[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

[win2bet]

@zubairs – that question is a trap! & doesn't test the content of the material well at all. This test is a game

REG 68,87
BEC 85
FAR 75
AUD 64,64, 86!

[Anonymous]

Flashcard: When are scholarships not taxable?

[WANNABE_CPA]

@bucky…when utilized to pay tuitions and all..vague guess from little something i remember?

FAR : 68, 74, 83 Thank you God 🙂
BEC : 78 (8/27) 🙂
REG : 72 ,80 (2/25) 🙂
AUD : 69,67, 07/23

[Anonymous]

Answer: When they are not in return for services rendered, AND the money is used *only* for tuition and books

Note: Scholarships for room and board are includable in income.

[Anonymous]

Flashcard: Which dividend income is tax free?

[SullivanNJD]

return of capital?

FAR- 87
REG- 81
AUD- 88
BEC-

Who's Better Than Us? nobody

[Anonymous]

Answer – S-Corps and Life Insurance

[MommyBear]

I don't think I have ever heard of life insurance proceeds referred to as dividends. Tricky!

[Anonymous]

@MommyBear – I think the card is talking about the dividends you get each year on the life insurance. Most people just reinvest the amount. I work at a life insurance company – that's the only reason I knew that one.

[MommyBear]

Uggg. One more thing to remember

[MommyBear]

Uggg. One more thing to remember

[WANNABE_CPA]

Need some clarification on this:

1.Carl, who is a HOH, purchased his principal residence on April 15 year2, for $240000. He lived in the home for 3 years and then sold it for $480000. during the three years, he had a home office and took depreciation totalling $2000.

2.Alice, who is single, purchased her principal residence July 1, year 1 for $420000, She moved out of the home December 31, year 3 and immediately rented it, claiming depreciation $20000 over the rental period. She sold the home January1 year 6 for $700000.

What is the taxable gain or deductible loss?

are we going to consider section 1250 because, in first case he has used it as a home office and 2nd she has rented it

or in every gain exclusion case?

FAR : 68, 74, 83 Thank you God 🙂
BEC : 78 (8/27) 🙂
REG : 72 ,80 (2/25) 🙂
AUD : 69,67, 07/23

[Anonymous]

@Wannabe – I thought section 1231 Assets had to be used in a trade/business for more than 12 months and that a residential house was a capital asset.

[Anonymous]

I would say 1) $0 – $480-240-2=$242 (exemption of $500K HOH)

2) $50K – $700-420-20 = $300 (;ess $250k exemption = $50K)

[WANNABE_CPA]

Solution:

1. Carl has maximum exclusion of $250000.Realized gain is $242000(480000-238000). $2000 is taxable at a maximum rate of 25%, as it is recognized as Unrecaptured section 1250 Gain.

2.Maximum exclusion for Alice is $250000.Rental period incurred after the qualified use, therefore the entire ownership period is considered as qualified use. Realized gain is $300000(700000-400000), $20000 gain is taxable as an unrecaptured gain section 1250 @25%.Total recognized gain is $50000.

FAR : 68, 74, 83 Thank you God 🙂
BEC : 78 (8/27) 🙂
REG : 72 ,80 (2/25) 🙂
AUD : 69,67, 07/23

[Author]

Replies