[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

[Anonymous]

@Bin, for the above problem of who is liable to whom, I can relate with your confusion because I am confused myself. Now I get to thinking, why would even Business Law have to be part of CPA tests? I don't get it! This should be law students' mere problems to solve for their stinking bar exam, haha. Just kidding and venting.
I could recall the mortgage problem you posted earlier:
Mortgagee
1st Mortgagor
2nd Mortgagor
I am still lost how that MCQ explains that only the 1st mortgagor was solely liable for the entire balance.

And for the recent problem (Debtor-Creditor-Substitute Debtor), hmm, what we are missing with these two problems?

[marqzho]

Bin

This seems like a classic example of creditor beneficiary. L & P enter into contract. P agrees to paint L's house and L agrees to repay P's debt to D. So D is a creditor beneficiary(Intended beneficiary). D is entitled to sue L for breach of contract if L refuse to pay. And of course D can sue P too.

REG 90
FAR 95
AUD 98
BEC 84

[Anonymous]

I am confused with the estate tax due date or taxable year. I’ve seen nine months, six months, 4 ½ months, end of the taxable year, and lastly “we can die anytime” stuff to remember. I keep getting things mixed up because there are so many dates or period to keep in mind.

[Anonymous]

DOES THE RULE BELOW APPLY TO FORM 706? (U.S. Estate (& GSTT) Tax Return)

For income tax purposes, the estate's initial taxable period for a decedent who died on October 24:

a.
May be either a calendar year, or a fiscal year beginning on the date of the decedent's death.

b.
Must be a fiscal year beginning on the date of the decedent's death.

c.
Must be a calendar year beginning on January 1 of the year of the decedent's death.

d.
May be either a calendar year, or a fiscal year beginning on October 1 of the year of the decedent's death.

Explanation

Choice “a” is correct.

Rule: An estate may elect either a calendar year or a fiscal year for the estate income tax return. (Note: Trusts, with limited exceptions, must use a calendar year end.)

Choices “b”, “d”, and “c” are incorrect, per the above rule.

[Future Ninja]

@bin – good thing I am studying the same topic. This is an example of delegation of duties. The rule says it does not relieve the obligor of obligations under the contract even if notice is given to the obligee (unless the contract stipulates). The Obligee can sue the obligor or both in the event of breach.

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

[Future Ninja]

@bin – lets wait what others have to say. But thats what I can think of. ^_^

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

[Anonymous]

@bin,

What everyone said is true. Duke is the creditor beneficiary which entitles him to sue the assignor and assignee.

@Amor D, it's rough. I just attempted to do your problem and I knew the answer only cause I've done it a couple times already. Have you tried creating a sheet with a comparison of different filing dates?

[Anonymous]

@CantStop, I think I am mixing up Form 706 and Form 1041. So I am trying to compile all the Estate MCQs from Becker and NINJA-MCQs together to see the differences, then I will get back here and share a summary of comparison.

[Anonymous]

Please help me with this sample SIM below. I need to know what this phrase means: “HAS ALREADY USED UP HER LIFETIME EXCLUSION” I don't see any ‘bearing' of this phrase to the solution/explanation provided by Becker. I would answer it the way I understand what is excludable and taxable anyway. Thanks.

SIM:
P. Speedo, who has already used up her lifetime exclusion, made the following gifts during the year:
-Cash in the amount of $18,000 to Kevin
-A pied of artwork value at $9,000 to Kelly
-Tuition in the amount of $30,000 to Maryville University for the benefit of Janis
-1,000 shares of C. Corp., a publicly held corp. valued at $40/share, to Robin

Task: Considering the P. Speedo situation, calculate the total taxable amount of the gifts she made in the current year. Enter the value of the gifts. Enter the taxable amount of each respective gifts.

Answer:
>>>>>>>>>>Value of Gift>>>>>>>>>>>Taxable Amt.
Kevin:……….18,000…………………………..4,000
Kelly………….9,000…………………………….0
Janis…………30,000…………………………..0
Robin………..40,000…………………………26,000

[Future Ninja]

To accept an offer, the offeree must do so either verbally or in writing?

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

[Anonymous]

@Future, it depends. Here's one of the PASS KEYS from Becker:
Notice that “a writing” is not a general element of a contract. Certain contracts must be evidenced by a writing, but the general rule is that a writing is not required. Thus, if you see an answer choice on the exam saying an offer or acceptance must be in writing, scrutinize the facts carefully. If the contract is not within the Statute of Frauds or the offer is not a merchant’s firm offer, the choice is probably wrong.

[Anonymous]

Sample SIM:
Task: Identify the required components
Situation: Taxpayer sold land she owned for four years with a basis of $60,000 to her brother for $40,000. The brother sold the land for $70,000 six months later.
ANSWER:
Proceeds – $70,000
Basis – $60,000
G/L: $10,000
Holding Period: Short-Term
Amount to be reported on tax return: $10,000

Explanation: Short-term is used. It starts with date brother purchased property. WHY?

[Future Ninja]

@Amor D – i think there is a rule when it is RP it is short-term. Let me check and review my Ninja Note.

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

[nib]

@ Amor D ,

following 2 exclusion relating to gift .

life time gift exclusion amount for 2015 = $5,430,000
and annual exclusion for 2015 14000 per person

[nib]

@ amor D

Related party txn
1)Related party =Ancestors + Bro+ sis +spouse + decendents –children , grand children +corpn or partnership where u r 50 % shareholder
2) los on selling to related party = not recognized
3) gain recognzd
4) holding period start when they acquired property
5)grandfather , grandson r related party
6)Half bro and half sis r related parties
Cousin is not related party
5)in-laws r not related party

loss on sale of property——-
#Between related parties are no recognized
#when related party , who purchased the asset , sells it to outsider , then the gain is reduced by the loss previously unrecognized but not in excess of gain .
#In other words, the related taxpayer may not be able to take all of the previous loss unrecognized.

In your sim,
1) Brother will not recognize 20000 loss in purchase txn from sister ( related party )
2) When brother sold to outsider with 30000 gain , previous 20000 loss recognize now + 10000 gain .

[Author]

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