reply.

    It still doesn't make sense to me. Without recourse is like trying to be free from any liability. Endorsers without recourse would not have to pay and not be responsible at all in case of default of the maker/issuer in the future?

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