[jeff]

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

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Post by Another71.

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

[Gabe]

@the_amyam I am pounding MCQs this weekend but I was definitely overstudying yesterday. I was getting everything wrong, even basic questions.

I plan on focusing on: AMT, basis, broad overview of taxes, basic BLAW.

oh and DESTROY REG ON SATURDAY!

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

[Gabe]

Adams owns a second residence that is used for both personal and rental purposes. During Year 1, Adams used the second residence for 50 days and rented the residence for 200 days. Which of the following statements is correct?

A.

Depreciation may not be deducted on the property under any circumstances.

B.

A rental loss may be deducted if rental-related expenses exceed rental income.

C.

Utilities and maintenance on the property must be divided between personal and rental use.

D.

All mortgage interest and taxes on the property will be deducted to determine the property’s net income or loss

I understand why C is correct but why is B incorrect?

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

[Leach2587]

Gabe – I may be wrong because I am just starting to study for REG again but I think B is wrong because you can only deduct your rental losses up to the point of your rental income… similar to gambling losses. I don't know if the passive loss carry forward rules would apply to this exact rental home in the question. I chose C when I read through the questions and the choices.

[Leach2587]

@Gabe, Actually I just did the question and according to the answer, if you use the property personally for over 14 days, you are not allowed to take a loss on the property.

[Forte Freeze]

As Leach said:

More from IRS below:

Limits on Rental Losses

If you have a loss from your rental real estate activity, two sets of rules may limit the amount of loss you can deduct. You must consider these rules in the order shown below. Both are discussed in this section.

1.

At-risk rules. These rules are applied first if there is investment in your rental real estate activity for which you are not at risk. This applies only if the real property was placed in service after 1986.

2.

Passive activity limits. Generally, rental real estate activities are considered passive activities and losses are not deductible unless you have income from other passive activities to offset them. However, there are exceptions.

4/13/14 BEC - 76!
11/29/14 AUD - (74) 79!
11/28/15 REG - 8/30/15 (72)4/1/15(68)
7/1/15 FAR - (70)(71) 77!

Persistence
Determination
Forte

[Gabe]

haha I completely misread the answer. You are correct Leach 🙂

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

[Mika]

Answer is..

B. Dividend income – $60,000 ; Roger basis – $5,000

Distribution = $310,000

AAA = $50,000 + $200,000 = $250,000

Remaining $60,000, since AEP is $90,000, therefore, $60,000 is treated as dividend income.

When calculating the basis of Roger

Initital Basis $100,000

Ordinary income $200,000 (which is also AAA)

Distribution ($250,000) (NOT the $310,000)

Ending basis $5,000

REG - 80 (02/13/2015) Roger + Ninja Flash Card + Ninja MCQ + Becker's Note
FAR - 84 (05/29/2015) Roger + Ninja MCQ + Some Wiley book questions
BEC - 77 (08/27/2015) Roger + Ninja MCQ + Half Wiley book questions
AUD - 87 (08/28/2015) Roger + Ninja MCQ + Half Wiley book questions

[Gabe]

uh Isn't 100+200-250= 50?

And I thought the order of distribution was

AAA

AEP

Ordinary Income

Is that incorrect?

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

[omalloy]

Taxes are not high on bankruptcy payout priority but they are not discharged (correct?).

If the IRS has a recorded judgment for unpaid corporate income tax, then does that make it a secured debt? Will recorded judgement always trump other unsecured debt?

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

Ethics 96

Péter un plomb

[Gabe]

Fox, the sole shareholder in Fall, a C corporation, has a tax basis of $60,000. Fall has $40,000 of accumulated positive earnings and profits at the beginning of the year and $10,000 of current positive earnings and profits for the current year. At year-end, Fall distributed land with an adjusted basis of $30,000 and a fair market value (FMV) of $38,000 to Fox. The land has an outstanding mortgage of $3,000 that Fox must assume. What is Fox's tax basis in the land?

A.

$38,000

B.

$35,000

C.

$30,000

D.

$27,000

Ok, so when is AB used and when is FMV used? I thought FMV was only used in regards to services?

edit: answer is A

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

[s2sylvir]

@Gabe

I think you're thinking about contributions. Contributions is usually NBV (unless FMV is lower, then FMV is used) and then services is at FMV.

For distributions, it is FMV

Off topic: I JUST REALIZED THERE'S AN EDIT BUTTON! Lol ;c

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

Becker for all + FAR 10 Point Combo

[Gabe]

@s2 all distributions are FMV?

edit: you're awesome 😉 lol

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

[omalloy]

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

Ethics 96

Péter un plomb

[Gabe]

Thanks omalloy!

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

[omalloy]

I think I had it wrong

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

Ethics 96

Péter un plomb

[Author]

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