[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

[Somnusious]

Two days before my test, and I just realized I haven't practiced any SIMS. The past week and half I've just been doing a ton of multiple choice questions (NINJA and Becker) as well as reviewing any tough material. Is it worth practicing SIMS at this point?

Also, how useful is the Authoritative Literature for Reg. Can you look up rules easily? For example: knowing what is involved with AMT.

[Claudia408]

I just started looking at SIMs on 4 days ago and going through them helps to understand a little better. It's in a different format but the same concepts. I wasn't going to look at SIMs for that reason but I thought taking a look can't hurt – especially since it can expose you to more of the tricks they can throw at you.

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

[marqzho]

IRC just like a language from another planet to me 🙂 I tried to look for some clues in the Code for an hour but it doesn't work.

I think it is a good idea for you to practice SIMS in the next two days so you can used to them.

REG 90
FAR 95
AUD 98
BEC 84

[Anonymous]

If the question below was a LIQUIDATING DISTRIBUTION, what would be the correct answer?

SAMPLE MCQ:
Day's adjusted basis in LMN Partnership interest is $50,000. During the year Day received a nonliquidating distribution of $25,000 cash plus land with an adjusted basis of $15,000 to LMN and a fair market value of $20,000. How much is Day's basis in the land?

a.
$25,000

b.
$20,000

c.
$10,000

d.
$15,000

Explanation

Choice “d” is correct. In a nonliquidating distribution, the partner takes the partnership basis for assets distributed. This basis cannot exceed the partner's partnership interest.

Choice “c” is incorrect. This is Day's remaining basis in the partnership, not the basis for the land.

Choices “b” and “a” are incorrect. In a nonliquidating distribution, the partner takes the partnership basis for assets distributed.

[Pandarama]

@amor – Hopefully someone else also chimes in… but I'm pretty sure the liquidating basis in the land would still be the same. Usually the liquidating questions seem to ask what your gain would be on the land and you wouldn't recognize a gain until the land is sold.

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]

@Panda, my answer for the above sample was letter A. I am thinking the partner's basis in the property would be likely different if the distribution was liquidating. I want to know the general rules and the IRS' most sought-after exceptions under two different scenarios.

[Anonymous]

I think, I found an answer to my question above (puzzle solved!)

This problem lays out the comparison of nonliquidating and liquidating distributions. Adjusted basis is used for nonliquidating while FMV (but not below the remaining partner's tax basis) is used in a liquidating distribution.

Olson, Wayne, and Hogan are equal partners in the OWH partnership. Olson's basis in the partnership interest is $70,000. Olson receives a liquidating distribution of $10,000 cash and land with a fair market value of $63,000, and a basis of $58,000. What is Olson's basis in the land?

a. $70,000

b. $60,000

c. $58,000

d. $63,000
Explanation
Choice “b” is correct.
In a liquidating distribution, the partner's basis for the distributed property is the same as the adjusted basis of his partnership interest (as the partner is simply exchanging his partnership interest for the distributed assets), reduced by any monies received in the same transaction.
Olson's basis before distribution $70,000
Less: Cash received (10,000)
Remaining basis in partnership 60,000
Less: Allocate basis to land (60,000)
Liquidated partnership basis $ 0
CHOICE “C” IS INCORRECT. THIS WOULD BE THE ANSWER IF THE DISTRIBUTION WERE A NON-LIQUIDATING DISTRIBUTION (WHICH WOULD THEN MEAN THAT PARTNER WOULD STILL HAVE A PARTNERSHIP INTEREST WITH A BASIS OF $2,000 ($60,000 – $58,000 LAND BASIS).
Choice “d” is incorrect. The fair market value of the asset is not considered in a liquidation.
Choice “a” is incorrect. The allocable basis must first be reduced by the amount of cash received.

[Anonymous]

The item below is a third scenario for liquidating/nonliquidating distribution sample MCQ.
This time, the problem suggests using the REMAINING PARTNER”s BASIS as the partner's basis in the property received in liquidation.
Wow! What am I missing?
Was the remaining partner's basis used ($30,000) because it's greater than the property's basis ($20,000)?

Fern received $30,000 in cash and an automobile with an adjusted basis and market value of $20,000 in a proportionate liquidating distribution from EF Partnership. Fern's basis in the partnership interest was $60,000 before the distribution. What is Fern's basis in the automobile received in the liquidation?

a.
$0

b.
$20,000

c.
$30,000

d.
$10,000

Explanation

Choice “c” is correct. In a complete liquidation of a partnership, the amount of cash distributed initially reduces the basis of the partner in the partnership (outside basis). In this question, the partner's $60,000 basis in the partnership is reduced to $30,000 by the $30,000 cash distribution. The $30,000 remaining partner basis in the partnership is given to the other property distributed (in this question, the only property distributed was the automobile).

Choice “a” is incorrect. The $0 indicates that the automobile was given no basis. That would happen only if the cash distributed exceeded the partner's basis in the partnership before the liquidation and distribution.

Choice “d” is incorrect. The $10,000 is the difference between the amount received in cash and the (fair) market value and basis of the automobile to the partnership. That amount does not represent the basis of the automobile after the distribution.

Choice “b” is incorrect. The $20,000 is the (fair) market value of the automobile at the date of the liquidation and distribution. That basis does not necessarily carry over to the partner.

[patelhj1]

In Year 2, Garland Corp. contributed $40,000 to a qualified charitable organization. Garland's Year 2 taxable income before the deduction for charitable contributions was $410,000. Included in that amount is a $20,000 dividends received deduction. Garland also had carryover contributions of $5,000 from the prior year. In Year 2, what amount can Garland deduct as charitable contributions?
a. $43,000
b. $41,000
c. $45,000
d. $40,000

Explanation:

Choice: “a” is correct. The charitable contribution deduction is limited to 10% of taxable income before dividends received deduction and the charitable contribution deduction. 10% ($410,000 + $20,000) = $43,000 from the current year and $3,000 from the prior year contribution carryover. That leaves a $2,000 carryover from Year 1 to Year 3.

MY ANSWER:
$410,000 – $20,000 = $390,000 x 10% = $39,000

Don't you subtract the DRD.

BEC 78 08/2015
REG 71 11/2015, RETAKE 83 01/2016
FAR 75! 5/2016
AUD ? 8/2016

Becker with Nonstop NINJA MCQ
Google most difficult professional exam

[rosecpa]

Patelhj1, the calculation is 10% of taxable income BEFORE charity and DRD. In that case, since the 410k is after the DRD was subtracted, you would add it back to equal 430k, and your allowable charitable deduction is 43k.

[patelhj1]

AHH!! Got you…

BEC 78 08/2015
REG 71 11/2015, RETAKE 83 01/2016
FAR 75! 5/2016
AUD ? 8/2016

Becker with Nonstop NINJA MCQ
Google most difficult professional exam

[Anonymous]

Can someone expound this topic, perhaps in a simple and easy to comprehend example?
Thanks.

Which of the following limitations will apply in determining a partner's deduction for that partner's share of partnership losses?

At-risk

Passive loss

a.
No

Yes

b.
Yes

Yes

c.
No

No

d.
Yes

No
Explanation
Choice “b” is correct. Both the “at-risk” limits and the “passive loss” limits will apply in determining a partner's deduction for that partner's share of partnership losses. Partners are subject to the basis limitations on losses, the “at-risk” provisions and the passive loss limitations on the losses passed through from the partnership.
Choices “d”, “a”, and “c” are incorrect, per the above.

[nib]

@ Somnusious

yesterday i solved one research simulation .
I answered 2(a) 1
my answer was wrong AND correct answer was 2(1).

Reason given was ,
1) question was asked about subsection .needed that only
so section=2
and subsection(a)
answer not required futher research details.

so read question correctly what is required . to get easy marks for what you know as correct answer .

[nib]

@ marqzho

THANKS SELF EMPLOYMENT TAX IS CLEAR TO ME NOW .

[nib]

@ Somnusious

below list might help you to chose sim and practice.

2015 NINJA MCQ REG SIMS
REG Sim 1 (Form 1040 – AGI)
REG Sim 2 (Form 1040 – Tax)
REG Sim 3 (Other Income)
REG Sim 4 (Research)
REG Sim 5 (Form 1040)
REG Sim 6 (Schedule A)
REG Sim 7 (Casualty Loss)
REG Sim 8 (Research)
REG Sim 9 (Part-Time Job)
REG Sim 10 (Form 1040)
REG Sim 11 (Deductions)
REG Sim 12 (Research)
REG Sim 13 (Property Transactions)
REG Sim 14 (Form 1120 – Income)
REG Sim 15 (Form 1120 – Deductions)
REG Sim 16 (Research)
REG Sim 17 (Capital Transactions)
REG Sim 18 (Schedule E)
REG Sim 19 (Form 1040)
REG Sim 20 (Research)
REG Sim 21 (Depreciation)
REG Sim 22 (Schedule C)
REG Sim 23 (Schedule SE)
REG Sim 24 (Form 1040)
REG Sim 25 (Research)
REG Sim 26 (Capital Transactions)
REG Sim 27 (Form 1040 – Income)
REG Sim 28 (Schedule A)
REG Sim 29 (Form 1040 – Tax)
REG Sim 30 (Research)
REG Sim 31 (Schedule B)
REG Sim 32 (Form 1040 – Income)
REG Sim 33 (Form 1040 – AGI)
REG Sim 34 (Research)
REG Sim 35 (Property Transactions)
REG Sim 36 (Form 1120 – Income)
REG Sim 37 (Form 1120 – Deductions)
REG Sim 38 (AMT)
REG Sim 39 (Research)
REG Sim 40 (Gain/Basis)
REG Sim 41 (Depreciation)
REG Sim 42 (Organization Costs)
REG Sim 43 (Distributive Share)
REG Sim 44 (New Partner)
REG Sim 45 (Research)
REG Sim 46 (Income and Expense)
REG Sim 47 (Depreciation)
REG Sim 48 (Self-Employment Tax)
REG Sim 49 (Research)
REG Sim 50 (Taxable Income)
REG Sim 51 (Sched M1 M2)
REG Sim 52 (Research)
REG Sim 53 (E/P Determination)
REG Sim 54 (Distribution 1)
REG Sim 55 (Distribution 2)
REG Sim 56 (Research)
REG Sim 57 (Partnership Operations)
REG Sim 58 (Research)
REG Sim 59 (Basis: Gains and Losses)
REG Sim 60 (C Corporation Taxable Income)
REG Sim 61 (Research)
REG Sim 62 (Basis in Partnership)
REG Sim 63 (Medical Expenses)
REG Sim 64 (Research)
REG Sim 65 (Unreimbursed Business Expenses)
REG Sim 66 (Medical Expenses)
REG Sim 67 (Interest Expenses)
REG Sim 68 (Casualty Losses)
REG Sim 69 (Research)
REG Simulations by AICPA CSO Category:
Category 4:
REG Sim 47 (Depreciation)
Category 5:
REG Sim 1 (Form 1040 – AGI)
REG Sim 2 (Form 1040 – Tax)
REG Sim 3 (Other Income)
REG Sim 7 (Casualty Loss)
REG Sim 11 (Deductions)
REG Sim 18 (Schedule E)
REG Sim 46 (Income and Expense)
REG Sim 48 (Self-Employment Tax)
REG Sim 62 (Basis in Partnership)
REG Sim 63 (Medical Expenses)
REG Sim 65 (Unreimbursed Business Expenses)
REG Sim 66 (Medical Expenses)
REG Sim 67 (Interest Expenses)
REG Sim 68 (Casualty Losses)
Category 6:
REG Sim 15 (Form 1120 – Deductions)
REG Sim 50 (Taxable Income)
REG Sim 51 (Sched M1 M2)
REG Sim 53 (E/P Determination)
REG Sim 54 (Distribution 1)
REG Sim 55 (Distribution 2)
REG Sim 56 (Research)
REG Sim 57 (Partnership Operations)
REG Sim 60 (C Corporation Taxable Income)

[Author]

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