[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

[Just3Letters]

Oh duh! I totally messed that up. I'll try to edit it and then check it out. It's easier to do problems than make them yourself. I'm a bad teacher.

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

[CPA2BEE]

19. Good, a C corporation, sells an automobile to its sole shareholder for $4,500. Good's adjusted basis in
the automobile is $12,000, and the fair market value is $5,000. What is the amount of loss that is recognized by Good?
A. $0
B. $500
C. $7,000
D. $7,500

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

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

[Just3Letters]

@CPA2BEE,

Is has to be A right? A sole shareholder is very much a related party. You can't recognized loss on related party. Carryover basis of $12,000 I think….

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

[Bear-Bear]

Dammit. Is it A? I can't remember of corps can recognize a loss.

[Bear-Bear]

Wouldn't basis to the person be FMV?

[Just3Letters]

@Bear, I think normally basis would be FMV but if this is tax deferred, it would have to be carryover basis right? Becker always said “N”o tax means “N”BV. The N's are the same

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

[Bear-Bear]

Argh! 🙁 I wish wiley had cool mnemonic things like that

[Just3Letters]

Don't quote me on this. We need somebody to confirm that basis on this question lol

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

[CPA2BEE]

You guys are correct, it is A. Its gotta be because it was to the sole shareholder, being a 80% or more related party. The only other rule I can find is that Corps do not recognize losses on the distribution of appreciated property. But this is a sale and the property is not appreciated. It has to be because of the related party I think

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

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

[Just3Letters]

So what is your choice on the basis CPA2BEE,

I just talked to the AICPA and they said that if you get this right you can skip Reg!

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

[CPA2BEE]

If it is the related party rule, then the basis would be 12,000. But are sales treated differently than ditributions or transfers? I am getting confused now.

I'm gonna skip out for a few for a lunch break. I'll catch you guys in about an hour.

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

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

[Anonymous]

Just3, so they wouldn't apply the GP % to the amount realized by the second sale? just take the entire gain?

how about this, for example (trying to dumb it down):

basis 50
installment sale to related party 100
related party makes no payments and sells it in year 2 for 70

the gain would be 20 right? or 35? lol idk

[Just3Letters]

Dr Cash,

I honestly don't know. That might be right. This is such a small topic that I guess I'll take an L on these points unless somebody can figure it out

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

[Just3Letters]

So on a completely different topic. the additional standard deduction for blind/elderly is $1,250 right? is that for both single and mfj?

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

[Anonymous]

mfj is 1250 and single is 1550. not sure why single is more haha

and yeah, i'm over it. i think i spend way too much time obsessing over little things that probably wont even be on the exam

[Author]

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