[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]

@Rose, now I give you the floor to revive McDonald Trump.
Can you give Trump mouth to mouth resuscitation so he gets to finish his nomination this year? 🙂

[rosecpa]

Amor d, actually you've got the right person! I'm a certified American red Cross CPR/FA instructor, and an EMT.

anyhow, back to the pursuit of accounting…

@bin, which review course are you following? Regarding the identification of real defenses, Becker has a mnemonic FAIDS- fraud in the execution, forgery, adjudicated insanity, material alteration of the instrument, infancy, illegality, duress, discharge of bankruptcy, suretyship, and statute of limitations.

As for the Estate calculation- why are you subtracting the 5,430,000, and then the credit that would eliminate tax on that”exemption”amount? As far as I understood, the 5,430,000 is never included in the calculation.

Please explain.

[Anonymous]

I don't blame you for being willing to accept my challenge for mouth to mouth with Trump.
His best asset (other than his billions) is his magic mouth, aside from his blowing hair:)

[rosecpa]

Professional rescuers don't do mouth to mouth- we always use PPE, especially the mask 😉

[Ninja Juice]

Tom Lewis, a single taxpayer, received $1,000 in gross receipts for renting his lake cabin for 10 days during 2015. The expenses related to this rental included:

Newspaper ad for rental $100
Cleaning and maintenance of rental 200

Tom's total income on his 2015 individual tax return will be increased by what amount as a result of the rental activities?

A.
$0

Incorrect B.
$1,000

C.
$900

D.
$700

Where does the 1000 go then?

[rosecpa]

Ninjajuice, what's the correct answer?
Since it is less than 15 days it wouldn't be considers a rental property.

[Anonymous]

@Rose, you are correct.
Answer should be a. 0.

[Ninja Juice]

The answer was 0 everyone.

and yes i guess the rental part threw me off, i was thinking it would increase his income… but the tail end of the questions specifically says as a result of the rental activities.

Thanks guys..careless mistake

[Anonymous]

What is the standard rate for realistic possibility of success?
<20%
20-33%
33-50%
>50%

[Anonymous]

My notes say:
Qualified Small Business Exception:
IRS also allows certain TPs with qualifying businesses to use cash method if they have average annual gross receipts under $10M.
INELIGIBLE BUSINESSES INCLUDE:
-Retail & Wholesale Trade
-Information Industries
-Mining Activities
-Manufacturing

CAN SOMEONE CLARIFY IF THE ABOVE FOUR BUSINESSES ARE ALLOWED TO USE CASH METHOD OR NOT?
It's funny how a person's own handwriting confuses herself. Oh, and that's me.

[Anonymous]

Okay, I found the answer to my question above re: standard percentage.
Realistic possibility = Position of more likely than not be upheld = >50%

[Anonymous]

@Amor D

Yes, you are correct. According to the IRS website, most individuals and many small businesses use the cash method of accounting. Generally, if you produce, purchase, or sell merchandise (retail, manufacturing, etc.), you must keep an inventory and use an accrual method for sales and purchases of merchandise.

https://www.irs.gov/publications/p538/ar02.html#en_US_201212_publink1000270640

[Anonymous]

Thanks CantStop for the link.

In other words, these businesses CANNOT use cash method regardless of their average annual gross receipts:
-Retail & Wholesale Trade
-Information Industries
-Mining Activities
-Manufacturing

[Anonymous]

Correct

[ahugemistake]

A calendar-year individual filed an income tax return on April 1. This return can be amended no later than:

A.
4 months and 15 days after the end of the calendar year.

B.
10 months and 15 days after the end of the calendar year.

C.
3 years, 3 months, and 15 days after the end of the calendar year.

Incorrect D.
3 years after the return was filed.

Taxpayers generally have 3 years to file an amended tax return. The 3-year period is measured from the date you filed your original return. If you filed your return before April 15, the 3-year period begins on April 15. If you requested an extension, the 3-year period runs from October 15. Therefore, you would count the 3 months and 15 days from January 1 to April 15, and then the 3 years from April 15.

Maybe I've studied too much today but I can't seem to understand the explanation for C

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

[Author]

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