[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

[ahugemistake]

On the exam do you have to memorize numbers like this:

Since George is eligible to be claimed as a dependency exemption by his parents, there will be no personal exemption on George's return and his basic standard deduction is limited to the greater of $1,000, or George's earned income of $1,700, plus $350. Thus, George's taxable income would be computed as follows:

The rule about earned income + 350 seem really specific…

FAR - 78*
AUD - 66, 79
REG - 73, 76
BEC - 79

[Anonymous]

Imagine memorizing 6-digit phase-limit figures. Haha. It's like memorizing phone numbers of many G/Fs or B/Fs.

Filing Status AGI—Beginning of Phaseout (2015) AGI Above Which Exemption Fully Phased Out (2015)
Married Jointly $309,900 $432,400
Head of Household $284,050 $406,550
Single $258,250 $380,750

How do you like the idea of Presidential Candidate Rand Paul to abolish IRS, impose 20%-tax across the board, and simplify tax code? I am seeing a chance for me to eventually pass REG one way or another:)

[Future Ninja]

@Amor D. Hell yeah!

AUD - 79 (expired) retaking July 28,2016
FAR - 76 expiring July 31, 2016
BEC - 85
REG - 74,74,74,74,59,70,

[Anonymous]

I have a question about the difference between SURETIES & CO-SURETIES' RIGHT.
I understand if there are multiple sureties (just like the SIM sample below), they are considered co-sureties among themselves.
How can then be CO-SURETIES distinguished from SURETIES alone?

Jane wishes to obtain a loan of $90,000 from Silver. At the request of Silver, Jane has entered into an agreement with Bing, Piper and Long to act as co-sureties on the loan. The agreement between Jane and the co-sureties stated that the maximum liability of each co-surety is as follows:
Bing $60,000; Piper $30,000; Long $90,000
Based upon the surety relationship, Silver agreed to make the loan. After paying three installments totaling $30,000, Jane defaulted.
For items 1 and 2, double click on the shaded cells in Column A and select the correct answer from the option choices provided. An answer may be selected once, more than once or not at all.

Item
Column A
1. Prior to making payment, the co-sureties may seek the remedy of:
Exoneration
2.. A distinction between a surety and a co-surety is that only a co-surety is entitled to:
Contribution

For items 3, 4, and 5, assume that Long properly paid the entire debt outstanding of $60,000. Record the dollar value in Column A that Long could recover from the other co-sureties.
Item
Column A
2
3. What is the amount Long may collect from Bing?
$20,000
3
4. What is the amount Long may collect from Piper?
$10,000
4
5. For this item only, if Piper’s debts, including his surety obligation to Silver, were discharged in bankruptcy, what is the amount Long may collect from Bing?
$24,000
EXPLANATION
1. Exoneration
Exoneration is the right of a surety prior to payment to get a court order demanding that the debtor pay. Note that this right is available to the surety prior to payment.
Contribution (the right of a co-surety after payment, to demand a pro rata payment from the other co-sureties) is not available prior to payment.
Subrogation (the right of a surety to gain the creditor's rights once the surety has made full payment) is not available prior to payment.
Reimbursement (the right of a surety to recover from the debtor payments made to the creditor) is not available prior to payment.
2. Contribution
Only a co-surety has the right of contribution against other co-sureties. Contribution results in the sharing of liability on a pro rata basis among co-sureties.
Reimbursement (or indemnification) is incorrect because reimbursement (the right of a surety to recover from the debtor payments made to the creditor) is available to both co-sureties and sureties.
Subrogation (the right of a surety to gain the creditor’s rights once the surety has made full payment) is incorrect because subrogation is available to both co-sureties and sureties.
3. $20,000
Long may collect $20,000 from Bing. On payment, a co-surety is entitled to a pro rata contribution from his co-sureties on their share of the payment. Long paid $60,000. Proportionally, Long was responsible for 1/2 of the debt (90/180). Bing was responsible for 1/3 (60/180) of the $60,000 debt or $20,000
4. $10,000
Long may collect $10,000 from Piper. On payment, a co-surety is entitled to a pro rata contribution from his co-sureties on their share of the payment. Piper was responsible for 1/6 (30/180) of the $60,000 debt or $10,000.
5. $24,000
Long may collect $24,000 from Bing. Since Piper's co-surety obligation was discharged in bankruptcy, it should not be considered in determining the pro rata share of the remaining co-sureties. With only Long and Bing to consider, Long was responsible for 3/5 (90/150) of the $60,000 debt and Bing was responsible for 2/5 (60/150) of the $60,000 debt. Thus, Bing's share would be 2/5 of $60,000 or $24,000.

[Jackobe24]

Kuo Sells residential property to his son Karo for $100,000. Karl gives Kuo $1,000 and an installment note for the balance of $99,000. Kuo's basis is $50,000. Karl pays Kuo $4,000 in year 1. In year 2, after paying Kuo $5,000, Karl sells the property for $70,000. Which statement is correct?

Answer is : Kuo should report $2,500 gain in year 1.

Anyone knows the calculation to get to this answer??

Thanks

FAR - 9/8/16 (Hopefully it's my last CPA exam, God bless me!)
REG - 80
BEC - 81
AUD - 69, 81

[CPA2B_NJ]

Can you guys help me understand built-in taxes? It seems that sometimes the adjusted basis is used and sometimes the FMV is used. I'm very confused because I can't tell from the question when a contributed property is fully depreciated. For example:

When the AQR partnership was formed, partner Acre contributed land with a fair market value of $100,000 and a tax basis of $60,000 in exchange for a one-third interest in the partnership. The AQR partnership agreement specifies that each partner will share equally in the partnership's profits and losses. During its first year of operation, AQR sold the land to an unrelated third party for $160,000. What is the proper tax treatment of the sale?

a. Each partner reports a capital gain of $33,333.

b. The entire gain of $100,000 must be specifically allocated to Acre.

c. The first $40,000 of gain is allocated to Acre, and the remaining gain of $60,000 is shared equally by the other two partners.

d. The first $40,000 of gain is allocated to Acre, and the remaining gain of $60,000 is shared equally by all the partners in the partnership.

FAR - 50, 78
BEC - 67, 72, 75
AUD - 72, 80
REG - 70, 85

To God be the glory! Forever, amen!

NJ License

[Anonymous]

@Jackobe, what's the FMV of the property? Are Karl and Karo one and the same person?

[ahugemistake]

@jackobe @amor

I want to say that the 100K is treated as the FMV, and the AB is 50K

1st calculate that gross profit percentage, 100 – 50 = 50K gain 50/100 = 50% GPP .50 * 1000 = 250 income recognized on sale

year one installment 4000 * .50 should lead to a 2000 gain in year one and 2500 in year 2, unless the sale has something to do with Karl paying back Kuo in full that might effect this? but I'm not sure.

FAR - 78*
AUD - 66, 79
REG - 73, 76
BEC - 79

[mcohen1993]

I sit for my exam at the end of the month and am just getting caught up on all the little things. Mostly business law too. I am trending at an 81-83% and can't get it much higher. I am worried I will be given something really out there like identifying PFICS for a simulation (which Becker does nothing on and you only see n practice). I keep on hearing the date of my exam and tread it. I hope this feeling is normal.

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

In the order I plan to take the exams.

[Jackobe24]

ok thanks guys…

anyway, I just took my exam….

feel like I did okay in first testlet, but damn….that 2nd testlet was difficult, so many curve balls….

I don't think I did well at all in the 2nd testlet….

so last one felt like was moderate only…..

is there a chance I still pass if I did good/very good in 1st and 3rd testlets, horrible is 2nd testlet and okay/average in sims??…..

FAR - 9/8/16 (Hopefully it's my last CPA exam, God bless me!)
REG - 80
BEC - 81
AUD - 69, 81

[Pandarama]

@jackobe – anythings possible. lol some people who felt like they bombed everything still pass… so yah there's honestly no point in asking if it's possible since everyone is different.

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]

I'm using Wiley CPAexcel and Ninja MJQs. In practicing the simulations with Ninja I found one of them to be extremely confusing or unfair. Sim #33 asks you to fill out the deductions for AGI. The taxpayer contributed to 4,000 to an IRA but is not entitled to the deduction for the following reason:

Line 32: For 2015, a taxpayer that files as Head of Household and is covered by an employer-sponsored qualified retirement plan is able to make tax-deductible contributions to a traditional IRA plan only if their modified AGI is $61,000 or less. In addition, a partially deductible contribution is permitted to a taxpayer only if their modified AGI is between $61,000 and less than $71,000. Since Keisha’s AGI is well above those limits, she can make a $5,500 contribution to her traditional IRA but none of it will be deductible. It should be noted that $5,500 is the maximum contribution in 2015 (see IRC Section 219(b)(1)(A)).

Nowhere (as I can see) in the problem states that she is covered an employer-sponsored qualified plan. How are we supposed to know this? Is there something I'm missing? The simulation is #33 in Ninja.

Thanks

[melody_pinaycpa]

Don Mills, a single taxpayer, had $70,000 in taxable income before personal exemptions. Mills had no tax preferences. His itemized deductions were as follows:

State and local income taxes $5,000
Home mortgage interest on loan to
acquire residence 6,000
Miscellaneous deductions that exceed
2% of adjusted gross income 2,000

What amount did Mills report as alternative minimum taxable income before the AMT exemption?

Correct answer is 77K but I answered 83K. Are we not suppose to add back Home mortgage interest on loan to
acquire residence of 6K? Please help

FAR (Apr 2015) - 88
AUD (July 2015) - 86
BEC (Oct 2015) - 82
REG - 73, 70, retake Sept 2016

[Mole351]

how important is knowing like-kind-exchanges and determining exchanges with recognized gain/loss? (outside of the “you should know everything” wisdom)

i only ask as it seemed VERY important in my review course (Yaeger), and the Ninja audio made mentioned that it sets students apart, but going through the Ninja MCQ's there are almost zero questions on it (I've been through/seen about 1300 of the 1900 questions and I don't know that I've seen one question on it)

I've done maybe 15 of the 70some SIMS so maybe they are in there?

Not that I'm not planning on knowing it – I've honestly just forgotten a bit of it as all I've been doing for the past few weeks is hammering out these MCQ's – so I've forgotten some of the rules. Can only retain but so much, you know? ha.

Thoughts?

FAR - 87 (5/15)
AUD - 93 (8/15)
REG - 86 (2/16)
BEC - 87 (5/16)

[nib]

@ melodylocquiao_pinoycpa

Deduction allowed
1) Home mortgage interest on loan to acquire residence 6,000
as this deduction is allowed , it is not added back in taxable income .

Deduction not allowed = so added back to taxable income .
1)Home equity indebtedness deduction
2)State and local income taxes $5,000
3)Miscellaneous deductions that exceed 2% of adjusted gross income 2,000

So

70,000 in taxable income + State and local income taxes $5,000 + miscellaneous deductions that exceed
2% of adjusted gross income 2,000 = 77000

[Author]

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