[jeff]

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

[jpowell31]

Also on #36. The company started in November of year 4, when organizational and start-up costs were incurred. the question is reporting at year-end December 31 year 5. why don't we amortize over 14 months rather than 12. i know it's a calendar year but the question isn't very clear as to whether it's a longer reporting period or maybe these costs should've and were reported in the short-year ending December 31 year 4. why is there so many little tricks that can totally change the way you answer a question you know how to answer otherwise! BLEARGH.

[HoosierCPA]

@jpowell31 is the question asking for expense reported in the tax year? If that's the case it would make sense you only take the 12 months instead of 14 since the first 2 months fell under the prior tax year. It's hard for me to chime in on your questions without seeing the full context of what they are asking.

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

[jpowell31]

it says to fill out the form for the year ending December 31, year 5. i guess if it were a long year it would be for the period ending, rather than the year ending but in that case, because it specifies that both the organizational costs and start-up costs were incurred in year 4, the $5k would be taken in year 4 and only the monthly amortization would be taken in year 5, which is not the case (answer has $5k being taken for year 5 along with amortization). it's hard without the full question but there's a bit too much to copy and paste. i was just hoping someone with ninja noticed and could confirm i wasn't crazy.

[jack yassa]

@dtatham10
Have you yourself ever used Gleim TBS?

Do you think Becker by itself is good enough?

Thanks

[HoosierCPA]

@jpowell31 ok so I was being lazy and didn't want to pull it up but you have me curious!

The other expenses – 29k
Start up expenses – ($60,000 ÷ 180 months) × 12 months = $4,000
Organizational Exp – (($50,000 – $5,000) ÷ 180 months)×12 months = $3k
total – 36k

I guess I'm not seeing that the $5k is included in year 5…the calculation they have included isn't reading that way at least. Am I missing something?

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

[aatoural]

A cash-basis farmer with gross farm income of $95,000 incurred the following expenses:
Feed for the current year
$ 5,000
Combine rental with an operator
1,500
Auger rental without an operator
50
Phone line installation
65
Farm labor
30,000
The phone installation expense is for a first line into the home of the farmer. The line is used 20% for business. The farm labor cost includes $15,000 for wages, $12,000 for boarding, and $3,000 for farm products used by the labor. What is the net farm profit?
A. $61,450
B. $58,450
C. $64,885
D. $58,385

Answer (A) is correct.
Farmers may deduct any ordinary and necessary costs of operating a farm for profit. Only feed expense for the amount consumed during the current tax year may be deducted by a cash basis taxpayer. Both farm-related rentals (i.e., with or without an operator) are deductible. Farmers may only deduct the business portion of phone installations for other than the first line. Farm labor and labor boarding costs are deductible, but not the value of farm products used by farm labor. The net farm profit is $61,450 [$95,000 – $5,000 – $1,500 – $50 – ($30,000 – $3,000)].

What am I missing here. If line installation was 20% business then it should be and expense of 13(65*20%). Why is that not there and why is that extra 3,000 deducted?

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

[HoosierCPA]

@aatoural that question is awful! I'm trying to wrap my head around it and can only take shots in the dark. What I've determined is it appears the question is missing info. The phone installation I've calculated every which way and cant even seem to back into the answer! For the $3k the only explanation I have is “farm products used by the labor” is some weird way of saying this is personal use and cannot be deducted????? Weird weird weird question! lol

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

[jpowell31]

there we are…i saw the $5k being deducted and didn't realized it wasn't added/included in the amount deducted in year 5. brain's gone fuzzy. 2 days to go!

@aatoural that's a tricky one but it's included in the answer – this is the first phone line in. it would be pro-rated for any other than the first line (so it's all personal). the answer also says that the products used in service are not deductible. the question breaks out the cost of labor, $3k being the products used. glad you posted that because WHO KNEW?

[aatoural]

OMG! but then the 3K should be taken out of the 30K. It seems it is being double counted. Terrible I am really bad at farm related income questions, the SIMS I defended myself a bit more.

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

[HoosierCPA]

wow yeah I suffered from the dreaded over reading and analyzing as well. For some reason I thought they included a portion of the phone install (I quickly glanced and thought that's what the $50 was). But like powell said it looks like the big curveball is thef farm products used not being counted.

If I remember correctly there is a specific becker sim where they say not to stress over the farm income that its almost more then certain you won't see one on the exam. The general rule of thumb if you are stumbling over these odd ball rules is to just treat it as if you are treating any ordinary business income/expenses–that will more likely then not get you by with a decent score.

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

[jpowell31]

by experience…i always get the one (or 4 sims) that are “never” tested. i got stronger in 4/6 and comparable 2/6 categories on MCQ last time and weaker on sims…and i thought they were easy. i overthink or oversimplify and it drives me crazy. i know this stuff just let me pass damnit.

[HoosierCPA]

@jpowell31 we may have had the same exam because I remember thinking the same thing. I could have studied for another 6 months and not covered a couple of the sims I got. It's beyond frustrating because you can know 90% of the material and then get hit with a couple sims over the 10% you don't know and bam, fail. I feel like I've gotten to a point where I am just praying I get a lucky set of sims that I am familiar with!

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

[jpowell31]

yep. it's cruel. I got 71 not 74, so slightly less painful but… my AUD for example was so by-the-book study for what they tell you type thing and i think some people just get that type of exam across the board and don't understand why some people struggle or say you're not studying smart enough. if you've seen one exam, you've seen one exam. if they want you to study it, it could show up to ruin your day/week/month/year/life. WOMP. when do you resit?

[aatoural]

for wash sale loss, if husband and wife each buys x amount of shares and one of them sales his/her shares at a loss and purchased new shares 30 days bfore/30 days after. Does that wash sale loss is not recognized as if they had purchased the shares together?

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

[aatoural]

I got it. Spouses are treated as one!

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

[Author]

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