[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

[marqzho]

Single or Married Filing Separately

Your standard deduction starts at $6,300.

Add $1,550 if you were born before January 2, 1951.
Add $1,550 if you were blind as of December 31, 2015.
Example: Single filer Joe, who was born in 1972 and has been blind since birth, has a standard deduction of $6,300 + $1,550 = $7,850.

Married Filing Jointly or Qualified Widow(er) with Dependent Child

Your standard deduction starts at $12,600.

Add $1,250 if you were born before January 2, 1951.
Add $1,250 if your jointly-filing spouse was born before January 2, 1951.
Add $1,250 if you were blind as of December 31, 2015.
Add $1,250 if your jointly-filing spouse was blind as of December 31, 2015.
Example: Joint filers Pat and Tracy, who were both born in 1941 and are not blind, have a standard deduction of $12,600 + $1,250 + $1,250 = $15,100.

Head of Household

Your standard deduction starts at $9,250.

Add $1,550 if you were born before January 2, 1951.
Add $1,550 if you were blind as of December 31, 2015.
Example: Head of Household filer Mary, who was born in 1963 and is not blind, has a standard deduction of $9,250.

by turbotax

REG 90
FAR 95
AUD 98
BEC 84

[CPA2BEE]

I really need to study the accounting for losses when Corps sell or distribute to shareholders…

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

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

[Just3Letters]

Hi Marqzho, welcome back 🙂

Congrats on those amazing scores!

@CPA2BEE,

I haven't really thought much about the losses. I just know gains. I'll check it out too!

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

[Anonymous]

Is Jeff going to launch yet the Q3 Study Group by midnight tonight EST?

[Just3Letters]

Note: I just read in my notes that you don't recognize any losses for corporate distributions

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

[CPA2BEE]

So Corporations never recognize losses on distributions?

What about when they sell assets to shareholder for cash?

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

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

[Just3Letters]

All I can find is information on recognizing a loss on liquidating distributions. Upon liquidation, you recognize a gain or loss but that is in respect to the capital accounts.

What we are talking about is a normal sale of property, still looking.

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

[CPA2BEE]

Per Becker book for Corporate Liquidation:

Corp Sells Assets and Distributes Cash to Shareholders:
– Corp Gain(Loss) = Sales Price – Basis

Corp Distributes Assets to Shareholders:
– Corp Gain(Loss) = FMV – Basis

This is limited information they give and there must be exceptions, because if the second item were true then there would have been a loss recognized in the problem I posted.

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

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

[CPA2BEE]

Kent Corp. is a calendar year accrual basis C corporation. In Year 1, Kent made a nonliquidating distribution of property with an adjusted basis of $150,000 and a fair market value of $200,000 to Reed, its sole shareholder.

The following information pertains to Kent:
Reed's basis in Kent stock at January 1, Year 1 $ 500,000
Accumulated earnings and profits at January 1, Year 1 125,000
Current earnings and profits for Year 1 (from operations) 60,000

What was taxable as dividend income to Reed for Year 1?
a. $185,000
b. $200,000
c. $150,000
d. $60,000

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

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

[Just3Letters]

I was originally thinking B because of the FMV is taxable thing.

But… I know that there is no tax to extent of AAA which would be 185,000…

I'll Say B I guess.

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

[CPA2BEE]

@Just3 you are right. I picked A, forgetting that the 50,000 gain to the Corp upon distribution is included in AAA. So AAA would = 125,000 + 60,000 + 50,000 = 235,000. So the entire 200,000 is taxable. This is all so much to remember every time lol

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

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

[Just3Letters]

OHHH I just got lucky. I wasn't even thinking about the 50,000 gain. I've done that before on a few mcq.

I was also thinking the wrong way about AAA

So to get this straight: To extent of AAA, distributions ARE taxable as dividend income (which totally makes sense) and after AAA is 0, ordinary income right?

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

[CPA2BEE]

@Just3 assuming you are talking about taxable to the shareholder….

For Shareholders:
– Distributions are taxable as dividends to extent of AAA
– Once AAA = 0, Distributions are Return of Capital until stock basis = 0
– Once AAA & Stock Basis = 0, Distributions are taxable as capital gain? (I think)

For Corps:
– For property distributions, Corps recognize gains (FMV – Basis)

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

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

[CPA2BEE]

Dole, the sole owner of Enson Corp., transferred a building to Enson. The building had an adjusted tax basis of $35,000 and a fair market value of $100,000. In exchange for the building, Dole received $40,000 cash and Enson common stock with a fair market value of $60,000. What amount of gain did Dole recognize?
a. $5,000
b. $0
c. $40,000
d. $65,000

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

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

[Just3Letters]

C.

And the basis in stock should be 75,000. I'm always thinking about basis implications now haha

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

[Author]

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