[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

[Future Ninja]

@Ano – It didn't say non-liquidation nor liquidating distribution.

Partner X received cash distribution of usd20,000 and Land with AB of usd 30,000, FMV of usd10,000. Partner X has AB of usd10,000. What is the taxable amount of the Land, if any?

a. 0
b. 10,000
c. 20,000
d. 30,000

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

[jmc0434]

How is everyone doing on their studies for REG? It is coming down to the wire for me (sit for the exam this weekend) and I have not even looked at the practice simulations yet. I am currently reworking multiple choice questions which is helping me identify areas that I need to concentrate on. But should I quit the MCs and concentrate more on the Sims?

BEC - 79
AUD - 89
REG - 80
FAR - 7/19/16

[monikernc]

i practice the sims to work through the details of applying the concepts. i think they help me grasp how the tax forms work line by line.

FAR 7/25/15 76!
AUD 10/30/15 93
BEC 2/27/16 82
REG 5/23/16 88!
Ninja Book and MCQ and the forum - all the way!!!
and a little thing i like to call, time and effort!
if you want things to change, you have to do something different

[jess3]

Anyone studying REG using only Ninja? I purchased 10 combo, but not sure where/how to start.. Not familiar with REG at all and i'm taking the exam at the end of May.

[monikernc]

i use only ninja. read the book, do the mcq's and take notes from the mcq's not book. when done with an entire book i do all the sims for that topic. i read the notes to brush up on trouble areas and watch blitz and take notes. i always score a couple of exam points from the topics jeff emphasizes as an exam tip in the blitz. i am now in review and do mostly the mcq's and the sims but will review notes and blitz for weaker areas. i play the audio as i go through the notes when i am tired because i need the visual with the audio. i have been studying awhile and feel like it is finally starting to sink in.

jeff posts a ninja method on the site that is different from my approach.

FAR 7/25/15 76!
AUD 10/30/15 93
BEC 2/27/16 82
REG 5/23/16 88!
Ninja Book and MCQ and the forum - all the way!!!
and a little thing i like to call, time and effort!
if you want things to change, you have to do something different

[jmc0434]

I have missed this question twice but got it “right” the third time. Please tell me if I am understand this properly:

Conner purchased 300 shares of Zinco stock for $30,000, 20 years ago. On May 23 of the current year, Conner sold all the stock to his daughter Alice for $20,000, its then FMV. Conner realized no other gain or loss during the year. On July 26 of the current year, Alice sold the 300 shares of Zinco for $25,000. What is Alice's recognized gain or loss on her sale?

A. $0

B. $5,000 short-term loss

C. $5,000 long-term gain

D. $5,000 long-term gain

Correct Answer: A.

So…

Conner's stock basis 30,000
Related Party Transaction 20,000
Realized Loss on Transaction (10,000) (in Conner's perspective)

Stocks Sold to Zinco 25,000
Realized Gain on Transaction 5,000 (in Alice's perspective)

Offset Gain with Loss (5,000)

Couple things:
1. Here Alice's basis in the stock is $20,000. Is the reason why Alice's stock basis is $20,000 and not $30,000 is because her father sold it to her (the related transaction) and not gifted the stocks to her?
2. In a related party transaction you can NEVER recognize a loss even if the final sale to an outside third party resulted in a loss? You can only bring down your realized gain to $0?

BEC - 79
AUD - 89
REG - 80
FAR - 7/19/16

[ahugemistake]

Started going to the REG classes for becker and couldn't keep up because of busy season. I feel a little bad but I wasn't even doing the homework so going to class felt like a waste of time. Now its down to the R7 and R8 classes and I dont even want to bother going in tonight.

FAR - 78*
AUD - 66, 79
REG - 73, 76
BEC - 79

[SaveBandit]

Anyone familiar with deferred gains in casualty losses? I don't remember seeing this type of question in Becker anywhere.

Patty Cake owned real estate that was condemned by the state. Patty had purchased the property for $30,000 and received $50,000 from the state as a result of the condemnation. Patty purchased replacement real estate for $52,000. Patty's basis in the new real estate is

a. 30,000
b. 32,000
c. 50,000
d. 52,000

Answer B.

New basis = New property cost – Deferred gain – Recognized gain

Is this a standard formula for these types of questions?

4 for 4

FAR 85
AUD 94
BEC 86
REG 90

[Credit Revenue]

Yes

A - 79 expires 4/30/16 need a pass on REG
B - 78
F - 80
R - 83!!! Can live again!

[Credit Revenue]

The new basis is the old basis plus the additional cash spent. No gain is recognized when you reinvest. The gain is deferred.

A - 79 expires 4/30/16 need a pass on REG
B - 78
F - 80
R - 83!!! Can live again!

[SaveBandit]

Thanks creditrevenue. The way you explained it makes more sense to me.

Anyone know why section 1231 gains/losses and un-recaptured 1250 income are separately stated items but 1245 gains are not?

4 for 4

FAR 85
AUD 94
BEC 86
REG 90

[Credit Revenue]

1245 gains are ordinary income. Depreciation was taken… Which is a deduction from ordinary income. Now you are selling the asset. So any recovery that is in accumulated depreciation goes back against ordinary income. I am not 100 % sure if that is what you are asking.

A - 79 expires 4/30/16 need a pass on REG
B - 78
F - 80
R - 83!!! Can live again!

[Credit Revenue]

The other two are taxed at the capital gains rate. So on most transactions a piece will be 1245 gain taxed as ordinary income (the accumulated depreciation). Then the remainder is a 1231 gain taxed at the capital gains rate. Your basis in an asset is the original cost minus accumulated depreciation.

A - 79 expires 4/30/16 need a pass on REG
B - 78
F - 80
R - 83!!! Can live again!

[Credit Revenue]

1250 is a little different because a portion is ordinary and the other part is capital gains. The moral of the story is capital gains portion of both is stated sep because it's taxed at a diff rate.

A - 79 expires 4/30/16 need a pass on REG
B - 78
F - 80
R - 83!!! Can live again!

[SaveBandit]

That makes sense. Thanks again.

Since you're the board hero…

Kane created a $100,000 trust that provided her nephew with the income interest until he reached 45 years of age. When the trust was created, Kane's nephew was 25. The income distribution is to start when Kane's nephew is 29. After Kane's nephew reaches the age of 45, the remainder interest is to go to Kane's niece.

The income interest:

A. Is a gift of complete interest.
B. is a gift of a future interest.
C. is not a completed gift.
D. is eligible for the annual exclusion.

Answer B.

Explanation:
The income interest is a gift of a future interest because the beneficiary will not benefit from the gift until a future time, when he is age 29.

To be a gift of a present interest, the recipient must have an unrestricted right to immediate possession, use or enjoyment of the property or income from the property. Only gifts of present interests are eligible for the $14,000 annual exclusion. Gifts of future interests are, however, subject to gift tax when made.

My question is, how is this not both an incomplete gift and a gift of future interest? What's the difference?

4 for 4

FAR 85
AUD 94
BEC 86
REG 90

[Author]

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