[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

[willpassby2014]

i am 100% sure

BEC Passed
FAR Passed
AUD Passed
REG Passed

[Anonymous]

Oh I guess it is allowed under JOBS act, the question must be outdated then

[willpassby2014]

Under Rule 506, no registration of securities is required for a private placement of an unlimited amount of securities as follows:

To any number of accredited investors

To up to 35 unaccredited but sophisticated investors experienced in financial matters and able to evaluate risks involved in the investment

With no general public offering or advertising

Restricted resale by the investor

Distribution of audited financial statements to nonaccredited investors

Under Rule 506(c), a company may advertise the offering to investors that are all accredited and the company has made sure they are accredited

BEC Passed
FAR Passed
AUD Passed
REG Passed

[Anonymous]

Section 201(a) of the JOBS Act requires the SEC to eliminate the prohibition on using general solicitation under Rule 506 where all purchasers of the securities are accredited investors and the issuer takes reasonable steps to verify that the purchasers are accredited investors.

It was only enacted in 2013, this question must be from before that

[RTCPA]

hi

why we didn't consider the land FMV since ED is having more than 80% of the stocks?

Ed, the sole stockholder of Looney Corp., paid $70,000 for Looney’s stock in 2010. During 2015, Ed contributed a parcel of land to Looney but was not given any additional stock for this contribution. Ed’s basis for the land was $5,000, and its fair market value was $15,000 on the date of the transfer of title. What is Ed’s adjusted basis for his Looney stock following the contribution of the parcel of land?

$75,000

This answer is correct. The requirement is to determine Ed’s stock basis following the contribution of a parcel of land to his solely owned corporation. When a shareholder makes a contribution to the capital of a corporation, no gain or loss is recognized to the shareholder, the corporation has a transferred (carryover) basis for the property, and the shareholder’s original stock basis is increased by the adjusted basis of the additional property contributed. Here, Ed’s beginning stock basis of $70,000 is increased by the $5,000 basis for the contributed land, resulting in a stock basis of $75,000.

[Anonymous]

RTCPA,

why should it be fmv?

[RTCPA]

hi ana

we should use FMV cause everything got mixed-up in mind 🙂

there should be no gain , right

I think im gone case 🙁

[Anonymous]

@anjanja

I think the keyword in the question is SOLE shareholder. Which means he has control (>80%) ownership. Therefore further exchanges of property/cash for stock are considered non-taxable exchanges and are carried over using the basis of the property.

If you think about it, you have a corporation and you know it needs more capital, so you transfer a building in. The government wants to promote growth and encourage business' so they will not tax you(S/H) as a capital gain for xfering the property into a corporation which you already own, instead it just gets xfered over C/O Holding period, C/O Basis.

[RTCPA]

s corporation can not be consolidated with c corporation or s corporation can not be consolidated at all?

[RTCPA]

s corporation can not be consolidated with c corporation or s corporation can not be consolidated at all?

[princeCPA]

S corporation as an entity don't pay taxes so you don't consolidate with C corp.

BEC 79
FAR 86
AUD 79
REG 90

[willpassby2014]

per capita and not per stirpes – I NEVER KNEW THIS CONCEPT. GLAD I DID A MCQ NOW

BEC Passed
FAR Passed
AUD Passed
REG Passed

[Double-entry Deviant]

Similar question as RTCPA:

I thought the answer would be $30,000:

Building basis: $40,000

<boot received> $10,000

(per notes from Corp tax 1)

Basis: $30,000

Did I get something wrong here?

Thanks!

Lind and Post organized Ace Corp., which issued voting common stock with a fair market value of $120,000. They each transferred property in exchange for stock as follows:

Adjusted Fair Market Percentage of

Property Basis Value Ace Stock Acquired

---

---

---

---

Lind Building $40,000 $82,000 60%

Post Land 5,000 48,000 40%

The building was subject to a $10,000 mortgage that was assumed by Ace.

What was Ace’s basis in the building?

Incorrect A.

$30,000

B.

$40,000

C.

$72,000

D.

$82,000

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]

didato, yeah I was angry at this concept few pages back using this same question. Relief of liability is not considered a gain for the contributor so corporation doesn't add it to it's basis. I am very uncomfortable with this concept and can't find a clear explanation -> answer B

[Anonymous]

on the other hand, shareholder's basis will be 30000

[Author]

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