[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

[marqzho]

For AMT, get a real IRS Form 6251, 1040, sch A and fill them in with some imaginary numbers.

For Medical,
Let say you are old, had AGI for 100k and paid $15k as medical expense.

On your schedule A, you will have a 7.5% limit, so you claim $7500 on sch A ($15k – 100k*7.5%)

Now for AMT purpose, it said you can't take 7.5% but 10% for the limit. So on the line 1 of Form 6251, you enter $92.5K ($100k-7.5k). Then you add back 2.5% of your AGI in line 2 = $2500

So at the end, your AMT taxable income would be $92.5k + 2.5k = 95k

For charitable contribution,
Let say you have a contribution for $20k, AGI $100k.

On form 6251, line 1, you enter 80k(100k -20k)

And then there is no item below ask you to put back the charitable contribution. You will then have a AMT taxable income for $80k.

So what does that do with your question asking “What are Robert's itemized deductions for alternative minimum tax?”

Contribution is one of the itemized deduction since “it is NOT added back for AMT purposes.”

Fill the form with some other numbers and you will finally make sense in it.

REG 90
FAR 95
AUD 98
BEC 84

[Just3Letters]

Is this a legitimate question for the exam? Some of this stuff seems so arbitrary… correct answer is B apparently.

What is the percentage depletion rate allowed by the Internal Revenue Code for the recovery of capital invested in mining coal?

A.
5%

B.
10%

Incorrect C.
15%

D.
20%

FAR- 81
REG- 81
BEC- Aug 22, 2016
AUD- TBD

[marqzho]

It is totally legit. My advice is to take your best guess and move on 🙂

REG 90
FAR 95
AUD 98
BEC 84

[Just3Letters]

lol… pretty much my thought on some of this stuff Marqzho!

Testing us on stuff actual CPAs definitely look up in IRC like tax rates for coal is just cruel and unusual…

FAR- 81
REG- 81
BEC- Aug 22, 2016
AUD- TBD

[mselaineous]

I'm knee deep in studying for REG and it's driving me crazy. I had no issues with FAR or AUD, but REG just makes me want to through my laptop through the window. And, totally agree about seemingly arbitrary questions, like Superfund and clean air act questions, really? Ugh, ok back to studying.

FAR - Passed (04/16) ROGER
AUD - Passed (05/16) ROGER & Ninja MCQs
REG - Passed (07/16) ROGER & Ninja MCQs
BEC - 08/16

[marqzho]

Just3Letters

Unless you are aiming at the EWS, you don't need to know everything to pass the exam. When you are working on MCQ from any providers, you will always see non-sense and unusual questions like this one. I have absolutely no doubt this could show up in the exam, or this is actually a real CPA exam question in the past, but we need to focus on the “core”, focus on the things that will show up in every single exam. Use your best judgement and skip the non-sense questions. I got 98 and 95, do I know 98% or 95% of everything?
I don't think so. 🙂

REG 90
FAR 95
AUD 98
BEC 84

[Just3Letters]

Thanks Marqzho, that is very reassuring haha

For this question: I get that 1244 is not available because not original owner, but why can't Jackson deduct the normal $3,000 capital loss against ordinary income? Correct answer is A.

Jackson, a single individual, inherited Bean Corp. common stock from Jackson's parents. Bean is a qualified small business corporation under IRC Section 1244. The stock cost Jackson's parents $20,000 and had a fair market value of $25,000 at the parents' date of death. During the year, Bean declared bankruptcy and Jackson was informed that the stock was worthless. What amount may Jackson deduct as an ordinary versus capital loss in the current year?

A.
$0

Incorrect B.
$3,000

C.
$20,000

D.
$25,000

FAR- 81
REG- 81
BEC- Aug 22, 2016
AUD- TBD

[Anonymous]

@just3 because the question is asking for how much ordinary loss can be deducted.

[Just3Letters]

Oh that's embarrassing :/

FAR- 81
REG- 81
BEC- Aug 22, 2016
AUD- TBD

[Claudia408]

doesn't the DRD calculation come after the Charity calculation? this problem seems to include it in income to calculate charity contributions. I thought the answer was $170,000

Gero Corp. had operating income of $160,000, after deducting $10,000 for contributions to State University, but not including dividends of $2,000 received from nonaffiliated taxable domestic corporations. In computing the maximum allowable deduction for contributions, Gero should apply the percentage limitation to a base amount of?

Answer: A corporation's contribution base is its taxable income before the charitable contributions deduction, the dividends received deduction, and before deductions for NOL and capital loss carrybacks. Since Gero had operating income of $160,000 after deducting $10,000 of contributions, its contribution base would be $160,000 + $10,000 + $2,000 dividends = $172,000.

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

[Spartans92]

How do you guys managed to recall all these info. Just finished the R2 SIMS and hardly recall R1 material on the them. :/ this is so stressful.

BEC- PASS

[Just3Letters]

Claudia,

I just always think that the percentage limitation for charity comes before everything. That's always worked for me. Therefore, you have to add back all NOLs, prior charity deductions, DRDs, etc. to get income “before” any deductions. It's essentially the base income that you want to get.

Spartans,

We don't manage to recall all the info. We just try our hardest to recall 75% of it hahaha. It's really difficult. This is only my second exam but it's easily the most difficult for me. Just keep working. I thought the exact same thing going through tax. It's just SO much. Focus on memorizing the main topics and big emphasized ideas in your review course and hope that's enough. That's what I'm doing anyways.

FAR- 81
REG- 81
BEC- Aug 22, 2016
AUD- TBD

[Bear-Bear]

Does anybody else absolutely HATE Alternative Minimum Tax?

[Spartans92]

Thanks just3. Fair enough. Ohh.. C-corps sounds like FUN!

BEC- PASS

[Claudia408]

Yes, the percentage limitation for charity comes before everything… so why do I include the DRD in calculating the charity limits? I used this formula:

Gross Income
Less: Deductions (except charitable, dividends received, domestic production deduction, NOL carryback, capital loss carryback)
=Taxable income for charitable limitation
Less: Charitable contributions (<= 10% of above)
=Taxable income for Div. Rec'd deduction (however, note that NOL carryforwards are not allowed for computing the DRD limit)
Less: Dividends received deduction
=Taxable income before carrybacks
Less: Domestic Production Deduction, NOL carryback and STCL carryback
=TAXABLE INCOME

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

[Author]

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