[jeff]

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

[aatoural]

So for the DRD exemption. If the corporation is a looser or is going to be a losser we pick the DRD based on the dividend income regardles of the taxable income. But what if the corporation is going to be a losser if you use either taxable income or dividend income to calculate the DRD?

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

[JMG]

@aatoural not sure if I'm answering your question or not, but I think the key to remember is that if the DRD creates a loss, the taxable income limitation is waived. In that case, the tentative DRD is used.

Totally unrelated but, for estate/trust tax, do we have to remember all the items that are principal vs income? Or are there some that are more important to know than others?

[aatoural]

@JMG – I guess that makes sense

What do you mean a;; items that are principal vs income?

The way I see it in a generalized way is that if any form of income is allocated to corpus (principal) then it is not added to the calculation of DNI.

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

[JMG]

@aatoural in Becker there's a table of estate/trust receipts with check boxes for each item as principal or income related. I was just curious if we needed to memorize any of that because it's a long list.

[aatoural]

I know what table you are referring now. I don't think we have to. Their lecture said review for HW but I have not actually seen any question or SIM so much in detail.

I am doing the GLAIM SIMS starting tomorrow if those don't require it either, then I am not memorizing that table particularly.

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

[JMG]

@aatoural Thanks. I just noticed your exam date is the 23rd, mine is the 24th! I wanted to take mine on the weekend but no weekend spots were available in my area. 3 weeks away, how are you feeling right now with everything?

[Namstut]

I particularly remember a question in Becker which included Street Assessment in the calculations (the last line item on the schedule you all are referring to (pg. 63, Reg4)).

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

[Namstut]

Maxine's Fashions operates a single retail location on the exclusive shopping strip known as Forbes Alley. Maxine's Fashions sells faux furs, leathers and accessories to an exclusive clientele. All of the inventory of Maxine's Fashions is secured by a properly perfected security interest in favor of Lux Bank & Trust. Lux Bank & Trust has declined Maxine's Fashions request for a loan to obtain new inventory for the upcoming holiday shopping season. If Maxine's Fashions secures financing from Plemun Bank for the purchase of new inventory

1. Plenum Bank's security interest cannot take priority with respect to new inventory over the perfected security interest of Lux Bank & Trust.
2. Plenum Bank's security interest will take priority over the perfected security interest of Lux Bank & Trust with respect to all inventory if Lux Bank & Trust is informed of the loan prior to the arrival of new inventory.
3. Taking a loan for inventory when a pre-existing loan covers existing inventory is a violation of the Uniform Commercial Code, unless consented to by the existing lien holder.
4. The security interest of Lux Bank & Trust was not automatically perfected. – CORRECT

Explanation
The security interest of Lux Bank & Trust must be perfected by filing; only a security interest in consumer goods can be automatically perfected and the items in question are inventory in the hands of a retailer. Plenum Banks security interest can take priority with respect to new inventory over the perfected security interest of Lux Bank & Trust if Lux is notified prior to the arrival of the new inventory.

-this question threw me off. It states that the inventory was property perfected. So my immediate assumption was that Lux filed the financing statement and #1 would be correct. I understand that it was not automatically perfected but that didn't stand out as the correct answer since I was fixated on the fact that it was property perfected. Overthinking much?

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

[JMG]

@namstut those semantics questions really stick it to you.

I'm having trouble understanding when and how the unified estate and gift credit is applied. Ninja MCQs didn't really have any questions about it. Do we use the $2,125,800 credit or the 40% x (tentative base – 5.45M), or are they the same thing?

[Namstut]

@JMG I am doing those questions from the CPA review for Free and they are challenging primarily because they are not based on the text from Becker. I am not sure if I am wasting my time or benefiting from it but I have been scoring 62% and my retake is on Saturday!!!

The estate and gift credit – It's on my list to review before the exam, I am not 100% comfortable with that area so I just happened to reread that part in Becker about an hour ago.

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

[Namstut]

@JMG

I decided to dig into the estate and gift credit since it's started bugging me that I don't know it. 🙂

So it is basically the same thing (which I initially stated in my earlier reply but then deleted because I was not 100% sure).

If you, for example, the tax payer dies with a tax base of 8,000,000. HE is able to apply applicable exclusion amount of $5,450,000 and the tax rate is 40%. His tax due is as follows:

(8,000,000-5,450,000)*40%=$1,020,000.

Looking at the same calculation from a different perspective

8,000,000×40%=3,200,000 – tax due not including tax credit
5,450,000×40%=2,180,000 – tax credit

3,200,000-2,180,000=1,020,000 – tax due after unified estate and gift tax credit is applied.

So I guess the answer is yes. It's not exactly 40% of $5,450,000 though.

NOTE: the applicable exclusion amount is going up to $5,490,000 in 2017 so I am not sure what amount we need to consider on our exam in 2017.

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

[RE2PECT]

@Namstut- I believe if you're taking it in Q1 we are still using the same numbers from Q4 last year. Hopefully someone else could confirm because I was thinking the same thing the other day.

Are there any other changes we should be aware of for Q1? I saw someone post in here that Dodd Frank won't be tested anymore, but I don't remember seeing anything on that.

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

[Namstut]

@re2pect, thanks!

I believe the Dodd Frank is under the new format that is tested starting Q2. Honestly, I am completely ignoring that section. Might be the wrong move on my part and I should at least read it but the fact that it will be completely omitted makes me think that we shouldn't see many questions on it if any. Don't listen to me though!! Every point counts.

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

[JMG]

@namstut thanks for breaking it down like that, makes more sense now. It was confusing because they give you the credit amount and then a formula to get the credit amount.

[Namstut]

I need advise.

My exam is on the 7th and I have 4 days left to review. I am going through Becker MCQs and scoring in the 90's. The questions are repetitive, I think by now I've seen nearly all of them. I am (was?) confident that I know the answers and didn't just memorize them. BUT after I did the free bank of questions (total of 200) on line and got in the low 60's for all of the attempts I am not sure what to do.

Did anyone try those questions? Are those results an indication that I am not prepared? For many of those questions I understand the questions and I know what the correct answer should be but I am having a very hard time picking the right answer because of the way the are worded.

Do I get Ninja MCQs? How do Ninja MCQs compare to Becker? Get Gleim SIMs – are they significantly different from Becker? Keep doing what I am doing using Becker for the next 4 days?

When I was studying for AUD and BEC with Becker my scores were in the 70-80 range and I passed on the first try. I didn't use any supplementary review material.

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

[Author]

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