[jeff]

Welcome to the Q1 2016 CPA Exam Study Group for REG.

Some BLITZ videos to help your exams: https://www.another71.com/ninja-blitz

[Pandarama]

Or do you think the table given was already accounting for the depreciation being half-year convention??? AHHHH, trying not to freak out over here. lol

BEC - 80
AUD - 64, 75 - credit lost, 90!!
REG - 73, 74, 83
FAR - 61, 72, 85

Feels good finishing on my best note. Time to watch the mailbox.

[Claudia408]

@Panda – not sure on this but I think those depreciation tables are suppose to “do the calculation for you”, so you wouldn't have to do it manually. so yes your 2nd post i think is correct.

BEC - 75 (3x)
AUD - 78 (3x)
REG - 67, 66, Aug 1
FAR - 54, Sept 8

[marqzho]

Pandarama

The table given to you already reflected the half-year convention.

Without using the table

Computer $14000 * (1/5year) * (200% declining) * (1/2 convention)= $2800

it doesn't matter whether the asset is purchase on 1/1 or 12/31.

REG 90
FAR 95
AUD 98
BEC 84

[Claudia408]

Hi guys, question on this… if you want to minimize your taxable income, don't you want to lower your income and use double declining instead of straight line? so i thought the answer to this would either A or B… but the answer is D. Can someone explain why my thought process is wrong?

A company acquired off the shelf software that qualifies for the Section 179 deduction. It wishes to minimize its taxable income. In order to do so, it:

a.May take the Section 179 deduction and depreciate the cost on an accelerated basis over 36 months.
b.May take the Section 179 deduction or depreciate the cost on an accelerated basis over 36 months.
c.May take the Section 179 deduction and depreciate the cost on a straight-line basis over 36 months.
d.May take the Section 179 deduction or depreciate the cost on a straight-line basis over 36 months.

BEC - 75 (3x)
AUD - 78 (3x)
REG - 67, 66, Aug 1
FAR - 54, Sept 8

[mcohen1993]

@Claudia408

Software is special in that it either gets 179 or does not and is depreciated over 36 months. I think the trick is software will usually full under the max limit so you'll usually get the whole thing. What does the explanation say?

REG: 91!!
BEC: 80!!
AUD: TBA
FAR: TBA

In the order I plan to take the exams.

[marqzho]

Claudia

mcohen1993 is right. Software is a special item.

Here is what IRS said:
Computer software. Use the straight line method over 36 months. A longer period may apply to software leased under a lease agreement entered into after March 12, 2004, to a tax-exempt organization, governmental unit, or foreign person or entity (other than a partnership). See section 167(f)(1)(C).

If you elect the section 179 expense deduction or take the special depreciation allowance for qualified computer software, you must reduce the amount on which you figure your regular depreciation deduction by the amount deducted.

REG 90
FAR 95
AUD 98
BEC 84

[Claudia408]

@mcohen1993 @marqzho – thank you both. yes the explanation was exactly what you guys said, i think i was missing that software is special. lol 🙂

BEC - 75 (3x)
AUD - 78 (3x)
REG - 67, 66, Aug 1
FAR - 54, Sept 8

[Claudia408]

hi again… so for this question, i was pretty lost about section 179 so i might not be making sense here!

Joe purchased a van for $30,000 on February 1, 20X4, for use with his business, Crew Airport Transport. Joe elected to take the Section 179 deduction. On January 1, 20X6, Joe sold the van for $20,000. What were the tax effects of this transaction?

if you use section 179, does that mean you expensed the first $25k which is the max and is the price of the van which would leave a $5k basis? And if you sold it for $20k, then $15k would be the gain?

The answer said all $30k was expensed under section 179 so the basis was $0 and all $20k is gain.

BEC - 75 (3x)
AUD - 78 (3x)
REG - 67, 66, Aug 1
FAR - 54, Sept 8

[marqzho]

the max is 500,000 except SUV is 25,000

REG 90
FAR 95
AUD 98
BEC 84

[Pandarama]

thank you marqzho & Claudia!

@Claudia – the 179 deduction is different for 2015 vs 2014. In 2015, the 179 deduction is $25,000 and then the remaining amount after the deduction is taken would be applied to the MARCS calculation. In 2014, the deduction is $500,000 so the entire $30,000 could be deducted(expensed).

BEC - 80
AUD - 64, 75 - credit lost, 90!!
REG - 73, 74, 83
FAR - 61, 72, 85

Feels good finishing on my best note. Time to watch the mailbox.

[marqzho]

2015 179 max deduction is also $500,000

REG 90
FAR 95
AUD 98
BEC 84

[Pandarama]

Sorry marqzho… you're right, as of 12/18/15 it's $500k. So now my question is what will the 2016 REG test look like for those questions since before they kept using the $25k amount.

BEC - 80
AUD - 64, 75 - credit lost, 90!!
REG - 73, 74, 83
FAR - 61, 72, 85

Feels good finishing on my best note. Time to watch the mailbox.

[Anonymous]

What? That Stupid-179 is absolutely confusing. I've seen the maximum allowable deduction is $25K or $500K ALTERNATELY for 2015? It's like Bruce Jenner, or Caitlyn Jenner, now wants to revert his gender???

[mcohen1993]

I feel like they shouldn't actually test on 2015 taxes until Q3 2016 because by then most of the legislation will be clear set. But don't quote me on that.

REG: 91!!
BEC: 80!!
AUD: TBA
FAR: TBA

In the order I plan to take the exams.

[marqzho]

Originally, under irc, it is 25k. But the economy went to toilet couple years ago so congress passed some laws to boost the deduction amount in order to provide more incentive to equipment investment. Those laws are yearly basis. 179 deduction amount would go back to 25k unless the congress decide to renew it by the end of every year. For 2014. It is 500k. For 2015 it is 500k. It is always 500k for couple years already. And Congress just passed the law days ago that make 500k now permanent amount with inflation adjustment every year. So forget about 25k unless the question ask you for a past year amount or specially tell you to use 25k. Hope that helps 🙂

REG 90
FAR 95
AUD 98
BEC 84

[Author]

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