[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]

I just read here https://www.irs.gov/publications/p535/ch06.html that life insurance premiums are deductible “Life insurance covering your officers and employees if you are not directly or indirectly a beneficiary under the contract.”

but health ins premiums are only deductible for more-than-2% shareholder-employees, but must also include them in the shareholder's wages subject to federal income tax withholding

[MaLoTu]

@No_one – the mom and pop exclusion applies in cases where someone is a >10% owner of a property and has AGI under 150k. The passive losses up to 25000 can be claimed on the income tax return and I am pretty sure they mean against ordinary income. It is a caveat to the passive losses can only offset passive gains.

Does that make sense?

[RTCPA]

hi

can any one advise for an average person who has no idea about any taxation topic, how many studying hours needs to pass,

im trying to go through the material too much information , and so confusing, what is the best strategy, my exam on 31st but now iam thinking to postpone till Aug

plz advise

thnx

[Anonymous]

Which of the following would be considered a tax-deferred transaction?

A.A tract of U.S. real property for a piece of foreign real property

B.An airplane for a Hummer

C.A statutory merger or consolidation (Type A)

D.An automobile for a light truck

Correct answer:C . The following from explanation ” A Type A statutory merger is usually completed as a stock-for-stock swap without a payment of cash, qualifying as a like-kind exchange.” But in Becker R4-17 mention “nonrecognition treatment …used in trade or business or held for investment (except inventory, stock , security)

Why we still choose Answer c since it is a stock swap? It contradict the explanation from Ninjn MCQ

Thanks

[RTCPA]

hi

here is question :

An individual received $50,000 during the current year pursuant to a divorce decree. A check for $25,000 was identified as annual alimony, checks totaling $10,000 as annual child support, and a check for $15,000 as a property settlement. What amount should be included in the individual’s gross income?

$25,000

This answer is correct. Gross income includes the $25,000 of alimony received. Excluded from gross income are the $10,000 of child support and $15,000 property settlement which are not taxable.

why we didn't include the 15K chk for property settlement although its cash

[No_one]

@WIlbyCPA yes I am talking about Passive activity losses. It's called “Mom and Pop exclusion”

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

[Anonymous]

Can someone help me with the problem below? According to the Becker pneumonic PANICTIMME I thought that mortgage interest and miscellaneous itemized adjustments are adjustments that are added back. I don't even understand why they are using the word deduction. Thanks…so hating AMT.

Farr, an unmarried taxpayer, had $70,000 of adjusted gross income and the following deductions for regular income tax purposes:

Home mortgage interest on a loan to acquire a principal residence $ 11,000

Miscellaneous itemized deductions above the threshold limitation 2,000

What are Farr's total allowable itemized deductions for computing alternative minimum taxable income?

Answer: $11,000. Both mortgage interest and miscellaneous itemized deductions are deductible for regular (schedule A) tax purposes. However, miscellaneous itemized deductions are “adjustments” and, therefore, are not allowed as deductions for alternative minimum tax (AMT) purposes.

[Anonymous]

no, principal residence interest is allowed

not allowed (added back): standard deduction, exemption, business itemized deductions, local taxes, medical under 10% AGI, interest on home equity loans

also private activity bonds, ISO, excess depreciation

[Double-entry Deviant]

@anjanja –

Health insurance premiums are deductible by the corp, but they are then included in the 2% owner's W2 wages.

At that point, the 2% owner / shareholder can deduct the health insurance premiums on page 1 of this 1040 return.

Hope that helps!

Tony

REG: 5/30/15 - 77
FAR: TBD
BEC: 8/31/15 - 70, 73, 1/8/16 - 77
AUD: 6/1/16- 73, 8/2/16

[Double-entry Deviant]

@anjanja and @willpassby

Thanks for the responses back. I think it's getting a bit clearer….

REG: 5/30/15 - 77
FAR: TBD
BEC: 8/31/15 - 70, 73, 1/8/16 - 77
AUD: 6/1/16- 73, 8/2/16

[Anonymous]

Thanks Tony, good to know!

[Anonymous]

@anjanja was that response to my question?

[Anonymous]

it was, yes haha

[Anonymous]

Ok, thanks. I still don't understand. I might need to break out the tax textbook for AMT because Becker is not cutting it.

[Anonymous]

ErikaG28,

also, they use the word ‘deductions', because both of those things are itemized deductions

[Author]

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