[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

[csvirk]

@just3 nevermind. I read the question wrong.

FAR: 71, 77!
AUD: 69, 80
BEC: 72
REG: 84

[Just3Letters]

Ohhhh thanks guys! I knew that. I keep tripping myself up on the different types of entities 🙁

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

[CPA2BEE]

This one is brutal for me…

Chris, a freelance photographer, uses the cash method for business. The tax year ends on December 31. Which of the following should not be included in the determination of Chris's gross income for the current year?

A.
Chris owns controlling shares of a closely-held corporation and is planning to delay the bonus payment from the corporation until January of the next year. The bonus was authorized on December 15 of the current year and may be drawn at any time.

B.
Chris received a check from a client on December 28 of the current year for a family portrait produced on December 22 of the current year. The check was dated December 23 of the current year but was not deposited until January 4 of the following year.

C.
A client notified Chris on December 27 of the current year that a check was ready. The check was not picked up until January 4 of the following year.

D.
Chris received a dividend check on January 4 of the following year. The dividends were declared payable on December 30 of the current year.

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

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

[Spartans92]

CPA2BEE, is it C? That one is kinda vague..

BEC- PASS

[CPA2BEE]

@Spartans it is not C, that is what I guessed as well. The answer is actually D. Cash basis users recognize income when it is actually or constructively received. Constructively meaning it is basically available and ready to be credited to the recipient's account. So in option C, since the check was “ready” it is constructively received. Apparently, declared and payable dividends do not constitute as “constructively received”, making D the right answer. This one was kinda ridiculous….

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

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

[csvirk]

Agree with @CPA2BEE. This question is tricky.

FAR: 71, 77!
AUD: 69, 80
BEC: 72
REG: 84

[Just3Letters]

I found this one pretty tricky.

Chip and Dale each have a 50% interest in a partnership. Chip uses a calendar year while Dale has a fiscal year ending November 30. Assuming that the partnership does not make a Section 444 election and does not establish a business purpose for a different period, what tax year must the partnership use to file its tax return?

A.
November 30

B.
December 31

C.
June 30

D.
They may choose any month.

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

[csvirk]

answer is A. From what I remember (vaguely) you have to chose date which gives you least accruals.

Calender year.

december 31 to decemer31 = 0 * .5 = 0
deceember 31 to november 31 = 11 * .5 = 5.5

Use year ending November 30

November 30 to November 30 = 0 * .5 = 0
november 31 to december 31 = 1 * .5 = .5

Since November 30 will result in least amount of accruals they will chose November 30.

FAR: 71, 77!
AUD: 69, 80
BEC: 72
REG: 84

[jad11]

In regard to that “constructive receipt” question, I do remember reading that a deduction can be taken as long as dividends are declared before End o year and paid before a certain date. Does that sound familiar to anyone and i the one I am thinking of for corporations perhaps? I can't seem to find on the book and don't have all my notes with me.

[CPA2BEE]

I think @csvirk is right. I remember seeing some calculation for this that explain why Nov 30 is the date but it made no sense to me

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

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

[CPA2BEE]

@jad11 – Yes I have seen that as well, I think that is for Corps to avoid Accumulated Earnings penalties? If dividends are declared by year-end and paid by March 15. Rather than an individual recognizing dividend income…

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

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

[csvirk]

FAR: 71, 77!
AUD: 69, 80
BEC: 72
REG: 84

[jad11]

That does ring a bell. It is good that I was on the right track, but it is not good that I didn't know the distinction outright. Got a lot of studying to do. Thanks for clarification.

[Anonymous]

Just3, that one is tricky. i had to look it up, and it looks like you have to use the YE with the least aggregate deferrals (deferral period for each partner * ownership)

11/30 YE
Chip deferral = 1 month *.5 = .5
Dale deferral = 0 months * .5 = 0
total aggregate deferral = .5

12/31 YE
Chip deferral = 0 months * .5 = 0
Dale deferral = 11 months * .5 = 5.5
Total aggregate deferral = 5.5

so you use 11/30 because the total aggregate deferral is less

[Claudia408]

am i not getting it or is NINJA just that much harder? I get 70s, 80s on Wiley and Roger but 60s and lower on Ninja.

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

[Author]

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