[jeff]

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

Jeff Elliott, CPA (KS) | Another71 | NINJA CPA | NINJA CMA | NINJA CPE

[Anonymous]

For employed individuals who are itemizing (or not claiming a standard deduction), they can use one of these itemized deductions (Schedule A)
Itemized Deductions [ID] {Schedule A} (Form 1040)
7 [COMETIC]
C – Charitable Contributions
O – OMD [Other Miscellaneous Deductions]
M – MADE [Medical and Dental Expenses]
E – Employee Expenses (unreimbursed employee expenses); Miscellaneous Expenses
T – Taxes Paid
I – Interest Paid
C – Casualty or Theft Losses

[Anonymous]

@CPYay, you're welcome.

I made my mnemonics out from the actual forms of IRS. I suggest you get a copy of tax forms. Print them and read each line.

I compiled the basic tax forms (1040, 1041, 1065, 1120, 1120F, etc.) and all the schedules A-H and schedules M1, M2, M3. They were very useful to me especially that I have zero tax background.

[HoosierCPA]

@jack I missed that question first time around as well. You probably know it without realizing it. Think of it this way, the rule for related party exchanges is if the donee sells between the FMV and purchase price there is NO GAIN. In order to have no gain then the basis and the selling price must be the same.

Bought from sister for 40 Basis of 60 later sell for 50. Qualified for no gain basis = 50 selling price = 50.

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

[Anonymous]

@cpyay

Subscriptions are miscellaneous itemized deductions exceed 2% AGI. This subscription is not meant to find a job.

[isoceles]

Okay this question really has me stumped. The rule I've been drilling in my head is BASIS @ ADJUSTED BASIS for contributions of property to corps. I don't know if I've just been studying too long or what, but what am I missing here that makes this not $300,000???

Question
Porter, the sole shareholder of Preston Corp., transferred property to the corporation as a contribution to capital. Two years later, Corley transferred property to the corporation in exchange for a 10% interest in corporate stock. The property transferred was valued as follows:

Porter’s Transfer
Basis: $50,000
Fair market value: $200,000

Corley's Transfer
Basis: $250,000
Fair market value: $500,000

What amount represents the corporation's basis in the property received?

A. $700,000
B. $550,000
C. $450,000
D. $300,000

Answer: B. Explanation: When property is transferred to a corporation, the basis of any property received is the fair market value (FMV) at the time of the transfer. Porter's transfer two years ago had an FMV of $50,000, but the current FMV does not have an impact on the corporation's basis in the property. The basis in Corley's contribution is the current FMV, and their basis in the property does not affect the corporation's basis. The total basis in property contributed to the corporation is the $50,000 original contribution (FMV) from Porter, plus the $500,000 current contribution (FMV) for Corley, which equals a total of $550,000.

Why FMV?!?!?!?!?!

[HoosierCPA]

@isoceles to get this problem you have to know the corp transfer rules. If at the point of contribution you and other partners contributing will own greater then or equal to 80% of the shares then the property contributed takes on the partners basis amount. If you and your partners contribute less then 80% then you take on the FMV as your basis.

So to the problem. When Porter contributed to the corp he was becoming the SOLE SHAREHOLDER, so taking on 100% of the shares. So he will take on his basis in the property or 50k. 2 years later Corley gets involved, to take on 10% of the shares, so you need to apply the less then 80% rule, he will take on the FMV as his basis or 500k.

Hope this helps!

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

[jack yassa]

dtatham10
You're awesome man. Thanks a lot.
One more question please?.
As i know we don't include”REPORT” income from gift and inheritances i the tax return, but we do count for gins and losses. Now why in REG4-TESTLET3-Q3, reported all income from gifts and inheritance to the tax return.

[HoosierCPA]

@jack what's the question?

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

[jack yassa]

1. Stock inherited from an uncle whose REPORT/TX RETURN
basis was $5,000. FMV at death was $700
$8,500. Stock sold for $9,200 by
nephew after 6 months. Uncle held
stock for 12 years.

2. Stock received as a gift. Donor's $3,300
basis was $3,000. FMV at date of gift
was $4,500. Donor owned stock for 3
years. Recipient sold stock after 90
days for $6,300.

Why do we report it on the tax return, isn't not re portable?

[HoosierCPA]

@jack the transaction itself is not taxable, you are correct. However, re-selling the inherited or gifted securities is taxable. That's what this sim is testing.

For the first one. The donee assumes the FMV as their basis since it's inherited. This transaction is tax free. They proceeded to sell the securities for $9,200…$8,500 minus $9,200 is the gain recognized.

The 2nd one is gifted so they take on the donors basis ($3,000). Again, like the last problem this transaction is tax free however they decide to sell it for $6,300. $6,300 minus $3,000 is the gain recognized.

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

[jack yassa]

@dtatham10
You mean taxable “re portable” for the recipient when he sells it, and not when he revives it?

[HoosierCPA]

yes

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

[jack yassa]

@dtatham10
Thanks a lot man. 🙂 Bless your heart and excuse me. English is my 2nd language that's somehow another challenge added to the exam LOL.

[jjjgolf47]

Hello All,

Sorry in advance for the contracts question (yawn). Having a little trouble identifying when title and risk of loss is transferred when there are no contract terms and shipping terms are used. When “shipping contract” is used are both transferred to the buyer when they are shipped? When “destination contract” is used does both title and risk of loss stay with the seller until the shipment reached the buyers warehouse? This is what it implies in the Roger books but I missed a few MCQ's in which it seems title is transferred as soon as the goods are shipped…

Thanks!

[Anonymous]

ugh my test is friday and i am feeling good about the tax stuff and not so great about b-law.

is there a better research database to practice with other than what is on the AICPA site? i was trying to practice with my roger research items and it seems like the IRS on the AICPA site only includes a limited amount of the code. am i nuts?

i was feeling great until i took practice exams.

[Author]

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