[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

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

[mcohen1993]

I figure LKE are pretty important as Becker has literally dozens of them where they just change a few facts and numbers around and ask recognized vs realized. NINJA may have a ton you may just have gotten a few right early on like myself. My “Taxation of Property Transactions” is at 94% so I don't see them much.

Only thing to remember is boot is only recognized as gain when received and not reduced by boot given. Only exception is with liabilities given and received. Then you do a netting.

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

In the order I plan to take the exams.

[rosecpa]

Mcohen, if your goal is to pass, a score in the 80's is more than enough. Unless you plan to be an Elijah Watt scholar…

amor d and ahugemistake, is the qualification for a lease under the statute of frauds due to the fact t that is a contract for land (in which case a lease for under a year should also be in writing) ? Or does it qualify only if the duration is lost than a year, simply because of the length of the contract?

[melody_pinaycpa]

@bin thank you!

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

[Anonymous]

@Rose
Land – always need in writing, regardless of time.
Lease – need not in writing if less than a year. Any lease contracts (other than land transactions) less than a year need not in writing. Correct?

Now, I have more questions.
What about leasing one apartment unit for six months only?
What about a car lease for EXACTLY ONE YEAR (i.e., 12 months or 365 days)?

[JS867_5309]

Q: Sands purchased 100 shares of Eastern Corp. stock for $18,000 on April 1 of the prior year. on February 1 of the current year, Sands sold 80 shares of Eastern for $7,000. Fifteen days later, Sands purchased 25 shares of Eastern for $3,750. What is the amount of Sand's recognized gain or loss?

A. $0
B. $500
C. $1,000
D. $2,000

A: C. A wash sale takes place when securities are sold at a loss and replaced with substantially identical securities within 30 days before and after the loss.

I answered A. Because the transactions qualify as a wash sale, the loss on the securities is disallowed. Why is it C?

Exam:I'm done 🙂 🙂 🙂
REG - 71 (2/22/14); 67 (4/3/14); 74 (8/29/15); 83 (2/29/16)!!!
BEC - 72 (5/24/14); 85 (1/3/15)!!!!
AUD - 72 (8/23/14); 76 (10/15/14)!!!
FAR - 77 (5/26/15)!!!

Started in 2013 using Kaplan and failed REG, REG, BEC, AUD. Switched to NINJA suite in Sept 2014 and passed AUD...then BEC...then FAR!
REG took 2 tries but I finally got it in too!
I'm a hard convert - Using NINJA method with NINJA video/book/notes/MCQ

Education: Check
Experience: 3 months left! I hit 4 years on May 30 🙂

[marqzho]

JS867_5309

Please check if this “Sands sold 80 shares of Eastern for $7,000” is a typo. The question should be sold 50 shares instead of 80.

Answer
Purchase 100 shares for $18,000/100=$180 per share
Sold 50 shares for $7,000/50=$140 per share
Buy back 25 shares for $3750/25=$150 per share

Because Sands buy back share within 30 days, only the portion that he didn't buy back recognizes gain / loss.

($180 – $140)*25 share = $1000 loss ( 25 share represents the portion that he didn't buy back)

And new basis would be 50 share for $9000 (50*$180) plus 25 share for $4750 ($3750+$1000 wash sales loss)

hope that helps!

REG 90
FAR 95
AUD 98
BEC 84

[Claudia408]

This is from a SIM about an M-1 Recon….The task is to insert the M-1 adjustment and determine if it increases/decreases taxable income….So, can someone explain to me in simple terms what is going on here? To me it sounds like the company appropriately depreciated the computer using MACRs , but it sounds like they didn't depreciate it enough?

Book depreciation on computers for 2015 was $10,000. These computers, which cost $50,000, were placed in service on January 2, 2014. Tax depreciation used MACRS with the half-year convention. No election was made to expense part of the computer cost and Reliant elected not to use bonus depreciation.

Answer M-1 adjustment: $6,000 decreases taxable income.

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

[marqzho]

Claudia408

Tax depreciation for 2014 : 50000*(1/5 year )*200% declining balance*(1/2 year convention) = 10000
Tax depreciation for 2015 : (50000-10000)*(1/5 year )*200% declining balance = 16000
Book depreciation for 2015 : $10000

when we reconcile in M-1, We need to subtract $6000 from book income to get to tax income.

hope that makes sense

REG 90
FAR 95
AUD 98
BEC 84

[Claudia408]

@marqzho – i understand where the math is coming from…. but if i understand the problem correctly… in 2014 and 2015 the depreciation was too low for book and it should be more for tax, hence adding back $6,000 to decrease taxable income?

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

[marqzho]

It is always a good idea to make up some numbers to see a better picture

Let say you have income for $100000 and no other expense beside depreciation.

In book income you will have $100000-$10000 =$90000
In tax income you will have $100000-$16000 =$84000

So in M-1,
book income 90000
depreciation XXX
Tax income 84000

XXX has to be a decrease adjustment.

REG 90
FAR 95
AUD 98
BEC 84

[Anonymous]

@Claudia, I've been following the sample SIM you laid out above along with the explanation. What's the final answer of this M-1 recon? Does the problem suggest addition or subtraction of $6,000?

[nib]

when i solved ninja regulation sim of 1040 form . i am not understanding calculation of self employment tax . please help me .
simulation question and answer given below.

————————-

,Mrs. Vick is a part-time real estate agent and income =5000 and is considered to be self-employed. She may owe self-employment tax. In order to calculate the amount of self-employment tax owed, she would fill in Schedule SE (Form 1040). One-half of the self-employment tax is a deduction before AGI.

1. Net profit from Schedule C $5,000.00
2. Multiply above amount by 92.35% (0.9235) 4,617.50
3. Multiply the lesser of $117,000 or line 2 amount by 15.3% (0.153) 706.48
4. Multiply line 3 amount by 50% (0.50) 353.24

so self employement tax deducted =353.24

[marqzho]

@bin

Schedule C income * 0.9235 * 0.153 = self employment tax

50% of self employment tax is a deduction to AGI.

So let say this question,

5000*0.9235*0.153 = $706.48 is your self employment tax

50% of 706.48 or $353.24 is a deduction to arrive at AGI.

I think the calculation is pretty straight forward in ninja explanation. Which part you are having problem with?

REG 90
FAR 95
AUD 98
BEC 84

[nib]

@ marqzho ,
thks , you made it just 1 step n easy.
what about 3 rd step
3. Multiply the lesser of $117,000 or line 2 amount by 15.3% (0.153) 706.48

1,17,000 is some limit amt or phaseout amt ?

[marqzho]

117000 is the max subject amount on social security tax for 2014.

The long version of this calculation is

92.35% of income (max at 117000) * 12.4% social security tax
+ 92.35% of income * 2.9% medicare tax
= self employment tax

let say income is 150,000, self employment tax will be:

117000*12.4% + 138525*2.9% = $18525

Hope that helps

REG 90
FAR 95
AUD 98
BEC 84

[Author]

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