[jeff]

Welcome to the REG CPA Exam study group for July & August 2018 exams. 🙂

Please introduce yourself & when you’re taking your exam (approximate timeframe).

REG Study Group Links and Resources:

1. NINJA Monthly – Full REG Course for $67/mo
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3. How to Pass REG in 20 Days
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5. Video: Study Advice for REG
6. CPA Reviewed Podcast
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9. I Passed the CPA Exam!
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11. NINJA REG SIMS List by Topic
12. Free Downloads: NINJA REG

[CPA2020]

Is it possible to get any TBS for ethics or business Law? I am feeling pretty discouraged with my TBS practice scores on Roger for tax. (Hopefully) wondering if the the tax TBS on Roger are just the hardest and that there are some TBS for ethics and law too. Anyone have any insight?

[Tncincy]

@Big4BeanCounter: I'm on Individual Taxation. I plan to move through this and have it done by Monday.

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

[msquared17]

@tncincy – good to see you back at it. I’m starting R1 tomorrow as well. Taking the exam late August.

[lam2848]

Does anyone know what the section 179 max for 2017 is? Becker says $510,000 but I read online that its $500,000. I think the directions for form 4562 online state $510,000 as well.

[Brian Riley]

Iam2848, the max is $510,000.

[Brian Riley]

Taxability of Social Security Benefits

Do you think it would be worth knowing exactly how to calculate the taxable social security benefits or to just know that the max it can be taxed at is 85%?

[murano]

someone contributed land to an s corp, nbv=2500, fmv=10000 in exchange for stock. he also loaned the s corp 1500 on a nonrecourse basis. so what is his stock basis and at-risk amount?
Is the stock basis 10000+1500, at-risk amount 10000, or
stock basis 2500+1500, at-risk amount 2500?
Is 80% control relevant in this context?

[Brian Riley]

Murano,

With an S-corporation you have to keep in mind there is a stock basis and a debt basis for the shareholder. This person's stock basis appears to be the $2,500 adjusted basis of the land (Remember what Jeff says in his lectures, use the adjusted basis not FMV when contributing property to the s corp) they contributed to the S-Corp and their debt basis appears to be the $1,500 for a shareholder's total basis of $4,000. I think you are correct though in saying that their at risk amount is only the $2,500.

As far as the 80% control you are talking about, I think what you are referring to has to do with C Corporations. Shareholders contributing PROPERTY to a C Corp (remove the shareholders contributing cash) receive tax-free treatment if at the time of contribution, they 80% control. That's a whole different topic though and probably not worth expanding on.

[murano]

Brian，
Thanks for the explanation，but I think s corp is also subject to section 351，which is the same as c corp.
https://www.fortenberrylaw.com/contributions-s-corporations/
so why not use fmv?
besides， you said :
With an S-corporation you have to keep in mind there is a stock basis and a debt basis for the shareholder.
that's right but I think stock basis DOES includes nonrecourse loans (since nonrecourse loans means no economic loss risk, it's included in stock basis but not at risk amount)，while debt basis ONLY includes recourse loans(such as guarantees and direct loans on a recourse basis). And at risk amount is calculated as stock basis + debt basis – nonrecourse loans.
The second paragragh is just an FYI, and my concerns is why not use fmv while contributing appreciated property to an s corp is subject to section 351.

[Brian Riley]

Murano,

You are right! S-Corps apparently are also subject to the requirements of Section 351. But yeah, I think the general rule would be to use the adj basis of the property contributed. Maybe if the 351 requirements are not met then the calculation would end up at the FMV of the property because you would have to include the gain?

[Anonymous]

@Brian, I wouldn't worry about the cutoffs or calculation on SS income. If you just know that they can be taxed between 0-85% depending on income you should be fine.

[Jane]

Two questions:

1) What is the difference between basis and at-risk amount? They seem like the same thing to me so I am clearly missing something,

2) I heard that simulations are now graded where if you get one in the row wrong, you get the whole row wrong. Is this true, and if so is it for every simulation? Can't find anything authoritative on this.

[Anonymous]

@jane

1) For an S-Copr; the At-Risk Amount does not include non-recourse loan however it's included on the basis and that's how they differ.

2) I am not quite sure about this.. I know this is how it is on the Mock Exams but I am not quite sure how it is on the actual exam.

Hope that helps!

[Jane]

@ abi, how about for c-corps and partnerships?

[Anonymous]

I believe at-risk amount is only for S-Corps and Partnerships because C-Corps are not pass through entities and therefore there's no pass-through losses. For partnership it's kind of the same except that it will be included if it's a general partner because they would be personally liable while the other partners (such as limited partners) wouldn't. does that make sense?

[Author]

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