[jeff]

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Post by Another71.

[Gabe]

Been through Ninja ~3 times…starting on Wiley testbank…anyone else sitting beginning of Q2?

CPA, CFE
CISA- Experience will be completed by August 2016

[Gabe]

@pass best thing to do is look at the IRS forms, that way you can visualize what is separate vs non separate.

CPA, CFE
CISA- Experience will be completed by August 2016

[NJPRU]

Good Morning Pass – for separately and non-sepately stated items, I memorized the K-1s in the S Corp and Partnership chapters. I believe the K-1 in the S Corp chapter has a back page to it that actually itemizes everything you should know. Also, if I'm not mistaken the second practice exam's SIMs were all K-1s. This helped me memorize the forms as well.

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

IM GOING TO BE A CPA!!!!!

[aegrace90]

@Gabe, I'm sitting for REG on 4/14..hopefully my last exam!!

AUD - 7/14 DONE
FAR - 10/14 DONE
BEC - 11/14 DONE
REG - 11/15 DONE

CPA in VT 1/16

[Gabe]

welcome ae! Same boat here 🙂

CPA, CFE
CISA- Experience will be completed by August 2016

[PasstheCPA7]

@ Gabe & NJ – thank you. Have not tried the Becker final exam yet, but, I'll give it a shot.

Can someone also explain this? Wanted to ask a question on Partnerships. When we talk about Partnerships and “Guaranteed payments” – are these payments that 1 partner gives to another partner for services? Or is a guaranteed payment a payment from the PARTNERSHIP itself to the partner for services? I never quite understood that because Becker said it's from the Partnership? But – I'm not sure how it's coming from the partnership itself? It doesn't make sense because the Partnership is not a real person, yet alone a separate entity. How can it come from the Partnership and not from the partner themselves? Can someone explain this concept? Confused.

Thanks again.

[NJPRU]

@PASS – I think of guaranteed payments like salary expense for services performed. By definition, the partnership pays the partner for services performed (which is why it is a deduction to arrive at business income). So, it comes out of the partnership income and paid by the partnership rather than from other partners.

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

IM GOING TO BE A CPA!!!!!

[PasstheCPA7]

@ NJ – makes perfect sense. Thank you! I'll be posting a lot of questions this week, so, hope you don't mind NJ! Taking REG this week and just like you – it's my last exam. So ready to be done, so, just making sure I master the Tax!

However, my weak area I would say is Estates/Trusts. Would you say Estates/Trust is heavily tested (compared to Partnerships) or should I not go into the details? Estates/Trusts can get very detailed and some of those Becker questions in Estates are pretty rough.

[PasstheCPA7]

@ NJ, I did this Becker Question CPA 01751. The question is asking: A guaranteed payment by a partnership to a partner for services rendered may include an agreement to pay:

I. A salary of $5,000 monthly without regard to partnership income

II. A 25% interest in partnership profits.

The answer is Roman numeral I only. But, I picked II. Now, Becker is saying that guaranteed payments are NOT calculated with respect to partnership profits? I don't get that because aren't Guaranteed payments coming FROM the partnership income (being paid by the partnership to the partner) and thus – shouldn't guaranteed payments be calculated with respect to partnership profits? Can you provide an example of this? Not sure I am following.

[NJPRU]

@PASS – With regards to guaranteed payment, I have a strong feeling that when they say “without regard to partnership income”, it means that it is not based off of their partnership %. For instance, the payments are not coming directly based off of, let's say, a partners 10% share of the business. It's a payment (expense) for services, rather than a pass through item such as income. I could be wrong, but I think this is correct.

See IRS publication 541, but here is a excerpt that follows my thinking, “Guaranteed payments are those made by a partnership to a partner that are determined without regard to the partnership's income. A partnership treats guaranteed payments for services, or for the use of capital, as if they were made to a person who is not a partner. This treatment is for purposes of determining gross income and deductible business expenses only.”

Let me know if you have any other questions.

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

IM GOING TO BE A CPA!!!!!

[NJPRU]

As for estates and trusts, I did not have any questions pertaining to that on my exam. A lot of another71 users have noted that the larger items covered in Becker, like estates and trusts, were not on the exam and I would agree with that statement. I would know the basis of all the information in Becker, but you don't really have to go that much more into detail. I think Becker has a good high level review of the material.

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

IM GOING TO BE A CPA!!!!!

[PasstheCPA7]

@ NJ. Great. Sorry – can I ask something else? It's on Separately Stated Items and HOW that relates to the Basis. I guess I am not seeing the “correlation” here.

So, is it SAFE to say that every single separately stated item a shareholder (in a S-Corp) or a partner (in a Partnership) that we have in a Schedule K-1 such as: Section 1231 gains (losses), Section 179 depreciation election, capital gains and losses, charitable contributions, etc. affects the S-Corp shareholder or Partner’s basis?? I’m trying to understand how the separately stated K-1 items we have affects the S-Corp shareholder or the Partner's basis. That's it.

For example – we know ordinary income is a separately stated item in both a S-Corp and Partnership Schedule K-1. Ordinary income is the 1st item we see on the front of Schedule K-1. We also know that ordinary income increases the S-Corp shareholder and Partner’s basis. So, we can see that this ordinary income K-1 item affects the basis of the S-Corp shareholder or partner. BUT – how about all the other separately stated items? Do those ALSO affect the basis? Can you explain how that works?

Thank you so much. You've been a great help.

[pia ach]

Let me just say please do not skip estates.

Finally done!!! Experience-pending. Ethics- Pending.
Reg 78 / 73/82.
Aud 74/89.
BEC 72 /78.
FAR 74/ 73/ 82.

[PasstheCPA7]

Does anyone know why “Gain on sale of securities” is a separately stated item? I don't see this listed in a Schedule K-1 item, but, I was doing a Becker question and they said “Gain on Sale of Securities” is separately stated. What makes this item “special” that it needs to be separately stated?

[Gabe]

@pass in response to an earlier question..here is a direct quotation from the IRS website:

S corporation stock. You must increase your basis in stock of an S corporation by your pro rata share of the following items.

All income items of the S corporation, including tax-exempt income, that are separately stated and passed through to you as a shareholder.

The nonseparately stated income of the S corporation.

The amount of the deduction for depletion (other than oil and gas depletion) that is more than the basis of the property being depleted.

You must decrease your basis in stock of an S corporation by your pro rata share of the following items.

Distributions by the S corporation that were not included in your income.

All loss and deduction items of the S corporation that are separately stated and passed through to you.

Any nonseparately stated loss of the S corporation.

Any expense of the S corporation that is not deductible in figuring its taxable income and not properly chargeable to a capital account.

The amount of your deduction for depletion of oil and gas wells to the extent the deduction is not more than your share of the adjusted basis of the wells.

However, your basis in the stock cannot be reduced below zero.

I also think you're getting too caught up in the “why's.” Just focus on knowing what items are separately stated. they're not going to ask you why it's separately stated. Hope this helps!

CPA, CFE
CISA- Experience will be completed by August 2016

[Author]

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