[jeff]

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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

[Gabe]

Dowd, Elgar, Frost, and Grant formed a general partnership. Their written partnership agreement provided that the profits would be divided so that Dowd would receive 40%; Elgar, 30%; Frost, 20%; and Grant, 10%. There was no provision for allocating losses. At the end of its first year, the partnership had losses of $200,000. Before allocating losses, the partners' capital account balances were: Dowd, $120,000; Elgar, $100,000; Frost, $75,000; and Grant, $11,000. Grant refuses to make any further contributions to the partnership. Ignore the effects of federal partnership tax law.

What would be Grant's share of the partnership losses?

A.

$9,000

B.

$20,000

C.

$39,000

D.

$50,000

So Grant's loss is $20k (10% * $200k), but what happens to the excess $9k that went below his basis?

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

[Anonymous]

@gabe…thnks

[omalloy]

What is Alimony Recapture?

FAR 65, 70, 78
REG 64, 76
BEC 70, 80
AUD 81

Ethics 96

Péter un plomb

[NJPRU]

never mind. lol

i hate this exam.

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

IM GOING TO BE A CPA!!!!!

[omalloy]

@Gabe Partnership losses cannot be taken bellow basis, the loss is carried forward until basis is available.

FAR 65, 70, 78
REG 64, 76
BEC 70, 80
AUD 81

Ethics 96

Péter un plomb

[omalloy]

This question is asking how to handle gain/loss from a sale, so depreciation is irrelevant. Land can be either property used in the trade or business and/or involuntary conversions-> Section 1231 property->losses @ ordinary tax rate, while gains are taxed @ capital rates.

FAR 65, 70, 78
REG 64, 76
BEC 70, 80
AUD 81

Ethics 96

Péter un plomb

[futureCPA]

Hi,

I got this question right and think I know how I got the answer but want to make sure. Please advise. Is it FMW 10,500-6,500+2000=6,000? Thanks in advance!

Mintee Corp., an accrual-basis calendar-year C corporation, had no corporate shareholders when it liquidated in Year 1. In cancellation of all their Mintee stock, each Mintee shareholder received in Year 1 a liquidating distribution of $2,000 cash and land with tax basis of $5,000 and a fair market value of $10,500. Before the distribution, each shareholder's tax basis in Mintee stock was $6,500. What amount of gain should each Mintee shareholder recognize on the liquidating distribution?

a. $0

b. $6,000

c. $500

d. $4,000

Explanation

Choice “b” is correct. When a corporation liquidates and distributes assets to shareholders, gain is recognized to the extent that the fair market value of assets distributed to a shareholder exceeds the shareholder's basis in the corporation's stock.

Choice “a” is incorrect. In a corporate liquidation, gain is recognized to the extent that the fair market value of the assets received exceeds the shareholder's basis in the stock.

Choice “c” is incorrect. The gain is calculated using the fair market value of assets received, not the basis of the assets received.

Choice “d” is incorrect. This is simply the difference in the fair market value of the land and the shareholder's basis in the stock, and is not how the gain is computed.

REG - 70, 72, retake at end of Nov.
BEC - PASS
FAR - 10/20/2015
AUD - PASS

[NJPRU]

Yeah.. i completely misread the definition.

when it “depreciable personal property and real property..

I thought it was depreciable personal and depreciable real property rather than depreciable personal proper… and… real property.

yikes!

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

IM GOING TO BE A CPA!!!!!

[NJPRU]

@future.. yes..

Cash received 2000

+ FMV of the land received 10500

= 12,500

12,500-6500 basis = 6000 (excess of their basis) = gain.

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

IM GOING TO BE A CPA!!!!!

[The_AmYam]

AMT Questions coming at you… I will post the question, possible answers, and then the correct answer/explanation.

REG - 81
FAR - 79
AUD - 94
BEC - OCT 15

[The_AmYam]

Certain adjustments must be made to a corporation’s pre-ACE alternative minimum taxable income (AMTI) to arrive at adjusted current earnings (ACE). Which one of the following adjustments increases pre-ACE AMTI to arrive at ACE?

a)80% dividends-received deduction.

b)Excess of capital losses over capital gains.

c)Amortization of organizational expenditures

d)Private activity bond interest income

REG - 81
FAR - 79
AUD - 94
BEC - OCT 15

[The_AmYam]

Correct Answer: C

see the MOLDD acronym in the corp AMT study materials

or the long answer

This answer is correct. A corporation’s organizational expenditures are not deductible and must be capitalized for purposes of converting a corporation’s pre-ACE alternative minimum taxable income (AMTI) to its adjusted current earnings (ACE). Private activity bond interest is a tax preference item and is added to regular taxable income in the process of computing a corporation’s pre-ACE AMTI.

REG - 81
FAR - 79
AUD - 94
BEC - OCT 15

[The_AmYam]

Catchem Corp., a calendar-year corporation, was formed on January 2, 2011, and had gross receipts for its first four taxable years as follows:

Year Gross Receipts

2011 $ 4,000,000

2012 9,000,000

2013 10,000,000

2014 7,000,000

What is the first taxable year that Catchem Corp. is not exempt from the alternative minimum tax (AMT)?

a) 2012

b) 2013

c) 2014

d) exempt for first 4 taxable years

REG - 81
FAR - 79
AUD - 94
BEC - OCT 15

[The_AmYam]

Correct Answer: C

This answer is correct. A Corporation is exempt from the corporate AMT for its first tax year. It is exempt for its second year if its first year’s gross receipts were $5 million or less. To be exempt for its third year, the corporation’s average gross receipts for the first two years must be $7.5 million or less. To be exempt for the fourth year (and subsequent years), the corporation’s average gross receipts for all prior three-year periods also must be $7.5 million or less. Here, Catchem is exempt for 2013 because its average gross receipts for 2011-2012 were $6.5 million. However, Catchem loses its exemption for 2014 and all subsequent years because its average gross receipts for 2011-2013 were in excess of $7.5 million ($7.67 million).

REG - 81
FAR - 79
AUD - 94
BEC - OCT 15

[The_AmYam]

A corporation will not be subject to the alternative minimum tax for calendar year 2015 if

a) corp has < 100 shareholders

b) corp's net assets do not exceed $7.5 million

c) 2015 calendar year is the corporation's first taxable year

d) the corporation had a net operating loss for 2014

REG - 81
FAR - 79
AUD - 94
BEC - OCT 15

[Author]

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