[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/

[willpassby2014]

can some one tell me what is gain recognized and basis for this question

BEC Passed
FAR Passed
AUD Passed
REG Passed

[Anonymous]

or is it 0

[Anonymous]

basis i think is 400000, gain realized is 175000

550000 + cash 25000 – liab. 25000 = 550000 amount realized

550000 – 375000= 175000

basis:

DR cash 25000

DR liab transferred 100000

DR New basis (plug) 400000

CR old basis 375000

CR Gain recognized 25000

CR liab assumed 125000

[willpassby2014]

The answer is 25000 Gain recognized

BEC Passed
FAR Passed
AUD Passed
REG Passed

[Anonymous]

Yes, Anna, only 1 research so hopefully it was a pretest. 🙂

[Meddik]

Hmmm, are they saying that since the mortgages were taken subject to, there were no liabilities assumed (since subject to =/= fully liability assumption)? Thus it's purely a like-kind exchange where 25000 boot was paid to him and thus a gain? That's a rough question.

I'm also assuming the apartment is considered business or investment property in order for like-kind exchange rules to apply.

FAR - 86
REG - 83
AUD - 97
BEC -

[willpassby2014]

meddik- IF YOU GET MORTGAGE ON BOTH SIDES DONT CONSIDER THEM AS BOOT . JUST THE CASH PORTION CONSIDER IT FOR REALIZED GAIN.

BEC Passed
FAR Passed
AUD Passed
REG Passed

[Anonymous]

actually net relief from debt is also considered boot

[Anonymous]

in this case he assumed more mortgage than he gave up it's not a boot

[Anonymous]

coloradorit,

were sims terrible? I am doing gleim sims and they are terrible

[Anonymous]

Robert had current-year adjusted gross income of $100,000 and potential itemized deductions as follows:

Medical expenses (before percentage limitations) $ 12,000

State income taxes 4,000

Real estate taxes 3,500

Qualified housing and residence mortgage interest 10,000

Home equity mortgage interest (used to consolidate personal debts) 4,500

Charitable contributions (cash) 5,000

What are Robert's itemized deductions for alternative minimum tax?

a. $21,500

b. $19,500

c. $17,000

d. $25,500

The answer is c, $17000 calculated as follows:

Medical expenses (exceeding 10% of AGI) $ 2,000

State income taxes (not allowed) −

Real estate taxes (not allowed) −

Qualified housing and residence interest 10,000

Home equity mortgage interest (not used to buy, build, or improve the home-not allowed) −

Charitable contributions (no difference) 5,000

---

Alternative Minimum Itemized deductions $ 17,000

Q: I dont understand why it itemizes Medical expenses exceeding 10% of AGI? Isn't it an adjustment item for AMT and should be added back to calculate AMT?

Thanks!

[Anonymous]

here you go CPALDCPA

https://www.another71.com/cpa-exam-forum/topic/reg-amt-question

[willpassby2014]

But he received 25000 cash for that compensation.

Since the boot received in the form of cash cannot be offset against boot given in the form of an assumption of a mortgage, the realized gain is recognized to the extent of the $25,000 cash received.

This is the explanation given.

BEC Passed
FAR Passed
AUD Passed
REG Passed

[Anonymous]

willpassby2014,

I don't know about that explanation, what I do know is: if you get realized gain, no matter what it consists of, the max gain you recognized is up to the boot received. Boot received could either be a cash, or net debt relief or both.

He gets negative debt relief (so to speak) so that isn't taken in to consideration. I don't recall reading anything about offsetting anything.

[Anonymous]

remember we discussed similar thing somewhere around page 60 🙂

[Author]

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