[jeff]

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

[SullivanNJD]

thats confusing. isnt a counter offer essentially a rejection of the offer and a new offer? Does the original offer still stand in a counter offer?

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Who's Better Than Us? nobody

[win2bet]

@maggie

Here is my reasoning: The July 15 telegram saying the offering was too high was not a rejection nor a counteroffer, I don't see in the question that it said that Tint's offer to buy the property for 82,000 was accepted (all the question stated was that they made the offer)

Thus- since Silk never accepted Tint's offer, and since Blue never rejected the offer (simply said too high) and then accepted the offer we have a contract. Makes sense ?

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

[win2bet]

Here's another tricky question about Net investment income-

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

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

[SullivanNJD]

Ok I guess “would you consider $XX” is considered “inquiry”, although I disagree because if the other party says yes then its probably a done deal right then.

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REG- 81
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Who's Better Than Us? nobody

[win2bet]

@sullivan – in the real world if some1 made an offer, and the other person said would you accept X, that would certainly be treated as a counter offer. but not on this test !

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

[Anonymous]

@win2betmore B – $2000 Deductible interest expense is limited to net investment income on the current tax year?

[Anonymous]

@MAGGIE The explanation is confusing. The first sentence should have been enough. Besides, I will not worry too much on this question, it may have been phased out (just like the telegram)?

[win2bet]

@cpaby2015

yes the answer is indeed 2000

I keep forgetting that Net Investment Income is not reduced by investment interest, & is simply the cap to the amount of investment interest that can be deducted in the current year.

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

[Anonymous]

I'm encountering similar questions like this on property transactions

In Year 1, Paul received a boat as a gift from his father. At the time of the gift, the boat had a fair market value of $60,000 and an adjusted basis of $80,000 to Paul’s father. After Paul received the boat, nothing occurred affecting Paul’s basis in the boat. In Year 3, Paul sold the boat for $75,000. What is the amount and character of Paul’s gain?

A. Long-term capital loss of $5,000.

B. Neither a gain nor a loss.

C. Ordinary income of $15,000.

D. Long-term capital gain of $15,000.

[win2bet]

@2015 is it D?

Seems like its a 15k long term gain, since when you receive a gift you take the donor's basis or the FMV whichever is lower

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

[SullivanNJD]

answer should be B I think

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Who's Better Than Us? nobody

[SullivanNJD]

For Gifts its easy to kind of map it out in writing. I write down the donor's basis and then if the FMV is lower than that, write down the FMV below the basis. Now if the recipient of the gift goes on to sell the gifted property in between those two amounts – no gain or loss is recognized.

If the recipient of the gift sells the property above the donor's basis, then you use the donor's basis to calc the gain

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Who's Better Than Us? nobody

[Anonymous]

It's B. Rules are: If gain used (Donee's) adjusted basis, if loss use FMV at date of gift, if price is between adjusted basis and FMV, then no loss/gain recognized. The technique I'm using to remember this is that always compare the selling price with both FMV and AB and whichever is in the middle will be use as basis of calculating gain or loss.

SP < FMV < AB = FMV (loss because SP is lower than basis of FMV)

FMV < AB < SP = AB (Gain since SP is higher than basis of AB)

FMV < SP < AB = No gain or loss because the basis is the SP.

Take note though that the above formula is based on the assumption that FMV is always lower than AB (maybe it's not always the case but so far of all the questions I encountered, it was).

[win2bet]

This donation of appreciated stock to a charity question is TOUGH. I highly doubt people remember this rule

Stein, an unmarried taxpayer, had adjusted gross income of $80,000 for the year and qualified to itemize deductions. Stein had no charitable contribution carryovers and only made one contribution during the year. Stein donated stock, purchased seven years earlier for $17,000, to a tax-exempt educational organization. The stock was valued at $25,000 when it was contributed. What is the maximum amount of charitable contributions deductible allowed on Stein's current-year income tax return?

A.

$17,000

B.

$21,000

C.

$24,000

D.

$25,000

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

[SullivanNJD]

Is it C- 24,000?

Limit is 30% of AGI

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AUD- 88
BEC-

Who's Better Than Us? nobody

[Author]

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