[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

[Anonymous]

MOAC – that doesn't make sense to me either. Maybe if you post the question exactly as is it can make sense.

[Anonymous]

Anyone please explain me the differencein tax implication of health saving account and the medical saving account

[Theodore]

I've studied all the way to chapter 7 and i feel like I remember nothing. Exam is in two weeks. Sigh :/ Feels like this section is harder than FAR.

FAR: 66, 76!
REG: 76!
AUD: 72, 9/7/2016
BEC: TBA

Don't Stop When You Are Tired, Stop When You Are Done.

[MOAC]

@emitremus3

Richard Norton is required to pay a self-employment tax based on the net profits of the farm business. For purposes of this task (Self-Employment Tax), assume that Richard had a net profit of $105,000 from the farm business for Year 3 and $10,000 of Section 1231 gain. Also assume that the maximum net income for social security tax is $117,000 for Year 3. Assume the following rates: 12.4% for social security and 2.9% for Medicare.

Part I
Total amount of Self Employment income:
Answer $105,000.

Part II
Net earnings from self employment
Answer 96,968. (105,00 x 92.3%)

Part III
Self Employment tax
$14,836 (96,968 x 15.3%)

Part IV
Adjustment for self employment tax paid
Answer $7,418. ($14,836 x 50%)

It's part II and III I don't understand.

FAR May 2012 81 (lost credit, didn't sit for other sections.)
FAR 86 Aug 2015
AUD 85 Nov 2015
BEC 84 Dec 2015
REG 78 Mar 2016

Passed ALL sections in first attempt!!

[CPA2B_NJ]

@Rosy0407 my feelings exactly

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

To God be the glory! Forever, amen!

NJ License

[nib]

Hello friends ,pls help me to understand .

. I answered as 2000 = 5000Adjusted basis -3000liability =2000, but correct answer is 5000 .

Able and Baker are equal members in Apple, an LLC. Apple has elected not to be treated as a corporation. Able contributes $7,000 cash and Baker contributes a machine with a basis of $5,000 and a fair market value of $10,000, subject to a liability of $3,000. What is Apple's basis for the machine?

ans=
A. $2,000
B. $5,000
C. $8,000
D. $10,000

CORRECT ANSWER= 5000

. I answered as 5000Adjusted basis -3000liability =2000

explanation .
The basis of contributed property is the same in the hands of the partnership as it was in the hands of the partner who contributed it.

The liability Apple assumes will decrease Baker's adjusted basis in his interest in Apple and will increase Able's adjusted basis in his interest in Apple.
– See more at: https://www.another71.com/cpa-exam-forum/topic/partnership-que#sthash.vMGlJKl4.dpuf

[nib]

Hello friends,

please help me to understand following que and ans. to partnership , no G/L .But I am not clear about using mortgage in calculating partnership and partner basis .

Strom acquired a 25% interest in Ace Partnership by contributing land having an adjusted basis of $16,000 and a fair market value of $50,000. The land was subject to a $24,000 mortgage, which was assumed by Ace. No other liabilities existed at the time of the contribution. What was Strom's basis in Ace?
ans=0

A. $0
B. $16,000
C. $26,000
D. $32,000

explanation

Strom's basis in Ace is calculated as follows:

Carryover basis $16,000
Less: 75% x $24,000
The portion of the recourse
debt assumed by the other partners – 18,000
———
Strom has a recognized gain of $ 2,000
=========
and Strom has a 0 basis in Ace
Carryover Basis $16,000
Add gain on transfer 2,000
——–
Total 18,000
Less liability assumed (18,000)
——–
Ending Basis $ 0
========

Contributions from a partner to a partnership are generally tax-free (except when the liabilities assumed by the other partners exceed Strom's carryover basis).
– See more at: https://www.another71.com/cpa-exam-forum/topic/regulation-partnership-and-partner-basis-using-mortgage-que#sthash.sszu36cC.dpuf

[Anonymous]

@MOAC

This definitely is confusing, and it has helped me to research this further. The reason it looks like it is duplicating the calculation for Self employment tax is because when you are self employed you are both the Employee and the Employer. So essentially, you get to take the half self employment tax deduction to get to Net earnings (7.62%) before paying the full self employment tax (15.3%) on net earnings. This link helped me understand it more:

How to Calculate Self-Employment Tax

“The way these taxes are structured, the burden is shared equally between the employee and the employer. The employee’s share is calculated as 6.2% of the employee’s wages for Social Security tax and 1.45% for the Medicare tax. At the same time, the employer also pays both taxes, calculated at the same rate. As a result, an amount equal to 12.4% (or 6.2% + 6.2%) is paid in total for Social Security tax, and an amount equal to 2.9% (or 1.45% + 1.45%) is paid in total for the Medicare tax.

As long as your “net earnings from self-employment” are $400 or more, you will be responsible for paying the self-employment tax — calculated as 15.3% of your net earnings from self-employment.
To calculate your net earnings from self-employment, subtract your business expenses from your business revenues, then multiply the difference by 92.35%.”

[Anonymous]

[Anonymous]

@bin

The reason the answer is 5,000 is because it is asking Apple's basis in the machine, not Able's or Baker's. Able's net basis in Apple is cash 7,000 plus share of liab 1,500 = 8,500. Baker's basis is Apple is basis 5,000 machine less liability 3,000 plus share of liab 1,500 = 3,500.

“A Partner's basis is not identical with the partner's Equity/Capital in the business, since the amount a partner has at risk (Basis) includes the partner's share of partnership liabilities to creditors.”

[Anonymous]

@bin

For the partnership question, this simple equation will get to where you need to be:

Inital outside basis +- % income/loss / muni bond int/ sep state items – Distributions recieved + your % of P/S liab – Liabilities contributed = ending outside basis.

Land contr 16,000 – 24,000 liab of land = (8,000) + 6,000 (share of liab) = (2,000). Basis cant go below zero, so basis 0 with a 2,000 cap gain.

[MOAC]

@emitremus3 Thank you!

FAR May 2012 81 (lost credit, didn't sit for other sections.)
FAR 86 Aug 2015
AUD 85 Nov 2015
BEC 84 Dec 2015
REG 78 Mar 2016

Passed ALL sections in first attempt!!

[fruitsyrup]

@bin thank you!

Hey everyone, my exam is in a week. I have been doing sets of 30 questions in the adaptive phase of Ninja – aiming for 100+ questions a day. Do you guys ever feel completely prepared for Reg? Been feeling a bit anxious as the exam date is coming up soon.

FAR - 71, 78
AUD - 71, 72, 78
BEC - 75
REG - 48, 60, 67, 76

[fruitsyrup]

Also, I was wondering did you guys memorize all the numerous phase outs for credits? Thank you all!

FAR - 71, 78
AUD - 71, 72, 78
BEC - 75
REG - 48, 60, 67, 76

[CPA2B_NJ]

Exam in 2 weeks, I finished all NINJA MCQs once, scoring 76% average trending. Any input on chances of passing? Does this mean anything? Tax is my weak point.

84% Ethics/Professional/Legal Responsibilities
76% Business Law
77% Federal Tax Process, Procedures, Accounting, an…
77% Federal Taxation of Property Transactions
72% Federal Taxation of Individuals
70% Federal Taxation of Entities

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

To God be the glory! Forever, amen!

NJ License

[Author]

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