[jeff]

Welcome to the Q2 2016 CPA Exam Study Group for REG.

Some BLITZ videos to help your exams: https://www.another71.com/ninja-blitz

[Anonymous]

S Corp Distributions:

View post on imgur.com

[CPA2BEE]

Is this the right train of thought….

Distributions reduce basis to the extent of AAA and to the extent that total distributions exceed AAA and E&P?

Starts with 20,000 basis, 19,000 is distributed. Basis is first reduced to the extent of AAA, being 8,000.

AAA + E&P = 18,000. 19,000 – 18,000 = 1,000 reduces basis further.

20,000 – 8,000 – 1,000 = 11,000

That is some tricky sh*t…..

FAR - 80
AUD - 82
BEC - 80
REG - 85

ETHICS - 90
EXPERIENCE - COMPLETE
Application for California license mailed 8/4/2016

[Just3Letters]

Yeah CPA2BEE,

that's exactly right. Do you guys think that question would be considered “Moderate” or “difficult” honestly…

FAR- 81
REG- 81
BEC- Aug 22, 2016
AUD- TBD

[CPA2BEE]

It better be difficult and better not be on any of our exams haha

FAR - 80
AUD - 82
BEC - 80
REG - 85

ETHICS - 90
EXPERIENCE - COMPLETE
Application for California license mailed 8/4/2016

[Anonymous]

difficult!

[Just3Letters]

That's good you guys agree with me! haha

I was through 55 MCQ on Ninja when my internet died and it kicked me out. I was doing pretty good so I decided that I'm spending most of today going over formulas and mnumonics.

I'm starting with like-kind exchange basis. I foresee an entire SIM being on this

FAR- 81
REG- 81
BEC- Aug 22, 2016
AUD- TBD

[CPA2BEE]

@Just3 I'm with you. I used to hate like-kind now I want a SIM on one come exam day! Clearly I am losing it

FAR - 80
AUD - 82
BEC - 80
REG - 85

ETHICS - 90
EXPERIENCE - COMPLETE
Application for California license mailed 8/4/2016

[Anonymous]

how does the installment method with related parties work? you can use it if they sell it again within two years or if they sell it again before making all the payments? what happens once the related party sells it again?

[Just3Letters]

From https://www.wipfli.com/BlogPost_Tax_09_30_13.aspx. Not sure of the authenticity of this website but I somewhat remember this stuff…

Gain recognition on the installment sale of property to a related party generally is accelerated (to the extent it has not already been recognized) if the related party disposes of the property within a two-year period. This rule is referred to as “the second disposition rule.”

They also restate the above paragraph here but I believe this restate is super confusing. Just look at above small paragraph.

When a taxpayer makes an installment sale to a related party and the related party subsequently disposes of the property within two years (and before all payments have been made on the first installment sale), the original seller treats amounts received by the second seller as amounts received on the original sale. The amount treated as received by the original seller as a result of the second disposition cannot exceed the lesser of: (1) the total amount realized by the related party on the second disposition before the close of the tax year, or (2) the total contract price for the first disposition, reduced by the sum of the total payments received by the original seller on the first disposition before the close of that year, plus the amounts treated as received on the first disposition in prior tax years as a result of this related-party resale rule.

FAR- 81
REG- 81
BEC- Aug 22, 2016
AUD- TBD

[CPA2BEE]

Is there any way to dumb that down? I am reading it like “uhhhhh…..”. Any examples we can use with this?

FAR - 80
AUD - 82
BEC - 80
REG - 85

ETHICS - 90
EXPERIENCE - COMPLETE
Application for California license mailed 8/4/2016

[Just3Letters]

Are these two situations for deferred gain/loss and basis on like-kind exchange correct?

Gain:

Your basis in current asset: 100; FMV of New asset: 120 Boot you are getting: 5
Realized Gain = 25
Recognized Gain = 5
Deferred Gain = 20

Basis in New Asset = 120 – 20 = 100

Loss:

Your basis in Current asset: 100; FMV of New asset: 90 Boot you are getting: 5
Realized Loss = 5
Recognized Loss = 0
Deferred Loss = 5

Basis in new asset = 90 + 5 = 95

FAR- 81
REG- 81
BEC- Aug 22, 2016
AUD- TBD

[Just3Letters]

CPA2BEE,

I *think* if you have an installment sale to related party and the buyer sells within two years, the seller recognizes all of the gain that hasn't already been recognized on installment.

Example I made up:

Installment Sale Price: $100, Cost of asset: $50, GP% = 50%

You have a gain of $50.

EDIT: First year you got $30 check from the buyer.

In the first year you would recognized: 50% * $30 = $15 recognized Gain

If the product was sold on Jan. 1, Year 2, the entire remaining unrecognized Gain would be recognized. This is $85.

FAR- 81
REG- 81
BEC- Aug 22, 2016
AUD- TBD

[CPA2BEE]

Nice @Just3 you got it. That method is SO much easier for me, just makes more sense to me

FAR - 80
AUD - 82
BEC - 80
REG - 85

ETHICS - 90
EXPERIENCE - COMPLETE
Application for California license mailed 8/4/2016

[Just3Letters]

Thanks CPA2BEE,

I like this method a lot more! Way less factors

FAR- 81
REG- 81
BEC- Aug 22, 2016
AUD- TBD

[Anonymous]

Just3, won't it matter how much the related party sells it for? installment sales you do GP % * collections

[Author]

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