[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

[jstay]

we were talking about separately/non-separately stated income yesterday so heres on

PDK, LLC, had three members with equal ownership percentages. PDK elected to be treated as a partnership. For the tax year ending December 31, Year 1, PDK had the following income and expense items:

Revenues $120,000

Interest income 6,000

Gain on sale of securities 8,000

Salaries 36,000

Guaranteed payments 10,000

Rent expense 21,000

Depreciation expense 18,000

Charitable contributions 3,000

What would PDK report as nonseparately stated income for Year 1 tax purposes?

A.

$30,000

B.

$35,000

C.

$43,000

D.

$51,000

[Anonymous]

when would it be 0? I'm not sure why I automatically assumed 0. Yea, jstay I remember something in Becker talking about C corps liquidating and it being assumed sold to an outsider so its FMV not basis.

[Anonymous]

B?

[Anonymous]

It would be 0 for partnership

[Anonymous]

b 35000

revenue 120

rent (21)

dep (18)

guar. pymt. (10)

salaries (36)

non separately =35

[jstay]

yep anjanja and cpa8488 are correct

ummm, maybe you were thinking 0 right away because thats the rule for partnerships. if a partner has a basis of 100,000 and the partnership distributes 50,000 cash & land with basis of 75 and fmv of 100,000…no gain would be recognized. his basis is brought down to 50 cause of the cash then his basis in land would be 50 but not gain

same scenario but instead the partnership distributes 105,000 in cash and basis is still 100,000..gain of 5,000. even if they distribute land with it the only gain is 5,000

same scenario accept is a C corporation. basis is 100,00 distribute 50,00 cash so now basis is 50,000. they distribute land with basis to corp for of 50,000 and fmv of 75,000. gain recognized to shareholder of 25,000. i believe gain is also recognized to corp for 25,000

hopefully this is all correct

[jstay]

heres a question related to this topic that i just got lol

When comparing liquidating distributions of different entities, which of the following statements is incorrect?

A.

If a partner receives cash in excess of the partner's adjusted basis, then gain is recognized on the excess.

B.

A C corporation will recognize a gain or loss when the corporation is liquidated.

C.

An S corporation will not recognize a gain or loss when the corporation is liquidated.

D.

In a partnership, if no cash equivalents are distributed, no gain is recognized.

[Anonymous]

C? But I suddenly went blank on everything

[jstay]

you are correct! yeah, @sandia said it up a little, S corps and C corps are treated the same for liquidated distributions

[Sandia]

Now that I took my test I remember everything… LOL

The idea is remember the test day not after or before.. GOOD LUCK !!!

FAR - 77 x2 Wiley book & no test bank
AUD - 83 x3 NINJA Test bank 3 time
REG - 80 x1 NINJA Test bank
BEC - 78 X2 NINJA Test bank ..done!!promesa cumplida mama -que llege al cielo 🙂
Ethic 100% Licensed VA CPA

[Anonymous]

I should start eating before the workout, this amnesia is even scary

[Anonymous]

thanks jstay that did make sense!…. all these rules it's hard to keep it all straight!

[Anonymous]

does it matter if the C corp is distributing to a SOLE shareholder or a group of shareholders?

[Ai]

I got 3 questions related to this topic wrong whilst doing MCQs earlier, I thought it would be useful to share if anyone else may come across these.

Releases of Cosurety:

A release of a co-surety without the consent of the other co- sureties means that remaining surety is discharged to the extent that the surety could have recovered from the released surety.

I keep thinking that the remaining surety gets released COMPLETELY!

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

[jstay]

@cpa8488, i dont think it does

[Author]

Replies