[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

[rosecpa]

Bin, does that mean that the bonus depreciation is dependent of the 179 deduction: in other words, if the entity is ineligible for the 179, they can't take the bonus either?

[CPA2B_NJ]

Has anyone taken the final exam simulation from Roger? How do you feel about its helpfulness? Do the questions vary or are they the same from the test bank?

I just finished watching all lectures and worked through the 1400+ MCQs from Roger. Now I'm about to try the final simulation and then move on to Ninja 1800+ MCQs.

FAR - 50, 78
BEC - 67, 72, 75
AUD - 72, 80
REG - 70, 85

To God be the glory! Forever, amen!

NJ License

[ahugemistake]

Once the S corporation completes the steps necessary to become a C corporation, it will be allowed to retain its June 30 year-end since C corporations are not subject to the tax-year limitations to which partnerships and S corporations are. However, C corporations cannot use the cash method of accounting unless their average annual gross receipts for the previous three years do not exceed $5,000,000. Once the $5,000,000 test is failed the accrual method must be used for all future tax years. Since this corporation has had revenues of more than $10 million it must use the accrual method of accounting.

Maybe i need coffee but what does it mean it cannot use cash method unless the receipts do not exceed 5 millilon?

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

[ahugemistake]

Stahl, an individual, owns 100% of Talon, an S corporation. At the beginning of the year, Stahl's basis in Talon was $65,000. Talon reported the following items from operations during the current year:
Ordinary loss $10,000
Municipal interest income 6,000
Long-term capital gain 4,000
Short-term capital loss 9,000
What was Stahl's basis in Talon at year-end?
65,000 – 10,000 + 6,000 + 4,000 – 9,000 = 56,000. The question is asking who the municipal interest income effects basis as well as the effect of the net capital losses.

Why is the capital loss not limited to 3000 for this, is there an exception for s corps?

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

[denivathar]

@ahugemistake

The $3000 limitation on capital losses only applies to individuals recognizing them.

In the case of an S-Corp losses are treated as a reduction shareholder basis.

REG - 94 (2/1/2016)
BEC - 88 (2/27/2016)
FAR - 86 (5/7/2016)
AUD - 89 (5/31/2016)

Using Becker Live Classes plus Ninja Audio

[Anonymous]

@Huge, the one who wrote “HOWEVER, C CORPORATIONS CANNOT USE THE CASH METHOD OF ACCOUNTING UNLESS THEIR AVERAGE ANNUAL GROSS RECEIPTS FOR THE PREVIOUS THREE YEARS DO NOT EXCEED $5,000,000” needs some coffee. Haha
The words Cannot, Unless, and Do Not were used in ONE sentence. How crazy is that?

Per Becker's book: Accrual must be used by C Corporations, trusts with unrelated trade or business income, and partnerships having a C corporation as a partner provided the business has greater than $5 million of average annual gross receipts of the 3-year period ending with the tax.

If I have to simplify it in my own words: Cash method can be used with AAGRs (3yr period) under $5M.

[ahugemistake]

Thanks denivathar and amor, was doing some Mcqs on the train this morning, couldn't confirm this for myself.

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

[nib]

rose cpa

For 2015 , No bonus amount at all.

for 2014, no bonus when , purchase amount< 500,000 .
“I am not sure about your comment ” in other words, if the entity is ineligible for the 179, they can't take the bonus either? ”

[nib]

rose cpa

For 2015 , No bonus amount at all.

for 2014, no bonus when , purchase amount< 500,000 .
“I am not sure about your comment ” in other words, if the entity is ineligible for the 179, they can't take the bonus either? ”

[ahugemistake]

I think Amor posted yesterday that the Bonus depreciation had been allowed again but none of the questions reflect this change, and I'm not sure the exam itself will adapt so fast.

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

[nib]

friends ,

please check my understanding .

s corporation will send capital loss amount in k-1 schedule to individual shareholder .
individual shareholder then adjust 3000 capital loss in current year individual tax return form 1040 and c/f rest as either long term or short term .

[rosecpa]

bin, if the 2015 rule does not allow any bonus depreciation- why do any of us have to know it? Aren't we being tested on 2015 rules only?

And in terms of 179, if an asset is over 200,000, there is NO 179 depreciation deduction on it and it is to be depreciated by any other method that's allowable?

[quamikazee]

Correct me if I'm wrong, but for the material being tested in Q1 and Q2 of 2016, I have the following for Section 179

-$25,000 limit
-phaseout at $200,000 (50% on each dollar)

Would the excess over $25,000 just be depreciated according to MACRS?

REG - 81 - 2/3/16
BEC - 87 - 4/5/16
AUD - 87 - 6/10/16
FAR - 8/29/16

Becker Self Study only

[rosecpa]

quamikazee, that would make sense…

[ahugemistake]

not to confuse everyone but does MACRS always use double declining method in the first year? not sure why I haven't seen this used in other questions, but in this question the corp declined Section 179 deduction.

“First-year depreciation under MACRS is based on double declining balance. A 7-year life would yield depreciation of 2/7 the first year. Because the purchase was made in December, the mid-quarter convention is used and 1-1/2 months of depreciation is recorded. Depreciation is $1,000 ($28,000 × 2/7 × 1.5/12).”

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

[Author]

Replies