[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

[monikernc]

hey FARWARS, for score release tonight, May the 4th be with you. ha! i just stole that from another post. corny? heck ya. i know you are not checking yours yet but take it as a good omen.

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

[monikernc]

just did the recently released questions. hard ard hard. medium were do-able. i need to snap to it.

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

[SaveBandit]

Conflicting ideologies on gift taxes? Ninja question 1824 4G5:

Which of the following credits may be offset against the gross estate tax to determine the net estate tax of a U.S. citizen?
A.Unified credit
B.Credit for gift taxes paid on gift made after 1976

A. Both A and B

B. Neither A nor B

C. Only B

D. Only A

Answer D

Explanation…
Estate and gift taxation has been combined into a unified system. The unified credit is a specific credit allowed against the estate tax and will encompass prior gifts as well.

As a result, option B (credit for gift taxes paid on gift made after 1976) is already included in option A, the unified credit.

What I don't get…
According to Becker, the gift tax formula subtracts gifts made after 1976 separate from the unified credit, which would make the answer A. But ninja is saying the post 1976 gifts are already included in the unified credit. What am I missing here?

4 for 4

FAR 85
AUD 94
BEC 86
REG 90

[jeff]

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

[monikernc]

Jeff, is the answer C?

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

[mckan514w]

monikernc I think the answer is B– without recourse makes it qualified and for collection only makes it restrictive- so it is technically qualified restrictive however since that is not a choice the best possible one would be restrictive

Special endorsement is one that makes a bearer paper order paper– in other words you identify the specific person to whom the paper is now payable to… so if it had stated payable to FRED without recourse for collection only then it would be a special qualified restrictive

Since the check was made payable to Tom Burns- he simply endorsed it….

and they ask me why I drink...

FAR- 61-next time I'll ask for lube instead of a calculator
REG-75- Never been so happy to see such a low grade
BEC- 8/11
AUD- 9/2

[KJF1031]

Easy question confusing me:

Gain on stock held for more than 12 months and sold on October 15, 2015, that would otherwise be taxed at a 15% rate if it were ordinary income is taxed at a rate of:

A.
20%.

B.
15%.

C.
10%.

Correct D.
0%.

Aren't long term capital gains taxed at 15% only if the taxpayers marginal tax rate is between 25%-35%(There isn't even an answer choice high enough to be correct here?) . And long term capital gains taxed at 20% only if the taxpayers marginal tax rate is 39.6%. And long term capital gains aren't taxed if the taxpayers marginal tax rate is 15% or below.

How is the correct choice 0%? Shouldn't it be 25, 33, or 35%?

BEC: Passed (8/31)
AUD: Passed (11/20)
FAR: Passed (2/26)
REG: 5/22

[blithesherry]

The following questions are from “2016 AICPA Released Questions – Regulation (Difficult)”

Can anyone help?

11. On year 1, Janice had the following transactions in Jacky, Inc. common stock:

Shares Price

Jan. 01 – Purchase 500 $25

May 12 – Sale 500 $23

May 28 – Purchase 250 $22

Oct 15 – Sale 100 $18

What is Janice's deductible capital loss?

$400

$700

$1,100

$1,400

Correct answer is C, but not understand why. Could anybody help me out ??? Thanks a lot in advance !!!

[blithesherry]

13. Dawson, Inc.'s warehouse (with an adjusted tax basis of $75,000) was destroyed by fire. The following

year, Dawson received insurance proceeds of $195,000 and acquired a new warehouse for $167,000.

Dawson elected to recognize the minimum gain possible. What is Dawson's basis in the new warehouse?

$47,000

$75,000

$139,000

$167,000

Answer is 75,000, not understand why, can anybody help me out ??? Thanks a lot !

[blithesherry]

9. Filler-Up is an accrual-basis calendar-year C corporation. Filler-Up uses an allowance method for

accounting for bad debts. The allowance for bad debts was $20,000 at the beginning of the year and

$30,000 at the end of the year. During the year, Filler-Up wrote off $5,000 of uncollectible receivables and

accrued an additional $15,000 of expenses for accounts estimated to be uncollectible. What is the

Schedule M-1 adjustment on Filler-Up's federal income tax return?

$10,000 decrease in taxable income.

$10,000 increase in taxable income.

$5,000 decrease in taxable income.

$5,000 increase in taxable income.

Answer is B, anybody know why?

[blithesherry]

7. Lite-Mart, a C corporation, had a beginning credit balance in its warranty reserve account of $120,000.

During the year, Lite-Mart accrued estimated warranty expense of $16,000. At the end of the year, Lite-
Mart's warranty reserve had a $90,000 credit balance. What amount of warranty expense should Lite-
Mart deduct?

A. $46,000

B. $30,000

C. $16,000

D. $14,000

Answer is 46,000, not sure why, can anybody help me out? Thank you in advance !!!

[Anonymous]

@blithesherry
your first question is from wash sales

250 share bought for $22/ share = $5500
+loss disallowed =$500 50%(500*25-500*23)
so basis of 250 shares =6000
rate per share =6000/250=$24

now 100 shares sold at $18/share =1800
less basis 100*24 =2400
loss =600
so total allowed capital loss =500+600=1100

[Anonymous]

for question no 9
In tax allowance for the bad debt is not allowed but book showed the allowance for bad debt (30000-20000)=10000
due to allowance book income decrease by $10000.
so when you reconcile the book income and tax income you add the $10000 in book income in order to reconcile it with the tax income.

[ABTX411]

@blithesherry

The M-1 calculation is a reconciliation from book to tax. So you determine the amount of bad debt expensed for book purposes (15,000), and then calculate the adjustment needed to convert that to the expense allowable for tax, which is limited to the amount of uncollectibles actually written off during the tax year ($5,000.). Thus, the reconciling item would be an increase of $10.000.

BEC - 90 - 2/04/2016
AUD - 97 - 2/29/2016
FAR - 92 - 4/19/2016
REG - 88 - 5/19/2016

[Anonymous]

last question
In tax, there is no warranty reserve is allowed, but when actual expense incurred then it will be deductible.
so actual expense incurred is 120000+16000-90000=$46000.

[Author]

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