[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

[Martin]

Zumo76,and Euro, thanks, i got it now.

Through God all things can happen!

“You never fail until you stop trying.”
― Albert Einstein
When I was young, I used to admire intelligent people;as I grow older, I admire kind people.
“Just keep swimming, just keep swimming.”

FAR= 72-84
Audit= 73-82
BEC= 74-75
Reg=77

[jonm857]

Hello –

I'm looking at Bankruptcy using Becker. There is a MCQ that differs from the info in the text. The text says that $15,325 must be owed to one or more creditors (if less than 12 creditors), or $15,325 for three creditors in aggregate (if more than 12 creditors).

The MCQ solution says that only $14,425 is the amount required.

Does anybody know the correct amount?

Thanks,

Jon

B - 81
A - 87
R - 73
F - July 5th

[Anonymous]

Definitely the $15,325

[jonm857]

Okay… Ch 7 for Becker is just the worst. Commercial paper, bankruptcy, secured transactions. Blahhhhhh

B - 81
A - 87
R - 73
F - July 5th

[jonm857]

@CantStopWontStop

Thanks

B - 81
A - 87
R - 73
F - July 5th

[Anonymous]

These are the type of questions that are tripping me up:

Bell, a cash basis calendar year taxpayer, died on June 1 of the current year. Prior to her death, Bell incurred $2,000 in medical expenses that were paid in the current year. If the executor files the appropriate waiver, the medical expenses are deductible on:
a. The estate tax return.
b. The executor's income tax return.
c. The estate income tax return.
d. Bell's final income tax return.

Can't the answer be a or d? I know you can't deduct on both, but why the answer D instead of A?

[EuroAddict]

@CPA

I believe when they pass the bills go to the estate. So if they want to deduct them on the final then they must file a waiver.

Pretty much opposite of when you are alive.

-----------------------------
BEC - 77, 03/2015 (first try)
FAR - 79, 05/2015 (second try)
REG - 83, 12/2015 (first try)
AUD - 84, 03/2015 (first try)

I got 99 problems but the CPA ain't one.

[monikernc]

Ninja REG sim #33 is about above the line deductions that result in AGI. this sim isn't hard but the treatment of the IRA deduction is confusing. the information provided mentions the taxpayer is an employee of a CPA firm but never states she is covered by an employer-sponsored qualified retirement plan. it says nothing about that employer benefit just that she contributed to her $4000 traditional IRA. her contribution was not considered a deduction to income to arrive at AGI in the solution. from what i understand, uncovered individuals can deduct $5500 without being subject to an income limitation, so i input the full $4000 on line 32.

i did not think a traditional IRA is considered an employer-sponsored qualified retirement plan? not sure what i missed in this sim. your help is appreciated.

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

[Martin]

On ethics, what do they mean by disclose position? This means that the tax preparer disclosed to the irs how he came up with his deductions?

Through God all things can happen!

“You never fail until you stop trying.”
― Albert Einstein
When I was young, I used to admire intelligent people;as I grow older, I admire kind people.
“Just keep swimming, just keep swimming.”

FAR= 72-84
Audit= 73-82
BEC= 74-75
Reg=77

[Future Ninja]

An individual taxpayer earned $10,000 in investment income, $8,000 in noninterest investment expenses, and $5,000 in investment interest expense. How much is the taxpayer allowed to deduct on the current year’s tax return for investment interest expenses?
A. $0
B. $2,000
C. $3,000
D. $5,000

Answer (B) is correct.

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

[Future Ninja]

Alex and Myra Burg, married and filing joint income tax returns, derive their entire income from the operation of their retail candy shop. Their 2015 adjusted gross income was $50,000. The Burgs itemized their deductions on Schedule A for 2015. The following unreimbursed cash expenditures were among those made by the Burgs during 2015:

Repair and maintenance of motorized wheelchair for
physically handicapped dependent child….$ 300

Tuition, meals, and lodging at special school for physically
handicapped dependent child in the institution primarily
for the availability of medical care, with meals and
lodging furnished as necessary incidents to that care…4,000
Without regard to the adjusted gross income percentage threshold, what amount may the Burgs claim in their 2015 return as qualifying medical expenses?
A. $0
B. $300
C. $4,000
D. $4,300

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

[Future Ninja]

#1. Farr, an unmarried taxpayer, had $70,000 of adjusted gross income and the following deductions for regular income tax purposes:

Home mortgage interest on a loan
to acquire a principal residence….$11,000

Miscellaneous itemized deductions
above the threshold limitation….$2,000
What are Farr’s total allowable itemized deductions for computing alternative minimum taxable income?
A. $0
B. $2,000
C. $11,000
D. $13,000

answer: C **why is it the MISC itemized is not included?

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

[Future Ninja]

#2. On their joint tax return, Sam and Joann, both age 70, had adjusted gross income (AGI) of $150,000 and claimed the following itemized deductions:

Interest of $15,000 on a $100,000 home equity loan to purchase a motor home
Real estate tax and state income taxes of $18,000
Unreimbursed medical expenses of $15,000 (prior to AGI limitation)
Miscellaneous itemized deductions of $5,000 (prior to AGI limitation).

Based on these deductions, what would be the amount of AMT add-back adjustment in computing alternative minimum taxable income?
A. $21,750
B. $23,750
C. $35,000
D. $38,750

answer: D

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

[Mouzam Ali]

Went through 3hrs of grilling today with Regulation.

I would recommend practicing every possible type of TBS problem for partnership, C & S corps, individual taxation. These TBS always screw me up. On top of that I wasn't able to come up with an accurate answer for Research question.

How do you people proceed with these research questions ?

BEC - 80 (6/9/15) - Roger+Becker
AUD - 69,61 - Roger
REG - 4/3/16
FAR - *****

Running out of 18 months soon.
Pursuing CPA since 2012. Started giving exams only in 2014 Q4.
Used Becker earlier now switched to Roger CPA Review.

[Bnots]

@Future Ninja

======================

RE: Investment income

The amount you can deduct for investment interest expense is capped by your net investment income.

The taxpayer had net investment income of $10,000 – $8,000 = $2,000 this year.

Thus, even though he had investment interest expense of $5,000, he is only allowed to deduct $2,000 of it. The other $3,000 can be carried over to the following year.

======================

RE: Alex and Myra Burg

$300 + $4,000 = $4,300

The wheelchair and the institutional expenses are both deductible (although I think they will be subject to the AGI limitation when itemized deductions are computed).

With the institutional expenses, food and lodging are deductible if they are considered to be a necessary part of receiving care at the facility. Things that are not necessary — for example, if the family pays an extra fee to let him use the video game room — are not deductible.

======================

#1 In this question it's asking which deductions ARE allowed for AMT purposes. You ARE allowed to deduct interest on a mortgage used to acquire a principal residence.

You are NOT allowed to deduct miscellaneous itemized deductions for AMT purposes.

If you were given taxable income as your starting point, you would add back any miscellaneous itemized deductions above the 2% threshold. As a quick demo, let's say Farr had $3,400 in qualifying miscellaneous expenses in this problem. For normal tax purposes, he can deduct the amount over 2% of AGI (.02 x $70,000 = $1,400). So he takes $2,000 in miscellaneous itemized deductions. For AMT purposes he can deduct none of the $3,400 so he has to add back the $2,000 that he did take.

======================

#2 In this question it's asking what you are ADDING BACK, if you assume you have a figure for taxable income.

Looking at the items individually:

1. You have to add back the $15,000 interest on a home equity loan to purchase a motor home. A motor home is not a qualifying residence for AMT purposes (note that there is a distinction between a “mobile home” like those in trailer parks and “motor home” or RV which is more like a truck with living accommodations).

2. You have to add back the $18,000 in state income and real estate taxes. These are not deductible for AMT purposes.

3. Because they are over 65, for regular tax purposes this couple can take a deduction for unreimbursed medical expenses over 7.5% of AGI (0.075 x $150,000 = $11,250; $15,000 – $11,250 = $3,750). However, AMT requires you to use the 10% of AGI threshold for medical expenses regardless of age (0.075 x $150,000 = $15,000; $15,000 – $15,000 = 0), so you have to add back that $3,750.

4. For regular tax purposes this couple can take miscellaneous itemized deductions that exceed 2% of AGI (0.02 x $150,000 = $3,000; $5,000 – $3,000 = $2,000). As with the previous question, AMT does not allow you to take miscellaneous itemized deductions, so the $2,000 they would have taken has to be added back.

$15,000 + $18,000 + $3,750 + $2,000 = $38,750

[Author]

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