[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

[ABTX411]

Number 7 is the same concept as number 9 – you can only deduct the amount actually incurred, not the estimated expense. So for 7, you need to do a T-account to determine the amount of the debit: 120+16-90 = 46.

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

[Anonymous]

I am not sure about question 13 my answer is 139000 I don't know how to get 75000.
Anyone please help.

[ABTX411]

For question 13 – the election entitled the tax payer to carry-over basis.

https://www.bdo.com/blogs/restaurants/september-2015/tax-treatment-for-involuntary-conversions?feed=8799bc52-2237-4688-aeac-83e40e623b56

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

[Anonymous]

@blithesherry
for question 13
If property converted directly into property similar or related in service or use, complete non-recognition of gain is mandatory.
so the basis of the replacement property is the same as the property converted.

in question13 warehouse is converted for the warehouse ,so no gain of $ 120000 will be recognized and the basis of the new warehouse will remain the same as $75000.

[SaveBandit]

@Ano

For question 13, if Dawson had bought the new warehouse for $200k instead of 195k would the new basis be 80k? If so, would he recognize a gain for 5k?

4 for 4

FAR 85
AUD 94
BEC 86
REG 90

[Anonymous]

@ save bandit
That rule is for property converted into similar property so no matter how much you reinvest.
when you buy exactly the same property then you must not recognize any gain and the basis would be the same as the old one.

[SaveBandit]

@ano

So what is the difference between question 13 and the question I posted on page 9? Why isn't its basis 30k?

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

4 for 4

FAR 85
AUD 94
BEC 86
REG 90

[Anonymous]

@ SaveBandit
Special rules apply for real property used in a business or investment that is condemned. The replacement rules allow a greater flexibility in choosing replacement property, such as replacing raw land with developed land. In a direct conversion, the taxpayer receives the replacement property instead of money, in which case, the nonrecognition of realized gain is mandatory, and the replacement property acquires the carryover basis of the converted property; gain is recognized upon the disposition of the replacement property. However, if the taxpayer is compensated for the conversion by payment, then the taxpayer must elect to postpone the recognition of the gain; otherwise the realized gain is recognized in the year that it occurred.

the detail information is given on this link, I am also getting through this question for the first time. I think the main point is the use of real property in business and for the investment purpose. the warehouse is used for the business that is why the nonrecognition of gain rule is applied.
https://thismatter.com/money/tax/involuntary-conversions-taxation.htm

[KJF1031]

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 the correct choice be one of these: 25, 33, or 35%?

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

[Anonymous]

@KJF1031
I think question is asking that

If regular tax rate on ordinary income is 15%, then the marginal capital gain rate within these brackets will be what ?
so the answer will be 0%.
I think framing of the question is little weird .
Correct me if I am wrong.

[Anonymous]

@Ano You are definitely right and I just took REG and all too often we see questions that are framed poorly like this one. I wrote them a little comment with my opinion on this in the survey after the test. I wonder if they will consider it….

[Anonymous]

@ chrisjets
How was your test ?
Do you have anything to tell about the AICPA released question no 13. which is posted on page 11.
hoping the material is still fresh in your mind.

[Future Ninja]

bad news guys! i failed REG again with 70. Arggghhh!!!

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

[Tncincy]

Bless your heart Future Ninja, there is light at the end of the tunnel…you're not far, make a few tweeks in study and be ready the next window. You can do it, YOU WILL DO IT.

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

[CPA2BEE]

Quick Corp. agreed to purchase 200 typewriters from Union Suppliers, Inc. Union is a wholesaler of appliances and Quick is an appliance retailer. The contract required Union to ship the typewriters to Quick by common carrier, “FOB Union Suppliers, Inc. Loading Dock.” Which of the parties bears the risk of loss during shipment?

a. Quick, because the risk of loss passes when the typewriters are delivered to the carrier.
b. Union, because both parties are merchants.
c. Union, because the risk of loss passes only when Quick receives the typewriters.
d. Quick, because title to the typewriters passed to Quick at the time of shipment.

The answer is “a”. I picked “d” the first time. This was the explanation for d being wrong:

Choice “d” is incorrect. Although it is true that title passed to the buyer on delivery to the carrier, risk of loss does not necessarily follow title.

I'm not understanding why this makes “a” right and “d” wrong, can someone explain?

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

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

[Author]

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