REG Study Group Q2 2015 - Page 153

  • Creator
    Topic
  • #192517
    jeff
    Keymaster

    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/

Viewing 15 replies - 2,281 through 2,295 (of 3,544 total)
  • Author
    Replies
  • #679506
    jstay
    Participant

    yeah gift tax will be added to basis, like i said though, only if the property actually appreciated

    #679507
    Anonymous
    Inactive

    i decided to answer some random tax mcq's

    what I don't get about this question is why wasn't FMV of inventory used

    The CSU partnership distributed to each partner cash of $4,000, inventory with a basis of $4,000 and a fair market value (FMV) of $6,000, and land with an adjusted basis of $5,000 and a FMV of $3,000 in a liquidating distribution. Partner Chang had an outside basis in Chang’s partnership interest of $12,000. In the second year after receiving the liquidating distribution, Chang sold the inventory for $5,000 and the land for $3,000. What income must Chang report upon the sale of these assets?

    A. $0 ordinary gain and $1,000 capital loss.

    B. $1,000 ordinary gain and $0 capital loss.

    C. $0 gain or loss.

    D. $1,000 ordinary gain and $1,000 capital loss.

    Answer (D) is correct.

    Chang begins with $12,000 of AB. Cash is distributed first and Chang’s AB is reduced to $8,000. Next, the $4,000 of inventory reduces Chang’s overall AB to $4,000. Since there is only $4,000 AB remaining, Chang is only able to take a $4,000 basis in the land. He cannot go negative in basis for a non-cash distribution. The sale of the inventory was completed within 5 years of the distribution; therefore, the $1,000 gain ($5,000 sale price – $4,000 AB) is an ordinary gain (not capital gain). The sale of the land results in a $1,000 capital loss ($3,000 sale price – $4,000 AB).

    #679508
    Anonymous
    Inactive

    Within a limited partnership, how is it that a general partner can also be a limited partner at the same time?

    #679509
    Anonymous
    Inactive

    I guess they do use BV for inventory distribution, Roger conveniently avoids this in his example. I am still not clear though if FMV or BV is used when partnership interest is sold. The code is just unreadable

    #679510
    jstay
    Participant

    yeah theyll use the NBV for the inventory which brings it to 4,000 basis that is applied to the land

    #679511
    jstay
    Participant

    anjanja, this is kind of like that question

    Owen's tax basis in Regal Partnership was $18,000 at the time Owen received a nonliquidating distribution of $3,000 cash and land with an adjusted basis of $7,000 to Regal and a fair market value of $9,000. Regal did not have unrealized receivables, appreciated inventory, or properties that had been contributed by its partners. Disregarding any income, loss, or any other partnership distribution for the year, what was Owen's tax basis in Regal after the distribution?

    A.

    $9,000

    B.

    $8,000

    C.

    $7,000

    D.

    $6,000

    #679512
    Anonymous
    Inactive

    B? no, I am only confused by hot assets, there is not much on it in my book

    #679513
    Anonymous
    Inactive
    #679514
    jstay
    Participant

    yeah B is correct

    #679515
    Anonymous
    Inactive

    It's 3pm and I'm about to re-do the Becker R3 mcq. Tomorrow re-do Becker R5 mcq. Tuesday do ninja. Wednesday review IRC. Thursday is judgement day! What do you guys think?

    #679516
    canaanko
    Member

    @PasstheCPA7

    You definitely should focus on taxes more than business law. I thought MCQ wasn't too bad, but SIMS were difficult like I stated earlier. Get a general understanding of business law, but make sure you actually know the concepts and not just breeze through it.

    #679517
    canaanko
    Member

    @cpa8488

    Don't forget to read/review your notes. I thought that was more important than just cranking out MCQs. Honestly, you don't need to review IRC. I feel that it's very easy to find the solution as long as you search for the right terms. Good luck!

    #679518

    Nolan agreed orally with Train to sell Train a house for $100,000. Train sent Nolan a signed agreement and a down payment of $10,000. Nolan did not sign the agreement, but allowed Train to move into the house. Before closing, Nolan refused to go through with the sale. Train sued Nolan to compel specific performance. Under the provisions of the statute of frauds:

    A.

    Train will win because Train signed the agreement and Nolan did not object.

    B.

    Train will win because Train made a down payment and took possession.

    C.

    Nolan will win because Nolan did not sign the agreement.

    D.

    Nolan will win because the house was worth more than $500.

    BEC Passed
    FAR Passed
    AUD Passed
    REG Passed

    #679519
    Anonymous
    Inactive

    is it b?

    #679520

    Answer is B. I thought the statue of fraud will come in since it involves realt estate but i was wrong.

    BEC Passed
    FAR Passed
    AUD Passed
    REG Passed

Viewing 15 replies - 2,281 through 2,295 (of 3,544 total)
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