[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

Jeff Elliott, CPA (KS) | Another71 | NINJA CPA | NINJA CMA | NINJA CPE

[Anonymous]

@ future ninja
for the previous question how the answer is C.$4,000………$10,000
can you explain the answer please.

[Future Ninja]

@Ano

Betty contributed land with a $6,000 basis and a $10,000 FMV to the ABC Partnership in Year 1. In Year 2, the land was distributed to Sally, another partner in the partnership. At the time of the distribution, the land had a $12,000 fair market value, and Sally had a $30,000 basis for her partnership interest. What gain is recognized by Betty on the distribution? What is Sally’s basis for the distributed land?

This is what they call pre-distribution gain. Actual Distribution is in current Y2. There was a pending Betty's gain from Y1 of usd4,000 which will be recognized upon actual distribution. For Land New Basis on Y2 (Adjusted Basis plus Gain recognized) which is usd6,000 plus 4,000 = usd10,000.

– See more at: https://www.another71.com/cpa-exam-forum/topic/reg-study-group-q2-2016/page/5?replies=196#post-907136

AUD - 79 (expired) retaking July 28,2016
FAR - 76 expiring July 31, 2016
BEC - 85
REG - 74,74,74,74,59,70,

[Andyred04]

Betty will only recognize that $4,000 pre-contribution gain if the asset is distributed to a non-contributing partner within 7 years of initial contribution.

FAR: 80 (Gleim, Ninja Notes, Ninja MCQs)
REG: 87 (Gleim, Ninja Notes, Ninja MCQs)
BEC: 87 (Gleim, Ninja Notes, Ninja MCQs)
AUD: 8/27/16

PA Candidate

[Future Ninja]

@Andyred04 – you explain it very well. Thank you.

AUD - 79 (expired) retaking July 28,2016
FAR - 76 expiring July 31, 2016
BEC - 85
REG - 74,74,74,74,59,70,

[Andyred04]

@Ano, the reasoning behind the $10,000 basis to Sally is a little more difficult (actually I just searched my Gleim book for a few minutes to figure it out). When this pre-contribution gain is recognized, the initial basis of the asset is increased by the amount of gain the contributor recognized. Therefore, the $6,000 initial basis in the asset will be increased by the $4,000 pre-contribution gain. Then, the distributee (Sally) will take a transfer basis (Betty's basis + the pre-contribution gain) in the distributed property.

FAR: 80 (Gleim, Ninja Notes, Ninja MCQs)
REG: 87 (Gleim, Ninja Notes, Ninja MCQs)
BEC: 87 (Gleim, Ninja Notes, Ninja MCQs)
AUD: 8/27/16

PA Candidate

[Anonymous]

@ Andyred04 .@ future ninja
thank you for the explanation
this is a new topic for me ,my study course didn't mention anything about pre-contribution gain.

[Future Ninja]

@Andyred04 – I'm using Ninja plus Gleim this time around. I read that explanation and I translated it to my own understanding.

AUD - 79 (expired) retaking July 28,2016
FAR - 76 expiring July 31, 2016
BEC - 85
REG - 74,74,74,74,59,70,

[Future Ninja]

@Ano – at risk question:

The at-risk limitation provisions of the Internal Revenue Code may limit:

I.A partner’s deduction for his or her distributive share of partnership losses.
II.A partnership’s net operating loss carryover.

A. I only.
B. II only.
C. Both I and II.
D. Neither I nor II.

answer: A

AUD - 79 (expired) retaking July 28,2016
FAR - 76 expiring July 31, 2016
BEC - 85
REG - 74,74,74,74,59,70,

[Future Ninja]

everyone: please help why we should use 50% to get the share of Andrew's?

Andrew is a 40% partner in the ABC Partnership, in which capital is a material income-producing factor. He gives one-half of his interest to his brother, John. During the current year, Andrew performs services for the partnership for which reasonable compensation is $65,000 but for which he accepts no pay. Andrew and John are each credited with a $100,000 distributive share of the partnership’s ordinary income. How much should Andrew report?

A. $132,500
B. $100,000
C. $67,500
D. $105,000

Answer: A

AUD - 79 (expired) retaking July 28,2016
FAR - 76 expiring July 31, 2016
BEC - 85
REG - 74,74,74,74,59,70,

[mtaylo24]

Because he gave one half interest to his brother. They are both credited 100,000K and he takes half of the 65K (32.5K)

AUD - 1st - 60 (12/12), 61 (2/13), 61 (8/13), 78! (11/15)
REG - 55 (2/16) 69 (5/16) Retake(8/16)
BEC - 71(5/16) Retake (9/16)
FAR - (8/16)

[Future Ninja]

@mtaylo24 – Thank you. My concern is he has 40% interest and he gave half of his interest, then it should be 20% right? Or I need to bump my head against the wall now!???

AUD - 79 (expired) retaking July 28,2016
FAR - 76 expiring July 31, 2016
BEC - 85
REG - 74,74,74,74,59,70,

[Future Ninja]

another one:

Partners Ann, Bob, and Carol of ABC, a calendar-year partnership, share partnership profits and losses in a ratio of 5:3:2, respectively. All three materially participate in the partnership business. Each partner’s adjusted basis in the partnership as of December 31, 2015, was as follows:

Ann $19,000
Bob 22,000
Carol 9,000

The partnership incurred an operating loss of $50,000 in 2015. What are Ann’s, Bob’s, and Carol’s shares of the loss to be reported on their 2015 individual income tax returns?

AUD - 79 (expired) retaking July 28,2016
FAR - 76 expiring July 31, 2016
BEC - 85
REG - 74,74,74,74,59,70,

[mtaylo24]

Half his interest would be 20%. I told you wrong in my explanation, but they yielded the same result. the $65K is included in the $200K they got. So Andrew gets the full $65 K for his services and they split the remaining $135,000 (67,500 a piece) which is still $132,500 for Andrew. I hate REG, I'm going back to the BEC thread lol.

AUD - 1st - 60 (12/12), 61 (2/13), 61 (8/13), 78! (11/15)
REG - 55 (2/16) 69 (5/16) Retake(8/16)
BEC - 71(5/16) Retake (9/16)
FAR - (8/16)

[Future Ninja]

@mtaylo24 – laugh out loud!

AUD - 79 (expired) retaking July 28,2016
FAR - 76 expiring July 31, 2016
BEC - 85
REG - 74,74,74,74,59,70,

[Tncincy]

I think the loss is distributed per ratio of each, then limited to given basis, per each.
so the loss is 50,000

Ann share is 25,000 of loss, basis is 19,000, loss amount is 6
Bob share is 15,000 of loss, basis is 22,000, loss amount is 15
Carol share is 10,000 of loss, basis is 9,000, loss amount is 1

I got lost trying to type this in….I guess it's good to turn it into a sim. My understanding is the loss is limited to basis and the remainder of the loss is carried forward. I did something wrong I think ( trying to participate)

It begins with a 75
Been here too long as a cheerleader....ready to pass

[Author]

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