[jeff]

Free Study Planner, Notes, Audio, Flashcards: https://www.another71.com/cpa-exam-study-plan/

Free CPA Exam Survival Guide: https://www.another71.com/cpa-exam-survival-guide/

Jeff Elliott, CPA (KS) | Another71 | NINJA CPA | NINJA CMA | NINJA CPE

[yassy]

@King Coffee you're welcome! I definitely know what you mean lol, sometimes you just need a break from all the madness that is REG. 🙂

FAR 75 (8/21/13)
AUD 72 (10/29/13) 74 (2/12/14) 84! (04/01/14)
BEC 75 (11/27/13)
REG 72 (05/29/14) 74 (07/10/14) 86 and DONE! (10/02/14)

[Mamabear]

Good luck to everyone testing this week!

CPA Exam - Finally DONE (November 2014)
BEC (08/10/13) 80
AUD (08/24/13) 65 (11/13/13) 85
FAR (04/12/14) 81
REG (07/19/14) 69 (11/29/14) 87!!

[yassy]

Tap, a calendar-year S corporation, reported the following items of income and expense in the current year:

Revenue $44,000

Operating expenses 20,000

Long-term capital loss 6,000

Charitable contributions 1,000

Interest expense 4,000

What is the amount of Tap's ordinary income?

A. $13,000

B. $19,000

C. $20,000

D. $24,000 (Correct)

Tap's ordinary income is $20,000, calculated as follows:

Revenue $44,000

Less: Operating expenses (20,000)

Less: Interest expense (4,000)

---

Ordinary income $20,000

========

Any income, losses, deductions, or credits that might affect the tax liability of a shareholder in a different manner depending on any other factors in their particular tax situation must be separately stated on the tax return. In this problem, the separately stated items include long-term capital loss and charitable contributions.

---

I thought that interest expense is something that is reported on the K-1 and not included in the ordinary income calculation?

FAR 75 (8/21/13)
AUD 72 (10/29/13) 74 (2/12/14) 84! (04/01/14)
BEC 75 (11/27/13)
REG 72 (05/29/14) 74 (07/10/14) 86 and DONE! (10/02/14)

[yassy]

Wait never mind I get it

FAR 75 (8/21/13)
AUD 72 (10/29/13) 74 (2/12/14) 84! (04/01/14)
BEC 75 (11/27/13)
REG 72 (05/29/14) 74 (07/10/14) 86 and DONE! (10/02/14)

[Anonymous]

@yassy I would think interest expense is separately stated as well. How did you figure it's not?

[yassy]

@cpaindeed Well, I haven't entirely cleared it up yet, but my thinking is that the interest expense wasn't specified as “Investment interest expense” (which would be separately stated as it relates to portfolio items)

I know interest income IS separately stated when it's not related to the business/trade

FAR 75 (8/21/13)
AUD 72 (10/29/13) 74 (2/12/14) 84! (04/01/14)
BEC 75 (11/27/13)
REG 72 (05/29/14) 74 (07/10/14) 86 and DONE! (10/02/14)

[Anonymous]

@yassy thanks!! that was my thought process when i tried to rationalize it.

[Amay]

Hi guys, I thought insurance companies were exempt from registration under Sec. Act of 1933 (BRINGS mnemonic from Becker); however I just got a NINJA question that says that securities issued by insurance companies are NOT exempt from provisions of the act. Can someone please clarify this for me?

Here is the MCQ:

Which of the following securities would be regulated by the provisions of the Securities Act of 1933?

A. Securities issued by not-for-profit, charitable organizations

B. Securities guaranteed by domestic governmental organizations

C. Securities issued by savings and loan associations

D. Securities issued by insurance companies

Answer is D: Certain issuances are exempt from the provisions of the Securities Act of 1933, including:

securities issued by not-for-profit, charitable organizations,

securities issued by domestic governmental organizations, and

securities issued by savings and loans and similar financial institutions.

Securities issued by insurance companies are not exempt from provisions of the act.

BEC: 73, 81
AUD: 85
FAR: 71, 77
REG: 74, 75...finally DONE! 😀

*This is my 2nd attempt at the CPA exam. For all of you who have failed this exam many times, given up on it, or taken a break like me, remember that it is still possible to finish what you started...failure is the opportunity to begin again more intelligently 🙂

[Anonymous]

@ Amay. Securities issues by Insurance POLICIES are exempt, Insurance companies are not. Hope this is helpful.

[Anonymous]

anyone have a good way of remembering how to get from book income to taxable income? mnemonic perhaps or can someone just list them.

[Anonymous]

*I posted this earlier and a couple people replied. Just wanted to reach out to more people*

Hey y'all this is my first post! I love this site glad I found it. My reg exam is in 11 days and currently at a 60% in ninja mcq. I'm almost in the adaptive learning phase. I listed to all the Becker lectures but still don't feel like I understood the material. Should I go back and read the Becker book again? Should I just continue to do ninja mcq? Haven't even looked at any SIMS yet! I don't feel confident going into this exam and I can't push it back 🙁 What would you do at this point?

[yassy]

@aspiringcpa2014 If i were you i would definitely reread the Becker book, but try not to feel rushed/overwhelmed as you do so because that won't be productive 🙂 11 days is a lot of time to solidify what you've learned. I would take notes/make flashcards as you read through, and after each chapter do the MCQs on that topic.

FAR 75 (8/21/13)
AUD 72 (10/29/13) 74 (2/12/14) 84! (04/01/14)
BEC 75 (11/27/13)
REG 72 (05/29/14) 74 (07/10/14) 86 and DONE! (10/02/14)

[time-wast3d]

This is regarding partner's basis—partnership.

It may seem like a very dumb question…if a partner assumes other partner's liability…why would the liability increase his/her basis? could any one of you please give me a simple explanation to the partnership/partner basis? thanks in advance!

refer pg becker V1.1 R4-40 ..last line of the page.

[rzrbkfaith]

@time-wast3d – Becker doesn't say a lot about it, but basis really comes down to how much a partner has “at risk.” The partner has his investment at risk (capital) plus he is at risk for his portion of the liabilities owed by the partnership. That the is basic concept.

@aspiringcpa – I would make sure to do plenty of SIMs – from what I saw on the REG thread for last quarter, the SIMs were killer. I wouldn't re-read the book, but I would keep doing MCQ. So much of the test is being able to read the question correctly and looking for keywords, that having that down is pretty important. Review your notes and any flashcards. But don't stop doing problems. I'm taking my exam next week and that is my plan! 🙂 Good luck!

AUD - 99
BEC - 97
REG - 91
FAR - 1/8/16

[shankysays]

^ that's the way of understanding that helped me with the concept, as well. If you think of basis as the amount you have “at risk”, it really helps. You're assuming a portion of someone else's liability (increasing basis), and if you are the one contributing the liability, you are sharing that liability (and decreasing basis).

BEC - 72, 82! ✓
FAR - 80! ✓
AUD - 70, 92! ✓
REG - 74, 78! ✓

Licensed CPA 5/2015

[Author]

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