[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]

bec isn't bad if you learn the formulas. There are no SIMS so as long as you can write well you will do good on the WC. Remember, it's computer graded (unless your in the bubble). So you have to use those “key terms” provided in the WC a lot. One of them I completely made no sense whatsoever. But I kept repeating the key terms and talking around it. Highest score I've gotten which leads me to believe that the SIMS are my downfall.

[Anonymous]

yes February 2016, there is not that much time left. I know, score etc, but it's still scary. FAR was easy, AUD was not easy, but there wasn't a lot of material.

[jstay]

BEC was the worst for me, thought i failed when i left (especially when you start looking up answers and see that you got them wrong). it was my highest score, go figure. The writing is definitely key to gaining those extra points that can throw you over the 75 mark and memorization of formulas

[Anonymous]

writing is a problem, it's not just ESL, it was just as bad using my 1st language

[Anonymous]

Blake, a single individual age 67, had a 2014 adjusted gross income of $60,000 exclusive of Social Security benefits. Blake received Social Security benefits of $8,400 and interest of $1,000 on tax-exempt obligations during 2014. What amount of Social Security benefits is excludable from Blake's 2014 taxable income?

Incorrect A.

$0

B.

$4,200

C.

$4,700

Correct D.

$1,260

Ninjas explanation/formula is like a paragraph long. Anyone care to explain how the answer is D. Because I'm lost!

[jstay]

@anjanja dont worry about it now, wait till you see a passing score come score (you will) on score release day. lets get back to REG folks

heres som tax humor:

An IRS agent is walking through Brackenridge Park when a mugger jumps out and yells “Give me all your money!”. The IRS agent says, “You can’t do this after all I work for the IRS.” At which point, the mugger yells: “OK, give me all MY money!”

[jstay]

@cpa8488 its asking what is EXCLUDED therefore we need to remember that if your AGI is high enough then you need to include 85% of ss income. 85% is the hights. 8,400 x .85 = 7140. 8,400 – 7,140 1,260

[Anonymous]

cpa8488,

it was just discussed few pages back. There is formula, but basically if income + exempt income + 1/2 of ss > 60000, 85% of SS is taxable => 15% is excluded

if it's < 25000 none of SS is taxable

[Anonymous]

@jstay, I have some slight pressure to pass REG on the 15th (said with EXTREME sarcasm). If I fail REG I lose BEC. If I pass I am finished with the exam.

[jstay]

@CTM best of luck to you come this Friday!

what study material are you using? how are you feeling with 3 days left?

[Anonymous]

I didn't know it was posted a few pages ago sorry guys! We are on hear on a daily basis sometimes its easy to miss comments. Let me clarify correct me if I'm wrong.

I thought social security wasn't taxable? However, if you make over 60,000 it's taxable up to 85%. And if you make less than 25000 than non of s/s is taxable. What about if your someplace in the middle?

[Anonymous]

As my Tax Professor said: Social Security is a worksheet item. It's taxed anywhere from 0% up to 85%. To determine how much is taxable, you need to do the worksheet.

With that in mind, the most important thing to remember is that Social Security CAN be taxed but only up to a MAXIMUM of 85% if there is enough earned income. Know that concept and you'll be fine on test day.

[Anonymous]

cpa8488,

then there is a formula which I don't know. I would guess it's just calculated proportionally?

[Anonymous]

Could someone please explain this example to me? I couldn't follow it at all.

Lee and Pat are married. Lee dies in 2014. The Lee estate's tentative tax base at death is $3 million. The Lee estate claims a unified estate and gift tax credit equal to the estate tax, before credits, on $3 million.

The executor of the Lee estate timely elects to allow the Pat estate – when Pat dies – to use the Lee estate's unused exclusion amount of $2,340,000. Pat, who has never made any lifetime gifts, dies later that year with a tentative tax base at death of $9 million. The Pat estate's exclusion amount will be $7,630,000, which is the sum of $5,340,000 available to the Pat estate plus the $2,340,000 that is the Lee estate's unused exclusion amount.

So, the PAt estate's unified estate and gift tax credit will be equal to the tax on $7,680,000, and the net estate tax due will be $528,000: 40% tax rate x ($9,000,000 – $7,680,000).

[Anonymous]

@cpa, if it is somewhere in the middle there is a nasty calculation you have to do. I don't remember it off the top of my head and I'm not going to try to memorize it for the exam. Personally I think that if you know under 25k AGI makes SSI non-taxable and over 32k AGI means 85% of SSI is taxed then you're good.

[Author]

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