[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

[Gabe]

I believe it is “S WAT IS UP” which includes all the various schedules…which ones are you having trouble remembering?

Schedules B, C, D, E, F

Wages

Alimony received

Taxable state/local refunds

IRA

Social security

Unemployment

Pensions & annuities

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

[Anonymous]

What do those schedules stand for?

[Gabe]

b- int and div

c- business

d- cap g/l

e- supplemental income/loss

f- farming

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

[Gabe]

L Corporation, an S electing corporation, pays single coverage health insurance premiums of $4,000 per year and family coverage premiums of $7,000 per year (the $7,000 includes single and family coverage). SH owns 10 percent of L stock and L pays SH's family coverage under the health insurance plan. What amount of insurance premium is included in SH's gross income?

A. $ 0

B. $ 700

C. $4,000

D. $7,000

Can anyone point me to the “rule” about this?

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

[Gabe]

Another fun one…

Prail Corporation is a C corporation that on February 1, 2014 elected to be taxed as a calendar-year S corporation. On June 15, 2014, Prail sold land with a basis of $100,000 for $200,000 cash. The fair market value of the land on February 1, 2014 was $150,000. Prail had no other income or loss for the year and no carryovers from prior years.

What is Prail's tax?

A. $7,500

B. $17,500

C. $22,250

D. $35,000

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

[Holly]

$17,500

BEC - 79
REG - 85
AUD - 5/27/16

[Gabe]

@HR correct!

Must recognize gain of $ less FMV and taxed at 35% TR

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

[Gabe]

Another one…

Facts:

C corp with 3 partners- Michael Ray and Debra

Michael contributes equipment with AB $30k liability $40k FMV $50k

Ray contributes land with AB 25k FMV 65k

Debra contributes services 20k

Michael owns 15%

Ray owns 65%

Debra owns 20%

The corporation decides to assume the $40k liability

Question:

What gain must Michael recognize, if any?

What is his basis in stock?

Answer:

Gain= $10k ($30k basis- $40k liab)

Basis= 0 ($30+10 gain – $40k liab assumed by corp)

My question- wouldn't the liability assumed by the corp be equal to 85% (Ray and Debras portion)? Or should I assume that the corp assumed the entire liability?

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

[Holly]

@Gabe I'm not exactly sure where the 85% comes in, but I think you might be getting partnership rules confused with corp. I'm assuming you're thinking that the corp (or partners) would assume a portion and leave the remainder for the contributing party? Am I on the right path with your thought process?

BEC - 79
REG - 85
AUD - 5/27/16

[Gabe]

@HR yes! Damn it. I am…so with corps that assume liabilities- take the whole thing…partnerships divvy it up. Correct?

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

[Holly]

@Gabe I think it would to remember that corps are distinct entities that are separate from any shareholders, so they can “own” liabilities, whereas partnerships don't exist beyond the partners.

BEC - 79
REG - 85
AUD - 5/27/16

[Anonymous]

West, an Indiana real estate broker, misrepresented to Zimmer that West was licensed in Kansas under the Kansas statute that regulates real estate brokers and requires all brokers to be licensed. Zimmer signed a contract agreeing to pay West a 5% commission for selling Zimmer’s home in Kansas. West did not sign the contract. West sold Zimmer’s home. If West sued Zimmer for nonpayment of commission, Zimmer would be:

a.Not liable to West for any amount because West did not sign the contract.

b.Not liable to West for any amount because West violated the Kansas licensing requirements.

c.Liable to West for the full commission.

d. Liable to West only for the value of services rendered.

Ninja gives the answer as A whereas Becker says it's B. Ninja explanation is as follows:

“A legally enforceable contract must have both an offer and an acceptance. Since Zimmer signed the contract, an enforceable acceptance would be for West to also sign the contract.”

Which is which? I am inclined towards Beckers answer.

[Holly]

@cracked what's the cpa question number? I want to look it up on Becker and read the explanation for A

BEC - 79
REG - 85
AUD - 5/27/16

[Gabe]

Thanks hr!

I've seen that question posted all over. Consensus seems to lean towards Becker

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

[Sandia]

A – West did not sign the contract.. real estate to be enforceable must be in writing…

FAR - 77 x2 Wiley book & no test bank
AUD - 83 x3 NINJA Test bank 3 time
REG - 80 x1 NINJA Test bank
BEC - 78 X2 NINJA Test bank ..done!!promesa cumplida mama -que llege al cielo 🙂
Ethic 100% Licensed VA CPA

[Author]

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