[jeff]

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Post by Another71.

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

[Gabe]

@blackhawks

calc is:

700

<300>- exp

<28>- dep

+ 7 (cap gains)

+ 60 div income

= 439

* 10%

=43.9

DO NOT include DRD and (obviously) charitable contributions.

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

[Anonymous]

@gabe thanks a lot! I remember the charitable contribution deduction is 10% of taxable income before the big 5 (DRD, DPD, capital loss carryback, NOL, and charitable contribution). Makes sense now looking at it.

The approach of this question always seems to trick me up.

For the DRD, I remember the deduction is the lesser of the actual dividends received or taxable income before the big 4 (DRD, NOL, capital loss carryback, DPD).

Maybe those tricks will help others

[Tre]

@amyam,

Here is a video that helps simplify AMT a bit from Jeff.

https://www.youtube.com/watch?v=ns6JReRDZbQ

BEC - 84
REG - 88
FAR - 75
AUD - 71, Nov 2015

[Gabe]

Thanks @tre. For 2014, the % to reach exemption amount is 25%, correct?

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

[Anonymous]

When an S Corp distributes property the shareholder's basis is the FMV. This is one of the pitfalls of an S corp – gains can be recognized on distributions, whereas for an LLC, there are no gains on distributions of property. S Corps basis is affected by inreases and decreases of separately stated items. One major trick the examiners try and pull is the difference between BASIS and INCOME. Tax exempt interest income will increase the shareholder's BASIS, but will not be counted as income. If an S corp has AAA then its tax free to the extent of AAA, then taxable as a dividend to any C corp E&P, then a reduction of basis, then any excess is taxed as a capital gain. No AAA for an S corp and to extent of basis is nontaxable return of capital and any excess is a CAPITAL GAIN.

For partnerships, a distribution to a partner is the adjusted basis of the asset. Gains are recognized only when there is an excess distribution of CASH. If its a liquidating distribution and there's cash and property and the cash doesn't zero out the basis, then the property takes that basis to amount to zero. Ordinary gains are recognized from the sale of hot assets (A/R + Inventory). Contributions to a partnership you have to reduce the partners basis by the liabilities that OTHER partners take on and increase by any liabilities that the partnership takes on and add any FMV of services rendered.

C Corporation distributions are taxed as ordinary dividends to the extent of accumulated and current E&P. Any excess is a reduction of basis. Any excess of their basis is taxed as a CAPITAL GAIN. If a corporation is distributing PROPERTY and still has E&P remember that a gain will still be recognized – the shareholder's basis is the FMV of the property and the corporation recognizes a gain amounting to the difference of the FMV and the ADJUSTED BASIS of the asset. Forming a corporation the shareholder has no gain if no boot and 80%. The shareholders basis is reduced by any liabilities the corporation assumed. The corporation generally recognizes no gain and has a carryover basis as the property contributed by the shareholder?

[Anonymous]

I was weak in taxation of entites for my 66. Does all of the above sound about right? 🙂

[Gillitl11]

Need some help with this Becker question as I think they are wrong on this one. Apologies if it has been addressed elsewhere.

Strom acquired a 25 percent interest in Ace Partnership by contributing land having an adjusted basis of $16,000 and a fair market value of $50,000. The land was subject to a $24,000 mortgage, which was assumed by Ace. No other liabilities existed at the time of the contribution. What was Strom's basis in Ace?

a.$16,000

b.$26,000

c.$0

d.$32,000

Choice “c” is correct. Strom's basis in the land ($16,000) carries over as an element of his basis in Ace. The assumption by Ace of Strom's liabilities on the land ($24,000) is treated as a distribution of money to Strom, which reduces his basis temporarily to negative $8,000. Then, through his status as a partner of Ace, Strom is treated as re-assuming 25% of the liability, or $6,000, and this increases his basis temporarily to negative $2,000. Since it is impossible to have negative basis, Strom realizes a gain (usually capital) of $2,000, the amount necessary to bring his basis up to zero.

The liability should be shared according to the ownership %, right? So Strom's basis should be reduced by 6,000 (24,000 *.25) to bring it to $10,000?

[Anonymous]

@gabe yes the exemption amount is 40,000 minus the 25% of any excess over 150K.

Individual exemptions are a bit rough considering all the numbers… individuals is like 52,100 minus 25% of any excess over 117,300 … MFJ is 82100 minus 25% of any excess over 156,500 … and MFS is 40,400 minus 25% of any excess over 78,250

[Anonymous]

@Gillitl11 no the partners basis is reduced by what the OTHER partners assume in regards to liabilities. So 75% of the liability (24,000 mortgage) is 18,000 thereby reducing his basis and therefore the partner recognizing a gain. if the PARTNERSHIP were to take on a new liability then the partners basis would increase by 25%

[Gabe]

Mom and Pop exemption- go! I seem to remember something about 25k but can't recall and don't have my materials with me…

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

[terryharm]

@Gabe (AGI – 100) * .50 – 25,000

So if AGI is ( 125,000 – 100,000) that's 25,000 *.50 = 12,500 less 25,000 loss is 12,500

BEC: 81
FAR: 75
AUD: 81
REG: 85

PA license Pending..

[Anonymous]

Can any of you recite depreciation?

Residential property is 27.5

Nonresidential property is 39

3 year is horses and special tools

5 year is autos/trucks/computers/copiers

7 year is furnitures/fixtures, equipment

10 year?

20 year who knows

mid month is half a month when placed and disposed of… no idea when we use it?

mid quarter is 40% when put in place?

half year crap i dont remember a lot of this depreciation stuff because it puts me to bed

[Anonymous]

If anyone can summarize what i just covered that would be great because my notes on it really suck… its depreciation for property transactions

[Anonymous]

Know basis for each different entity like the back of your hand. I over emphasized business law a little too much ( I scored average comparable) but got smashed on entities and property transactions. I mean heck blaw is 20%

[thawdar]

What is the phase out limitation that you normally memorize???

[Author]

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