[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

[nib]

@ amor D

I found some stuff about at risk rule I hope it helps .

The at-risk rules ———-a taxpayer's at-risk amount typically includes the following:
• The amount of money or other property that is contributed to the venture
• The amount of any liabilities for which the taxpayer is personally liable that relate to the investment
• An allocable share of nonrecourse debts incurred by the venture from third parties that relate to real estate activities
1)apply to all taxpayers (including partners) and encompass all business and investment activities.
2) The at-risk restrictions on deducting partnership losses provide that a partner may deduct his share of a loss from a partnership activity only to the extent to which he is at risk.
3) A partnership is not allowed a deduction for net operating losses (NOLs). A net operating loss (and any related c/b or c/f ) is determined at the partner level, taking into account all of the partner's applicable items of income and expense.
4) The expected tax has no bearing on the at-risk rules. The income tax will be the personal responsibility of the partner and not the partnership.

[nib]

hello friends ,

completed all ninja MCQ ..Both avg score and avg trending score = 72 %
I have many weak topics like busines law ,ethics, Federal Taxation of Entities .

I have already started with regulation sims .

now What should be my next step regarding mcq . what should i practice ,
“missed last time seen ” or ” troubled que ” ?

Also suggest what else i can do to improve my score .

[Anonymous]

@Bin, thanks for your help about at-risk.

[Anonymous]

I have a new question about a partner's tax return involving loss from operations.
Partners can only REPORT the charitable contributions on their Schedule K-1 and carry them forward (due to losses or no AGI), correct?

Mom and Pop Partnership had the following results during the taxable year:

Income from operations

$100,000

loss

Capital gain from sale of land

25,000

Charitable contributions

10,000

Junior, a 50% partner, had an adjusted basis of $40,000 at December 31, without regard to the current year income or loss items. In preparing his individual income tax return, Junior should report which of the following amounts?

Ordinary Loss

Capital Gain

Charitable Contributions

a.
$50,000

$12,500

$5,000

b.
$40,000

$12,500

$5,000

c.
$32,500

$0

$0

d.
$47,500

$12,500

$5,000

Explanation

Choice “d” is correct. The deduction of the ordinary loss is limited to Junior's basis and any at risk amounts. Junior's basis is calculated as $40,000 + $12,500 capital gain – $5,000 charitable contributions = $47,500; thus the ordinary loss deducted on his return would be limited to $47,500.

Choices “a” and “b” are incorrect. Both of these options incorrectly state the ordinary loss. Choice “a” did not take into account the limitation to basis and choice “b” did not take into account the adjustment of basis by the other income/deduction items for the year.

Choice “c” is incorrect. The loss, capital gain, and charitable contributions are all stated separately – income from operations is passed through as a net number to the partners and charitable contributions and capital gain are separately stated items, not netted in that figure.

[Pandarama]

@amor – bin did a good job summarizing it. I'll take it one step more simple:

Passive activity loss is typical = passive activity gross income – passive activity deductions.

At-risk limits losses to the amount you're at risk of losing (your basis) if the activity fails or has losses.

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.

[Pandarama]

@amor –

The partner is 50%, so we start right off the bat by applying the 50% to each of the amounts.

100 * 50% = $50 loss
25 * 50% = 12.5 gain
10 * 50% = 5 charity

The partner started with a $40 basis. First we apply the gains ($40 + 12.5 = $52.5). Then we subtract any items before the loss ($52.5 – 5 charity = $47.5). We are going to save the loss for last and figure out our basis right before we apply the loss. We can only recognize (report) a loss of up to our available basis, which at this point is $47.5.

I did a search on google to try and answer your question about the charity contributions. I found a pretty easy to follow explanation from https://biztaxlaw.about.com/od/businesstaxdeduction1/f/charitydeducts.htm; here's a what is said:

“A partnership is a special case, because the partnership itself does not pay income taxes; the income and expenses (including deductions for charitable contributions) are passed along to the partners on their individual Schedule K-1 each year. So, if the partnership makes a charitable contribution, each partner takes a percentage share of the deduction on his/her personal tax return. For example, if the partnership has three equal partners and it donates a total of $1500 to charity in 2010, the partners each can claim $500 of charitable deductions.

Because the donation of cash or property reduces the value of the partnership, each donating partner must reduce his or her partnership interest by the value of the donation.”

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.

[nib]

I have one question about contract law .

question=Wilk bought an apartment building from Dix Corp. There was a mortgage on the building securing Dix's promissory note to Xeon Finance Co. Wilk took title subject to Xeon's mortgage. Wilk did not make the payments on the note due Xeon, and the building was sold at a foreclosure sale. If the proceeds of the foreclosure sale are less than the balance due on the note, which of the following statements is correct regarding the deficiency?

A. xeon must attempt to collect the deficiency from Wilk before suing Dix.
B. Dix will not be liable for any of the deficiency because Wilk assumed the note and mortgage.
C. Xeon may collect the deficiency from either Dix or Wilk.
D. Dix will be liable for the entire deficiency.

I gave answer as ” c”= ” Xeon may collect the deficiency from either Dix or Wilk.”

But this is wrong answer .
correct answer id D.” Dix will be liable for the entire deficiency.”

.
My understanding is Dix is original creator of loan . so he remains responsible . + Wilk is also responsible because he took title subject to mortgage .
Then how come only Dix is liable for entire deficiency .

[Pandarama]

@bin- You're right about being the original creator of the loan so they remain responsible.

In this situation, I would try and think of it as a sub-lease. Dix has a house and subleases it to Wilk. Wilk makes the payments directly to the mortgage company instead of just paying it to Dix and Dix remitting the payment to the mortgage company. The mortgage company never really adds on Wilk to the mortgage.

Idk if that helped at all, but I hope it does.

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.

[rvelez]

Hi All,

My CPA exam story,

Passed FAR 76, Lost Credit 🙁
Passed AUD 79, Lost Credit 🙁

I started a new job last year that screwed me up in more ways than one. Now I want to study ,but I'm having a hard time getting with the program. I need some words of motivation, feeling like I'm getting to old for this.

Any advice is appreciated.

[nib]

@ Pandarama

thanks a lot.

it seem your basic concepts understanding is really good .Gr8 .I would always remember this .

[Anonymous]

@Panda; @Bin, I think the catch phrase for Wilk and Dix problem is this: WILK TOOK TITLE SUBJECT TO XEON'S MORTGAGE.
Xeon => Mortgagee
Dix => Original Mortgagor
Wilk => 2nd Mortgagor

Hmm, I don't want to be the original mortgagor. Not so fair.

[Tncincy]

@rvelez,
Just jump in. I was feeling a little mushy a few days ago, I am currently 50 and will be 51 in April and still have not passed a part. Yes, I am feeling like I'm getting a little old for this. Time is going on and I will only get one part in this window , when I intended to get two taken, oh well. so I am REGROUPING AGAIN, NOT dragging my feet, but jumping in. It was easy for me to start with ninja notes, just to get started, Now I am getting into the reading (ninja book), I purchased my mcq's yesterday, and taking care of my nts next week. Hopefully I will be ready for February. so don't hesitate any longer, time is still going on….. JUMP IN. start simple and work upward. Hope this helps.

It begins with a 75
Been here too long as a cheerleader....ready to pass

[Claudia408]

@marqzho – i know you know this! https://www.another71.com/cpa-exam-forum/topic/simple-trust-calculation-help

was that 1/2 calculation for the trustee fee and distribution covered in Roger? I was like uuuhh

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

[Anonymous]

SAMPLE SIM:
Task: For each of the partnership transactions shown below, select the appropriate tax treatment by clicking the shaded cell. A tax treatment may be selected once, more than once, or not at all.
SIM Item: Partnership made a cash contribution to a foreign charity.
My answer: Treated as a separately stated item by the partnership and potentially deductible by the partners.
CORRECT ANSWER: Partners are not entitled to a deduction and decrease their basis in the partnership.
EXPLANATION: Since cash was contributed to a foreign charity, no deduction is allowed (IRC Section 170(c)). Each partner's basis is reduced by their distributive share of nondeductible partnership expenditures. (The reference for this question is section 4652.01(b) in the Regulation Reference Volume.)

If this cash contribution were not made to a foreign charity, my answer would have been correct, agree?
I'm glad to have learned today that foreign charity is not deductible.

[marqzho]

Foreign charitable contribution is not deductible 🙂 you are right

REG 90
FAR 95
AUD 98
BEC 84

[Author]

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