[jeff]

Welcome to the Q1 2017 CPA Exam Study Group for REG. 🙂

[aatoural]

GRRR! I hate Securities Act of 1933 and 1934. Cannot find a way to make it stick. How have you guys done to learn this part of Becker chapter 5?

When a common stock offering requires registration under the Securities Act of 1933:
a.
The issuer may make sales 10 days after filing the registration statement.
b.
The issuer would act unlawfully if it were to sell the common stock without providing the investor with a prospectus. CORRECT
c.
The SEC will determine the investment value of the common stock before approving the offering.
d.
The registration statement is automatically effective when filed with the SEC.

I look for the answer and nothing shows on the book. So frustrating.

BEC - PASSED
AUD - 8/29/16
FAR - TBS
REG - TBS

[LIZZ]

Hotel lobby is just as loud as a Starbucks excepts its free and open 24 hours.

FAR - 05/2015
AUD - 75,11/2014
REG - 07/2015
BEC - 09/2015

[JMG]

@Namstut thanks, I read through it a few times and still had no idea what I just read.

@aatoural try to remember that 33 comes before 34, so 34 deals with sales of securities AFTER issuance. Whereas 33 deals with initial issuance. I would just try to know as much as possible about 33 since it's a little bit meatier than 34 in the book. But yeah I feel your pain, I was constantly getting tripped up on those questions too.

Another tip: usually negligence comes before fraud, so 33 deals with negligence, 34 deals with fraud. (at least that's how it stuck in my mind lol)

[anastasiab43]

Can anyone help me understand this Section 1244 question on capital loss?

A married individual invested in Section 1244 small business stock in year 1. In year 7, the individual sold the stock at a loss of $157,000. There were no other stock transactions during year 7. If the taxpayer files a joint return, how much loss can the taxpayer deduct in year 7?

A married taxpayer can deduct up to $100,000 of losses for Section 1244 stock. The other $57,000 loss is a long-term capital loss, but I don't understand how $3,000 of the capital loss is deductible.

[JMG]

@anastasiab43 any loss in excess of the 100K limit is entitled to a max 3K deduction for MFJ. If you have the Becker book it's at the tail end of the C corp tax section in R3.

[aatoural]

Thank you JMG

BEC - PASSED
AUD - 8/29/16
FAR - TBS
REG - TBS

[JMG]

@aatoural no problem, I studied the Blaw section first and then moved on to the tax sections so I will definitely have to go back and review those two again!

[RyanC23]

Hey all,

Sorry if this is somewhere earlier in the thread, I briefly checked but may have missed it. I am just finishing the last of the tax material before I move onto to business law material ( I am using Becker). Just curious if anyone has any suggestions or advice for making a cheat sheet on the tax stuff. There just seems to be so much, and I want something I can make to look at every once in awhile so I dont forget the main points while studying law. I probably wont have much of a review period so I am trying to efficiently review the tax while I study law.

By cheat sheet I mean something i can make on notebook paper that is well organized and easy to distinguish. I was thinking maybe separating it by taxable entity ( Individual, S-corps, C-corps- partnerships, etc). But just wanted to get some advice or input from someone who has done this before and found it helpful

Thanks and good luck

AUD 88
BEC 8/16/2016
REG TBD
FAR TBD

[RE2PECT]

Wow what a difference after switching back to Ninja from Gleim. I reset my stats and did a couple 20 question sets on individual tax and got a 100 on both lol. Gleim was starting to kill my confidence and I needed a break from constantly getting 60's and 70's.

FAR: 75 Roger & Ninja (notes/flashcards/audio/MCQ)
AUD: 73, 81
BEC: 71, retake 8/29
REG:

[LIZZ]

So Depreciation/ MACRS. Its Killing me but I think it could be a good SIM question right?

Do I have to remember what qualifies for the 3,5,7 years? Some problems just tell you the years and some don't. I am also having a hard time finding questions so I can practice the calculations. Does anyone have a good comprehensive example i can study from ? There was a few in Ninja and im about the check the SIMS in Ninja and Becker to see if that helps it sink in for me.

FAR - 05/2015
AUD - 75,11/2014
REG - 07/2015
BEC - 09/2015

[Namstut]

@LIZZ SIMs 5-8, Becker chapter 4 Homework.

AUD 7/6/16 Passed
BEC 9/3/16
FAR TBD
REG TBD

[HoosierCPA]

@Lizz macrs is a pain. I have gotten a little better but it's still not one of my strengths.

Knowing the big items won't hurt.
–Commercial Property 39 years, Residential Property 27.5 years.
–5 year life: automobiles, general purpose light trucks, office machinery
–7 year life: heavy trucks, office furniture

I remember the 5 year life on automobiles by using personal experience, most the time when people finance a car they will have a 5 year auto loan. Also, just using common sense, furniture naturally lasts longer then computers so furniture gets the 7 year life and computers get the 5 year life.

Next comes the conventions:
–Half year = personal property (generally this is what you will use for ALL personal property)
–Mid Quarter = personal property, this is used if 40% or more depreciable property is placed into service the LAST quarter of the year
–Mid month = real property

Now comes the calculation. Lets say you buy a 5k computer in August. Calculate Year 1 MACRS deprecation

Criteria: 5 year life, Half year convention

$5,000 X (2/5) x 50% = $1,000
–you multiply the $5k by 2/5ths because year 1 is double declining..as a result rather then running 1 year of depreciation off you run 2 years.

–you then multiple you entire year 1 double declining depreciation of $2k ($5,000 x 2/5ths) by 50%…this is because you are using half year convention so you only will take 6 months of deprecation. If you were to switch the example up and use mid quarter because the $5k was acquired in November you would calculate it as $5k X (2/5) X .125 = $250. The .125 is calculated by taking 25% because the asset was acquired in the LAST quarter and cutting it in half because its MID QUARTER convention.

A lot to digest there– I could throw out a couple other odd ball examples but I have probably already confused you enough! haha

FAR - 78
REG - 72,74,71...please just go away REG nobody likes you!
BEC - 82
AUD - Aug 16

[Namstut]

@RyanC23 I am not good at taking notes but if I decided to prepare a cheat sheet for REG I would concentrate on Partnerships and Corporations and would focus on the following:

1. Initial contributions of property/cash/services for partnership and corporations
2. Basis of partner in partnership/shareholder in corporation and contributed property basis on corporation's books/partnership books
2. Allocation of income for partnership/dividend distributions for corporations
3. Corporations converting to S. Corporations, property distributions and the effect on Corporation's and Shareholder's basis
4. Distributions of cash/property, liquidating vs. non-liquidating distributions for both, corps and pships
5. Calculations of Accumulated Earnings and Profits for Corporations, M-1 reconciliation for Corporations
6. Separately and non-separately stated items for Partnerships and items that flow through partner's K-1

AUD 7/6/16 Passed
BEC 9/3/16
FAR TBD
REG TBD

[Teal]

Ugh I hate basis. Can anyone explain to me why you don't reduce his basis by the FMV of the equipment?
Belson and Forman decided to terminate North partnership. On the date of termination, North's balance sheet was as follows:

Adjusted Basis
Cash $2,000
Equipment (fair market value $4,000) 6,000
Capital – Belson 4,000
Capital – Forman 4,000

Forman's outside basis is $2,000. The partnership assets were distributed equally between the partners. What is Forman's tax basis in the property received?

*CORRECT
A.
$1,000

B.
$4,000

C.
$6,000

D.
$10,000

Answer: Since the partner's basis is more than the cash received from the partnership, there would not be any gain to recognize on the liquidation. In that case, the basis in the property received would be the partner's share of the fair market value (FMV) of the distributed property less any cash received in the liquidation. Forman's distributive share of the property would be $2,000 less their share of the cash received ($1,000), which would give Forman a basis of $1,000 in the distributed property that they received from the liquidation of the partnership.

FAR (66,68) Aug 26
REG (66) July 25
AUD (66) December 1st
BEC - October 3rd

[Namstut]

@Teal his basis in the partnership is $2,000. After $1,000 of cash was distributed the basis went down to $1,000.

You can't reduce basis below zero, so the remaining basis of $1,000 is what his basis will be in the distributed property.

The gain can only be recognized if the distributed cash exceeds partner's basis. If there was no property and the total distribution was 4,000 he would recognize a gain of $3,000.

AUD 7/6/16 Passed
BEC 9/3/16
FAR TBD
REG TBD

[Author]

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