[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

[letspassthecpa]

If anyone has retaken a Becker course, would you recommended buying a new book as well? Or should I just keep the old book with all of my notes and such?

REG: 02/16
BEC: 03/16
FAR: 05/16
AUD: 06/16

[Anonymous]

The first problem I used this formula:

2000 Original Basis
+5000 Exempt Income
– 4000 Loan
+2000 His Share of the Loan
-7500 Operating Loss

= 0 Basis.(cannot have negative basis)

Not sure why the individual loan was ignored. Definitely interested in the calculation for Problem 2

[Future Ninja]

@cantstop – this is S corp.

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

[Anonymous]

ohh gotcha. Can you post the explanation for Problem 2?

[nib]

fUTURE ,

I sent many explanations before this message . if it does not show in the forum , there is some technical problem .

It is a tough question. I am just trying to answer the quesiton .

Bobby owns 50% of Jingles, Inc., an S corporation filing tax returns on a calendar year. For tax year 2015, the corporation has an operating loss of $15,000 and separately stated tax-exempt income of $10,000. Bobby individually loans the corporation $4,000. His basis on January 1, 2015, is $2,000. What is his basis in the stock at year end 2015?
tion
A. $1,000
B. $3,500
C. $(9,000)
ans=D. $0

Its Solution-
stock basis loan basis
Basis at Jan 1 ; ; $2000
Loan to Corp $4000
Tax exempt interest $5000
Ordinary loss of
S Corp ($7000) ($500)

Basis at Dec 31 0 ; ; $3500

The loss of $7,500 first reduce stock basis to zero, the debt basis is reduced to $3,500 .
Question is asking only about basis in the stock at year end 2015.?
Which answers 0 .

Bob and Sally, unmarried taxpayers, each owned 50% of Lostalot, Inc., an S corporation. The corporation had a $50,000 operating loss for the tax year ending December 31, 2015. As of December 31, 2014, Bob’s basis in his stock was $15,000 and Sally’s was $5,000. During the 2015 tax year, Sally mortgaged her home for $25,000 and loaned the money to the corporation. Although not personally liable, Bob told her not to worry and that if anything happened, he would help pay the mortgage debt. Calculate the amount of allowable loss deduction each shareholder would be able to recognize on their individual 2015 tax returns.
A. Bob: $25,000, and Sally: $25,000.
B. Bob: $15,000, and Sally: $5,000.
C. Bob: $15,000, and Sally: $30,000.
D. Bob: $15,000, and Sally: $25,000.

ANSWER: D – solution provided considered the loan to get the Basis.

Lets see Bob’s basis first . For Bob there is no loan basis as no loan contributed .Bob has only stock basis .
stock basis
Basis at Jan 1 15000
Loan to Corp 0
Tax exempt interest 0
Ordinary loss of
S Corp ($ 15,000)

Basis at Dec 31 0

Allowable loss deduction for Bob would be able to recognize = 15,000

let’s see sally’s basis
stock basis loan basis
Basis at Jan 1 5000
Loan to Corp $25,000
Tax exempt interest 0
Ordinary loss of
S Corp ($5000) ($20,000)

Basis at Dec 31 0 ; ; $5,000

Allowable loss deduction for sally able to recognize = 25000

[nib]

read as a table .

stock basis loan basis
Basis at Jan 1 ; ; $2000
Loan to Corp $4000
Tax exempt interest $5000
Ordinary loss of
S Corp ($7000) ($500)

Basis at Dec 31 0 ; ; $3500

——————————————-

let’s see sally’s basis
stock basis loan basis
Basis at Jan 1 5000
Loan to Corp $25,000
Tax exempt interest 0
Ordinary loss of
S Corp ($5000) ($20,000)

Basis at Dec 31 0 ; ; $5,000

[Anonymous]

NINJA MCQ Question:

A husband and wife agree to split monetary gifts to their relatives. The husband gives his daughter $22,500, and the wife gives her niece $19,000. The annual exclusion is $14,000. What amount is the taxable gift for the husband and wife?

A.
$0

Incorrect B.
$13,500

C.
$17,000

D.
$37,500

Why is the answer A, $0 taxable?

[nib]

Hello friends ,

Please help me to understand , why not “”.Novel copyright held by the author “””” is capital asset ? because it personal property.
whereas Mineral deposits sold in place is used for business .

Which of the following is considered capital assets for tax purposes?
A.Inventory
B.Land used in a business
C.Novel copyright held by the author
D.Mineral deposits sold in place

Correct answer= D.

EXPLANATION=Mineral and similar natural resources deposits are considered to be capital assets when sold in place. The sale of mineral deposits, which are removed and sold in units, results in ordinary income. Copyrights held by the creator are not capital assets; however, purchased copyrights are capital assets. Inventory and land used in a business are specifically excluded from the definition of capital assets.

[nib]

hello friends,

The Employee Retirement Income Security Act (ERISA)
1) such plans are established, then ERISA prevents employers from unduly delaying an employee's participation in such a plan.
2) For instance, employee rights to employer contributions to the plan must vest in no more than five years.

I am not understanding meaning of these 2 lines .

[Future Ninja]

Agnes, a cash-basis taxpayer, died August 31, 2015. During 2015, the following amounts were paid to her estate:•$1,000 dividend from the ABC Corp., which was declared on August 25 and paid on September 2.
•$5,000 distributive share of XYZ Partnership income received on October 3, 2015. This distribution was for the partnership’s tax year ended September 30, 2015.

What income must be included on Agnes’s final individual income tax return for the dividend and partnership payments?

A. The $1,000 dividend and a pro rata portion of the $5,000 partnership income.
B. The $1,000 dividend but no portion of the partnership income.
C. A pro rata portion of the partnership income but not the $1,000 dividend.
D. No income from either payment.

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

[Future Ninja]

i dont know if this will help you guys: just an idea on how will i remember things on the test date:

TRUST = (TC) Take Care = trust calendar
TRUST = CNN ( bec i love watching CNN)

C = CURRENT distribution of Income
N = NO Distribution of Principal
N = NO Charitable Distribution

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

[Future Ninja]

Which of the following, if any, are deductible from a decedent’s gross estate?

I.Expenses of administering and settling the estate
II.State inheritance or estate tax

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

[Future Ninja]

Joe is contemplating retirement and decided to simplify his financial situation by disposing of some assets. He had the following transactions during 2015:

1.Sold his business to his son for $100,000. The fair market value of the business at the time of the sale was $175,000.
2.Paid college tuition of $20,000 for his brother’s child.
3.Gave stock valued at $15,000 to his alma mater.
4.Paid $25,000 of the medical expenses of his sister who had no insurance.

What is the total amount of taxable gifts (before exclusion) that should be reported on his gift tax return for 2015?

A. $75,000
B. $95,000
C. $110,000
D. $135,000

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

[Future Ninja]

Good Morning Ninjas! rise and grind!

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

[Future Ninja]

Donald is a tax return preparer. His client, Jody Black, told him that she had made several gifts during 2015. She asked whether she should file a gift tax return and, if so, how much tax she would owe. Jody has never given a taxable gift before. Donald reviewed Jody’s gift transactions as follows:

1.Paid her parents’ medical bills, $15,000 for her father and $10,000 for her mother
2.Bought a sports car for her son at a cost of $40,000
3.Gave $17,000 cash to her church
4.Prepared her will, leaving her vacation cabin, valued at $76,000, to her sister
5.Sent a wedding gift of $1,000 to her niece

What is Donald’s best answer to Jody’s questions?

A. No return is due because gifts to family are excluded.
B. Jody must file a gift tax return and will owe tax on $26,000.
C. Jody must file a gift tax return, but she will not owe tax because of the unified credit.
D. None of the answers are correct.

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

[Author]

Replies