[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]

corporation basis on the property is the basis to shareholder + gain recognized
(10000+5000) + 5000=20000

the basis of property to the corporation is the basis of property to shareholder + gain
we do not minus the liability assumed by the corporation from the basis.

same way when the corporation distributes the property to the shareholder which encumber with the mortgage then distribution amount is FMV of property minus liability
but the basis of same property to a shareholder is just the FMV. we do not minus the liability .

[Anonymous]

Lane Inc., an S corporation, pays single coverage health insurance premiums of $4,800 per year and family coverage premiums of $7,200 per year. Mill is a ten percent shareholder-employee in Lane. On Mill's behalf, Lane pays Mill's family coverage under the health insurance plan. What amount of insurance premiums is includible in Mill's gross income?
a. $0
b. $720
c. $7,200
d. $4,800
Explanation
Choice “c” is correct. $7,200 of insurance premiums (the amount of family coverage premiums, as indicated in the question) is includible in Mill's gross income.
Rule: Fringe benefits paid by an S corporation are deductible by the S corporation only for non-shareholder employees and those employee-shareholders owning 2% or less of the S corporation. Other fringe benefits paid are deductible by the S corporation if included as part of gross income from the S corporation for the individual receiving the benefits (i.e., included as part of income on the shareholder's W-2).

The reason this question confuses me is because Mill is a 10% shareholder. Why would his piece of the fringe benefit be excluded? It's deductable for non-shareholders and shareholders with LESS THAN 2% ownership. If he has 10% shouldn't he be included (and not deducted)? I assumed the answer would be 12,000 (7200 + 4800).

Any thoughts?

[mtaylo24]

I think it is C because Mills has a family and isnt single

single person 4800
Family 7200

You can't claim both, just like you can't file MFJ and Single…

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)

[mees0]

Hi all, I'm new to these forums as I'm trying to pass the CPA once and for all. First up… REG. Is everyone on here following the Ninja method (videos, MCQs, etc.)? It seems so excessive to watch all the videos at once but I wonder if this is the best way to just throw myself into the materials. Otherwise I have the Ninja notes which have been very helpful for other sections (I've passed the others but my credit for BEC and AUD expired). I also have access to Becker.

Any input on what others are doing would be great!!

[msteezzz]

Can I ask for accounting codification question here? I'm having such a hard time answering codification questions correctly. What's the word of advice? How can I improve on it or understand it better? 🙁

First time taking CPA exam.

[Anonymous]

@mtaylo24

My question is really, why is Mills allowed to deduct his portion of the fringe benefit? He owns more than the 2% which would disallow it per the note from Becker. I understand why the family portion wouldn't be included, but why is his piece allowed?

[mtaylo24]

The question isn't asking what he is deducting, it is asking what he is including in Income. It is tax free if you own 2% or less, but he owns 10%, so it's taxable.

Gleim's explanation:

Certain fringe benefits received by shareholders owning more than 2% of the stock of an S corporation are included in the shareholder’s W-2. Health insurance premiums are not a tax-free benefit to shareholders holding more than 2%.

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)

[spyves83]

Hello, everyone!

Can anyone give me tips on how to complete the research tab for REG? I've taken and passed FAR and Audit, and I've never had this much difficulty finding the research simulations. I am using Becker to prepare for the exam and I can't the “search within” function to work. My exam is in 4 days. Just took my first practice exam and got an overall 82, but the research tab took me longer than another of the other simulations. If this happens to me on exam day, I'm doomed! Thanks!

[Tncincy]

Oh my goodness, didn't do too well on the mcq's so I started section by section 20 at a time….Is that a good plan? I;m determined to keep going but I guess I'm getting a little restless. Help reg group.

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

[Tncincy]

Well, back at it hope everyone will have a productive study session :-))

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

[Anonymous]

@mtaylo24 thanks for following up. I understand what you are saying, I just think it's kind of a BS question. I don't think this really tests your knowledge of the information and it tests more on how much you can be tricked. Frustrating stuff!

@tncincy I think 20 at a time is a good way to start. Take notes of the areas you continue to struggle with. I usually do 200 questions or so (in 10, 20, or 30 question intervals), and take note of the 10-15 areas where I struggle. I got back and try to master those 10-15 areas. I feel that if I can become proficient in 8-10 of those, I will be in good shape! Turn your weaknesses into strengths.

[diabloargentino]

Hi all – at work so I don't have the specifics in front of me but:

When can you start amortizing start up/organizational costs? Lets say you incorporate on Jan 1, incur costs in March and start operations in July – past the $5,000, would you start the 180 months in July or January?

[Anonymous]

Hey guys, check this link and see if this helps you with your ISO and ESPP base knowledge.

View post on imgur.com

[Anonymous]

In month of July ,when you start your business.

[debitcash]

WHY ISN'T BLUE'S TELEGRAM ON JULY 15TH NOT CONSIDERED A COUNTEROFFER???? I HAD ORIGINALLY CHOSE THE ANSWER CHOICE “C” AND WAS TOLD THAT IT WAS WRONG AND THAT ANSWER A WAS INDEED THE RIGHT ONE.

I GET THAT THERE WAS A FIRM OFFER OF ONE MONTH BUT BLUES COUNTEROFFER WAS A SERIOUS BID. I DON'T GET IT.

On July 1, Silk, Inc., sent Blue a telegram offering to sell Blue a building for $80,000. In the telegram, Silk stated that it would give Blue 30 days to accept the offer. On July 15, Blue sent Silk a telegram that included the following statement: “The price for your building seems too high. Would you consider taking $75,000?” This telegram was received by Silk on July 16. On July 19, Tint made an offer to Silk to purchase the building for $82,000. Upon learning of Tint’s offer, Blue, on July 27, sent Silk a signed letter agreeing to purchase the building for $80,000. This letter was received by Silk on July 29. However, Silk now refuses to sell Blue the building. If Blue commences an action against Silk for breach of contract, Blue will:
Select an answer:
A.

win, because Blue effectively accepted Silk’s offer of July 1.
B.

win, because Silk was obligated to keep the offer open for the 30-day period.
C.

lose, because Blue sent the July 15 telegram.
D.

lose, because Blue used an unauthorized means of communication.

FAR:75!
AUD:69, 63, 73, TBD
BEC:76!
REG:71, TBD

BECKER + NINJA PRODUCTS

keep your cool

[Author]

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