[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]

Sand orally promised Frost a $10,000 bonus, in addition to a monthly salary, if Frost would work two

years for Sand. If Frost works for the two years, will the statute of frauds prevent Frost from collecting

the bonus?

A. No, because Frost fully performed

B. No, because the contract did not involve an interest in real estate

C. Yes, because the contract could not be performed within one year

D. Yes, because the monthly salary was the consideration of the contract

How this doesn't fall under the statute of frauds? I thought Frost having to work for two years implies that the contract cannot be performed within one year?

[willpassby2014]

In April, A and B formed X Corp. A contributed $50,000 cash and B contributed land worth $70,000 (with an adjusted basis of $40,000). B also received $20,000 cash from the corporation. A and B each received 50% of the corporation's stock. What is the tax basis of the land to X Corp.?

A.

$40,000

B.

$50,000

C.

$60,000

D.

$70,000

BEC Passed
FAR Passed
AUD Passed
REG Passed

[Anonymous]

C?

[willpassby2014]

Yes. you are right.

Transferor's Basis

+ Gain recognized by shareholder=0

= Basis

is that how you calculated?

BEC Passed
FAR Passed
AUD Passed
REG Passed

[willpassby2014]

Dole, the sole owner of Enson Corp., transferred a building to Enson. The building had an adjusted tax basis of $35,000 and a fair market value of $100,000. In exchange for the building, Dole received $40,000 cash and Enson common stock with a fair market value of $60,000. What amount of gain did Dole recognize?

A. $0

B. $5,000

C. $40,000

D. $65,000

BEC Passed
FAR Passed
AUD Passed
REG Passed

[Anonymous]

Ugh I don't know, these are confusing. 40000?

[willpassby2014]

The answer is 60,000. No gain is recognized if you contribute property for exchange of shares only (80% rule). If you receive cash or any other property then gain is recognized lesser of

Realized gain – which is 70,000-40000= 30,000 or cash received which is 20,000

So 40,000+20,000=60,000

FOR THE SECOND QUESTION THE ANSWER IS 40,000.

IT IS TRANSFEROR BASIS + GAIN RECOGNIZED BY SH = 40,000+0= 40,000

BEC Passed
FAR Passed
AUD Passed
REG Passed

[RTCPA]

hi

can any one help me with the bellow:

Harold, an unmarried taxpayer, purchased a home in a suburb of Chicago on October , 2011. Eighteen months later his employer transferred him to St. Louis and Harold sold his home for a gain of $200,000. Since Harold sold his home because of a change in place of employment and had owned and used the home as a principal residence for eighteen months, the exclusion of his gain is limited to $250,000 × 18/24 = $187,500.

2 questions : a – if the sales was because of employment why we had to pro rata

b – gain is only 200,000 why the calculation was based on 250,000

thnx

[Anonymous]

An S corporation had the following income and expenses:

Sales

$240,000

Rent expense

25,000

Entertainment expense

5,000

Interest income

1,500

Contributions to qualifying charities

600

Section 179 expense

3,000

Depreciation expense

1,800

What would be reported as ordinary income on the corporation's income tax return?

A. $206,100

B. $208,600

C. $210,700

D. $213,200

I'm a bit confused with P/Ships and S-corps if you include interest income or not. I always thought you disregarded the interest income for both entities because they are reported separately on the individual's k1. edit: nevermind I can't math. Correct answer is C.

[No_one]

@RTCPA here my 2 cents..

If Iam not wrong Person need to stay in the house 2 out of 5 years. and Here he is single, so i guess max gain you can claim is 250000/- and MFJ 500000/- (Correct me if I am wrong)

I am not sure about the Pro rata rule (haven't revised yet) So hopefully somebody else from the group can explain better..

CA Candidate
FAR: You are down...
Aud: Surprised me...Thanks
BEC: 75% work done
REG: It's 80 but I am 100% done 🙂

[Anonymous]

RTCPA,

yes, the amount of the exclusion is prorated, not the amount of gain. Normally you'd have to live in the house 2 years out of 5 previous years to be qualified for the exclusion, but there are exceptions when you can prorate it. Work, health, something else

[jstay]

oh wow…

ill be here in july with you guys, thats for sure

[Anonymous]

why, how was it?

[jstay]

a mess!

sims were pretty freaking hard. pretty sure i got research so thats one in my favor. 2 other sims im pretty sure i got 75+ on them, maybe even higher but idk. one of them i either got 100 or 0, lol it wsa hard to figure what they were asking. another i feel “ok” on. then one was just guesses, i knew the concepts but who knows.

the mcq were alright, some were like WTF and others i knew right away.

12 days..

ill probably start studying again next Friday just because

[Anonymous]

that doesn't sound bad at all actually. Well let's hope

[Author]

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