[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

[Anonymous]

deductible”for” AGI means above the line deductions and deductible “from” AGI means below the line deductions correct?

[jstay]

can someone explain to me mid quarter though? say i buy a 5 year asset for 20,000 in November. Where would i take it from there? i kind of get half year from the problem on the last page where we cut it in half even though it was placed in service in jnauary

[Anonymous]

mid quarter is 1.5 months, I would first calculate depreciation for a full year 20000/5*2 = 8000 and then divide by 8 = 1000

right?

[jstay]

yeah heres some a thread on it, looking at the thread and yours i would say you are correct

https://www.another71.com/cpa-exam-forum/topic/reg-depreciation-mid-quarter-convention

[Ai]

Biz Law:

On April 1, Roe borrowed $100,000 from Jet to pay Roe’s business expenses. On June 15, Roe gave Jet a signed security agreement and financing statement covering Roe’s inventory. Jet immediately filed the financing statement. On July 1, Roe filed for bankruptcy. Under the federal Bankruptcy Code, can Roe’s trustee in bankruptcy set aside Jet’s security interest in Roe’s inventory?

A) Yes, because a security agreement may only cover goods actually purchased with the borrowed funds.

B) Yes, because Roe giving the security interest to Jet created a voidable preference.

C)No, because the security interest was perfected before Roe filed for bankruptcy.

D) No, because the loan proceeds were used for Roe’s business.

I choose C but according to wiley the answer is B. I didn't understand wiley's explanation for this. Anyone have a a way of explaining this?

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

[Tncincy]

Is anybody rewriting notes? I hit a wall and instead of giving up studying, I started writing notes. If you write them how many times have you written them since studying? or doing questions?

I'll get back to questions but I just needed a confidence booster.

It begins with a 75
Been here too long as a cheerleader....ready to pass

[OR_CPA]

@cpa8848, what is the mnemonic “TIMME” stand for in the AMT calculation again?

FAR - PASS
AUD - PASS
BEC - PASS
REG - 11/24

[Anonymous]

From @jstay‘s post earlier:

T- Taxable refunds are added back. a state refund that was a deduction from your reg tax is added back – it isnt allowed for AMTI purposed

I – interest on home equity loan – for reg tax purposes we can deduct up to 100,000 regardless of what we use the money on. for AMTI , if it is not used to buy/build/improve qualified residence, it will be added back.

M – Medical expenses, must be in excess of 10% AGI –

M- Misc deductions – normally we can add all our reg misc deductions that are subject to 2% threshold and if it above 2% of AGI we can deduct it. NOT so for AMTI, it is not allowed..so add it back

E- Exemptions and std deductions- not allowed, add them back too

[jstay]

Max sold his 10% interest in the Ajax partnership for $60,000. Ajax had $150,000 of unrealized receivables. Max had an adjusted basis in the partnership of $40,000. As the result of the sale, Max should report:

A.

$15,000 ordinary income, $5,000 capital gain.

B.

$15,000 capital gain, $5,000 ordinary income.

C.

$20,000 ordinary income.

D.

$20,000 capital gain.

[princeCPA]

Is it A? I think unrealized inventory and receivables will be ordinary gains.

BEC 79
FAR 86
AUD 79
REG 90

[Anonymous]

is it A? those are confusing

[jstay]

yeah its A. He sold it for 60 when basis was 40 so gain of 20. then we need to figure his share of the unrealized receivables, which is 15,000 si 15 of that is ordinary the rest is capital

[jstay]

For an S corp that was previously a C corp, is this how distributions work?

1st – any distribution is applied to S corp E&P (is it both current and accumulated?)

2nd – any distribution is taken from C corp E&P

3rd – any excess distribution would be a reduction in basis

4th – taxed as capital gains

[Anonymous]

I think E&P, then current earnings, then AAA, reduction of basis, cap gains

not sure if current or AA first though

[jstay]

just loked it up, ti would go

S corp AAA- not taxed

C corp E&P- taxed as dividend

reduce basis

capital gain

sooo if we distributed 500,000 and had a basis of 100,000, S corp AAA of 200,000 and C corp E&P of 50,000. it would look as follows

AAA – 200,000 is exhausted – not taxed

E&P- 50,000 exhausted – dividend

100,000 reduction in basis, not taxed

150,000 return on capital – capital gain taxation

[Author]

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