[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

[CPAfit]

@colorado Thank you for your feedback, hopefully i can remember these rules during the real thing.

[CPAfit]

Also can anybody explain to me, what do they mean by “negotiate” in terms of endorsements?

[willpassby2014]

Zubairs -Negotiate means transferable . Meaning if you have a check you can endorse it at the back and make it negotiable. Hope this helps

BEC Passed
FAR Passed
AUD Passed
REG Passed

[willpassby2014]

Anna, I did a similar question on partnership where the balance basis of 50,000 is allocated based on FMV proportion. This is way too confusing.

BEC Passed
FAR Passed
AUD Passed
REG Passed

[CPAfit]

@willpass sorry to if this sounds like a dumb question but what does “endorsing” means?

[Gabe]

@zubairs when you sign the back, you indorse a check.

CPA, CFE
CISA- Experience will be completed by August 2016

[willpassby2014]

Anna

The adjusted basis of Ted's partnership interest is $30,000. In complete liquidation of his interest, he receives $10,000 in cash, his share of the inventory items having a basis to the partnership of $12,000, and two parcels of land having both fair market values and adjusted bases to the partnership of $12,000 and $4,000. What is Ted's basis in the two parcels of land?

A.

$8,000 and $4,000

B.

$5,000 and $3,000

C.

$6,000 and $2,000

D.

$8,000 and $0

This is a similar question raised by you . Thanks for posting. I am going to look at what you put

BEC Passed
FAR Passed
AUD Passed
REG Passed

[willpassby2014]

Zubairs- To negotiate means – the instrument is payable to bearer or order. Bearer is the person who has the instrument.

If bearer wants to transfer the instrument to another person , he indorses it . For eg. Anna gave a promissory note to me saying pay to bearer. I indorse/endorse the instrument saying pay it to Zubair. Then the instrument becomes payable to you.

BEC Passed
FAR Passed
AUD Passed
REG Passed

[CPAfit]

@willpass Thanks man, I really appreciate it!

[CPAfit]

@willpass as for your question the answer is:

C.

$6,000 and $2,000

[willpassby2014]

you are right Zubairs

BEC Passed
FAR Passed
AUD Passed
REG Passed

[Anonymous]

Willpass, this question isn't as bad because you are not given a choice of basis or market value. If the inventory had a market value of 20000 that's where I would have no idea

[willpassby2014]

agreed. We would not have know if we have to use FMV or basis

BEC Passed
FAR Passed
AUD Passed
REG Passed

[Anonymous]

Anna, if you haven't had time to do those chapters, at least listen to the audiovisual and take a few study session MCQs; should help quite a bit. I took all of BEC without reading more than the first chapter or two – but I'm weird in that I thought BEC was really easy (relatively speaking) and AUD was near impossible.

[Anonymous]

Here's a simpler one on the same topic that may help some of you:

Gulde's tax basis in Chyme Partnership was $26,000 at the time Gulde received a liquidating distribution of $12,000 cash and land with an adjusted basis to Chyme of $10,000 and a fair market value of $30,000. Chyme did not have unrealized receivables, appreciated inventory, or properties that had been contributed by its partners. What was the amount of Gulde's basis in the land?

$26k basis – 12k cash = 14k. That is all applied to the land since there is no other property distributed. Basis in land is $14k.

[Author]

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