[jeff]

Free Study Planner, Notes, Audio, Flashcards: https://www.another71.com/cpa-exam-study-plan/

Free CPA Exam Survival Guide: https://www.another71.com/cpa-exam-survival-guide/

Post by Another71.

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

[jalleyne]

Hi guys,

I just did REG today 27/02/2015 and i'm not feeling the most confident. Is there anyone planning on taking REG in April 2015 as I would like to perhaps join a study group or partner up if possible?

[NJPRU]

Thanks Lauren! My exam is at 1230 est. I'll check back in after a few glasses of wine tomorrow evening. 🙂

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

IM GOING TO BE A CPA!!!!!

[Anonymous]

Hi everyone.

I have been slient reader here and there. Now i need some advice.

My exam is tom. Brain doesnt want to take in anymore information. I am using becker and did 2nd practice exam and just had last sim left when library was closing so i rushed out. I came home to finish the last sim which was RESEARCH. After ending the test the whole screen went blank and nothing got saved. I really wanted to work on the both practice test and now i dont know what to do. I am so upset right now that i cant even think. Should i retake that test, work on the the other practice exam or practice the AICPA exam?

[lab2008]

CPAneed – my exam is also tomorrow not until 4:30pm (not really by my preference.) I'm currently practicing SIMs which I saved until the end and until I realized that's where my practice tests are low. Right now separately stated income which I'm getting pretty comfortable with. (Btw, anyone know if life insurance premiums paid on partners is separately stated?)

Anyway, I don't think it matters which of those 3 options you do as long as you continue to put in the hours studying. Good luck and make sure to get enough sleep.. if your exam isn't at 4:30 like me 🙂

3 out of 4 passed and sitting for FAR on May 31. Will lose credit for Audit if I don't pass FAR by Aug 4. I love leases and bonds.

[Anonymous]

Thank you for the reply.

Good luck tom. Yes do go over those sims especially the first 4 chapters. This is my 2nd time taking and i rem thats what killed me the first time.

My exam is at 1 so i thinking of heading to bed hoping to get some last min review done tom before the exam.

[Anonymous]

@lab2008. You will do great tom. Don't stress too much.

We got this. 🙂

[PasstheCPA7]

@ CPAneed or Lab – I wanted to ask you guys an IMPORTANT question. Can you please explain to me WHY the “AAA” when we talk about S Corps is NOT taxable when distributed? This is the concept I don't get. I feel the distributions from the AAA should be taxed because the S Corp is a flow-through and this distribution (coming out of AAA) should hit my Individual Form 1040 and I should get taxed on it when I receive it. How is this logic wrong? Can you please explain?

IF the AAA is not taxed (when it is distributed) – when is it taxed then? I mean we know the distribution from the AAA is NOT taxed at the S Corp entity level because the S Corp DOESN'T pay taxes at the entity level. Only a C Corp does. Please explain this.

Thanks!

[FIFOisbetterthanLIFO]

@Pass, the S corp is a flow through entity. This means that all income is taxed to the shareholders each year. Current earnings are always taxed in the year they are earned. If the income earned is not distributed, then it goes into AAA and stays there until it is distributed. That's why AAA should not be taxed because it was already taxed in the year it was earned. Just because the income is earned by the S Corp it does not mean its distributed to shareholders. It is however always taxed in the year it was earned! Let me know if that doesn't answer your question.

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

Licensed CPA

[Holly]

@Pass Also, AAA distributions aren't taxable because they they reduce stock basis for the shareholder who is taking the distribution. It is possible for the shareholders to take distributions in excess of basis and then the distributions become a capital gain.

BEC - 79
REG - 85
AUD - 5/27/16

[Anonymous]

AAA is one of the advantages of an s corp over a c corp. If the s corp was not a flow through entity like a c corp then you are right AAA should be taxed when distributed. Since an s corp is a flow through entity being taxed on the distributions at the shareholder level another tax when distributed from AAA would be a double taxation which would defeat the purpose of being an s corp for tax advantages.

Hopefully that helps.

[Anonymous]

I really thought I was done with the whole illogical boot received concept after FAR. It's so irritating to see it again. My brain just refuses

[PasstheCPA7]

@ FIFO, HR, & Dabutler – thank you guys so much. Very helpful.

I did want to ask you guys another important concept that I keep confusing myself with and that's Shareholder Basis and C Corp Basis. For example – if there is one thing I hate, that is memorizing formulas. The reason is because I tend to forget it. My question to you guys is this: The Shareholder basis in new stock formula is this:

Adjusted basis of transferred property (including cash)

+ Recognized gain

+ Cash paid

+ Liabilities assumed by corporation

– Cash received

– FMV of nonmonetary boot received

– Liabilities transferred to corporation

My question is this: I like journal entries better. It's easier for me to do (than just memorize that formula up above). If the question is asking me to find shareholder basis, can I create a journal entry with ALL of those components above and the “plug” would be the new basis in shareholder stock? Would a journal entry work all the time? Because if a journal entry WERE to work all the time and plug would be “new basis in shareholder stock” – I would just do that. It's easier for me to do (than again memorize that formula up above). I would love to know this.

Thanks.

[Holly]

@Pass is the formula you gave correct for the liabilities? I would think so you could do an entry…..How else would you get it on the balance sheet if you were faced with this situation? Are you using Becker?

BEC - 79
REG - 85
AUD - 5/27/16

[Holly]

@Pass I'm asking if you're using Becker because I am and I have an idea and I want you to see the same information as me.

BEC - 79
REG - 85
AUD - 5/27/16

[PasstheCPA7]

@ HRSexton, yeah, I am using Becker. However, my friend is using a different program and he told me his review course uses that formula. It's the same formula as Becker. But, again, I just wanted to see if we could construct a journal entry when doing questions on this. To me, entries are easier to understand. Not sure if you think the same way. What do you think @ HRsexton?

Also – one other thing I don't seem to understand is Becker says use the greater of Debt assumed or adjusted basis for the C Corp basis. However, IF the C corp is ASSUMING debt that is being paid by the Corp, how come this debt is NOT a reduction of the adjusted basis? That's another issue I had. For example, on page R3-6, Gearty forms a Corporation and contributes property with a basis of $140,000 subject to $60,000 mortgage. Why is the basis for the Corp $140,000? Instead, how come the basis of the asset is NOT $80,000 (140,000 – 60,000)? Am I missing some important concept there? What's the logic there? Not sure why the $60,000 mortgage assumed by C Corp is NOT reducing the C Corp basis. After all, the C corp IS responsible for this. Can you explain that?

[Author]

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