[jeff]

Welcome to the Q2 2015 CPA Exam Study Group for REG.

“Death and Taxes” – Individual Tax for the CPA Exam

Posted by Another71 on Monday, November 24, 2014

Free NINJA: https://www.another71.com/cpa-exam-study-plan/

AUD - 79
BEC - 80
FAR - 76
REG - 92

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

[jstay]

Wait, now Anjanja confused me, so if they ALL own 80% its tax free? (don't they own 80% after in this problem?) or is it individually (had roberk owned 85 shares and the others 8 and 7 respectively, then Roberk wouldn't have recognized tax income and Quigley would recognize the service income?

[PasstheCPA7]

Hi guys,

Quick question on UCC Sale of Goods. There is a rule called the “Merchant's Confirmatory Memo rule.” It's also known as the 10 day rule. Does this 10 day rule only apply to the party who is the seller or the receiving party? Or does the 10 day rule also apply to the buyer (who is sending the Purchase order) as well? Not sure I'm following this. Can someone explain or show an example of how this works?

Thanks.

[Anonymous]

if those who contributed assets own 80%, it's 351 => rollover basis. Services don't qualify

Although now I am not sure of anything anymore

[Anonymous]

There are also some exceptions for contributing stock, but I don't remember. I should just carry my book everywhere

[Gabe]

Ok…let's end the confusion…from my notes: “if you remove all SH who contributed services in exchange for ownership in corp and the remaining SH who contributed property add up to less than 80%, then ALL SH have a taxable event.”

So, Q is out because he contributed services- those don't count towards the 80%

R is included because he contributed land, so 60% for him

S is out because he contributed cash- also doesn't count

So, after the formation Q and R add up to less than 80%, thus, a taxable event for Q and R- S is not included because an exchange of cash for stock is exempt.

CPA, CFE
CISA- Experience will be completed by August 2016

[jstay]

@Anjanja agreed! but its better not using a book and trying to recall it

[Anonymous]

I'm back I've been on a little hiatus the past 5 days or so… hope everyone is doing well 🙂

[jstay]

cpa8484, whats up! hows the studying going?

[Anonymous]

nonexistent! I was in the ER yesterday I think I had food poisoning but I'm good now. And last week I took 2 days off. I feel like I'm dragging this out a little to much. I have 22 days to go and need to get my shit together. How's it going for you?

[jstay]

haha same exact feeling, im 3 weeks out from this Friday so once Friday comes its crunch time. Other then that ive been doing well on BLAW (all my scores are up) but I know commercial paper will kill my confidence later. I have been scoring mid 70s to low80s on my progress tests of 72. its going to be a long 3 weeks that's for sure

[Gabe]

Keep going strong jstay and cpa!

CPA, CFE
CISA- Experience will be completed by August 2016

[Anonymous]

Gabe, I just read your post, I think cash counts, but it's still less than 80%

[stoleway]

As far as the 80% is concerned, it relates to anyone who contributes property and cash. When I was studying for REG, the easiest way to remember this rule is that anyone who decides to contribute services in exchange of stock is a traitor and is trying hard to make the transaction taxable. funny, but it works.

Lets take this example

A (20% Owner) contributed services, B (65 % Owner) contributed property , C (10% Owner) contributed property, D (5% owner) contributed cash

A is the traitor here, but his actions will not cause the other shareholders to be taxed, simply because B,C and D have control (80%)

If D had contributed services other than cash, his action would have made the transaction a taxable even, because B & C does not have control (75%)

Hope this helps..

REG -63│ 84!!
BEC- 59│70│ 71 │78!
AUD- 75!
FAR- 87!

Mass-CPA

[Sand Wraith]

Can anyone explain the sentence between brackets:

Jack and Jill purchased a vacation home in 2006 for $150,000. In 2014, they sold the home for $600,000 and received a down payment in the amount of $200,000. ((The rest was mortgaged in the amount of $400,000)). What is Jack and Jill's gross profit percentage on this sale?

I know what mortgage means obviously and I know the percentage is 75%, but the sentence as a whole, I don't get, what did happen to the 400K ?

AUD ... Passed
REG ... Passed
FAR ... Passed
BEC ... Passed

I'm Done!!

[jstay]

Gross profit % = 450,000/ 600,000 …right?

600 – 150 = 450

OR would we take into the MFJ homeowners exclusion?

[Author]

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