[jeff]

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

[wakefern58]

Appreciate @Celia! Thanks =]

@Jack, Yes this is referring to the De Min Rule

[thebigguy1992]

8. Which of the following items reported on a C corporation's tax return would not require an adjustment to
taxable income in computing current earnings and profits?

Straight-line depreciation.
Installment sale income.
Amortization of organizational expenses.
Meals and entertainment expenses.

why is the answer a…?

[thebigguy1992]

13. Dawson, Inc.'s warehouse (with an adjusted tax basis of $75,000) was destroyed by fire. The following
year, Dawson received insurance proceeds of $195,000 and acquired a new warehouse for $167,000.
Dawson elected to recognize the minimum gain possible. What is Dawson's basis in the new warehouse?
$47,000
$75,000
$139,000
$167,000

Why is the answer b..?? (both of these last two are from 2016 AICPA released difficult By the way)

[jack yassa]

@thebigguy1992
1-
Proceed 195000
<Basis> <75000>
======== =========
Realized 120,000

He used only 167000 of the 195000 proceed to get a new warehouse, which is 28000 still not used and will be taxable
Since he already deferred 92000 (120K-28K)

2-
The new basis is
new prop price 167000
<Deferred gain> <92000>
=============================
New basis 750000

[thebigguy1992]

can someone confirm whether the phaseout for section 179 expenses in test for Q1 2017 is 2,000,000 or 2,010,000? i see sometimes that it is increased 10k a year, so it should be the latter, but i see in the ninja notes they only mention the former

[CPA788]

@thebigguy1992 – I had to google this but I found they did not increase for 2017, still at 2M.

My book must be outdated and my Becker software updated – for Bonuses paid to non-stockholders as well as charitable contributions made (by C Corps), I guess the payment date has been extended to April 15 to be allowed as deduction in prior year? Used to be March 15th. Is this a recent update?

BEC - 74, 77
FAR - 72, 71 (retake 7/29)
REG - 69
AUD - Q4 '16

CA Candidate

[thebigguy1992]

@cpa788 i dont think thats true….its still march 15th…thats the only time I've ever heard of that changing. the only 2017 REG change is that there is no more dodd frank law. someone update me if I'm wrong

[CPA788]

Check this out – HW of R3 in Becker. Where is this 3 1/2 month (Apr 15) coming from? Everything in my book says 2 1/2 month (Mar 15). Even see articles online recently dated stating 2 1/2 month.

Question: CPA-02106
Axis Corp. is an accrual basis calendar year corporation. On December 13, Year 1, the Board of Directors declared a two percent of profits bonus to all employees for services rendered during Year 1 and notified them in writing. None of the employees own stock in Axis. The amount represents reasonable compensation for services rendered and was paid on April 13, Year 2. Axis' bonus expense may:

a.Be deducted on Axis' Year 2 tax return.
b.Not be deducted on Axis' Year 1 tax return because the per share employee amount cannot be determined with reasonable accuracy at the time of the declaration of the bonus.
c.Not be deducted on Axis' tax return because payment is a disguised dividend.
d.Be deducted on Axis' Year 1 tax return.

Explanation
Choice “d” is correct. The deduction is an ordinary and necessary business expense treated just as any other compensation expense is treated. Axis is an accrual basis taxpayer, and the deduction is taken on the return for the year in which the expense accrued because it was paid within 3-1/2 months of year-end.

BEC - 74, 77
FAR - 72, 71 (retake 7/29)
REG - 69
AUD - Q4 '16

CA Candidate

[thebigguy1992]

i guess thats a mistake then because if everything in your book says 2.5 months, and even like you said if even articles online say 2.5 months, and everywhere in ninja says its 2.5 months… than its probably 2.5 months.

[thebigguy1992]

do we actually have to know this alimony recapture formula? I've seen it in the ninja notes, but none of the ninja MCQ that have come up deal with it at all, and it seems pretty confusing and complex…what the hell is this?

Alimony Recapture Formula:
R2: P2 – (P3 + 15,000)
R1: P1 – [(P2 – R2 + P3)/2 + 15,000]
R3: R2 + R1

[CPA788]

Wth. I vaguely recall seeing this formula before, but this being my 4th attempt at REG, I can legit say I've never used that. Disclaimer – don't hunt me down if it's on your test haha. I'd be really surprised if it was.

BEC - 74, 77
FAR - 72, 71 (retake 7/29)
REG - 69
AUD - Q4 '16

CA Candidate

[wakefern58]

For estate/trust tax, is it correct that the Income Distribution Deduction is the amount taxable to the beneficiary?

[isoceles]

Took REG on Friday. Went medium, hard, medium and did very well (I think) on the sims. I was running low on time for my preparation, so I didn't study anything outside of taxation other than skimming professional responsibilities. So there were about 10 MCQs out of the 72 that I had no idea what I was doing on. Fingers crossed!

I would highly recommend shooting for 90 minutes MCQs and 90 sims. I did this and it helped tremendously with the sims.

[thebigguy1992]

ninja notes say this is personal holding company taxable income….why are DRD and NOL added back, and capital loss and net LTCG over net STCL deducted…? this seems like it came out of left field

Taxable Income
+Dividends Received Deduction
+Net Operating Loss
-Federal Foreign Taxes
-Charitable contributions in excess of 10% limit
-Net Capital Loss
-Net LTCG over Net STCL (net of tax)
= Adjusted Taxable Income

[jack yassa]

@isoceles

Where did you studied from?

[Author]

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