REG Study Group Q2 2015 - Page 44

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    Topic
  • March 5, 2015 at 8:08 pm #192517
    jeff
    Keymaster

    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

Viewing 15 replies - 646 through 660 (of 3,544 total)
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  • March 22, 2015 at 12:05 pm #677850
    Gabe
    Participant

    @HR thanks for the clarification 🙂 Seems like it's a sore point for everyone.

    So, just to reiterate: you CAN take medical expenses for non dependents as long as they pass every dependent test (not including gross income).

    Got through all the Ninja SIMS for a second time yesterday. Going to work on trouble MCQs in Ninja and Wiley.

    Trending in the upper 90's

    Average at a solid 80%

    Happy studying 🙂 I'll be sure to post any good questions I find

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

    March 22, 2015 at 12:39 pm #677851
    OnlyBelieve
    Participant

    How many years is an organization required to deduct business start up/organization costs? Sim #42- Ninja, the second year org cost is given as $72. Why is the company still deducting org costs in year 2.I thought they are only allowed a deduction in the first year?

    AUD - DONE
    BEC - DONE
    REG - 04/04
    FAR - 05/30

    March 22, 2015 at 12:47 pm #677852
    Gabe
    Participant

    @only I don't have the SIM in front of me, but I am assuming it is amortization of organization costs that is the $72, in that case, organizational costs are amortized over 15 years or 180 months

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

    March 22, 2015 at 12:59 pm #677853
    OnlyBelieve
    Participant

    But why are we taking amortization in year 2? Wouldn't it be just the first year of incorporating and that if not taken in the first year, can never be taken?

    AUD - DONE
    BEC - DONE
    REG - 04/04
    FAR - 05/30

    March 22, 2015 at 1:03 pm #677854
    Gabe
    Participant

    Pretty sure you took it in yr 1 as well…let me pull up the SIM…

    Yep…so 1st yr

    eligible org exp= $6,080

    org exp= $5,000

    amt to be amort= $1,080/180

    = $6 * 4 months (sept-dec)

    = $24 + $5,000

    = $5,024

    2nd yr= $6 * 12= $72

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

    March 22, 2015 at 1:08 pm #677855
    OnlyBelieve
    Participant

    does that mean we can take org cost in year 3 and beyond as well?

    AUD - DONE
    BEC - DONE
    REG - 04/04
    FAR - 05/30

    March 22, 2015 at 1:09 pm #677856
    OnlyBelieve
    Participant

    so for every year after year 1, $72?

    AUD - DONE
    BEC - DONE
    REG - 04/04
    FAR - 05/30

    March 22, 2015 at 1:12 pm #677857
    Gabe
    Participant

    @only correct, for 15 yrs…

    edit: usually, with org expenses they make the number bigger so you're not expensing $72/yr for 15 yrs lol. Most questions I have seen show org expenses of $50k or something, not $6k

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

    March 22, 2015 at 1:14 pm #677858
    Anonymous
    Inactive

    Yes.

    General rule with the Amortization period on REG. It's 15 years or 180 months (15 * 12 = 180).

    You also get to amortize things in REG that you wouldn't get to amortize in FAR. Such as Goodwill.

    March 22, 2015 at 1:15 pm #677859
    OnlyBelieve
    Participant

    thanks guys!

    AUD - DONE
    BEC - DONE
    REG - 04/04
    FAR - 05/30

    March 22, 2015 at 1:29 pm #677860
    Anonymous
    Inactive

    I have a simple question that i hope someone can clarify for me.

    Under the common contracts and sales contracts, what does “consideration” mean?

    I see the terminology, without consideration/added consideration and I can't comprehend the concept.

    March 22, 2015 at 1:32 pm #677861
    Gabe
    Participant

    @CPAer did some googling…came up with this “law” definition of consideration:

    In order for consideration to provide a valid basis for a contract — and remember that every valid contract must have consideration — each party must make a change in their “position.” Consideration is usually either the result of:

    a promise to do something you're not legally obligated to do, or

    a promise not to do something you have the right to do (often, this means a promise not to file a lawsuit).

    Hope this helps.

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

    March 22, 2015 at 1:37 pm #677862
    Anonymous
    Inactive

    Key thing to remember is that Consideration needs to be “Legally Sufficient”

    Fairness has nothing to do with it. It might not be fair to sell a brand new car for $10 cash but both the cash and the car are both “Legally Sufficient” consideration so the exchange will be valid and enforceable.

    March 22, 2015 at 1:41 pm #677863
    Gabe
    Participant

    ^ agree with angel. As long as both parties agree, it is consideration.

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

    March 22, 2015 at 1:43 pm #677864
    Anonymous
    Inactive

    @Gabe, I too googled the concept of consideration, but it didn't help me understand the concept.

    @angelwatch, Thanks for the golden nugget on considerations having to be legally sufficient.

    Anyone else struggling with the concept of consideration?

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