[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

[marqzho]

This deduction should be only applied to self-employed person. Think about if you are an employee, insurance premium paid by employer is a deductible expense on the corporate tax return. So if you are self-employed, those expense should also be a deductible from your income.

If you are a employed individual and you pay for the insurance premium, this should be a medical expense in Schedule A – itemized deduction.

REG 90
FAR 95
AUD 98
BEC 84

[Anonymous]

Thanks again, Marqzho.

I think I confused this (self-employed) medical insurance premium with home mortgage insurance premium that is no longer deductible beginning 2014 or 2015.

I've been studying 2013, 2014, and 2015 taxation and I've mixed changes/updates from one year to another.

So to clarify, home insurance premiums are NOT DEDUCTIBLE in 2015?

[Anonymous]

Follow-up question:
My medical insurance is an automatic salary deduction. (I forgot how I prepared our personal MFJ tax. I just clicked all I could click using Turbo software. Please do not crucify me.)

So are these medical insurance premiums (automatic salary deduction) included in Schedule A?

[marqzho]

It depends, whether it is a pre-tax deduction or after-tax deduction.

If it is an after tax deduction, meaning they deduct the money from your net paycheck amount. Then yes, you can deduct that premium on your schedule A (of course it also subject to 10% AGI limitation)

If it is a pre-tax deduction, meaning they deduct the money from your gross pay (Most employers do this BTW). Then no, you already took tax benefit by not paying income tax, fica tax, etc. on that portion of money.

I don't think you will see a question regarding this in your exam day =)

REG 90
FAR 95
AUD 98
BEC 84

[Anonymous]

After seeing 5 REG tests in 5 consecutive testing Windows, no one can really tell what we are or not going to see in the next test.
AICPA is naughty, ruthless, evil. They don't really test CPA aspirants. They trick us as much as they can.

[Claudia408]

@marqzho – great makes sense.. just so i'm clear. this is a ++ situation bc AEP = 25000, and AEP =30000 (w appreciated prop). but to answer the question: AEP is beginning 5000 and since the distribution is 40000, then taxable income is 35000. but why is AEP beginning positive and not negative? Is it bc of the ++ situation?

BEC - 75 (3x)
AUD - 78 (3x)
REG - 67, 66, Aug 1
FAR - 54, Sept 8

[marqzho]

Claudia408

In year 1, the company has a ending AEP for -$5000. In year 2, the company has a ending AEP for $5000(-5000+10000)

Ending year 2 AEP = Beginning year 3 AEP = $5000

For year 3, CEP without considering the appreciate property is $20000
CEP with considering the appreciate property is $30000

Then we use roger method
CEP=$30000(+)
AEP=$5000(+)
So max. taxable dividend = ++ = $35000

Distribution=$40000, Taxable dividend is $35000, The rest is ROC $5000

REG 90
FAR 95
AUD 98
BEC 84

[Claudia408]

@marqzho – thank you! do you work in tax or you just learning all this stuff using Roger?

BEC - 75 (3x)
AUD - 78 (3x)
REG - 67, 66, Aug 1
FAR - 54, Sept 8

[marqzho]

All by Roger class and Wiley MCQ. I don't even work in public accounting or tax =)

REG 90
FAR 95
AUD 98
BEC 84

[Claudia408]

@marqzho… ok! neither do i! but this is so crappy, lol. what is your Reg study strategy? I feel like Roger's lectures are good and i mostly understand while I'm watching them and reading the book, but can't seem to be connecting the dots when i practice MCQs. you seem to be picking up on this stuff REALLY WELL!

BEC - 75 (3x)
AUD - 78 (3x)
REG - 67, 66, Aug 1
FAR - 54, Sept 8

[marqzho]

I think I did the same way everyone do. Watch all the lectures, try all the MCQ, read and understand all the solutions, re-try those incorrect questions, take notes. There was time when I tried to answer the MCQ, none of them make any sense. But when I kept doing them, they kept making more sense and formed a big picture in my mind.

As Roger always says, it's not a IQ test. If you study, you will pass =)

REG 90
FAR 95
AUD 98
BEC 84

[lswang]

Hey everyone:

Don Wolf became a general partner in Gata Associates on January 1, Year 1, with a 5% interest in Gata’s profits, losses, and capital. Gata is a distributor of auto parts. Wolf does not materially participate in the partnership business. For Year 1, Gata had an operating loss of $100,000. In addition, Gata earned interest of $20,000 on a temporary investment. Gata has kept the principal temporarily invested while awaiting delivery of equipment that is presently on order. The principal will be used to pay for this equip­ment. Wolf’s passive loss for Year 1 is:

A.
$0.

B.
$4,000.

C.
$5,000.

D.
$6,000.

The correct answer is C. Can someone please explain to me why the $20,000 interest income is not considered in determining passive loss?

FAR | 81 - July 21 15
REG | 66 - Oct 1 15 | 87 - Jan 7 16
AUD | 90 - Oct 29 15
BEC | 86 - Nov 25 15

[Anonymous]

@lswang because investment income is not the ordinary income of the partnership.
Investment income is a portfolio income and portfolio income and passive income ( like rental income) flow saperatey to the partners in schedule k.
This is what I understand if I am wrong please correct me.

[lswang]

Thanks Ano!

FAR | 81 - July 21 15
REG | 66 - Oct 1 15 | 87 - Jan 7 16
AUD | 90 - Oct 29 15
BEC | 86 - Nov 25 15

[ahugemistake]

Quick question because maybe I am misunderstanding this:

Jay, a CPA, is preparing a tax return for his client. Under which of the following circumstances would there be a violation of the code of professional conduct?
A. While preparing the tax return, Jay is uncertain as to the meaning of a question and decides to omit the question.
B. Jay decides to omit the $50,000 taxable interest income from his client's tax return because it would increase his client's tax bracket.
C. While analyzing the client's previous tax return, Jay finds a material error and does not notify the client of the error. Instead, Jay continues to prepare the current tax return without taking reasonable steps to ensure that the error is not repeated.
D. B and C.

Incorrect…

No violation here. According to SSTS No.2., Jay had reasonable grounds for omitting an answer because of the uncertainty as to the meaning of the question, which need not be explained.

The correct answer is D of course, but I was confused what ‘omitted' meant here. Did he just skip the question on the return and filed it? Is that allowed?

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

[Author]

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