[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

[hunter32]

Hey guys quick and maybe a dumb question regarding the DRD. Is it 70% or 80% if the ownership is exactly 20%?

BEC - 80 (Becker)
AUD - 92 (Becker+NINJA MCQ)
FAR - 87 (Becker+NINJA MCQ)
REG - 90 (Becker+NINJA MCQ and Audio)

[Anonymous]

Exactly 20% ownership, use 80% DRD.

[Anonymous]

what's excess contribution here? what is being contributed where?

For tax year 2014, Oaktree Corporation's books and records reflect the following:

Net income per books (after tax) $52,800

Tax-exempt interest 500

Excess book depreciation 7,222

Capital losses 3,000

Federal income tax 8,478

Excess contributions 1,710

Premiums on officer life insurance (payable to corp.) 1,500

Meals in excess of 50% limitation 400

What is the amount of Oaktree's taxable income as it would be shown on Schedule M-1 of its corporate income tax return?

[Anonymous]

I'll take a stab at it but I might not be 100% right:

Net income per books (after tax) $52,800: This is your base

Tax-exempt interest 500: Subtract from Book – It's income that is not taxable

Excess book depreciation 7,222: Add back to Book – It's an expense over MACRs depreciation

Capital losses 3,000: Add back to Book – Capital Losses can only offset capital Gains. 3 Years back and 5 years forward

Federal income tax 8,478: Add back to Book – Always add Fed Income Tax back

Excess contributions 1,710: Add back to Book – Expenses that are not allowed

Premiums on officer life insurance (payable to corp.) 1,500: Add back to Book – Expenses that are not allowed

Meals in excess of 50% limitation 400: Add back to Book – Only 50% of meals and entertainment expenses are allowed for taxes (this is the “cutback” rule).

I come up with 74,610 based on this.

Excess Contributions could be charitable contributions in excess of 10% of a C Corps income. Or perhaps it's a non-deductible political contribution. Or maybe it's a “contribution” to to an elected official to receive a permit to dump radioactive waste under the playground of a local school. Regardless it's contribution that is not allowed for tax purposes. The company took it as an expense for Financial Income purposes (book) but it needs to be added back to determine taxable income.

Hope that helps and if it says the answer, I'd be curious to know what the taxable income is to see if I was right.

[hunter32]

Angelwatch, I got the same thing.

BEC - 80 (Becker)
AUD - 92 (Becker+NINJA MCQ)
FAR - 87 (Becker+NINJA MCQ)
REG - 90 (Becker+NINJA MCQ and Audio)

[Anonymous]

oh charitable contribution, I am an idiot

yes, the answer is correct

[PasstheCPA7]

Can someone provide an example of this? It's a question on Partnership and choosing the tax year. Basically – what does it mean for the “partnership to use the tax year that results in the least aggregate deferral of income”? I'm not sure I'm following what this means?

Thanks.

[Svitlana85]

On July 1, Silk, Inc., sent Blue a telegram offering to sell Blue a building for $80,000. In the telegram, Silk stated that it would give Blue 30 days to accept the offer. On July 15, Blue sent Silk a telegram that included the following statement: “The price for your building seems too high. Would you consider taking $75,000?” This telegram was received by Silk on July 16. On July 19, Tint made an offer to Silk to purchase the building for $82,000. Upon learning of Tint’s offer, Blue, on July 27, sent Silk a signed letter agreeing to purchase the building for $80,000. This letter was received by Silk on July 29. However, Silk now refuses to sell Blue the building. If Blue commences an action against Silk for breach of contract, Blue will:

A.

win, because Blue effectively accepted Silk’s offer of July 1.

B.

win, because Silk was obligated to keep the offer open for the 30-day period.

C.

lose, because Blue sent the July 15 telegram.

D.

lose, because Blue used an unauthorized means of communication.

Why isn't the answer B? Also, I don't understand the explanation:

To create a contract, the offer must be accepted before a termination of the contract. A counteroffer is a rejection of the original offer followed by a new offer. Since Silk accepted the new offer, the counteroffer is a new contract.

Thanks Ninjas!

CPA Excel/Wiley/Ninja Notes/MCQs

FAR Feb 2014 85
AUD Aug 2014 88
BEC Nov 2014 85
REG Feb 2015 71 Retake April 16, 2015

[Svitlana85]

Here is another one

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 Lind’s basis in Ace stock?

A.

$82,000

B.

$40,000

C.

$30,000

D.

$0

Wouldn't the fact the the shareholder is giving up the liability to the corporation increase their basis?

CPA Excel/Wiley/Ninja Notes/MCQs

FAR Feb 2014 85
AUD Aug 2014 88
BEC Nov 2014 85
REG Feb 2015 71 Retake April 16, 2015

[Anonymous]

Anybody notice in ninja mcq how often a previously correct answer shows up again even though you set it on “new questions only”? It happens at least 2-3 times in a set of 20 new questions.

[Anonymous]

I have 22 days left before exam day. I don't feel prepared at all I know I still have time but it's so difficult. I must pass this exam and put this studying behind me. I can't take much more!

[Anonymous]

You've got time. Just keep at it and it'll come together. May the Fourth be with you.

[Anonymous]

I am so burned out on studying…..Wednesday evening can't come soon enough. Who else is tired of studying and feeling like they are dragging themselves through MCQs? Maybe it's the fact it's Saturday…haha.

[Sandia]

When your body tell you no more run take a break x run1 o 2 days.

If your brain tell you BREAK SO TAKE A BREAK at least for 12 hours… I do that It is working x me. Full time job, mother of 2, native Spanish speaker and in my 40s.. WE CAN DO THIS!!! JUST TAKE A BREAK..

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

[lab2008]

check this out… I really need my weekends to study. It's so hard to work and study in the evenings even though I try. i'm at the point where i'm totally being fine being anti-social I just want to spend at least 7 hours sat and at least 7 hours sun studying….. and then…I worked from home almost the whole day today. (I work every day during the week salary so this is just over time….) so I just started studying. I know everyone has their own thing, like kids etc but geez to work almost a full Saturday and have that eat up your study time (when you already work 5 days a week during the week.) 🙁 determined to still stay up late and get some hours and and then I have to work at home tomorrow as well. (quarter close.) keep going everyone. I know I need motivation even though it's my last one.

3 out of 4 passed and sitting for FAR on May 31. Will lose credit for Audit if I don't pass FAR by Aug 4. I love leases and bonds.

[Author]

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