[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]

@Claudia – I have not done any SIMs yet, but I went and looked at that one.

The explanation on it kind of sucks…or I guess it can't suck if there isn't one there.

The 50% isn't the 150% declining – you're right, this is built into the chart. The farmer sold the truck in Year 2 so it looks like you have to multiply by 50% to account for the half year at the end of the assets life. Normally, if an asset is not sold, this 50% would come into the chart in the 6th year of depreciation, but because the farmer sold it before the 6th year the half year has to be manually accounted for.

I can't find anything to confirm this, but I'm assuming the same way the additions of assets are treated as being added In the middle of the year (no matter when they were actually added – unless at all the end….blah blah blah) then the same goes for disposals of assets and treating it as if it happened in the middle of the year no matter when it actually happened. Or maybe even easier thought process – whatever method was used to depreciate the asset when it came in should also be used to calculate the depreciation as it goes out.

[Claudia408]

allaboard – right, 50% isn't the declining balance, why'd i say that? lol. that was my question! anyways, i feel like if they give is a MACRs table that would be too easy.

BEC - 75 (3x)
AUD - 78 (3x)
REG - 67, 66, Aug 1
FAR - 54, Sept 8

[Anonymous]

or if they do provide a chart you better believe there something else they're trying to trip us up on. jerks;)

[Claudia408]

can someone please help to clarify what kind of home interest should be included (basically added) for AMT?

BEC - 75 (3x)
AUD - 78 (3x)
REG - 67, 66, Aug 1
FAR - 54, Sept 8

[Claudia408]

For any Roger users out there: the nmemonic SIMPLE PIE for an individual's AMT, where S is Standard Deduction and P is Personal exemption, you are only supposed to add back one or the other correct? How do you know when to use S or P?

BEC - 75 (3x)
AUD - 78 (3x)
REG - 67, 66, Aug 1
FAR - 54, Sept 8

[TBBG]

Michael and JeMeace (brother and sister) own unimproved land that they hold in joint tenancy with rights of survivorship. The land cost $40,000 of which Michael paid $30,000 and JeMeace paid $10,000. JeMeace died during 2016 when the land was worth $280,000. What amount should be included in JeMeace’s gross estate with respect to the land?

Incorrect $0
$ 10,000
Correct $ 70,000
$140,000

Shouldn't it be zero??? If someone dies and has a property with “tenancy with rights of survivorship,” doesn't the co-owner get the property?

Audit 86
BEC 75
FAR 82
REG 93

[Anonymous]

@claudia you always get personal exemption. the difference is did you take the standard deduction or itemize? if you itemized then you addback the I M P L E
I – interest on home loans other than to purchase/improvement main home – the I in COMMITT includes investment interest expense as well as mortgage interest on secondary properties and i guess if a home equity is used for something other than improvements (or above and beyond the FMV of the property)
M – medical expenses deducted that were under 10% AGI
L – local and state taxes
P – personal exemption
E – this is the Misc Expenses – 2% BIT deductions

If you used the standard deduction then it's just the S P

[Anonymous]

@tbbg I'm pretty sure that only applies when spouses co-own. If the joint tenancy is with someone other than a spouse, their estate gets the current FMV of the property in proportion to the amount they contributed to purchase it. Since she paid 25% of the original cost, then her estate gets 25% of the current FMV.

I think all the property will go to her brother since he has rights of survivorship, but for figuring out the value of her estate they include her share.

[Claudia408]

allaboard – thanks, clears it up. sounds like you got Reg down! are you ready for 6/6/16!?

BEC - 75 (3x)
AUD - 78 (3x)
REG - 67, 66, Aug 1
FAR - 54, Sept 8

[Anonymous]

meh…i'm still weak in areas. honestly with both of your questions i looked them up to make sure i was thinking about it correctly and sometimes going through it with other people helps me hammer it out. so keep 'em coming!

[TBBG]

@allaboard, thanks!! Here is another one for you that I don't get!

Certain adjustments must be made to a corporation's pre-ACE alternative minimum taxable income (AMTI) to arrive at adjusted current earnings (ACE). Which one of the following adjustments increases pre-ACE AMTI to arrive at ACE?

A: 80% dividends-received deduction.
B: Excess of capital losses over capital gains.
C: Amortization of organizational expenditures.
D: Private activity bond interest income.
Answer is C. But why is D incorrect? Private activity bond interest is an ADDBACK and therefore INCREASES pre-ACE amount. Isn't this what the question is asking? Where does the amortization of organizational expenditures fit anywhere in the solution?

Audit 86
BEC 75
FAR 82
REG 93

[Anonymous]

@tbbg D is wrong because it is an adjustment to get to to the pre-ace. the question is looking for an adjustment to get from pre-ace to ace.

With that said, I'm not sure I would've gone for C either. Roger doesn't make any mention of organization expenses and AMT. Ninja notes say “organizational expenditures capitalized NOT amortized” – which kind of confuses me, does that mean you addback the $5,000 you could deduct in the first year because they are “not amortized”? but that would've only happened the first year and aren't corporations exempt from AMT the first year? or maybe it means addback all the org costs that haven't been amortized yet?

did it give you any kind of explanation or just the answer?

and here's hoping this question isn't asked on the exam! or better yet, now that brewed on it for so long, maybe it will be and we'll know the answer (even though we don't REALLY know the answer) and win the prize!

[Claudia408]

what is pre ACE? Did Roger cover that?

BEC - 75 (3x)
AUD - 78 (3x)
REG - 67, 66, Aug 1
FAR - 54, Sept 8

[Todd]

When are changes in tax laws added into the exam? If I took Regulation tomorrow, would I use the 2015 exemptions/phase outs etc.? Or the updated 2016 figures?

[Tncincy]

Does any one know what will be newly tested for Reg in the July/August window? This weekend has been a disaster, my confidence bottomed out and I rescheduled for July 2.

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

[Author]

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