[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/

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

[vritti]

@ CPA8488

Like kind Exchanges

Amount realized : 50,000

Adjusted basis <40,000>

= 10,000 (realized gain)

Recognized gain <6000>

Unrecognized gain = 4000

Basis of tractor acquired :

Cost of 44,000 less unrecognized gain of 4000 = 40,000.

[vritti]

Can someone please help me understand AMT adjustments?

Suppose I have AGI of $100,000 and $12,000 in medical expenses, how much do I add back as an adjustment for AMT purposes? How much can I deduct?

[Anonymous]

You don't need to add anything back if you didn't take itemized deductions yet. If you did, it would depend on how old the taxpayer is. If they were > 65, you add back medical expenses for the difference between 7.5 and 10% of agi. If they are < 65 then do nothing

If there were no itemized deductions taken yet, you deduct 2000 of medical expenses to arrive to amti (medical minus 10% agi)

[Anonymous]

Tom Lewis, a single taxpayer, received $1,000 in gross receipts for renting his lake cabin for 10 days

during 2014. The expenses related to this rental included:

Newspaper ad for rental $100

Cleaning and maintenance of rental 200

Tom's total income on his 2014 individual tax return will be increased by what amount as a result of the

rental activities?

A. $0

B. $1,000

C. $900

D. $700

You are correct, the answer is A.

If an individual rents a personal residence for a period of time less than 15 days during a tax year, the

rents he or she receives are not included in gross income and the associated expenses are not deductible

as a rental expense. Thus, since Tom rented the property for only 10 days all year, he will not show any

income or expenses from the rental on his tax return.

How is this not taxable? I would think that if you're receiving income, the government wants you to report this income in gross income. Is this just an exception for property rented for less than 15 days?

[Anonymous]

yes, because less than 15 days

[Anonymous]

Would someone please help me with the question below?

Ms. W, who is single, determined that her total tax liability for Year 2 would be $10,000. W is required to make estimated tax payments if:

A. Her Year 1 tax liability was $5,000 and her Year 2 income tax withholding will be $9,750.

B. Her Year 1 tax liability was $9,000 and her Year 2 income tax withholding will be $8,500.

C. Her Year 1 tax liability was $12,000 and her Year 2 income tax withholding will be $9,750.

D. Her Year 1 tax liability was $12,000 and her Year 2 income tax withholding will be $9,000.

Thanks

[vritti]

CPA2B2015

Hi, this deals with Estimated taxes and inadequate withholding.

A taxpayer has to make quarterly payments if both these conditions are met.

1) Taxpayer has $1000 or more tax liability (which he does in this question).

2) The taxpayers withholding is less than the lesser of

a) 90% of prior year tax

or 100% of current year tax

(Also remember the exception if AGI is in excess of $150,000, it becomes 110% not 100%)

thus,

Answer is A

$ 5000 (last year's 100% tax liability) < $9750 (which is the withholding amount)

[Anonymous]

What's the right answer, is it B?

General Rule (from publication 505)

In most cases, you must pay estimated tax for 2015 if both of the following apply.

You expect to owe at least $1,000 in tax for 2015, after subtracting your withholding and refundable credits.

You expect your withholding and refundable credits to be less than the smaller of:

90% of the tax to be shown on your 2015 tax return, or

100% of the tax shown on your 2014 tax return. Your 2014 tax return must cover all 12 months.

[vritti]

omg sorry I got it completely wrong. Disregard the last part of my answer. Sorry again!

[Anonymous]

Vritti – The answer is B.

Anjanja – Thanks for clarification.

I have my exam tomorrow and feel like I'm not ready yet, too many rules…gosh.

Goodluck to me and everybody else in the process. Will post back after the exam tomorrow.

[Anonymous]

Good luck tomorrow!

[Ai]

@jstay Thanks!

AUD (x3)81 (expires SEPT 2015)
BEC (x2) 81 (Lost Credit in March), Retake- 79
REG (x5) 76
FAR (x1) 62 Retake August 2015

[Anonymous]

I'm having a hard time understanding why Separately stated items for S-corp and P/S affect the Basis of the stockholder. Is it because these Separately stated items are an increase in the corps Income, therefore they increase equity/value of their stock? And the only reason we separately state these items is because they might have different tax implications for the individual than for s-corp & P/Ships

[jstay]

18 days out….oh boy

atleast after tomorrow, I have off until exam day

[Anonymous]

I have little over a month and all the blaw + some ethics to go through.

I am trying to decide if I should give up taking notes and just go through the rest of material faster, or continue taking notes and skip few last chapters? How much of blaw mcqs are usually on a test?

[Author]

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